EC “Budget for Europe 2020″ – Research and Innovation

POLICY
Europe needs cutting-edge research and innovation that goes beyond national boundaries, combines different scientific disciplines, technologies and business competences, and attracts talent from all around the world. Research and innovation is essential to support the EU’s position in today’s rapidly evolving globalised markets and to meet the challenges of the future. Investing in research and innovation in Europe will create new job opportunities, and will ensure Europe’s long-term sustainable growth and competitiveness.
Scientific advances, new technologies and innovations are also needed to address pressing societal challenges, such as climate change, ageing population and resource scarcity. These are enormous challenges that need major research and innovation breakthroughs, some of which can only be achieved by coordinated action at the European level. Past EU-funded research has, for example, brought together expertise from leading centres across Europe resulting in an innovative way to detect and treat Alzheimer’s disease. Such breakthroughs will profoundly affect the lives of European citizens through improvements in the quality of health care, new patterns of work and private life, and more secure livelihoods. Successful innovations that address these challenges will provide huge opportunities for companies to grow and create new jobs.
Yet despite its fundamental importance, Europe’s performance in research and innovation lags behind that of the US and Japan, and China, Brazil and India are rapidly catching up. To reverse the current trend, the Europe 2020 Strategy sets a target of raising spending on R&D to 3% of GDP by 2020. A particular priority is to increase business-driven research and innovation through, for example, the use of public funding to leverage private investments.
In conjunction with national and private sector funding, the EU budget can make an important contribution to hitting these targets and to boosting Europe’s research and innovation performance.

INSTRUMENTS
A key step to modernising EU programmes for research and innovation is to bring together within a single Common Strategic Framework for Research and Innovation (CSF) the three main existing initiatives and sources of funding:
–the 7th Framework Programme (FP7);
–the innovation part of the Competitiveness and Innovation Framework Programme (CIP); and,
–the European Institute for Innovation and Technology (EIT).
The CSF will set out the strategic objectives for all EU research and innovation funding actions. It will be more streamlined than current funding schemes, and will be implemented through harmonised rules and procedures. In this way, research and innovation activities will be coupled together coherently, and the impact of EU funding will be increased. The CSF will increase the added value of EU interventions through generating the critical level of resources, expertise and excellence for research and innovation that cannot be achieved at national level.
By making EU research funding simpler and more coherent, the CSF will also be more SME-friendly and open to new participants. It will improve the dissemination of the know-how needed for innovation and policy making. It will allow the Joint Research Centre to contribute more effectively to policy making. It will give a more strategic orientation to international cooperation and it will underpin the European Research Area.
Within this overall framework, the CSF will cover direct and indirect research, each structured around three distinct but mutually reinforcing blocks in line with the Europe 2020 priorities:
(1)Excellence in the science base. This block will strengthen the EU’s world-class excellence in science by developing talent within Europe and attracting leading researchers to Europe. The emphasis will be on: stronger support for frontier research (through the European Research Council); future and emerging technologies; skills, training and career development of researchers (Marie Curie Actions); and networking of, access to, and development of priority research infrastructures (including e-infrastructures).
(2)Tackling societal challenges. To respond directly to the challenges identified in the Europe 2020 strategy, this block will support activities covering the entire spectrum from research to market. It will integrate innovation actions (pilots, demonstration, test-beds, support to public procurement and market uptake of innovation), cross-disciplinary approaches, and socio-economic and humanities research. The focus will be on: health, demographics changes and well-being; food security and the bio-based economy; secure, clean and efficient energy; smart, green and integrated transport; supply of raw materials; resource efficiency and climate action; and, inclusive, innovative and secure societies (including cyber-security and making the Internet a safer place). The EIT will, through its Knowledge and Innovation Communities, strongly contribute to addressing the challenges, with a significantly increased budget.
(3)Creating industrial leadership and competitive frameworks. To support and promote business research and innovation in enabling technologies; services and emerging sectors with a strong focus on leveraging private sector investment in R&D; and, to address SME-specific problems. Priority actions will cover: increasing strategic investments and leadership in current and future enabling and industrial technologies and services, with dedicated support for ICT (including micro/nano-electronics and photonics); nanotechnology, advanced materials, advanced manufacturing systems; industrial biotechnology; space research and innovation and low carbon and adaptation technologies, with particular regard to ensuring an integrated approach to key enabling technologies; facilitating access to risk finance and venture capital (building on the FP7 Risk Sharing Finance Facility and CIP financial instruments); and, providing EU wide support for innovation in SMEs with high growth potential.
The approach will include both agenda-driven activities and more open areas for applicants to propose innovative projects and breakthrough solutions.

IMPLEMENTATION
In line with the concept of a CSF, implementation will be simplified and standardised. The simplification will concern both funding schemes and administrative rules for participation and dissemination of results. The new single set of rules will apply to the three blocks of the CSF, while taking account of the specificities of the EIT (and its needs for regulatory flexibility) as well as those of SMEs. The key operational features of the CSF will include the following:
•A rationalised set of funding schemes and instruments will be used across the CSF, taking forward those that work from the current programmes, merging those with similar objectives, and discontinuing those no longer fit for purpose. As well as grant funding, greater use will be made of innovative financial instruments. Consideration will also be given to pre-commercial procurement and prizes.
•A single set of rules covering eligibility, accounting, reporting, and auditing will apply across the board. A new balance will be struck between trust and control, and between risk taking and risk avoidance. To lighten the administrative burden for beneficiaries (grant-holders) a radically simplified cost-reimbursement approach will be introduced based on the broadest possible acceptance of the beneficiaries’ usual accounting and management practice and with greater use of lump sums and flat rates. Beneficiaries will be required to exploit the results or make them publicly available through appropriate dissemination channels.
•Projects will be able to start earlier because the selection and post-evaluation negotiation phases will be much shorter. Simpler guidance and advisory services to applicants and participants will be provided through a unique IT portal. Furthermore, support structures within Member States will be rationalised to establish a one-stop shop for all activities under the CSF in the national language. Specific measures will be introduced to assist talented researchers and innovators who lack experience in accessing EU funding. A single audit approach will be applied across the CSF.
•The quality, efficiency and consistency of implementation of the CSF will be enhanced through a major externalisation, building on the progress achieved in current programmes. The executive agencies established under the current programmes will be expanded to realise economies of scale. Further use will be made of Public-Private Partnerships with industry and Public-Public Partnerships with Member State programmes, including by using new possibilities foreseen under the revised Financial Regulations. These partnerships will rest on the strong commitment from all sides to pool resources in order to boost investments in strategic areas and overcome fragmentation of effort.
•Strategic alignment of EU, national and regional resources through Joint Programming with Member States will increase the added value and impact of overall investments.
•Increased use of innovative financial instruments will leverage private research and innovation investments, including venture capital investments for innovative, high-tech companies, in particular SMEs. These will be managed externally by the European Investment Bank Group or other international financial institutions or public financial institutions where at least one Member State is a shareholder, in accordance with the common rules for debt and equity.
In this way, it is anticipated that around two thirds of the CSF budget could be implemented externally (around a half in the present period), split between the various support mechanisms. The degree and nature of externalisation should be determined by, inter alia, the impact on efficiency and the overall budget under management and may entail further simplification of the rules applicable to externalised management. The Commission would, nonetheless, maintain direct management responsibilities in particular in areas linked to core policy competences.
Complementarity and synergies with research and innovation funding channelled through cohesion policy will be ensured by clearly differentiating between the objectives and the methods of intervention. Research and innovation are at the heart of the prosperity and well-being of all EU regions, and as such it is in the interest of all Member States to build excellent, strong and efficient research and innovation systems. CSF interventions will contribute to this through funding allocations based on excellence in research and innovation regardless of geographical location. Cohesion policy interventions will be enhanced as the most important instrument to tackle research and innovation capacity building at regional level, including the development of research infrastructures, through funding allocations based on pre-defined envelopes for eligible regions. The Partnership Contracts with Member States, together with the CSF, will support smart specialisation strategies addressing priorities set out in the CSF and based on the assessment of the regional/local situation. This should provide a ‘stairway to excellence’, and lead over time to a higher number of excellent researchers and innovators from the regions (notably the convergence regions) being able to establish programmes fully aligned with the CSF, but also to strengthen the capacity of all regions to make full use of their innovation potential. An appropriate interface will also be established with the CAP to support research and innovation in agriculture, and with relevant activities of education and other EU programmes, including security.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
Figures in constant 2011 prices
Common Strategic Framework for Research and Innovation €80 bn