Budgetary Control Committee approves Commission spending for 2010
Committee : Budgetary Control
The European Commission's 2010 budget spending was approved by Parliament's Budgetary Control Committee on Monday under the "budget discharge procedure". Committee MEPs criticized the lack of sanctions for mismanagement in Member States and the use of financial engineering instruments and pre-financing of EU projects. Commissioner Semeta assured the committee that he would strive to improve management in these areas.
A recurring question is how to improve control of EU money spent by national or regional administrations under so called "shared management".
Even though the Commission does not directly manage these funds, representing some 80% of the total EU budget, it remains responsible overall. Cohesion spending in particular shows a high error rate. The error rate in cohesion, energy and transport project payments for 2010 was 7.7 %.
Stepping up use of sanctions
The committee urged the Commission to be tougher on spending that breaches the rules. It observed that sanctions are currently too weak to enable the Commission to assume its responsibilities in full, and suggested that provisions for tougher ones be included in new rules being defined for spending in areas such as cohesion, rural and regional development, farm and fisheries for 2014-2020.
"Shared management means shared responsibility, not no responsibility", said Christofer Fjellner (EPP, SE), who is steering the discharge for the Commission spending through Parliament. We know that for the European Social Fund (ESF), the suspension of money has been used several times, however for the Regional and Cohesion Funds, suspension was never used in 2010."
MEPs also want the Commission to be able to impose penalties on Member States or to stop programmes in countries or regions that repeatedly breach the rules. Member States should be obliged to recover wrongly spent money from beneficiaries and stop the current practice of replacing ineligible projects by other projects retrospectively in order not to lose EU funding, they added.
MEPs expressed concern about the growing use of pre-financing in EU projects, even though they consider pre-financing necessary for beneficiaries to start their projects. Pre-financing is gradually replacing regular payments, which leads to increased financial risk as beneficiaries might go bankrupt and regular payments are postponed.
Close eye on financial engineering instruments
Mr Fjellner criticized the use of so called "financial engineering instruments" (FEIs), as insufficiently solid and high risk. "But I am satisfied with the responses of Commissioner Semeta, who said he will thoroughly review what is wrong and what needs to be improved in this area", he said.
The Commission proposes to step up the use of financial engineering instruments in the next budgeting period (2014-2020). In the discharge report, MEPs are particularly critical about the lack of information about such instruments and the big variations in quality of information received from different Member States.
The Committee also decided to approve the spending by the European Parliament for 2010.
In the chair: Mr Michael THEURER (ALDE, DE)