On Wednesday, MEPs approved modifications to EU cohesion and social funding rules. The reform allows member states to reallocate funds from the European Regional Development Fund, Cohesion Fund and Just Transition Fund to six new priorities.
The legislation passed with 440 votes in favour, 168 against and 52 abstentions. The six new priorities are defence-industrial capabilities, military mobility (prioritising dual-use infrastructure), water resilience, affordable housing, decarbonisation, energy infrastructure, and civil preparedness. Social funds may now support skills linked to civil preparedness, defence, cybersecurity and green transitions.
One-off financing boost
Rapporteur and Committee on Regional Development (REGI) chair Dragoș Benea (S&D/ROU) said: “Cohesion policy is the foundational pillar of European solidarity. We are adjusting it to respond to current events and ensure flexibility, while maintaining its core values. Parliament has accepted defence as a new priority and is ensuring that Europe prioritises dual-use defence industry or military mobility investments.“
Mr Benea went on to stress that “we also secured funding for civil preparedness“, extending the scope of water resilience investment, and positioned affordable housing as a priority. „We made sure its scope also covers middle income families, and we limited support going to large companies. We will continue to promote fair and balanced development across all EU regions,” he said.
To accelerate liquidity, the rules introduce a one-off 20 per cent pre-financing boost for reallocated 2026 funds and raise co-financing rates by 10 percentage points (capped at 100%). Regions reallocating 10% of programme resources gain an extra 1.5% pre-financing. Eastern border areas adjacent to Russia, Belarus or Ukraine receive 9.5% extra—reflecting acute security risks.
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Money for crises
The reforms retain cohesion’s focus on small and medium-sized enterprises (SMEs) and poorer regions. Large companies’ defence or decarbonisation projects qualify only in areas with below-average GDP per capita. Exceptions apply to the so-called Important Projects of Common European Interest, which face no regional restrictions. Funds frozen under the Rule of Law Conditionality Regulation cannot be redirected to new priorities.
The update aims to align cohesion spending with crises like energy insecurity and geopolitical threats while safeguarding core goals. Critics argue defence spending risks diverting funds from social cohesion—proponents counter that flexibility ensures relevance. The final vote split underscores lingering divisions over cohesion’s evolving role.
Ambition alone will not deliver results. — MEP Ciaran Mullooly (Renew/IRL)
On Tuesday, the parliamentary plenary session discussed the matter in depth. Three reports dominated the debate: ensuring a just transition for regions hit by decarbonisation, tackling the housing emergency, and simplifying access to cohesion funds.
No to centralisation
One of the REGI committee rapporteurs, MEP Ciaran Mullooly (Renew/IRL) opened with a stark warning: “Ambition alone will not deliver results.” He framed the green transition as a daily reality, citing job losses in Irish towns like Lanesborough and Polish coal regions. His call for a second Just Transition Fund was unequivocal: “We need it. Anything less is unacceptable.”
Mr Mullooly then went on to demand special economic zones and tailored retraining, stressing that “no worker should face redundancy without a plan.” He dismissed centralisation, arguing that “local communities must chart their path” towards a fair Europe. He handed cohesion Commissioner Rafaele Fitto a letter from a displaced worker—a blunt reminder that “this is real.”
Another rapporteur, MEP Marcos Ros Sampere (S&D/ESP) shifted focus to housing, declaring it a social emergency. With homelessness up 40 per cent and households spending over 40 per cent of income on rent, he urged public intervention to stop housing becoming a vehicle for speculation. He pushed for cohesion funds to prioritise affordable, publicly owned homes, particularly in rural and tourist areas. “The welfare state starts at home,” he argued, linking housing access to dignity. His report sought EU-wide policies to help young people “imagine leaving their parents’ homes”, a crisis he called suffocating.
Cohesion has limits
MEP Vladimir Prebilič (Greens-EFA/SVN) struck a defensive tone, asking: “Will we destroy cohesion policy?” He warned that proposed cuts and centralisation in the next EU budget risked a two-speed Europe. Simplification, he argued, was existential: “Mayors are tearing their hair out over applications.”
Mr Prebilič proposed decentralising access points and slashing audits from five to one. Slovenia’s success in narrowing regional gaps with cohesion funds exemplified their value, but he cautioned against national governments dictating spending: “Regions know where money is needed.”
Cohesion policy is the foundational pillar of European solidarity. We are adjusting it to respond to current events and ensure flexibility, while maintaining its core values. — MEP Dragoș Benea (S&D/ROU)
Commissioner Fitto responded by praising the €12bn Just Transition Fund and its 46 per cent uptake, while hedging on a second fund. He endorsed the Affordable Housing Plan’s goal to double cohesion spending on homes but noted limits: “Cohesion alone cannot solve this.” On simplification, he cited progress but offered few new commitments. He reaffirmed €450bn for cohesion in the next budget, with half for poorer regions as a nod to critics fearing austerity.
Shield and catalyst in one
Debate threads converged on cohesion policy’s role as both shield and catalyst. Messrs Mullooly and Prebilič framed it as the antidote to fragmentation; a “community of solidarity” versus a “single market.” Mr Sampere tied housing to social stability, warning that without affordable roofs, “the rest is lost.” Mr Fitto balanced praise for existing tools with caution against overreach, stressing partnerships over prescriptive solutions.
The session underscored a deepening rift: MEPs demand bold, localised interventions while the Commission emphasise incrementalism. Yet urgency united speakers—whether Mr Mullooly’s displaced worker, Mr Sampere’s rent-burdened families, or Mr Prebilić’s exasperated mayors. Their message was clear: cohesion policy must adapt or risk becoming collateral in Europe’s polycrisis decade.
The legislation is now up for adoption by the Council. It is to take effect after subsequent publication in the EU Official Journal.
