On Monday 12 January, the European Court of Auditors (ECA) published two opinions on the European Commission’s legislative proposals to boost competitiveness, research and innovation in the EU through the European Competitiveness Fund and the Horizon Europe programme.
These opinions are the first in a series that the Court will publish on the proposals for the EU budget for the period 2028-2034. The European Competitiveness Fund (ECF) (see EUROPE 13677/1) was allocated €410 billion last July and comprises four “policy windows”: green transition, digitalisation, health, and defence.
The Horizon Europe research framework programme will receive €175 billion in funding.
However, according to the first analysis, although the two proposals refer repeatedly to the EU’s cross-cutting priorities, “neither the Commission nor the Member States have comprehensive and reliable data on the use of EU funds and the proposal does not address this significant weakness”.
And while the Horizon Europe proposal refers to the ‘European Semester’ budgetary process, this is not the case for the draft regulation on the European Competitiveness Fund.
ECF. According to the ECA, the proposal for the European Competitiveness Fund will allow funds to be reallocated quickly between different policy areas, and may even allow additional contributions from Member States or other stakeholders. But “this increased budgetary flexibility could have implications for State aid that need to be clarified”.
The ECA also recommends specifying “minimum requirements for revolving capacity (where funding is re-used several times for guarantees, loans or equity investments during the implementation of the programme) and setting management fees at reasonably low levels for partners (such as the European Investment Bank or other financial institutions)” implementing the programme.
The rules must also clearly state that the competition will be based on principles such as excellence or expected impact (societal benefits, sustainability).
The Court notes “clear simplification efforts in both proposals”, but some key elements need to be clarified, notably in relation to public procurement, the use of non-cost related funding and simplified cost options.
Horizon Europe. With regard to the EU Framework Programme for Research and Innovation (see EUROPE 13683/7), the Court of Auditors noted that there is no definition of ‘added value for the EU’ in European legislation. However, a common definition would make it possible to “optimise the use of European funds”.
The proposal should specify more precisely “how the principle of excellence would be applied in the four pillars” of the programme.
The Court also recommends simplifying the programme and procedures for beneficiaries. To this end, it is asking the Commission “to provide guidance on pre-commercial procurement”. It also asks the Commission to maintain its audit rights in all agreements between beneficiaries and third parties in order to ensure a satisfactory level of compliance, sound financial management, transparency, accountability and traceability of expenditure.
Finally, with regard to the performance framework, the auditors noted that most of the indicators relate to outputs rather than outcomes or impacts and are therefore insufficient to assess performance. They suggest that the regulation should set out the Commission’s obligations to produce an implementation report during the programming period and an ex-post evaluation.
Link to reviews: https://aeur.eu/f/k7y (Original version in French by Solenn Paulic and Anne Damiani)