Members of the European Parliament’s Committee on Budgetary Control (CONT) voted, on 26 March, in favour of granting the European Commission discharge for 2020, ie okaying its annual accounts (23 in favour, two against and one abstention). Deputies deplore, nevertheless, that payments remain affected by material error for the seventeenth year in a row and they also lament the 7.7% increase in the error rate for cohesion, energy and transport. The other three main issues raised in Christofer Fjellner’s (EPP, Sweden) report relate to the use of financial engineering instruments (FEIs), pre-financing and the accountability chain. The Commission has been asked to submit an action plan regarding these four concerns.

The report on the 2010 EU budget, drafted by the EU Court of Auditors (ECA) and upon which the EP bases itself, estimates that the error rate for payments was 3.7%, up from 3.3% in 2009. Any percentage over 2% is considered by the ECA as affected by material error. Thus, overall for the 17th year in a row, the court has delivered an adverse opinion on the legality and regularity of payments underlying the accounts. This has some deputies fed up. Jan Mulder (ALDE, Netherlands) said in committee, on 20 March, that he doubted whether giving the Commission discharge in these circumstances would be wise.

The Commission is ultimately responsible for the proper implementation of the EU budget as a whole. Yet, beyond suspension and interruption of payments, it has few means to put pressure on member states in charge of issuing around 80% of EU expenditure through shared management. Seeing as the increased error rate for cohesion, energy and transport spending (7.7%) is the main culprit for the overall poor performance, MEPs lament that the Commission is unable to impose penalties on member states or regions that have repeatedly failed to implement such funds correctly. They believe that the EU executive’s interruption policy is not effective enough and that payments are resumed too quickly. Deputies are also disappointed that despite identifying that two-thirds of all reported quantifiable errors in 2010 came from three member states (Spain, Italy and the Czech Republic), the Commission was unable to improve performance.

“Shared management means shared responsibility, not no responsibility,” said Fjellner. “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.”

As had been done by his predecessor, Jorgo Chatzimarkakis (ALDE, Germany), for the 2009 discharge, Fjellner considers that improving the accountability chain in the Commission is a top priority. MEPs ask, for example, that responsible commissioners sign off annual activity reports. Deputies also repeat their request that the Commission present a proposal for the introduction of mandatory national management declarations, a highly sensitive issue that faces resistance at member state level.

FINANCIAL ENGINEERING INSTRUMENTS

Fjellner’s report raised several questions about financial engineering instruments, whose use the Commission proposes to step up in the 2014-2020 multiannual financial framework (MFF). The lack of information on the implementation of FEIs and the important variations in quality of information received from different member states, in particular, were singled out. The rapporteur indicated, however, that he was “satisfied” with the responses of Audit Commissioner Algirdas Semeta, “who said he will thoroughly review what is wrong and what needs to be improved in this area”.

Deputies 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. They fear this will lead to increased financial risk as beneficiaries might go bankrupt and regular payments being postponed. MEPs therefore ask the Commission for more information about the rise in pre-financing and request that its use be decreased to a level absolutely necessary for the beneficiary to start the project. n