While agreeing to a number of proposals making managing and receiving EU funds easier, MEPs insist on retaining sound financial management.
- a single rule book for recipients of EU funds instead of different sets of rules
- no-profit principle reinstated: recipients of EU grants should not make profit
- no trust funds for internal actions to avoid further fragmentation of EU budget structure
The draft report adopted by the Committees on Budgets and Budgetary Control on Tuesday seeks to improve the Commission proposal for a new Financial Regulation and a number of accompanying financial rules, jointly setting the scene for spending and control of the EU budget.
The draft report was adopted by 29 votes to one, with 13 abstentions. The Committees also voted to start negotiations with the Council and Commission.
Coherent rules for recipients of EU funds being the MEPs’ priority, the Committees support the Commission’s simplification agenda. However, co-rapporteurs Ingeborg Gräßle (EPP, DE) and Richard Ashworth (ECR, UK) consider that the Commission uses simplification to justify abandoning principles that have been intrinsic to the EU budget process.
While welcoming a number of the Commission’s proposed measures on budget flexibility, the Committees are opposed to automated carry-overs between various branches of the budget.
To avoid further fragmentation of EU funds and loss of accountability, MEP’s oppose the proposed introduction of trust funds for emergency or specific actions within the EU. Co-rapporteurs argue the “galaxy” of instruments surrounding EU budget has grown in recent years. The further it grows, the less transparent the budget becomes, and the less control the budgetary authority has over it, they say. To this end, the draft report also proposes a strict procedure for setting up trust funds for external action, subjecting them to the scrutiny of the discharge procedure.
MEPs oppose the proposed removal of the no-profit principle (grant recipients may not make profit on EU funds), reintroducing it in the draft report.
MEPs also insist the Commission undertakes an impact assessment when proposing substantial changes to the financial regulation in future to assess the burden imposed on recipients of EU funds.
Next steps
The decision by the committees to enter into inter-institutional negotiations will be published on the plenary website. If no request for a vote in plenary on this decision is made within 24 hours after the publications, the committees may start negotiations with the Council and Commission.
Background
The Financial Regulation sets out the principles and procedures governing the establishment and spending of the EU budget and the control of the EU funds. In September 2016, the Commission tabled a proposal for a new Financial Regulation, which would replace the current one, as well as amend related rules and regulations. Apart from the Committees on Budgets and Budgetary Control, 9 other committees submitted opinions that have been considered in the draft report.
The Commission justifies its proposal by the need to simplify EU financial rules and make them more flexible.