Former European Commission President, Romano Prodi visited Brussels to meet the current President, Juncker and several Commissioners for a timely debate around the urgent need to close the investment gap in social infrastructure in the EU. Mr. Prodi who led the work of the High-Level Taskforce that produced a much talked about report in 2018, highlighted in a press event following the meeting at Berlaymont discussed various sectors in dire need for investment, including Education and life-long learning, health and long-term care but focused primarily on affordable housing. This is why we have asked him to tell us more regarding this increasing momentum that the housing question seems to be gaining on the EU agenda, only a few months ahead of the European Elections.
Several years after the end of your term at the helm of the European Commission we see you more and more actively involved in the EU quarter? How does Europe look today from your point of view, President Prodi?
Our social models are under pressure – with a huge and as yet unsatisfied requirement to modernize and adapt to the needs of all our citizens, and the opportunities presented by a digitally-transformed world. The aftermath of the Eurocrisis has caught Member States in dire fiscal straits, a choice between two competing evils - Pressures for deficit reduction constrain the domestic policy space for social investment reform, while populists - increasingly successful with disenchanted citizens - resist austerity measures. In my view, there is an urgent need for an ambitious Social Europe. Although I must highlight that I commend this Commission for its efforts in this direction. The Juncker Commission took on an ambitious swath of social policy initiatives.
Investment in Social Europe is in decline as the report of the High-Level Taskforce you led has showcased. What are your main takeaways from the work you have carried out over the last years?
Indeed, public investment in social infrastructure during the Eurocrisis reached a 20-year low. Current investment in social infrastructure in the EU is estimated at 170 billion euros per year. The minimum infrastructure investment gap in these sectors is estimated at 100 to 150 billion euros, representing a total gap of at least 1.5 trillion euros between 2018 and 2030.
High-quality large-scale investments in social infrastructure are especially required in the EU now given our ageing populations, radical structural changes in labour markets, and the opportunities presented via technological innovation. I don’t think we can risk not making those much-needed investments, as an ageing population will have serious and prolonged impacts, particularly on the affordability of health, and on long-term care and pensions. These challenges are at the heart of our Report - which calls for a new deal for Social Europe.
Housing and affordable housing in particular comes across as a priority area for investment in social infrastructure in the Report. This seems to indicate a change of course for the European Commission that has avoided even commenting on housing issues for years. Do you agree with that?
I cannot deny that we were indeed surprised that affordable housing is a critical challenge everywhere and that the projects in this area are most advanced to be resourced now. demand for affordable energy-efficient and accessible housing continues to grow - and incomes grow less than the cost of housing and energy. This creates a vicious circle in which many people pay near to 40 percent of their income for housing, paying unaffordable prices to keep their homes warm or cool, while increasing numbers of people wait and wait on never-ending waiting lists for social housing; others depend on subsidies to pay for their heating or cooling.
The Commission, EIB and banks have already made major efforts - but if we do not step up, together, now, in the pace and level of ambition. We can show the leadership in Europe, right now, to use all the resources available to finance projects that are ready to go now, to support more affordable, energy-efficient and accessible housing.
How can these resources be put into motion in the most efficient way in your view?
Well, let me put a bit differently, the real question is this: how to finance a pipeline of essential projects secure financing can to close the enormous gap we identified. The reality is that Europe’s social infrastructure gap cannot be closed with public finance alone - and we have a great opportunity now to catalyse private investment for social infrastructure and services.
A dedicated window for social investments will help to improve the social investments in many of the regions with the greatest needs. I fervently hope this window will get larger and play an ever more central role in the future social policy of the Union.
I therefore want to reiterate the importance of supporting stakeholders to prepare a pipeline of bankable projects - and call on us all to take the initiative to make this happen now. The HLTF is ready to support a group to work, together with the Commission, and with a short time delivery if needed. The right framework will be in place once the new MFF and InvestEU are successfully adopted and operationally launched in 2021 – and there is no time to waste.
You mention the MFF and the InvestEU milestones but at the same time highlight the urgency of the need to deliver change. Do you think that the upcoming Elections may risk putting investments on hold?
No, don’t get me wrong. I would actually say the opposite. We can only effect real change in Europe if we seize the moment now, even before the election. In fact, across Europe, existing best practice and models that could be widely shared – and the Commission could help sharing those and develop a framework to make work in the Member States easier and so quickly increase the number of initiatives we can deliver rapidly at scale.
Additionally, we can seize the financial opportunity of the current moment with the financial instruments like EFSI already in place, with the backing of EIB, CEB and the promotion banks and last but definitely not least, while the interest rates are still low.
Getting back to housing, since this is your field of interest, let me stress that the Commission, EIB and banks have already made major efforts - but if we do need to step up, together, now, in the pace and level of ambition. We can show the leadership in Europe, right now, to use all the resources available to finance projects that are ready to go now, to support more affordable, energy-efficient and accessible housing.
Personally, I call on all parties to work together and to publish clear guidance and case studies as examples for other stakeholders to start developing a new pipeline of bankable projects and investment platforms. I am wholly committed to mobilising partners and investors to step up their efforts now.