Auditors warn of risk of over-promising and under-delivering with EU funds

Annual meeting between the European Court of Auditors and the EC, Klaus-Heiner Lehne and Jean-Claude Juncker, 5 February 2018. [Etienne Ansotte/EBS]

In order to regain citizen trust ahead of the EU elections in May 2019, the European Court of Auditors recommended matching expectations with results when using the EU budget, as less than 15% of funds available were actually spent last year.

“We are all a little bit afraid,” ECA President Klaus-Heiner Lehne told a group of reporters on Wednesday (3 October).

Despite the EU budget representing only 1% of the bloc’s GDP, the European Commission and the European Parliament are adding new priorities to finance with the common funds.

But while the number of challenges keep increasing, member states are not improving their use of EU resources

Last year, EU countries only spent between 10 and 15% of the outstanding commitments available.

Lehne warned that “we cannot come to a situation of over-promising” while member states are not capable of using the funds available.

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Over the next few months, member states and the Parliament will negotiate the multi-annual financial framework (MFF), the EU’s long-term budget for the next period (2021-2027).

This would be the right manner to regain citizen trust, against the backdrop of the growing tide of populism and anti-European parties across Europe, he argued.

Better expenditure

The Court published on Thursday (4 October) its audit on the expenditure of EU funds.

For the second consecutive year, the auditors provided a “qualified opinion”, which means that the margin of error in using EU funds was not significant.

“The situation has improved very, very much,” Lehne said.

The level of irregularities in EU spending continued to decrease last year, reaching 2.4% of total expenditure, compared with 3.1% in 2016 and 3.8% in 2015.

Although the ECA chief said that member states and the Commission are moving “in the right direction” in implementing the EU budget, there is still room for progress with those projects where incurred costs are refunded, including innovation funds under Horizon 2020.

Ex-ante controls

But the auditors are not only willing to monitor how the EU money is disbursed. The body is also increasingly looking at the performance of euros spent in various sectors, such as high-speed trains or  Erasmus.

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Lehne also expressed the court’s intention to check the impact assessments made by the Commission to justify its proposals.

These assessments become key tools to convince sceptic member states and legislators, by claiming significant job increases and economic growth.

Due to the Court’s mandate to assess the use of EU funds ex-post, the review of impact assessments could be done only in a “limited and very general way” to avoid a “conflict of interest”, Lehne explained.

Payments backlog

Looking ahead, one of the main challenges for handling the EU budget continues to be the growing discrepancy between the high amount of commitments and the lower volume of payments. The payments backlog reached €267.3 billion last year.

Only around 2% of the commitments made are not spent at the end of the MFF, a marginal percentage insufficient to reduce the growing payments backlog.

A slight difference between commitments and payments is manageable, said the Court.

But various factors, in particular the possibility for member states to continue submitting payment claims three years after the conclusion of the current MFF, expands the budgetary period to a decade. “That is not how a budget should look like”, the auditors warned.

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