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Debates
Wednesday, 26 October 2011 - Strasbourg OJ edition

6. Financial rules applicable to the annual budget (continuation of debate)
Video of the speeches
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  President. − We continue the debate about the report by Ingeborg Gräßle and Crescenzio Rivellini on the financial rules applicable to the annual budget.

 
  
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  Crescenzio Rivellini, rapporteur.(IT) Mr President, ladies and gentlemen, I would like to thank all my fellow Members and this institution, but in particular Ms Gräßle and my assistant, Davide Ruffo, for the work we have carried out. The effective implementation, management and accounting of the European Union’s budget funds are geared towards achieving the three goals of confidence, support and progress.

The economic and legal basis for the Financial Regulation is today made firmer by the prospect of financial changes designed to bring about innovation in Europe through the promotion and improvement of infrastructural investments, guarantees and financial methodologies. We must spend the resources we have in the best way possible. We must invest in the sectors most likely to bring about growth and progress for Europe – a more integrated and competitive Europe with enough resources to bring shared policies to fruition and to take the lead on the international scene.

Today, the first task must be to stimulate public investment, private investors and the governments of individual Member States to take more courageous action in the financial and economic sphere and, within this framework of mutual cooperation, to tackle any opposition arising from democratic debate. In this sense, issuing new financial instruments represents a key aspect of the Regulation, supporting the market and the financial system of the Union and the Member States.

At a time of serious economic crisis characterised by a globalised and bipolar economy, with the increasing political and economic entrenchment of the United States on the one hand and China on the other, Europe must equip itself with new financial instruments to ensure that it is not marginalised and does not lose out. The goal is as follows: step by step, let us give Europe a level of political and economic clout that makes it capable of developing and strengthening economic ties, putting financial goals at the top of the list of Europe’s priorities. This is the only way to ensure progress and a positive future.

Hence, in order to implement our economic and financial growth objectives more effectively, I think it is essential to make explicit the need to keep a close eye on the effective promotion of European society. Indeed, increased spending capacity and therefore the capacity to create wealth must be carefully channelled towards concrete ends; otherwise it will not have the desired effects and will merely produce waste.

Shrinking national budgets must be compensated for by funding from banks and guarantors. This would boost investment in areas where, without the EU’s support, there would be no increase in capital and no acquisition or creation of new resources for moving European industry forwards. All of that, I must underline, is not for the benefit of banks or of the wealthy but to increase a spill-over effect that can have repercussions on all levels of society.

In the same way, European support for the potential losses deriving from sub-optimal investments can surely be seen as a great example of support and surety for European citizens, since we know that some large projects such as energy supply would not make sense without initial public capital.

Moreover, the key role of project bonds is undeniable. Today, they take on fresh significance through the joint decision of the Group of the European People’s Party (Christian Democrats) and the Commission to start promoting private investment in infrastructure for energy, transport, information and communications. By investing in infrastructure, we can support and assist the European market and the EU’s financial system.

If it does not work in an equitable way, based on mutual trust and learning from past experiences, the market cannot properly fulfil its economic function. People who ignore their past will never understand anything about the present day. This maxim is essential for us to learn from the difficulties that the old system of financial management left us with and to ask ourselves what the errors were, what did not work, how to do justice to the European market and to the economic system that binds us together and – despite the difficulties – provides us with a guiding light and a source of support for the countries that we represent today.

The more we are able to look at the past, the more we can drive onwards into the future. Let us improve research, technology and innovation through support for competitiveness and innovation projects, which are particularly effective since they provide financial guarantees – which are not provided in almost all Member States – through support for projects in the research and innovation sector in which ad hoc financing systems allow for loans to be granted to individual beneficiaries.

In terms of reforming Europe, we can perceive a structural solution to the crisis we have to deal with in the current economic slowdown. Unless European initiatives become more efficient and more decisive, as long as the spaces of intermediation between capital and investment are many and confused, and as long as private citizens can count on a system, we cannot count on a system that gives them guarantees, confidence and the chance to make Europe a bulwark of the world economy and for its citizens.

Having reflected on the most important and innovative points of the Financial Regulation and the Multiannual Financial Framework, I should like to pose a few queries on financial instruments. I have noted the communication that the Commission published last Wednesday about financial instruments. On this subject, I would like to ask Mr Lewandowski whether or not he thinks the list currently under debate is too reductive in its enumeration of the types of financial instruments? Do you not think that perhaps it would be better to consult experts on the subject as well, such as the Directorate General for Economic and Financial Affairs, before considering expanding Articles 130 and 131 of the Financial Regulation – particularly with regard to risk-sharing instruments?

Do you not think, Mr Lewandowski, that financial instruments could have a greater margin of success? What is your opinion on the basic identification of the financial instruments? Last, but by no means least, in terms of the issues identified, I would be interested to hear about the intended ways to tackle the effects of the financial crisis that will inevitably affect the economic situation in the initial years of the implementation of the Multiannual Financial Framework.

 
  
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  Janusz Lewandowski, Member of the Commission. Mr President, our proposal for the new Financial Regulation was presented in May 2010, with the intention of agreeing on the rules of how to spend before discussing the volumes for the next financial perspective.

First of all, I would like to express my gratitude to the rapporteurs, Ingeborg Gräßle and Mr Rivellini, for their report on this very complex and technically very difficult dossier. I appreciate your patience in handling the issue for more than one-and-a-half years.

As for the guiding principles of our proposal, they are all very much present in what is to be voted on today. By that I mean three guiding principles: simplification, pooling of resources and more accountability. Regarding simplification, this was a clear request from everybody who was present at last week’s conference, with so many stakeholders asking for the lives of the beneficiaries of our grants and funds to be made easier. Therefore, in response, we are facilitating simplification via the use of lump sums and other instruments, making it possible for the Commission to assess and determine ex ante the amounts necessary for achieving the project. That is a step towards an outward-oriented philosophy and approach in grants and also in prices. The Commission also has the same response to the overall criticism of the rules concerning recovering interest on pre-financing, which should not be due to the Union.

However, there are two parts, liebe Inge, to this simplification procedure. On the one hand there are beneficiaries and on the other the Commission, which is managing the budget and requesting some flexibility in the management of a budget in terms of the choice of implementing partners and not direct management. If we overburden the Commission, this also slows down the procedure and payments to the final beneficiaries. If we overburden the Commission with more reporting at a time when we are asking for a reduction of 5% in the Commission’s human resources in the coming years, this also includes the burden of reporting, which is not in line with what we see as the essential savings in the administration of the European Union.

The same goes for transfers and buildings, where we have amendments which we cannot support because they represent a step backwards in relation to the transition rules agreed for implementation of the Lisbon strategy.

Regarding delegated acts, this is an issue of respecting the Common Understanding on Delegated Acts. I do not think the Financial Regulation is the place to settle the horizontal interinstitutional issues, but we very much welcome Parliament’s support in the area of management declarations of assurance. Now we have on the table more or less the whole picture not only of financial regulation but also regulations on cohesion and agriculture, which are the biggest areas of spending, with clear management responsibilities on the part of the Member States. We welcome the support for trust funds, making the visibility of the European Union, as the greatest donor worldwide, visible. This is simply for visibility.

As for the financial instruments which are to be standard tools in the future – not exceptional but standard, and considerably upgraded. In response to Mr Rivellini’s question, this is mainly to leverage private investment in the area of trans-European networks in energy, transport and research and development already tested. But it must longer be exceptional if we are to close the gap in transport networks in Europe. I estimate that it must be up to EUR 200 billion, with even more in energy. We have to leverage the euros spent from the European budget, and this is why we should not be limited as to the flexibility and cooperation of the European Investment Bank and the other institutions in leveraging the budget via private investment.

Finally, we are an honest broker for the final political agreement. I think we should make the Financial Regulation a coherent point of reference in establishing all sorts of rules for the future. We hope that we are much nearer to this goal.

 
  
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  Edit Herczog, deputising for Ivailo Kalfin, rapporteur for the opinion of the Committee on Industry, Research and Energy. Mr President, first of all I would like to apologise as Mr Kalfin, who is our rapporteur, cannot be here, and I have to share with you his opinion, or rather our opinion in the Committee on Industry, Research and Energy.

As you said, Commissioner, innovation research is directly affected by several elements of the budget: the MFF, the Financial Regulation and the annual budget. So we have to find the proper balance between the principles of financial accountability, flexibility and beneficiaries which has the greatest impact on research and development.

Unfortunately, the overriding interpretation of the Financial Regulation in recent years has created a culture of risk avoidance and a zero trust attitude towards our participants in the research programme, which has resulted in a reduction in efficiency vis-à-vis research and innovation. Therefore the Industry Committee proposes the following polices: we need simplification, simplification, simplification, facilitation of access to grants with the aim of a greater impact on final research programmes and a specialised approach towards a tolerable risk of error rate for research and innovation.

We also call for the abolishment of the timesheet mechanism and for new perspectives for financing the new EU financial instruments and private public partnerships. Alongside these main requests, we have the aim of achieving more innovation, more research and development, which is the cornerstone if we want to have a more successful Europe in future.

 
  
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  Franziska Katharina Brantner, rapporteur for the opinion of the Committee on Foreign Affairs. – (DE) Mr President, ladies and gentlemen, I would like to start by thanking the rapporteur most sincerely for her sacrificial and very often thankless work, which nevertheless has brought tangible results.

The situation of recipients of EU funds at home and abroad is not always simple. I am convinced that the position we are adopting today will simplify the lives of these people to a certain degree. I would like briefly to mention five points from the area of foreign policy where the situation will improve.

Firstly, we are also enabling flexible funds for the prevention of armed conflicts, in other words wars. Up to now, the EU has been able to release flexible funds as soon as a country has declared itself to be in a state of crisis. Declaring a country to be in a state of crisis does not usually make sense from a political point of view, because then the country really is already on its way down that road. For the purpose of prevention, it would be helpful to be able to do this one step earlier. That will now be possible – a real improvement in conflict prevention, which is, of course, usually significantly more favourable than what happens once it has already reached the stage of war.

Secondly, with regard to development aid, the question of VAT will make life easier for a lot of people.

Thirdly, I think it is important that we are calling for a separate budget line for all EU missions – this is something that we have been calling for for a long time, but it is nevertheless important.

Fourthly, we also have greater transparency, not only in respect of the recipients, but also in respect of the actual aim of the project funded. That is particularly important in the area of foreign policy.

Fifthly, in the area of foreign policy we give a great deal of money to international organisations. We are now demanding to know, at the end of the process, how much money has been given to each organisation. That will also increase transparency.

 
  
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  Jan Olbrycht, rapporteur for the opinion of the Committee on Regional Development.(PL) Mr President, the nature of the document we are debating at the moment means that it has not attracted much interest from the recipients of Union funds or from the media. We very often discuss how much money there will be, but we talk comparatively less often about how we are going to spend that money and how we are going to account for it.

For the Committee on Regional Development, completion of work on this regulation is particularly important, because we are in the process of preparing for work on new regulations. The relation between what is known as the financial regulation and regulations on particular funds is a direct one, and it will undoubtedly be much easier if certain questions concerning, for example, accreditation, control and reporting have been settled before completion of work on regulations on the Structural Funds. In a word, it is a regulation which is extremely important for cohesion policy.

 
  
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  Jean-Pierre Audy, on behalf of the PPE Group.(FR) Mr President, Commissioner, President-in-Office of the Council, my first words must be to congratulate our rapporteurs, Ms Gräßle and Mr Rivellini, as well as the rapporteurs for the groups, who have all done important work.

The first thing I want to mention is simplification, and I would like to thank both the Commissioner and the rapporteur for having moved towards simplification. Both citizens and central and local government bodies are at the end of their tether. Every time we see an increase in the error rate, it is because the rules are too complicated. I warmly thank you, therefore, for the Cohesion Fund resources, and for the research that has been done, continuing on from Mr Carvalho’s excellent report.

I would also like to thank the Committee on Budgets and the Committee on Budgetary Control for having agreed to introduce a measure of consistency, by allowing the use of international accounting standards applicable to the public sector in future. We had to put an end to this inconsistency whereby the EU’s accountants made their own rules. Thank you also for having looked into shortening the timescale for granting discharge. It is only given after 16 months, which is far too long.

I will end by mentioning two other subjects. The first is the national declarations: I have a lot of reservations about these. I believe we ought to discuss the matter from both the political and technical points of view, to make sure that these declarations are in keeping with international auditing standards applicable to the public sector. In auditing, we never ask for declarations of assurance from managing authorities. We ask them for representation letters stating that nothing has been concealed, but not letters of assurance. It is not the job of ministers to perform audits. What is more, in the Member States that have agreed to the principle, the error rates are no lower than in other countries.

To conclude, I would like to thank the committees for having agreed to the principle of an investment section within the European Union, in order to keep investment operations separate. We will at last be able to have a budget framework for our major investment projects, such as GALILEO or ITER, which are planned over periods that go well beyond the annual framework, or even the financial perspective. Another significant step forward that is within sight in terms of budget presentation is the inclusion of the future project bonds in our accounting system, and the establishment of a major European investment plan to help growth within the Union.

 
  
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  Jens Geier, on behalf of the S&D Group. – (DE) Mr President, President-in-Office of the Council, Commissioner Lewandowski, ladies and gentlemen, it is of course also appropriate at this point for we shadow rapporteurs to express our thanks and appreciation to the two rapporteurs from this House. They delved so deeply into the subject that sometimes we could no longer see them. My compliments on this splendid work.

In connection with the Financial Regulation, we are also discussing Article 56, which deals with shared management. In the European Union, that is particularly important in regional policy and represents the second largest budget area. It represents the acid test for whether the Member States really are serious about the prudent use of EU funds, about which we have heard so much in the budget debates this morning.

We see that, since 1994, there has been a total of more than EUR 7 billion in financial corrections in this area. We also see that, in 2010 alone, there was more than EUR 250 million in repayments to the EU budget – funds that were misspent in the Member States. At this point, I would like once again to recall the fact that EUR 250 million is more than the European Parliament wants to mobilise by means of the Flexibility Instrument. All I can say, Mr Dominik, is that when you next visit in the Council, please convey a message from the Committee on Budgets: we want our money back!

What has been proposed in terms of audits and better control procedures in the Financial Regulation within the framework of Article 56 will help in this regard. I will be interested to see how the Council responds to this.

 
  
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  Jan Mulder, on behalf of the ALDE Group. (NL) Mr President, I would like to start by complimenting the rapporteurs on their diligent work. The position taken by the Group of the Alliance of Liberals and Democrats for Europe is that the Commission should be responsible for the implementation of the budget and that the Council and Parliament should not try to micro-manage. We place our confidence in the Commission and we do not wish to interfere too much with the details. Control will come afterwards.

For the ALDE Group, the main issue so far has been that we adhere to an earlier provision of the Interinstitutional Agreement, that Member States are required to submit a discharge statement every year. Up until now, that has proved to be almost a dead letter and we find that most regrettable. We will insist that it again be included in the Financial Regulation and, this time, it will be a key point for the ALDE Group.

Another point of debate: do we need to introduce a tolerable risk of error? The ALDE Group is of the opinion that we do not. We need to stick to the standards and, if the implementation of the budget becomes too complicated and too expensive to check, then we should not introduce it.

 
  
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  Marta Andreasen, on behalf of the EFD Group. Mr President, for the last few years the EU auditors have been saying that a large proportion of the irregularities are due to complex rules. This recast of the Financial Regulation was meant primarily to solve that problem. While this proposal is a long way from achieving that goal, what worries me most is that it fails to include fundamental aspects of control. Why does it exclude the demand for an annual treasury audit when this function is at the core of the management of taxpayers’ money? Such an audit would reveal the failures of the system to prevent, detect and control any misappropriation of EU funding. However, since my time as chief accounting officer of the European Commission, I have seen such important and basic procedures dismissed. I will not vote in favour of any regulation that does not include fundamental control procedures that strengthen the Commission’s responsibility regarding taxpayers’ funds.

 
  
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  Göran Färm (S&D). - Mr President, my thanks to the rapporteurs. This has been very complex, as the Commissioner has said, particularly because it has been a dossier handled by two committees at Parliament: the Committee on Budgets and the Committee on Budgetary Control. As the S&D coordinator of the Budgets Committee, I wish to thank the rapporteurs for their fruitful cooperation.

My group has sometimes been a bit difficult for the rapporteurs: we have made problems for them, but it has been for a good cause, because we have to use this opportunity to move forward. We have to find the proper balance between, on the one hand, control, proper spending, and so on, and, on the other hand, swift implementation and a reasonable level of complexity for end users, for citizens. And most of all we must focus on results.

We are afraid to repeat historical mistakes, but now is the time to move forward. We must recognise that the most important thing is ensuring that EU spending has a real effect on the economies of the Member States and citizens. That is why we are so insistent on the issue of simplification.

 
  
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  Miroslav Mikolášik (PPE). – (SK) Mr President, the proposed revision of the regulation on budgetary rules for the EU following the entry into effect of the Treaty of Lisbon should bring greater transparency, as well as a simplification of the administrative and financial rules. It is extremely important, for example, for the evaluation of research funding to be based not only on the type of research involved, but also whether the research accords with the fundamental values of the EU, the protection of human rights and above all the protection of human dignity. The evaluation must also be carried out in accordance with the recent judgment of the European Court of Justice in the case of Oliver Brüstle v Greenpeace, which bans the patenting of discoveries in areas where the basic principles guaranteeing human dignity and integrity are not respected, and in which the court emphasised that this protection also applies to the human body in any stage of its formation or development, including embryo cells.

 
  
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  Sergio Paolo Francesco Silvestris (PPE).(IT) Mr President, ladies and gentlemen, the plan to recast the Financial Regulation of the European Union in light of the Treaty of Lisbon responds to a number of a clear and well-defined requirements. These include the need to favour investments of such a quality as to stimulate competitiveness and the need to introduce and beef up shared policies, which will help ensure an increasingly leading role for Europe in investment and territorial cohesion processes.

I also think it also offers a robust response to the need for simplification being heard around the continent, where European regulations often cannot be comprehended or fully implemented. Public investments must be used increasingly both to encourage private investment and to stimulate national governments to provide fresh impetus through new financial instruments.

I should like to express my particular satisfaction over the consideration given to project bonds, which could stimulate private investment in infrastructure, energy, research and innovation, opening up a new frontier of investment through shared policies.

 
  
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  Janusz Lewandowski, Member of the Commission. Mr President, I would like to repeat that I am grateful to Ms Gräßle and Mr Rivellini for their dedication and to you all for your comments on this very complex issue of financial regulation. The Commission believes that the legislative resolution should be postponed in order to find additional time for negotiations and explanations on this difficult topic.

We see many of the amendments voted today as right in their substance, but some of them will be difficult to implement in reality. We should not place additional burdens on the Commission in terms of management of what should be a much more transparent process for implementation of the EU budget.

We will present the next simplification package in the delegated acts. As for the national declarations of insurance, the point raised by Mr Mulder, I do not know whether Europe is ready to follow the Dutch model, I have some doubts. My general remark is that, in implementing all the amendments, what is essential is cost-benefit analyses of controls, post controls and the swift and smooth management of the EU budget.

I would again like to insist on the timely acceptance of proposals, so we can know how we are to spend resources before we know how much we have to spend.

 
  
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  Ingeborg Gräßle, rapporteur. – (DE) Mr President, I would like to thank all of my colleagues for this debate. I would have liked also to have heard something more from the Council. It is a shame, but I am sure that we will have another opportunity to exchange views. Commissioner Lewandowski, at no time during any of the work did I forget that every day 14 000 workers in the Union have to take the rule book that is the Financial Regulation in their hands and work with it. For that reason, we are in agreement that this text clearly needs a comprehensive tidy-up. It needs to be streamlined and also made easier to understand. I would like the Commission to play a more active role in the negotiations than it has done up to now. We need the Commission, because we need to solve a great many problems relating to the details.

I would like once again to make a commitment to simplification. We want simplification, but our problem is the following: you are familiar with these tables. It is the multitude of different rules in the Framework Programme for Research. This diversity of rules was created by the Commission itself. I am sure that even the Commission has learnt from this in recent years. However, we simply must ensure that we take a much more coherent approach with regard to the next funds. Admittedly, in this regard we have sometimes also put forward complicated proposals. I have to say, though, that three quarters of our proposals are taken from the Commission’s texts themselves. I am now astonished to hear that the Commission’s texts are not supposed to be perfect, which I really cannot believe.

I look forward to the negotiations and I would also like to assure my colleagues from the committees concerned – the Committee on Industry, Research and Energy, the Committee on Foreign Affairs and the Committee on Regional Development – that we have taken your concerns on board and we are taking them very seriously. We will not merely accept them here and then forget about them, but will bring them very specifically into the negotiations and we will fight for them, as the Council has already experienced to its cost in the part of the last sitting that was devoted to the Committee on Foreign Affairs. We are one Parliament, and we also want everyone’s views to be reflected in this text, because everyone wants to play a part in improving the current situation. Therefore, Mr Geier, take heart. I know that you and your group are concerned that we are disappearing into the abyss of the Financial Regulation and you alone will remain behind. We would like to take you with us. So, I ask you: come to my office. I would like very much to explain the entire matter to you in around three hours.

 
  
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  President. − The debate is closed.

The vote will take place today at 12.00.

Written statements (Rule 149)

 
  
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  James Elles (ECR), in writing. I welcome the report tabled on the financial regulation today, which should be strongly supported for the following three reasons. First, the essential need to simplify rules for the end user – particularly SMEs. Rule simplification should also apply to researchers where time sheets for their work should not be required. Second, encouraging steps towards national accountability for the EU funds put at their disposal in order to finally achieve a European Statement of Assurance, sadly lacking today. Last, but not least, ensuring that the European Commission is set clear and fair rules which ensure transparency and uphold the rights of Parliament.

 
  
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  Jiří Havel (S&D), in writing. (CS) Ms Gräßle completed a huge piece of work last month, with a whole series of specific and highly positive results in the form of visible changes during the review of the Union’s financial Bible, the financial regulation. The main purpose of this new proposal is to simplify and reorganise the financial regulation by creating a simple legal instrument combining the principles and basic rules of budgetary and financial management. The new financial regulation of the EU should clarify EU expenditure, make it transparent and provide greater reassurance for users of European funds. The new draft emphasises that better financial management in the EU must be supported by careful monitoring of developments by the Commission and the Member States, and therefore insists that Member States should assume responsibility for the proper use and administration of funds, issuing regular annual national reports on the use of EU funds at the appropriate political level through a so-called national declaration.

 
  
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  Anna Záborská (PPE), in writing.(FR) The implementation of the financial rules applicable to the annual budget of the Union must comply with ruling C-34/10 of the European Court of Justice. It ruled that human life starts at conception and that the human embryo is worthy of legal protection. The Court writes: ‘Any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted, and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis constitute a “human embryo”.’ The Court points out that the EU legislator has sought to exclude any possibility of patenting so long as respect for human dignity could be jeopardised. This ruling must be fully applied immediately to the research projects financed by the current EU budget, including with a view to the programming of the Eighth Research Framework Programme. I call on the Commission to submit a draft framework programme which focuses on the ethical alternatives of fundamental research. Many examples of serious scientific research prove that biomedical research is possible without using human embryos. Europe can be proud of its capacity for competitive scientific research that respects universal ethical principles.

 
  
  

(The sitting was suspended at 11.45 and resumed at 12.00.)

 
  
  

IN THE CHAIR: JERZY BUZEK
President

 
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