Sittings · Document

DRAFT OPINION (2024/2106(INI)) 2025-03-17

On possibilities for simplification of cohesion funds

Committee on Budgetary Control · Rapporteur: Jacek Protas

AMENDMENTS

The Committee on Budgetary Control submits the following to the Committee on Regional Development, as the committee responsible:

Amendment 1

Motion for a resolution

Citation 11 a (new)

Motion for a resolution	Amendment
4	– having regard to European Court of Auditors review 03/2024 of 8 July 2024 entitled ‘An overview of the assurance framework and the key factors contributing to errors in 2014-2020 cohesion spending’,

Or. en

Amendment 2

Motion for a resolution

Paragraph 1 a (new)

Motion for a resolution	Amendment
	1a. Further recalls that if during the implementation of the EU budget, the level of error is persistently high, the Financial Regulation requires the Commission to take corrective measures, such as simplification of the applicable provisions, improvement of control systems and the redesign of the programme or delivery systems; considers that, on this basis, there is a clear need for the simplification of cohesion policy funds, as the European Court of Auditors’ estimate of the error rate for expenditure related to cohesion has been above the materiality threshold of 2 % every year since 2017, reaching 9.3 % for the financial year 2023;

Or. en

Amendment 3

Motion for a resolution

Paragraph 1 b (new)

Motion for a resolution	Amendment
	1b. Underlines that simplification should be a guiding principle in cohesion policy; considers that simplification in the implementation of cohesion policy funds should be achieved at all levels, with the ultimate objective of facilitating application procedures and reducing the administrative burden for final beneficiaries; insists that simplification should never come at the expense of sound financial management, control or transparency requirements; considers that simplification measures should still ensure that all Union institutions and bodies involved in the control of EU funds and the protection of the Union’s financial interests, notably the European Public Prosecutor’s Office (EPPO), the European Anti-Fraud Office (OLAF) and the European Court of Auditors, have full access to the documents, information and data required for the exercise of their respective competences;

Or. en

Amendment 4

Motion for a resolution

Paragraph 2 a (new)

Motion for a resolution	Amendment
	2a. Underlines the need to prevent excessive bureaucracy and calls on the Member States to avoid gold-plating in the implementation of cohesion funds; recalls that gold-plating has a detrimental effect not just for beneficiaries, in particular smaller beneficiaries such as SMEs, but also on the overall functioning of the single market, as it creates differing layers of regulatory burden across Member States;

Or. en

Amendment 5

Motion for a resolution

Paragraph 3

Motion for a resolution	Amendment
3. Calls on the Commission to promote a bottom-up approach in the upcoming proposals for simplifying the design of the new cohesion policy, ensuring the mandatory consultation and involvement of LRAs, civil society organisations and small and medium-sized enterprises;	3. Recalls the importance of the principle of subsidiarity; considers that pursuing development on the basis of a territorial and decentralised approach should remain the premise for EU cohesion policy in the next multiannual financial framework; calls on the Commission and the Member States to ensure that funding decisions are made by those closest to the ground who have the best understanding of the regions where the funds are spent; further calls on the Commission to promote a bottom-up approach in the upcoming proposals for simplifying the design of the new cohesion policy, ensuring the mandatory consultation and involvement of LRAs, civil society organisations and small and medium-sized enterprises;

Or. en

Amendment 6

Motion for a resolution

Paragraph 4 a (new)

Motion for a resolution	Amendment
	4a. Considers that while thematic concentration of funds ensures alignment with EU priorities, excessive rigidity often slows down fund disbursement and leads to inefficiencies; calls on the Commission to introduce greater thematic flexibility for cohesion policy funds with a view to enhancing sound financial management, reducing bureaucracy and improving fund absorption;

Or. en

Amendment 7

Motion for a resolution

Paragraph 4 b (new)

Motion for a resolution	Amendment
	4b. Stresses that digital transformation is indispensable for increasing the efficiency and transparency of the EU budget; considers, in particular, that the digitalisation of practices and procedures can contribute to simplifying the implementation of cohesion policy funds and, in the long run, decrease the administrative burden on applicants and beneficiaries, as well as on managing authorities and the Commission;

Or. en

Amendment 8

Motion for a resolution

Paragraph 4 c (new)

Motion for a resolution	Amendment
	4c. Underlines the importance of ensuring the protection of the Union budget by making general and systematic use of digital and automated systems for reporting, monitoring and audit; calls on the Commission to urgently establish an integrated and interoperable system that builds on, but is not limited to, existing tools and databases in the context of the concluded recast of the Financial Regulation; is of the opinion that putting in place such an automated, interoperable system would enhance the protection of Union funds, while at the same decreasing the administrative burden; considers that the use by the Member States of a single, integrated and interoperable information and monitoring system, including a single data mining and risk scoring tool, should be a precondition for the disbursement of any funds to Member States under the post-2027 multiannual financial framework, including cohesion policy funds;

Or. en

Amendment 9

Motion for a resolution

Paragraph 8

Motion for a resolution	Amendment
8. Opposes any form of top-down centralisation reform of the cohesion policy; acknowledges, however, some positive elements currently being developed within the Recovery and Resilience Facility, but draws attention to the fact that in programmes under direct management, the disbursement of funds to Member States does not necessarily reflect the quantity and importance of the milestones and targets included therein; stresses that the centralised model has highlighted several critical issues, including regarding the traceability of EU funding;	8. Opposes any form of top-down centralisation reform of the cohesion policy; acknowledges, however, some positive elements currently being developed within the Recovery and Resilience Facility, but draws attention to the fact that in programmes under direct management, the disbursement of funds to Member States does not necessarily reflect the quantity and importance of the milestones and targets included therein; stresses that the centralised model has highlighted several critical issues that have been acknowledged by the Commission, including, reduced accountability and reduced insight at the EU-level into respect for rules and regulations in the implementation of EU funds, reduced transparency with regard to final recipients, limited EU added value owing to, in particular, the limited number of cross-border projects and the limited involvement of subnational entities, in particular local and regional authorities, in the design and implementation of the instrument; is of the opinion that any shift to a performance-based approach based on the Recovery and Resilience Facility as a blueprint cannot take place as long as the issues identified in the implementation of the Recovery and Resilience Facility are not addressed;

Or. en

Amendment 10

Motion for a resolution

Paragraph 9

Motion for a resolution	Amendment
9. Acknowledges that performance-based mechanisms can be instrumental in making the cohesion policy more efficient and results-orientated, but cautions against the one-size-fits-all imposition of this model in the context of the new 2028-2034 programming period, taking into due consideration the specificities of different spending sectors, especially in projects related to research and social issues;	9. Acknowledges that performance-based mechanisms can be instrumental in making the cohesion policy more efficient and results-orientated; recalls that the shift towards a more performance-based approach in cohesion funding is also linked to the high error rate experienced in recent years; highlights that any transition to a performance-based approach in cohesion funding should not take place without addressing the underlying causes of this issue; recalls that under performance-based instruments, such as the Recovery and Resilience Facility, the European Court of Auditors has been unable to calculate an error rate, owing to the specificities of the financing not linked to cost model; cautions against the one-size-fits-all imposition of this model in the context of the new 2028-2034 programming period, taking into due consideration the specificities of different spending sectors, especially in projects related to research and social issues;

Or. en

Amendment 11

Motion for a resolution

Paragraph 10

Motion for a resolution	Amendment
10. Acknowledges that liquidity problems deter potential beneficiaries such as municipalities from applying for cohesion policy funded projects and therefore calls for a significant and tailored increase in pre-financing in such cases;	10. Acknowledges that liquidity problems deter potential beneficiaries such as municipalities from applying for cohesion policy funded projects and therefore calls for a significant and tailored increase in pre-financing in such cases; cautions, nevertheless against the excessive use of 100 % co-financing, as crisis response tools financed from cohesion funds with 100 % EU co-financing have proven to be particularly prone to errors; considers that fostering ownership at the local, regional and national level is key to the successful implementation of cohesion policy funds;

Or. en

Amendment 12

Motion for a resolution

Paragraph 10 a (new)

Motion for a resolution	Amendment
	10a. Recalls that the recast of the Financial Regulation introduced a new category of very low value grants of up to EUR 15 000 for which certain administrative requirements are waived; calls on the Commission to introduce further simplifications for smaller beneficiaries, with a view to reducing administrative burdens and costs;

Or. en

Amendment 13

Motion for a resolution

Paragraph 12

Motion for a resolution	Amendment
12. Calls on the Commission to propose further measures to prevent and avoid double funding, to ensure the interoperability of data-mining tools, and to ensure a balance between simplification and protection of the EU budget;	12. Calls on the Commission to propose further measures to prevent and avoid double funding; stresses, in particular, the need for the ex ante prevention of double funding through a clear demarcation of what kinds of action can be funded from which instruments; emphasises, in this regard, the increased need for detection of double funding through a single integrated interoperable information and monitoring system, including a single data-mining and risk-scoring tool, building on, but not limited to, existing tools and databases in the context of the concluded recast of the Financial Regulation;

Or. en

Amendment 14

Motion for a resolution

Paragraph 13

Motion for a resolution	Amendment
13. Recommends the setting up of a simplified and streamlined mechanism with the aim of ensuring direct funding for cities in the next multiannual financial framework and including smart conditionality;	13. Calls on the Commission to explore additional ways of ensuring that local and regional authorities, civil society and other beneficiaries can continue to benefit from Union funding in cases of breaches of the rule of law by national governments without weakening the application of the Rule of Law Conditionality Regulation;

Or. en

Amendment 15

Motion for a resolution

Paragraph 14

Motion for a resolution	Amendment
14. Stresses the need to increase investments in building effective administrative capacity, especially in LRAs, with a view to encouraging effective decentralised management and implementation of EU funds, and highlights that cohesion policy outcomes rely on forward-looking and inclusive strategy, on proper stakeholder involvement and on good governance;	14. Stresses the need to increase investments in building effective administrative capacity, especially in LRAs, with a view to encouraging effective decentralised management and enabling further simplification of procedures in the implementation of EU funds, and highlights that cohesion policy outcomes rely on forward-looking and inclusive strategy, on proper stakeholder involvement and on good governance;

Or. en

Amendment 16

Motion for a resolution

Paragraph 14 a (new)

Motion for a resolution	Amendment
	14a. Notes that the single audit approach has been followed in cohesion policy funds since 2007; highlights the fact that the single audit approach prevents the duplication of audit work, reducing the overall cost of audit activities for the Member States and the Commission and decreasing the administrative burden on auditees; points out that, in practice, the application of the single audit approach depends, among other things, on the robust and reliable audit work carried out by the audit bodies in the Member States; considers that for the single audit approach to work well and achieve a reduced administrative burden for beneficiaries and managing authorities, adherence to audit standards at all levels of control and audit is essential; regrets the fact that the lack of sufficient resources is a factor affecting the managing authorities’ capacity to carry out effective and thorough checks and verifications of expenditure; calls on the Commission, in this regard, to provide them with clear guidance, and to increase its support for administrative capacity building, including through staff training, best practice sharing, peer-to-peer reviews and technical assistance to ensure effective fund management;

Or. en

Amendment 17

Motion for a resolution

Paragraph 15

Motion for a resolution	Amendment
15. Considers that a new approach to audit and controls should be enshrined in the next cohesion policy, introducing preventive controls executed at the beginning of the budgetary perspective to detect and eliminate the possibility of repeating potential errors in subsequent years of implementation;	15. Considers that the Commission and Member States should take further action to identify risks, reinforce preventive measures, and strengthen ex ante controls to prevent, detect and reduce frequently recurring errors; notes, in particular, the European Court of Auditors’ findings that between 2018 and 2023 ineligible expenditure and ineligible projects were the most prevalent type of error and had the biggest impact on the estimated level of error in cohesion, followed by non-compliance with state aid rules and with EU and national public procurement rules; calls on the Commission to address the Court’s findings;

Or. en

Amendment 18

Motion for a resolution

Paragraph 17

Motion for a resolution	Amendment
17. Instructs its President to forward this resolution to the Council, the Commission, the European Economic and Social Committee, the Committee of the Regions and the national and regional parliaments of the Member States.	17. Instructs its President to forward this resolution to the Council, the Commission, the European Court of Auditors, the European Economic and Social Committee, the Committee of the Regions and the national and regional parliaments of the Member States.

Or. en