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Johannes Hahn

Commissioner for Regional Policy

Harnessing urban potential - working together for a smart, sustainable, and inclusive Europe

Opening address at the Urban Forum

Brussels, 16 February 2012

The future will be urban, not only in Europe, but around the world. Globally, more people are moving into cities. Cities have become the main engines of economies in the developed and developing worlds alike. Just 100 cities account for about a third of the world's economy, and for almost all of its innovation. In Europe, around 70% of our population already lives in urban areas, but this will be the global average by 2050. China, the west's biggest economic competitor, is expected to have 15 megacities with an average population of 25 million each by 2025. European cities will have to be ready to compete.

Our shared European values have an urban history. From the Greek polis, where democracy was born, to the Italian city-states and Northern Europe's trading network, to the cities of the Industrial Revolution, we owe who we are to the creativity of our cities. They are the places we turn to for education, for trade and finance, and for world-class culture – it's the role they play, rather than size, which makes them so important. Cities, not nations, have been the main players during most of our civilization's existence, and cities may again overtake nations as the primary building-blocks of Europe.

Cities have to be at the heart of our plans to create a Europe that is prosperous, environmentally sustainable, and where no citizen is marginalised. They are social laboratories – cities are where we experiment with new ideas and where both positive and negative trends begin. With positive innovations, we want our cities to act as pathfinders that guide the rest of society towards a better way of doing things. With those trends that are damaging to society, it is in cities that we have to find and test solutions, preventing these problems from becoming widespread.

This is why, having weathered one financial crisis only to find ourselves in the middle of another, the European Commission is looking to cities to create growth and jobs. Although we face a period of instability and difficult austerity measures, cohesion policy funds will give us the means to continue investing, not only in order to recover from the crisis, but also to achieve the Europe 2020 goals. Cohesion policy is the most important European instrument for helping us to deliver the Europe 2020 vision of a smart, sustainable, and inclusive Europe, and we are here today to discuss how we can make best use of it in our urban areas.

From my own experience in government in Vienna, I understand the potential of cities, but I also know that we are not fully exploiting the unique energy and diversity of our city network and, if we do not act, our cities risk storing up serious problems for the future. I'm thinking of issues such as social exclusion, linked to higher rates of migration and the widening gap between rich and poor. Also climate change, which cannot be managed without better urban efficiency. Another issue is our aging population, which threatens us with a situation in which we will no longer have enough workers to preserve the European welfare model that has been one of our greatest achievements. Other problems that we are more familiar with from our past – such as poverty, unemployment, and environmental degradation – also tend to be concentrated in cities.

Cities hold the key to answering their own problems. It is in cities that we can best work to reconcile environmental goals with economic ones. Improving the urban environment improves quality of life, and this helps to attract talent. Addressing social exclusion draws people into the workforce and gives a voice to those who often see problems from a different perspective and who have new ideas to contribute. A city is a place where a Rubik's cube of problems can be tackled with one comprehensive strategy.

This is why I have argued for an ambitious urban agenda for Cohesion Policy after 2013. Cities should be full partners in the drive for European recovery. We should all – and this includes the Member States – help cities to exploit their potential to innovate, to foster dynamic, competitive business, and to lead the transition to a low-carbon economy. We want you to have ownership of your own development strategy and be able to draw on investment from all sectors, from high tech to housing, in order to reach your goals.

To give urban development a new boost, we have introduced bold – perhaps even controversial – new instruments.

Firstly, we have proposed that in each Member State at least 5% of the resources of the European Regional Development Fund should be allocated to sustainable urban development, delivered through what we call an 'integrated territorial investment' or ITI. With these investment plans, all or part of fund management is delegated to cities themselves. Of course, we anticipate that much more than 5% of ERDF will be spent in cities overall. The 5% proposal is simply designed to ensure that a minimum number of cities are given the opportunity to work in this way.

With an integrated territorial investment, money from different priorities or funds can be put together into one customised 'bundle', allowing you to use a wide range of different projects to address your particular needs. Our aim is that coordinated policies on employment, social inclusion, research and innovation, business support, mobility, and energy efficiency, will promote balanced development. It's also an approach that should give us all better value for money.

These integrated investments can cover the centre of a city only, or they can include the wider urban agglomeration or 'commuting zone', or an entire city-region. The aim is that the instrument should be as flexible as possible. This is an important point – compare, for example, Romania to the UK. Nearly 20% of the urban population in Britain is at risk of poverty. In Romania, the figure is only 5%, while the risk of poverty outside cities is more than five times this. In Denmark, a third of city-dwellers don't own a car; in Italy this is only about 15%. So, rather than trying to impose a uniform approach on cities, we need to be as sensitive as possible to specific needs, while delivering on our key objectives.

The ring-fencing for integrated territorial investments would guarantee that Member States give cities a bigger role in delivering cohesion policy. It would mean that, across Europe, cities would have more influence over how to achieve European goals.

Secondly, cities' role as innovators is recognised by the introduction of another new instrument – Urban Innovative Actions. The Commission will manage this initiative by organising an EU-wide call for proposals. We will look for the most interesting, innovative and forward-looking ideas for addressing urban challenges. These could be pilot projects, demonstration projects or new urban experiments which would be of interest across Europe. Where we find a new policy-solution, we'd like this to be tested in other cities and ultimately, if suitable, scaled up to the regional or national level. We hope to be able to put aside about 400 million euros over the 2014-2020 period to fund these actions.

Finally, we propose the creation of an 'urban development platform'. It will be a 'university of urban development' through which those actively involved in the implementation of integrated territorial investments and Urban Innovative Actions, together with the Commission and academics, will be able to exchange knowledge and ideas. We think that this dynamic exchange will be a mechanism for driving forward the delivery of sustainable urban development. It will give cities a voice in policy-making at the European level, but will avoid any overlap with the roles of existing – and very valuable – networks and organisations.

The selection of member cities will take place in two stages. In their Partnership Contract, each Member State should put forward a list of up to 20 cities for participation in the platform. The list should only include those cities which will themselves manage integrated solutions for sustainable urban development. The Commission will then select participants in the platform from these lists. We think it's important that the platform be both representative of the diversity of urban issues in Europe, whilst including major cities that have the critical mass needed to achieve our objectives.

These cities will be joined by those which are implementing Urban Innovative Actions. This will make sure that the results of these 'urban experiments' can be rapidly deployed in the development of more mainstream programmes.

Besides these instruments, we have proposed a set of specific investment priorities for urban areas. These will mean that funding can be concentrated on developing low-carbon strategies for cities, on energy efficiency in public buildings and housing, on urban regeneration and the reduction of air pollution, and on low-carbon urban transport.

Our introduction of a Common Strategic Framework will make sure that the investment of different funds is better coordinated. For the first time, five funds – from cohesion policy, rural development, and fisheries – will support each other in delivering a single strategy, making it easier to design programmes that cut across a range of policy areas.

The proposals also stress the principle of partnership, which I think is vital for programmes to be effective and legitimate. We will introduce a binding Code of Conduct to provide guidance on how to establish productive partnerships and, throughout the proposals, we have aimed to strengthen the involvement of partners in the design and management of programmes.

One way of doing this is by encouraging bottom-up, community-led local development. Funds can be used to support representatives from across a community to form a local action group, which can then create its own strategy on how to best develop its local area. By bringing together private sector stakeholders and local government with civil society, we think we can kick-start improvements in places where other types of policy-making have failed, particularly in deprived urban areas.

I've outlined the main cornerstones of our proposals for the urban dimension of future cohesion policy. As you will all know, these initiatives have not come from nowhere. We have drawn on last year's 'Cities of Tomorrow' reflection process, during which experts made a range of proposals on how to build Europe's cities of the future. Their recommendations on integration and innovation are reflected throughout the proposals, and the outcome of the reflection process is captured in the 'Cities of Tomorrow' report, which was published last October.

We are also building on the success of URBACT, which will continue to support networking between cities in Member and Partner States. And we must learn all we can from the innovative urban programming that I know has taken place during the current and previous funding periods. Additionally, a 'Reference Framework for Sustainable Cities' is currently in development. It will aim to promote a common understanding of sustainable and integrated urban development, and is a joint initiative involving Member States, stakeholders, cities, and the Commission. It will act as an operational toolkit for cities that will assist them in applying the integrated approach and with putting European objectives and principles for sustainable urban development into practice. From May this year it will be freely available for all policy-makers to use.

Some of the reforms the Commission has proposed are controversial, and I count on you to help us persuade governments negotiating in the Council and Members of the European Parliament that these steps are the right ones. I would also like to encourage you to start preparing your integrated strategies now, to mobilise stakeholders, and to find partner cities that already have experience of implementing successful integrated programmes. A strategy needn't have 2020 as its end-point – cohesion policy is part of building Europe for the long-term. Your early involvement in programme design – alongside the Commission, national and regional authorities – will help to ensure that programmes are effective and, importantly, start on time.

I hope that the Urban Forum will mark the start of a closer partnership between the Commission and cities, and also between European cities themselves. We’re facing serious challenges, and it is only with the full involvement of cities that we will be able to tackle them.

The Commission's proposals for 2014-2020 are just a first step towards harnessing the potential of European cities in our increasingly competitive and globalised world. I very much look forward to discussing these proposals today: Let's work together to make every city a place where people will want to live and work, now and in the future.

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