With a relatively small proportion of staff involved in ESIF administration in departments/agencies responsible for MA and IB functions, there is a heightened risk of differences between EU and domestic rules in (for example) procurement practices, eligibility rules and other administrative processes, resulting in errors. In this context, the growing complexity of financial management and control is contributing to disproportionately high administrative workloads. More corrosively, it is causing
a loss of trust and confidence in the policy, to the extent that some IBs and beneficiaries are deciding to avoid involvement in ESIF where there are alternative domestic funding opportunities. Efforts to address these problems through regulatory provisions for proportionality have, so far, been marginal and made little difference.
Not surprisingly, the need for ‘differentiation’ in the management of Cohesion policy is now a central topic in the debate on reforming the policy after 2020. The question is whether and how a differentiated approach could be designed that moves away from the one-size-fits-all model of shared management and which recognises that different models are appropriate for different contexts.
A starting point is to consider the principles that would need to guide a differentiated approach – or the minimum requirements that the Commission can justifiably expect from all Member States and programmes. These would certainly include: (a) coherence with Cohesion policy objectives and wider EU economic governance and industrial policies; (b) assurance on the regularity and legality of spending; (c) evidence on the performance of EU funding and the outcomes achieved; and (d) a commitment to the principles of partnership.
Based on these principles, it might be possible to conceive a new model of devolved management - as opposed to shared management - based on partnership and cooperation, which would be inspired by the current ‘direct budget support’ approach. This might have the following elements.
First, Member States would elaborate national strategies for territorial/regional development and cohesion (or demonstrate that there is a domestic strategy in place) and negotiate these with the Commission to ensure they meet regulatory requirements. The Commission would clearly want to be assured that pre-conditions (conditionalities?) relating to sound financial management, performance and partnership are met.
Second, Member States would implement the strategies – in terms of management, monitoring and controls – according to national rules and administrative arrangements without the need for approved OPs. Relevant EU rules on State aids, public procurement, the internal market and environmental protection would need to be fulfilled.
Third, Member States would commit to regular reporting to the Commission and Council on the progress and performance of their use of EU funding. Financial payments would be approved by the Commission based on the demonstrated achievement of agreed outputs or results. Audit would be the responsibility of national audit services; verification of the work of these services would be undertaken by a single or limited number of system audits by the Commission audit or ECA.
Lastly, the Commission would have the scope to implement Community initiatives to respond to specific challenges or opportunities. It would also facilitate coordination of the exchange of experience across Member States within the framework of the open method of coordination.
A key issue, of course, is which criteria should be used to justify the use of devolved management in some Member States. A recent study exploring
new ideas for post-2020 Cohesion policy has presented a range of options. Some are related to the scale or proportion of EU funding or the share of EU co-financing (essentially measures of EU funding ‘at risk’). Others relate to measures of implementation such as the level of absorption. And quality of government might also be considered, given the
evidence for its influence on financial compliance and the increasing recognition of the importance of administrative capacity for sound management of ESIF.
Introducing differentiation into the management of Cohesion policy will not be easy and might well cause unintended consequences. However, it is an idea whose time has come and deserves to be part of the debate on post-2020 reform of the policy.
Professor John Bachtler and Dr Carlos Mendez
European Policies Research Centre, University of Strathclyde