Annexes to SEC(2011)1453 - Executive summary of the impact assessment - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | SEC(2011)1453 - Executive summary of the impact assessment. |
|---|---|
| document | SEC(2011)1453  |
| date | November 30, 2011 |
(b) Efficiency: cost-effectiveness for the financial instruments (measured in terms of cost per job created and/or safeguarded) is estimated to be € 2735 per job. Concerning general administrative costs, the impact of staff costs across the total budget is 5.8% - mainly due to personnel costs.
(c) In terms of Coherence, the intervention logic of the current programme will be linked to other aspects of EU Competitiveness and SME policy, such as a reference to the relevant Flagship Initiatives of Europe 2020 or the priorities of the Small Business Act.
Option 2: Discontinuation
The Discontinuation Option does not achieve the policy objectives and its impacts are generally negative, both in social and environmental terms, compared to the baseline.
(a) Effectiveness: The only positive impact of this option would be in the area of cost savings.
(b) Efficiency: the discontinuation option would lead to significantly decreased efficiency in programme management by Member States due to the fragmentation of the management of individual national programmes, instead of the benefits of coordination under a pan-European programme.
(c) Coherence: the discontinuation option would have negative results in terms of the inconsistency of national approaches to competitiveness policy, as well as the absence of an EU dimension.
Option 3: Expansion
Different degrees of expansion of the current Programme were explored using the scenario envisaged by the external study as a benchmark, which is not considered to be a viable option.
Scenario 3a: Optimal Expansion
Scenario 3a would achieve the objectives of the programme to a considerable extent, but at an unrealistic cost.
(a) Effectiveness: There are positive direct economic impacts from the financial instruments, estimated at an increase in GDP of approximately €2.3 billion per year and €7.2 billion in additional lending/equity investment compared to the baseline scenario. The activities of the Network are not expected to have any additional result compared to the baseline scenario. The budget of the other activities would also increase considerably under this scenario and, in qualitative terms, activities to improve European competitiveness and entrepreneurship would lead to relevant policies based on best practices being implemented at EU and Member State level. There are also positive social impacts regarding employment: a major contribution is again expected to come from financial instruments, which are expected to contribute to the generation and/or preservation of more than 50,000 jobs by assisting approximately 65,000 more firms compared to the baseline option, as well as an additional 1750 jobs/year generated or safeguarded by the Network. Positive environmental impacts are expected to be significantly higher compared to the baseline, due to the scaling up of initiatives in support of eco-sustainable processes and products in targeted industrial sectors and tourism. The expansion of the Network would spread the EU environmental rules to additional third countries, generalising best practices.
(b) Efficiency: cost-effectiveness is estimated to be € 4732 per job. The incidence of staff costs over the total budget is expected to be 2.6%, mainly due to the significant increase in the budget for financial instruments.
(c) Coherence: this Scenario expands the current activities in order to reach out to other EU policies and programmes, so as to maximise the potential for added value of the EU-level intervention.
Sub-Option 3b: Balanced Expansion
The Balanced Expansion Option would achieve the policy objectives in a satisfactory manner by striking a balance and allocating the scarce budgetary resources accordingly.
(a) Effectiveness: Economic impacts of financial instruments are expected to result in an increase of GDP of approximately €500 million above baseline level and to generate about €1.7 billion in additional lending/equity investment. No additional impact is expected by the Network in comparison with the baseline option.
The budgetary allocation for other activities would be increased to achieve a more appropriate scale. A limited increase in the budget for support for European competitiveness would make it possible to implement some of the new actions included in the Europe 2020 flagship "An Integrated Industrial Policy for the Globalisation Era" as compared to the baseline option, such as initiatives relating to corporate social responsibility. As regards SME policy development, the same budget as under the baseline scenario would be maintained and the same impacts can be expected. As regards SME business support in markets outside the EU, a considerable scaling up of financial support would lead to an increased direct presence of SMEs in key global markets, as they would be able to rely on specialised support. Improved international cooperation would also have positive impacts on business internationalisation.
As regards social impacts, the financial instruments are expected to assist approximately 13,000 firms, thereby generating and/or safeguarding 11,000 more jobs than under the baseline option.
Other activities are expected to enhance cooperation between policy-makers at EU and national level, and a strong emphasis would be placed on identifying and disseminating best practices, with appreciable effects. In general, the envisaged measures are designed to be open to all groups of economic actors and therefore non-discriminatory. The activities envisaged to promote entrepreneurship are an exception, as these are designed to also target specific groups. Their aim is to promote and foster entrepreneurship across European societies, including social entrepreneurs, long-term unemployed, elderly workers, migrants and ethnic minorities. For instance, activities promoting entrepreneurship are expected to lead to a direct employment effect of 300-400 additional jobs, due to the internationalisation of beneficiary entrepreneurs.
Environmental impacts are not expected to be significantly higher than the baseline.
Aggregate impact due to synergies among the different components of the programme is expected to be significant compared to the baseline, as the reinforced financing of different measures is expected to enhance cooperation between policy-makers at EU and national level. Strong emphasis would be placed on identifying and disseminating best practices. The Network would be the centre-piece connector of different components, multiplying synergies between measures such as support to SMEs abroad and international industrial cooperation. Another example of expected synergies is the interplay between the Enterprise Europe Network and the financial instruments. The “use” of the Network for the promotion of the financial instruments will, for example, obviate the need for further promotional activities. Activities to improve European competitiveness, on the one hand, and the activities to develop SME policy and to promote entrepreneurship, on the other, will also be mutually reinforcing, as they are all intended to improve the framework conditions under which European businesses operate.
(b) Efficiency: cost-effectiveness is estimated to be €2824 per job. As regards general administrative costs, the impact of staff costs on the total budget is expected to be 4.1%.
(c) Coherence: this Sub-Option attempts to strike a viable balance between the different objectives in order to maximise the potential for added value of the EU-level intervention, in several fields related to the EU competitiveness and SME policy and identified in Europe 2020 flagship initiatives and other EU programmes.
Sub-Option 3c: Focused Expansion
Option 3c would partially achieve the policy objectives by focusing only on a specific subset of the competitiveness and entrepreneurship problems of the European economy.
(a) Effectiveness: Concerning economic impacts, positive quantifiable impacts are expected to flow from increased access to finance. Compared to the baseline, the concentration of resources mainly on the financial instruments would allow further reduction of the estimated market gaps for SME financing. The structural effects on the venture capital market would be limited. Compared to the baseline, however, financial instruments are expected to generate an increase in GDP of approximately €0.3 billion and €1.1 billion in the form of additional lending/equity investment facilitated.
Under this option, the focus of the financial instruments would be addressing the financial needs of growth-oriented enterprises and primarily those planning for internationalisation. The increase in resources would allow more young enterprises to benefit from loan guarantees and equity. More than half of the resources in this scenario would be allocated to equity instruments.
Some additional impacts compared to the baseline are expected by the Network due to the shift in priority, to become an "entry point" for helping SMEs access to finance. However, this effect is not quantifiable
The main economic costs under this option would concern the opportunity costs of not tapping the European added value which could be generated by the other, smaller-scale support activities proposed under the baseline option and Option 3b. It is not possible to quantify their economic impact as they are mostly indirect instruments.
This option would involve positive social impacts by the financial instruments, resulting in an additional 5,300 jobs per year compared to baseline. Nonetheless, this option would have a negative impact in terms of missed opportunities of European added value resulting from the discontinuation of the smaller-scale activities of the baseline scenario. Without activities to support SMEs abroad, it is likely that European SMEs would be less successful in seizing the opportunities in emerging markets that recent studies have highlighted, which would mean negative economic and social impacts from this option.
Environmental impacts are expected to be positive, but not significantly higher than the baseline.
Aggregate impact due to synergies among different components of the proposed programme under this scenario is deemed to be inferior to the baseline scenario, as only synergies between Financial Instruments and the Network will be present.
(b) Efficiency: Cost-effectiveness is estimated to be €4385 per job. Concerning general administrative costs, the impact of staff costs over the total budget is expected to be 4,9%, mainly due to personnel costs.
(c) Coherence: This sub-option lacks substantial synergies and linkages to other EU objectives and programmes, as it focuses mainly on the access to finance of EU businesses.
6. Comparison of options
In view of the above considerations, the following tables assess the options in terms of impacts, taking the baseline as the benchmark against which the other options are compared (Table 2) and the criteria of effectiveness, efficiency and coherence (Table 3).
The effectiveness of each of the two expansion options considered for the financial instruments is sensitive to how the measure is composed. Option 3b has a larger share of the guarantee instrument than 3c and, therefore, due to the much higher leverage of guarantees, benefits many more enterprises and generates more employment, which leads to higher value added (GDP) per unit of budgetary resources. Option 3c is based on new product and service concepts financed by venture capital, which could generate higher value added and growth in the long term. Cross-border venture capital spending can also contribute to the development of the equity market and strengthen the entrepreneurial eco-system with longer-lasting impacts on the economy.
Table 2 Comparison of the options' impacts
|| Budget || Economic || Social || Environmental
Option 1 (baseline) || €213 million/year || €660 million per year increase to GDP €1.8 billion in additional lending/equity investment €200 million incremental turnover per year || 26,000 firms assisted 17,000 jobs created and/or safeguarded 900 new products, services or processes created per year || By 2011, involvement of at least 7,500 SMEs in more than 400 cooperation agreements signed with environmental service providers.
Option 2 || €0 million/year || 0 || 0 || 0
Option 3b - moderate expansion || €340 million/year || €500 million additional increase of GDP €1.7 billion in additional lending and equity investment || 13,000 additional firms assisted 12,500 additional jobs created and/or safeguarded 200 additional start-up companies created || No change relative to baseline
Option 3c - focused expansion || €340 million/year || €300 million additional increase of GDP €1.1 billion in additional lending and equity investment || 5,300 additional jobs created and/or safeguarded || No change relative to baseline
Table 3 Comparing the options according to three dimensions
|| Budget || Effectiveness || Efficiency || Coherence
Option 1 (baseline) || €213 million/year || 0 || 0 || 0
Option 2 || €0 million/year || --- || - || ---
Option 3b - moderate expansion || €340 million/year || ++ || 0 || ++
Option 3c - focused expansion || €340 million/year || - || + || --
Legend: (---) very negative, (--) negative, (-) slightly negative, (0) no change, (+) slightly positive, (++) positive, (+++) very positive
Option 2 clearly fails to address the underlying problems of competitiveness and entrepreneurship. Discontinuation of the programme would also remove the EU contribution to dealing with the effects of the economic crisis on small businesses.
The only realistic choice, other than maintaining the status quo of Option 1, is between Options 3b and 3c. Whereas Option 3c concentrates the budget on two measures only, Option 3b attempts to strike a balance between different initiatives, in order to maximise the potential for added value of EU-level intervention across a wider field of activity. It also entails striking a balance between the different financial instruments. Option 3b, therefore, performs better in terms of achieving the programme’s objectives and of providing a coherent set of European support activities. Competitiveness means many things, and concentrating resources on financial instruments and the Network alone would not do the job. However, a wider range of activities does not come without a price. It involves higher staffing levels and therefore higher administrative costs. Moreover, the public consultation of stakeholders showed well over 80% of respondents supporting all of the envisaged activities. As it offers the most comprehensive solution, Option 3b is the preferred option.
7. Monitoring and Evaluation
The system for the monitoring and evaluation of the future programme would build on a robust hierarchy of logically interdependent objectives with a corresponding set of relevant indicators, and would adopt a holistic approach to monitoring and assessing the performance of the activities envisaged. Compared to the current programme, the following improvements would be made to the data collection and analysis system, as well as to the evaluation and monitoring approach:
· formulation of a new set of specific indicators and monitoring arrangements;
· cross-reference to Europe 2020 flagship indicators to steer the programme management process and to provide additional input to the Europe 2020 monitoring process;
· utilisation of counter-factual methodologies, comparing samples of beneficiaries with a similar set of non-beneficiaries, if relevant, and in order to distinguish the impact of the programme on the proposed indicators from the effect of changing economic circumstances.
· recourse to thematic evaluations across the various components of the future programme, where relevant.
The monitoring system and the indicators used to assess the current programme have already been the subject of a specific external study and of the EIP final evaluation. The recommendations from these sources have been used to improve the monitoring of the current programme, which will run until 2013. Moreover, the recommendations of a recent IAS Performance Audit of the EIP will also be taken into account in the implementation of the current programme and in the design of the monitoring system and of the indicators for the next programme. To this end, a Performance Report of the current programme is currently being drawn up.
The new programme will be subject to both an interim and an ex-post evaluation, in order to assess progress towards the objectives and the results. The interim evaluation will be completed by end-2017 to feed into the preparation of a successor instrument to the programme. The ex-post evaluation will be undertaken within two years of completion of the programme.
In the case of the Financial Instruments, the future monitoring and evaluation system will be based both on regular information about the beneficiaries collected by the financial intermediaries and intermittent sample-based surveys that will cover some elements in more detail. Additional analyses will be carried out in the context of evaluations of the programme. In particular, such evaluations will compare the development of the beneficiaries with groups of enterprises that do not use the instruments provided. The latter will require detailed analysis, since there are naturally a number of factors that influence the development of an individual enterprise which need to be distinguished from the impact of the programme. The most important aspects to be assessed in such an exercise are actually the growth and employment foregone because a guarantee was denied or a venture capital application was turned down. The scope of the evaluations will also be extended by considering impacts on the internationalisation of enterprises. Data required for this purpose will be collected by means of surveys, on a sample basis, rather than through regular reporting, in order to avoid imposing a disproportionate burden on intermediaries and final beneficiaries.
[1] COM(2011)500 final
[2] http://ec.europa.eu/cip/documents/implementation-reports/index_en.htm
[3] http://ec.europa.eu/cip/public_consultation/index_en.htm
[4] Study on the successor of the current programme and study on tourism, conducted by Economisti Associati
[5] Structural Business Statistics Database (Eurostat)
http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/data/database
[6] European Business Test Panel, Commercial Disputes and Cross Border Debt Recovery, 14.07.2010–13.08.2010, http://ec.europa.eu/yourvoice/ebtp
[7] See footnote 3
[8] Europe Innova, Meeting the challenge of Europe 2020, A report by the Expert Panel on Service Innovation in the EU, February 2011
[9] EIM, Opportunities for the Internationalisation of SMEs, June 2011
[10] Ibidem
[11] Over 50,000 different users of the IPR web portal and e-learning services over the first 3 years, with over 2 million hits; more than 30 training seminars and interactive workshops run every year, of which 2/3 performed in Europe, to gather SMEs' concerns.
[12] EIM, June 2011
[13] The budgetary assumptions of this study were not consistent with the Commission’s final proposal for the next MFF as the study was commissioned already in 2010, but the quantitative analysis remains relevant. As a consequence, Scenario 3a is omitted in the following tables.