EU spending watchdog pours cold water on Commission’s reform-for-cash budget plan

Don't absolve yourself from the responsibility of managing EU funds, the head of the EU's financial oversight body has urged the European Commission, slamming its core ideas to reform the next EU budget in an interview with Euractiv.

The Commission is finalising its proposal for a drastic overhaul of the EU's €1.2 trillion seven-year budget, expected on 16 July. At its heart, the EU executive wants to put in place a "reform-for-cash" model inspired by past rules linked to covid recovery funds.

That approach has been heavily criticised by the European Court of Auditors, responsible for examining the EU's finances – and its president Tony Murphy expressed scepticism in an interview with Euractiv.

What follows is an edited transcript.

Has the Commission listened to your criticism of the post-covid recovery fund (RRF), which it suggested reusing in the next EU budget?

Murphy: No. It's the most difficult thing we've had to audit because they disagree with every single thing we say.  I mean, honestly, they dispute everything we say more or less.

In a recent Parliament hearing, Economy Commissioner Valdis Dombrovsvkis suggested that the disagreement is small, and said that you agreed on 97.9% of the countries' targets that you examined.

Murphy: That is too simplistic. The 98% is only a technical aspect of a limited sample of milestones and targets.

We say: the RRF has limited focus on results, no information on actual costs, is not clear on what we got for the money, gives an incomplete picture of who received the funds; payment conditions were not clearly defined, risks overlaps with other EU funds, has insufficient controls.

The main problem is: we don't even have a basis for saying whether it worked well or not.

The Commission absolved themselves from financial management of the EU budget and transferred all the responsibility to EU countries.

Do you support the push for simplification and flexibility?

Murphy: Simplification is great, but it is easier said than done. The RRF was sold as an efficient instrument, but almost without fail every EU country has said it was actually worse.

National regional partnerships could potentially be even worse: A national plan is negotiated between the Commission and the country, and then extra plans are negotiated between the state and its regions.

We're not against budget flexibility to move money quickly to react to certain crises. But there needs to be proper accountability when the money is spent.

What about the Commission's proposal to repurpose money from cohesion funding to defence and competitiveness?

Murphy: We don't comment on the political decision to broaden cohesion. But we can say that adding these new priorities, which are not related to the core objective, to cohesion is diluting its main purpose.

In a new Competitiveness Fund, the Commission is likely to increase strategic funds like investEU to mobilise private capital. Are such instruments effective?

Murphy: Our experience in the past suggest that these often aren't as successful as hoped. Some projects may happen anyway, and you rarely get the huge multiplier as predicted.

The Commission must be realistic and honest about what such programmes can achieve, otherwise they lose meaning.

Is it finally time for a major budget reform?

Murphy: The need to reform was always there, but it is very difficult to deal with 27 different administrations. We hope for the best, but we also think that people should be realistic.

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