Europaudvalget 2017-18
KOM (2018) 0321 Bilag 2
Offentligt
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EN
2018
The Commission’s proposal
for the 2021-2027
Multiannual Financial
Framework
Briefing Paper
July 2018
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2
CONTENTS
Paragraphs
Introduction
The Commission’s proposal does not provide a clear overview of changes in spending
Our analysis shows a bigger EU-27 budget with additional spending in priority areas
1-2
3-5
6 - 12
The Commission prepared its proposal following a sound procedure, including a
spending review focused more on the efficiency of spending than on reprioritisation 13 - 33
The MFF proposal was developed as part of a wider debate on the future
of Europe but presented before the EU defined its new post-2020 strategic goals 13 - 17
The Spending Review accompanying the MFF proposal has useful elements
for improving the efficiency of programmes
The Spending Review does not support the proposed reprioritisation of EU
spending with a systematic assessment of spending programmes’ EU value
added
The Commission has partially taken account of our proposals
The EU still lacks a fully defined concept of value added to guide its spending
Flexibility to deal with unforeseen events will increase significantly
The Commission has not fully disclosed the assumptions behind the MFF proposal
It is too early to assess progress on simplifying programmes and strengthening
performance frameworks
Including the EDF will improve the “unity” of the EU budget but overall
accountability remains an issue
Public audit at EU level is still not assured for all relevant spending
Challenges for the EU before adopting MFF 2021-2027
18 - 20
21 - 25
26 - 33
26
27
28
29 - 31
32
33
34
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INTRODUCTION
1.
On 2 May 2018 the Commission published a package of legal proposals and accompanying
explanatory documents for the new Multiannual Financial Framework (MFF) – a seven-year
budget for the European Union for the 2021-2027 period. In this briefing paper we focus on the
proposed MFF Regulation
1
, the MFF Communication
2
and the accompanying Spending Review
3
.
Our comments relate to the proposal itself and the process for preparing it. We also highlight the
extent to which proposals we made in response to the Commission’s Reflection paper on the
future of EU finances
4
have been taken into account.
Figure 1
recalls those proposals and the
Commission’s “principles for reform”
5
of the EU budget which we endorsed. This is not an audit
report; it is a review mainly based on publicly available information.
1
Proposal for a Council Regulation laying down the multiannual financial framework for the years
2021 to 2027, COM(2018) 322 final.
Communication from the Commission to the European Parliament, the European Council, the
Council, the European Economic and Social Committee and the Committee of the Regions, “A
Modern Budget for a Union that Protects, Empowers and Defends, The Multiannual Financial
Framework for 2021-2027”, COM(2018) 321 final.
SWD(2018) 171 final.
“Future of EU finances: reforming how the EU budget operates”, Briefing Paper, February 2018.
Reflection paper on the future of EU finances, COM(2017) 358, p. 25, Box 4.
2
3
4
5
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4
Figure 1: Key principles and ECA proposals
Source:
ECA
2.
We will, at a later stage, provide opinions on other elements of the MFF package and on
related sectoral regulations, such as:
•
•
the legislative proposals on the EU system of own resources
6
;
the legislative proposal on the protection of the Union’s budget in case of generalised
deficiencies as regards the rule of law in the Member States
7
;
6
COM(2018) 325 final, COM(2018) 326 final, COM(2018) 327 final, COM(2018) 328 final, SWD(2018)
172 final.
COM(2018) 324 final.
7
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5
•
the legislative proposals on the common agricultural policy
8
, on common provisions for
the European Regional Development Fund, the European Social Fund Plus, the Cohesion
Fund, and the European Maritime and Fisheries Fund and financial rules for those and
for the Asylum and Migration Fund, the Internal Security Fund and the Border
Management and Visa Instrument
9
, and the European Monetary Fund.
THE COMMISSION’S PROPOSAL DOES NOT PROVIDE A CLEAR OVERVIEW OF CHANGES IN
SPENDING
3.
In its MFF Communication, the Commission emphasises proposed increases in funding,
compared to the current MFF, for priorities such as youth, security, and migration and borders.
However, the Commission’s comparison with the current MFF does not cover other areas of
spending. A full and clear comparison between the current and new MFFs that would help
understanding how EU spending priorities will change is lacking in the published package (see
paragraph 1)
10
.
4.
Making such a comparison is not straightforward because adjustments are needed to take
into account four significant factors
11
:
•
Inflation
– The Commission presents monetary amounts for the current and new
MFFs with different reference dates
12
. To compare the current and new MFFs,
8
COM(2018) 392 final and COM(2018) 393 final.
COM(2018) 375 final.
The Commission has provided the European Parliament and the Council, as well as the ECA, with
additional information indicating the changes between the current and the new MFFs.
We verified these adjustments with the Commission.
The Commission uses the term “current prices” to refer to absolute amounts to be paid or
committed in a given year. To account for inflation, the Commission also uses “constant prices”
(2011 prices for the current MFF and 2018 prices for the next MFF), calculated using a 2 % “annual
deflator”, which corresponds to the European Central Bank inflation target. This adjustment is an EU
budgetary convention and does not necessarily reflect the actual rate of inflation in the EU.
9
10
11
12
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19.2 billion euros
need to be
added
to MFF 2014-2020 amounts
13
to convert them into
amounts with a 2018 reference value
14
.
•
Brexit
– Without additional contributions from the UK, the EU-27 will not pay grants and
subsidies to UK farmers, researchers, businesses, organisations and public institutions.
A comparison can be made between the current and new MFFs by
deducting
the
52.8 billion euros
15
that the Commission estimates is attributable to UK beneficiaries
during MFF 2014-2020.
•
Incorporation of the European Development Fund into the budget
– The Commission
proposes to incorporate most of the European Development Fund (EDF) into the EU
budget. Only the African Peace Facility (2.3 billion euros), which will be absorbed into a
new European Peace Facility, will remain outside the EU budget. To compare the
current and new MFFs,
28.2 billion euros
16
in EDF funds need to be
added
to MFF
2014-2020.
•
Change of structure
– the Commission proposes a new structure for MFF 2021-2027.
This development does not affect the comparability of the two MFF periods in terms of
total budget, but it needs to be taken into account when analysing changes in spending
priorities. The change of MFF structure, presented in
Figure 2,
involves:
o
renaming the current MFF headings (e.g. “Sustainable Growth: Natural
Resources” becomes “Natural Resources and Environment”);
o
creating new headings (“Migration and Border Management” and “Security and
Defence”);
13
Expressed in “current prices”.
In other words, expressed in 2018 prices. Unless specifically stated otherwise, all subsequent
amounts in this paper are expressed in 2018 prices and all percentages are based on 2018 prices.
In “current prices”.
In “current prices”.
14
15
16
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o
shifting programmes between MFF headings. Only the headings covering
agricultural and environmental programmes and administrative expenditure are
not affected by any shifts.
Figure 2: Proposed changes to the MFF structure
Programmes which moved between headings
and their 2014-2020 budget (in current prices)
1a: Competitiveness for
growth and jobs
(including research)
1b: Economic, social and
territorial cohesion
2: Sustainable Growth:
Natural Resources
(including Common
Agricultural Policy)
3: Security and citizenship
1: Single Market,
Innovation and Digital
(including research)
2: Cohesion and Values
3: Natural Resources and
Environment
(including Common
Agricultural Policy)
4: Migration and Border
Management
+
5: Security and Defence
6: Neighbourhood and the
World
4: Global Europe
2014-2020 MFF
5: Administration
headings
7: European Public
Administration
2014-2020 MFF
headings
and the corresponding
2021-2027 MFF
headings
Source:
ECA, based on Commission data
5.
Most EU spending is implemented by Member States, under
shared management,
in the
areas of agriculture and cohesion policy. These funds are largely pre-allocated to Member States
in accordance with a number of criteria and parameters. The MFF proposal does not describe in
detail the criteria and parameters to be applied in the 2021-2027 period
17
. They play a crucial
role in determining the level of EU funding each Member State receives as well as in directing
17
The Commission provides more information on the criteria and parameters for allocating funds
among Member States in sectoral legislative proposals.
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8
agricultural and cohesion funding towards political priorities, such as economic, social and
territorial cohesion, viable farming, youth unemployment, environment, climate action, and
migration.
OUR ANALYSIS SHOWS A BIGGER EU-27 BUDGET WITH ADDITIONAL SPENDING IN PRIORITY
AREAS
6.
In absolute terms
18
, the Commission’s proposal for MFF 2021-2027 represents an 18 %
increase on MFF 2014-2020 (from 1 087 to 1 279 billion euros). However, after putting the
figures on a comparable basis
19
(see
paragraph 4),
the real increase is 5 % (see
Figure 3).
However, as a proportion of Gross National Income (GNI), the Commission estimates that, when
applying the same comparable basis, there is a decrease from 1.16 % to 1.11 %.
18
In other words, in “current prices”.
Different methodologies can be used to compare MFFs. In our analysis we compare the new MFF
with the spending for the whole 2014-2020 MFF. The Commission, however, prefers to take the last
year of the current MFF, multiplied sevenfold.
19
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9
Figure 3: The Commission proposes a 5 % bigger 7-year budget
Source:
ECA, based on Commission data
7.
The Commission proposes a reprioritisation of EU spending.
Figure 4
compares the current
and new MFFs by taking account of the changes outlined in
paragraph 4
and recasting MFF
2014-2020 under the headings of MFF 2021-2027.
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10
Figure 4: Big increases in smaller programmes and a 16 % decrease in the MFF heading
“Natural Resources and Environment”
Source:
ECA, based on Commission data
8.
As
Figure 4
shows, the Commission proposes to reduce funding (by 16 %) for one MFF
heading –
“Natural Resources and Environment”.
Given that this heading covers 37 % of EU
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spending under MFF 2014-2020, the total saving is considerable – nearly 6 % of the current
seven-year budget. As a result, the overall share of spending under the heading “Natural
Resources and Environment” will fall from 37 % to 30 %. The proposed decrease in spending
does not affect all programmes equally:
•
For the
common agricultural policy,
the Commission proposes a
15 % cut.
Within the
common agricultural policy,
direct payments to farmers and market measures
(the first
pillar) are to
decrease
by
11 %,
and
rural development programmes
(the second pillar)
are to be
reduced
by
28 %.
At the same time, the Commission proposes to raise the
level of co-financing provided by Member States.
•
The Commission proposes a
50 % increase
for the
Programme for Environment and
Climate Action (LIFE),
which will remain a small part of the heading “Natural Resources
and Environment” (2 %).
9.
Overall, the Commission proposes to increase funding for the other MFF headings by
115 billion euros
20
, which corresponds to
11 % of the current MFF
(see
Figure 5):
•
55 % of this amount (63 billion euros, i.e. 6 % of the current MFF) comes from the
reduction in the heading covering agricultural spending (“Natural Resources and
Environment”).
•
45 % of this amount (52 billion euros, i.e. 5 % of the current MFF) corresponds to new
funds (see
paragraph 6
and
Figure 3).
20
This amount refers to reprioritisation at the level of the new MFF headings. More reprioritisation
occurs at lower levels of budget classification. For example, within the heading “Cohesion and
Values”, a decrease in funding for the Cohesion Fund and European Social Fund is offset by proposed
increases for Erasmus + and other programmes (see
paragraph 11).
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Figure 5: The Commission proposes to increase spending in priority areas using a 63 billion
reduction in “Natural Resources and Environment” and 52 billion euros of new funds
1 200
(in billion euros)
166
1 000
Single Market, Innovation and
Digital
Cohesion and Values
800
392
Natural Resources and
Environment
600
400
337
115 billion euros
for reprioritisation
Migration and Border
Management + Security and
Defence
Neighbourhood and the
World
200
55
new funds
109
52
63
reshuffled
funds
76
European Public
Administration
0
Source:
ECA, based on Commission data
10. The Commission’s proposed reprioritisation focuses on policies and programmes that have
had smaller financial allocations so far. As shown in
Figure 4,
increases above 10 % are proposed
for “Neighbourhood and the World” (+ 13 %), “Single Market Innovation and Digital” – the
heading which covers research spending (+ 43 %), and the two new headings “Migration and
Border Management” and “Security and Defence” (which we analyse together here) – replacing
the current heading “Security and citizenship” (+ 359 %). As a result, the share of “Migration and
Border Management” and “Security and Defence” will rise to nearly 5 % of the whole budget
(from 1 % currently), and spending under “Single Market, Innovation and Digital” will rise to 15 %
(from 11 % currently).
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11. The spending proposed for the heading
“Cohesion and Values”
is to increase by 1 %,
although the overall share of the EU budget will fall from 36 % to 35 %. However, there are
major changes at programme level:
•
Taken together, the
three funds that currently make up “cohesion”
(the European
Regional Development Fund, the Cohesion Fund and the European Social Fund) are to
be
cut
by
10 %.
However, each fund is affected differently:
o
the
European Regional Development Fund
is to
increase by 2 %,
in line with the
evolution of the whole heading.
o
For the
Cohesion Fund,
the Commission proposes a
45 % cut.
o
The allocation to the
European Social Fund
will be
reduced by 7 %.
•
Other programmes will be included in this heading, such as
Erasmus +
for which the
Commission plans a
92 % increase
in funding. As a result, Erasmus + will represent 7 %
of the new heading “Cohesion and Values”.
12. The 7 % increase proposed for “European Public Administration” includes administrative
expenditure of the institutions (+ 3 %) as well as the cost of European Schools and pensions
(+ 21 %). It cannot be viewed in terms of reprioritisation. The EU’s administrative expenditure is
an overhead cost that relates to all EU spending programmes, operations and institutions and
can be expected to grow in line with the increase in EU responsibilities that has occurred since
the start of the current MFF.
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THE COMMISSION PREPARED ITS PROPOSAL FOLLOWING A SOUND PROCEDURE, INCLUDING A
SPENDING REVIEW FOCUSED MORE ON THE EFFICIENCY OF SPENDING THAN ON
REPRIORITISATION
The MFF proposal was developed as part of a wider debate on the future of Europe but
presented before the EU defined its new post-2020 strategic goals
13. As
Figure 6
illustrates, the future course of EU action is set out in 10-year EU strategies,
programmes of the Commission and Council, political declarations
21
and binding international
agreements, which are only partly aligned in terms of goals or timing. Against the background of
these frameworks, the Commission developed its MFF proposal concurrently with holding a
wider debate on the future of Europe and drawing up proposals for spending programmes for
the 2021-2027 period.
Figure 6: Overlapping and unsynchronised strategic frameworks and objectives for EU action
Paris Agreement
KEY EU
INTERNATIONAL
COMMITMENTS
Sustainable Development Goals
Lisbon strategy
SPENDING
AND
REGULATION
1
st
Barroso
Commission
SPENDING
European
Council: up
to 2014
Europe 2020
European Council:
Strategic Agenda for the
Union in times of change
Juncker Commission:
ten priorities
MFF 2014-2020
Europe 2020 + ?
next European Council
strategy
next Commission’s
programme
MFF 2021-2027
2
nd
Barroso Commission
MFF 2007-2013
2007
2008
2009
2010
2011
2012
2013
2014 2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Source:
ECA
14. The Commission began the debate on the future of Europe after 2020 in spring 2017 with
the publication of the White Paper on the future of Europe and a series of reflection papers on
the key challenges ahead, including globalisation, defence, migration, social issues, the Economic
21
Bratislava Declaration of 16 September 2016; Rome Declaration of 25 March 2017.
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15
and Monetary Union, and the future of EU finances (the “Reflection Paper”
22
). The latter was
discussed in the European Parliament and the Council, as were our comments on it
(see
Figure 1).
15. The Commission followed up the Reflection Paper with a contribution
23
to the informal
meeting of EU-27 Heads of State or Government in February 2018, which presented options for
increasing or decreasing funding for major spending programmes. The MFF proposal remains
largely within the scope of the options presented.
16. The Europe 2020 strategy will end before the start of the new MFF period, and no new set
of strategic EU goals has been decided yet. In effect, due to the Commission’s legal obligation to
publish the new MFF proposal at this stage, it has become a vehicle for shaping the EU’s political
objectives after 2020 rather than simply reflecting them. This is not the customary or logical
sequence of events, in which public budgets are determined after the setting of political
objectives and designing policies. It means that it will be essential for the EU’s legislative
authorities, before adopting the new MFF, to take due account of the effect of decisions to come
on the EU’s political objectives after 2020 and the design of its key policies.
17. The Commission proposes to have the MFF legislation and the sectoral legislation for
spending programmes, adopted by spring 2019. This would leave more than half a year for
preparing the implementation of spending programmes – an improvement on the current MFF,
which was adopted less than a month before its start date. The additional time would help the
Commission and Member States to launch new programmes without delays – a problem that
affected the start of the current MFF. However, compared to the adoption of MFF 2014-2020,
this timetable seems ambitious. The current MFF needed 30 months from publication to
adoption.
22
Reflection paper on the future of EU finances, COM(2017) 358.
COM(2018) 98 final.
23
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The Spending Review accompanying the MFF proposal has useful elements for improving the
efficiency of programmes
18. In line with our proposal
24
, the Commission carried out a spending review covering all major
programmes under the current MFF. The review aimed to combine a strategic review (focused
mostly on prioritising programmes according to their value added and coherence with EU
objectives) with an efficiency review (seeking how to improve the delivery of existing
programmes by examining opportunities for streamlining and synergies, simplifying rules,
improving flexibility, and focusing more on performance).
19. We found that the Commission’s analysis was convincing with regard to the efficiency of
spending. When we compared the messages in the Spending Review with observations we had
made in our reports (to which the Commission’s document frequently refers), we found that the
Commission’s account of the current policies’ performance was balanced overall. In some cases,
however, the Spending Review does not sufficiently reflect certain key problems that we had
identified. For example, it is positive about the effects of climate mainstreaming, which the
Commission proposes to increase as a share of EU budget from 20 % to 25 %. But it does not
reflect our observation that, in agriculture and rural development, funding for climate action has
been overestimated and has not resulted in a significant change in activities.
20. The Spending Review provides strong arguments in favour of measures for simplifying
programmes, streamlining the budget, and increasing financial flexibility. It identifies unexploited
synergies between different programmes as well as opportunities to merge similar programmes
in various policy areas. It also gives examples of unnecessarily complex, inconsistent rules and
concludes that the success of simplification efforts so far has been limited. In addition, it explains
how flexibility mechanisms proved to be insufficient to cope with emergencies during the
current period, so that they had to be increased through an amendment to the MFF Regulation
following the mid-term review, while also illustrating how existing flexibility tools helped set up a
24
EU budget: time to reform? A briefing paper on the mid-term review of the Multiannual Financial
Framework 2014-2020, November 2016.
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17
new European Border and Coast Guard and supported urgent research on the Ebola and Zika
viruses.
The Spending Review does not support the proposed reprioritisation of EU spending with a
systematic assessment of spending programmes’ EU value added
21. We found that the published Spending Review was less convincing with regard to strategic
aspects, such as spending programmes’ EU value added and coherence with EU objectives.
22. In the Reflection Paper, the Commission stated that EU value added should be at the core of
any discussion on the future EU budget. The document explained how the concept of EU value
added went together with the principles of subsidiarity and proportionality. It proposed a list of
seven criteria for the assessment of EU value added and spelled out how EU financial support for
programmes should depend on the results of that assessment (see
Figure 7).
Figure 7: The Commission proposed criteria for the assessment of EU value added and spelled
out how EU financing should depend on the results
Source:
Commission Reflection paper on the future of EU finances
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18
23. According to the Reflection Paper, only programmes with very high EU value added should
receive full EU financing. For those with medium-to-high EU value added, the financing should be
limited, and there should be none for programmes whose EU value added was low.
24. The published Spending Review provides neither a systematic assessment of programmes
based on the criteria that the Commission defined for EU value added, nor a clear overall
conclusion on each programme’s EU value added. Readers cannot readily use the information in
the Spending Review to compare or rank programmes in terms of the EU value added they
generate. Consequently, the information does not provide much insight to guide future funding
decisions by the EU legislative authorities.
25. Given that the strategic objectives for the period after 2020 have yet to be set, the
Commission was not in a position to adequately assess coherence with the EU’s objectives for
the 2021-2027 period. This is an inevitable weakness of trying to carry out a spending review at
this point in the EU’s strategic and policy-making cycle (see
Figure 6
and
paragraph 16).
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19
THE COMMISSION HAS PARTIALLY TAKEN ACCOUNT OF OUR PROPOSALS
Figure 8: The Commission has made some progress in implementing our proposals
Progress on the implementation of our proposals
1. Develop and apply a robust concept of EU value added
2. Improve the EU budget’s capacity to respond to changing circumstances
3. Complement the next MFF with a comprehensive financial plan
4. Strengthen the overall performance framework
5. Develop principles of accountability and transparency for all EU-related bodies
6. Establish public audit mandates for all EU-related bodies
Little progress
Some progress
Significant progress
Source:
ECA
The EU still lacks a fully defined concept of value added to guide its spending
26. We proposed that the Commission develop and apply a robust concept of EU value added
(Figure
1).
We note that the MFF package, including the Spending Review, does not offer a new
definition of EU value added, but refers to the set of criteria presented in the Reflection Paper
(see
Figure 7).
We also note that the Commission identified the concept of EU value added as a
guiding principle of the spending review exercise. However, the published results do not include
an assessment of the relative EU value added of programmes in the way outlined in the
Reflection Paper (see
paragraphs 21-24).
As we have argued, the concept of EU value added is
necessary not only to allocate resources but also to design and evaluate spending programmes.
Flexibility to deal with unforeseen events will increase significantly
27. We proposed improving the EU budget’s capacity to respond to changing circumstances by
reforming key flexibility mechanisms of MFF 2014-2020. Under the Commission’s MFF proposals,
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20
the EU will retain the main features of the current arrangements with some changes to increase
overall flexibility and ensure sufficient appropriations to cover unforeseen events. The main
changes include:
•
raising the own resources ceiling
from 1.20 % to 1.29 % of GNI to take account of the
inclusion of the EDF in the EU budget, increases in budgetary guarantees, and the UK’s
withdrawal from the EU. The own resources ceiling sets an upper limit on the EU budget
payments that can be made in a year. The Commission’s MFF proposal assumes that its
proposal for an own resource decision, which is the subject of a lengthy adoption
procedure, will be adopted before the new MFF enters into force. Until it is adopted,
the ceiling will remain at the lower level of 1.20 % of EU-27 GNI. A higher own resources
ceiling provides more flexibility to cover potential calls on the EU’s budgetary
guarantees.
•
reducing the difference between total payment appropriations and total commitment
appropriations
compared to the current MFF (2.6 % for MFF 2021-2027; 5.5 % for MFF
2014-2020). Sufficient payment appropriations are needed in the new MFF to honour
outstanding commitments from the current MFF
25
and any commitments made under
the new MFF falling due before the end of 2027. A smaller gap between total
commitment and payment appropriations reduces the risk of payment problems
occurring.
•
removing the limits on the Global Margin for Payments.
Under the current MFF,
subject to certain limits, the margin between the MFF ceiling for annual payment
appropriations and the payments executed in a given year can be carried forward to
future years of the MFF. This mechanism helps ensure that sufficient payment
appropriations are available if spending programmes are delayed. Removing the limits
will simplify the mechanism and increase the EU budget’s ability to make payments in a
timely manner.
25
Outstanding commitments at the end of 2017 were 267 billion euros, Annual Accounts of the
European Union 2017, Table 4.4 of the implementing reports.
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•
increasing the size and scope of special instruments outside the MFF
26
by a further
34 %, from 1.8 billion euros per year during the 2014-2020 period
27
to 2.4 billion euros
per year during the 2021-2027 period. As a result, the total appropriations potentially
available through special instruments under the new MFF will be 16.8 billion euros. In
addition, the Commission proposes that amounts spent in any one year from the four
special instruments outside the MFF should be counted on top of the annual MFF
ceilings for payment appropriations. This would clarify the treatment of special
instruments in line with our previous recommendation
28
.
•
widening the scope of the Global Margin for Commitments
and renaming it the
“Union
Reserve”.
Under MFF 2014-2020, the EU may carry forward unused commitment
appropriations to future years only for spending related to growth, employment,
migration and security policies. Under the proposal, the budgetary authority could, in
future, allocate unused commitment appropriations to any policy area. In addition, the
Commission proposes that cancelled commitments in the EU budget
(“decommitments”) should be added to the Union Reserve. In the last seven years,
annual “decommitments” have varied between two and five billion euros a year. These
two measures will increase the EU’s ability to respond to unforeseen events.
The Commission has not fully disclosed the assumptions behind the MFF proposal
28. We proposed that the Commission should complement its MFF proposal with a medium-to-
long term financial plan. The principle purpose of such a plan would be to put the figures in MFF
2021-2027 into their proper economic and financial context for decision-makers and the public.
As noted above, the MFF proposal does not sufficiently explain the underlying programming
assumptions or provide a payments forecast. The Commission will have an opportunity to
26
The European Globalisation Adjustment Fund, the European Union Solidarity Fund, the Emergency
Aid Reserve and the Flexibility Instrument.
This figure includes increases already made in annual amounts following the mid-term review of
MFF 2014-2020.
Chapter 2 of the 2016 Annual Report, paragraph 2.48, Recommendation 2.
27
28
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22
provide such information in line with the new Financial Regulation requirement
29
to produce
annual financial and accountability reports, including a five-year forecast of future flows of
funds. Information is also missing on the assumptions regarding the financial risks to EU finances
for which funds will be kept in reserve, the economic situation during the period, and
complementary sources of funding to be used to meet EU objectives.
It is too early to assess progress on simplifying programmes and strengthening performance
frameworks
29. The Commission announced that among the principles shaping its MFF proposal were “less
red tape for beneficiaries” and “a budget that performs”. This is in line with the Commission’s
“principles for reform”, which we endorsed (see
Figure 1).
30. For the 2021-2027 period, the Commission proposes to reduce the number of spending
programmes by a third and “to make rules more coherent on the basis of a single rulebook”.
This, according to the Commission, “will drastically reduce the administrative burden for
beneficiaries and managing authorities”. When pursuing this goal, the Commission needs to be
alert to key risks:
•
To genuinely achieve simplification, the single rulebook should eliminate all unnecessary
rules, requirements and procedures. It should not simply be a consolidation of the
existing separate rulebooks into a single large volume.
•
Simplification is not a goal in itself but a means to increasing the efficiency of EU action.
Therefore, when designing rules for EU programmes, the Commission needs to strike a
balance between ease of implementation and effectiveness in achieving EU objectives.
•
For spending areas under shared management, Member States are largely responsible
for setting detailed rules. The Commission will need to ensure that Member States’
rules strike the same balance between ease of implementation and effectiveness.
29
Article 247(1) of the new Financial Regulation, see Council document 7847/18 ADD 1 (ongoing
legislative procedure 2016/0282/COD).
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23
31. In the MFF Communication, the Commission proposes “to strengthen the focus on
performance across all programmes, including by setting clearer objectives and focussing on a
smaller number of higher quality performance indicators”. The new programmes’ objectives
defined in the annex to the MFF Communication take the form of narrative mission statements.
They are not quantified and lack specificity. We expect comprehensive intervention logic models
with specific targets and matching sets of informative output, result and impact indicators to be
developed in the relevant sectoral legislation or programming documents (including at Member
State or regional level).
Including the EDF will improve the “unity” of the EU budget but overall accountability remains
an issue
32. The Commission’s plan regarding the EDF is in line with our previous proposals (see
Figure 1).
Incorporating the EDF – an EU programme pursuing EU objectives – into the EU
budget, and subjecting it to the same principles and rules as those applicable to other
programmes financed from the EU budget, will improve overall accountability with regard to EU
action. However, the Commission’s proposals do not explain how a consistent level of
accountability and transparency will be ensured between funds spent to achieve EU objectives
through the EU budget and those that will continue to be spent outside it. We have previously
proposed including six elements in any new arrangements to ensure strong accountability,
transparency and audit chains
30
: clear roles and responsibilities, requirements on management
to provide assurance, full democratic oversight, a mechanism for improving performance,
independent public audit, and follow-up of audit recommendations.
Public audit at EU level is still not assured for all relevant spending
33. As we proposed (see
Figure 1),
public audit mandates should be established for all types of
financing of EU policies at EU and national level. The European Court of Auditors should be
appointed as the auditor of bodies set up to implement EU policies, including EU bodies (such as
the European Defence Agency and the proposed European Monetary Fund) and bodies created
30
“Gaps, overlaps and challenges: a landscape review of EU accountability and public audit
arrangements” ECA, 2014, paragraph 14 and Table 1.
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24
through agreements outside the EU legal order (such as the European Stability Mechanism and
the European Investment Bank in relation to its non-EU budget operations). This change would
require amendments to the founding acts of the bodies concerned, and it is not necessarily
linked to the transition from one MFF period to another. However, it needs to start from a
political commitment, which is not present in the Commission proposals for MFF 2021-2027.
CHALLENGES FOR THE EU BEFORE ADOPTING MFF 2021-2027
34. A number of issues that we raised when the MFF was being developed continue to be
relevant. We believe that they can be addressed when the EU tackles the following
challenges
before the start of the new MFF and programming period:
•
Developing a comprehensive financial plan.
Adopting MFF 2021-2027 by spring 2019
will be challenging. However, meeting this deadline would help to ensure spending
programmes start on time. We consider that good quality information could contribute
to speedier – and better – decision-making. In this context, we maintain our invitation
to the Commission to clarify the key assumptions behind the MFF proposal in a
comprehensive financial plan.
•
Determining the EU’s strategic objectives.
The debate on the MFF proposal has begun
before the EU has clearly stated its strategic objectives for the period after 2020. It will
be important for EU decision-makers to ensure that the EU’s financial planning for the
period 2021-2027 adequately reflects any subsequently determined objectives.
•
Strengthening performance frameworks.
It will be essential to equip EU spending
programmes with strong and mutually consistent performance frameworks aligned with
the EU’s strategic objectives and MFF 2021-2027. We will be providing our opinions on
legislative proposals for a number of key spending programmes.
•
Ensuring adequate accountability and transparency.
The Commission is currently
proposing a range of new and revised funding schemes. These proposals need to ensure
that a consistently high level of public accountability and transparency is achieved. We
have advocated developing a set of principles based on six elements
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25
(see
paragraph 32).
One option could be to include such a statement of principles in the
interinstitutional agreement accompanying the MFF proposal
31
.
•
Strengthening public audit at EU level.
We maintain our view that the European Court
of Auditors should be mandated to audit all EU bodies, including the European Defence
Agency and the proposed European Monetary Fund
32
, and invited to audit all bodies
created through agreements outside the EU legal order to implement EU policies. This
would include the European Stability Mechanism and the European Investment Bank’s
non-EU budget activities.
31
COM(2018) 323 final of 2 May 2018.
As mentioned in
paragraph 2,
the ECA will issue an opinion on the proposed European Monetary
Fund. The opinion will focus on its accountability and audit arrangements.
32
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