WRITTEN QUESTION E-3091/02

by Ilda Figueiredo (GUE/NGL) to the Commission

(28 October 2002)

Subject: Implementation of the Structural Funds and the n+2 rule

The current period of economic slowdown and the constraints imposed on public expenditure, in particular public investment, by the Stability Pact are creating problems for the correct and full implementation of the Structural Funds. The situation is all the more serious for countries such as Portugal, which need more capital and investment, as the questioner has discovered during various visits and meetings. Furthermore, the level of co-financing and the existing regulatory procedures, especially after the changes brought in by Agenda 2000,

do not seem to have helped to improve the situation. In this context the n+2 rule, also known as the guillotine clause is creating serious concern regarding cuts in structural expenditure. Commissioner Michel Barnier, when talking to the European Parliament's Committee on Regional Policy on 9 October 2001, called the rule a time-bomb and more recently, in July 2002, he presented figures showing that more than EUR 3 000 million under the Structural Funds was covered by the n+2 rule, that the implementation rate for 45 operational programmes was less than 50 % and that, although there is no substantial threat of appropriations being lost in 2002, the situation will become worse in 2003.

1. Does the Commission not consider that the n+2 rule is undermining the expenditure aims of the Structural Funds and should therefore be eliminated? What is the situation in 2002 and what are the prospects for 2003 as regards the application of this rule?

2. What is the Commissions view of the review of the procedures for refunds and payments for the Structural Funds introduced in Agenda 2000? What measures does it intend to introduce to improve the implementation of the Structural Funds, in particular by revising or simplifying the refund and payment procedures?

3. What does the Commission think of the increase in the rate of Community co-financing for the Objective 1 regions as a way of improving the absorption capacity and full implementation of the Structural Funds?

Answer given by Mr Barnier on behalf of the Commission

(9 December 2002)

The Commission would remind the Honourable Member that the n+2 rule on the automatic decommitment of appropriations is to be found in Article 31(2) of Council Regulation (EC) No 1260/1999 laying down general provisions on the Structural Funds(1), which was adopted unanimously. It is designed to impose year-on-year discipline on the management of the Structural Funds, which should encourage the Member States to ensure that implementation of the programmes progresses at an adequate and sustained rate, instead of delays emerging only at the end of the period, as happened in earlier programming periods. When the Commission met the Ministers responsible for regional policy on 7 October 2002, a meeting to which Parliament was invited, the Member States confirmed their adherence to this rule on the automatic decommitment of appropriations, which ensures the sound management of the funds allocated to structural policy.

As regards 2002, the first year to which this rule has applied, there is a risk of loss at the end of the year for a limited number of programmes. The applications for payment submitted to the Commission by the end of 2002 will certainly reduce these figures very substantially.

The number of programmes which could be affected by application of the n+2 rule at the end of 2003 cannot be estimated at this juncture.

The payment procedures introduced by the new Regulation on the Structural Funds have strengthened the link between payments made by the Funds and the financial needs of the operations.

Before 2000, payments from the Funds were based mainly on a system of advances calculated on the programme implementation plans which, only too frequently, did not correspond to actual progress on the spot. This system was criticised by Parliament, which pointed to the weak correlation between budget implementation and the progress of Structural Funds programmes.

As regards the payments system, the Commission believes that a better rate of programme implementation depends on an improved rate of payments to beneficiaries. Here, the system seems well adapted to needs, in view of the substantial amount of the initial payment on account and the time normally required for the payment of reimbursements (60 days). The Commission is continuing its efforts to reduce the time needed for payments as far as possible.

Regulation (EC) No 1260/1999 allows the Member States substantial scope as regards modulation of the rates of contribution of the Funds. Determination of the real rate of aid may vary depending, for example, on the multiplier effect required for a project to be carried out. The Commission would stress that an increase in the rate of Community part-financing would, for a given level of finance, reduce the number of projects which could receive Community aid. Such a measure would not solve the difficulties experienced in implementing the Structural Funds, which do not lie in the rates of part-finance applied but rather in the capacity of the Member States to implement the programmes in the time allowed by the rules. That is why, at the meeting on 7 October referred to above, the Commission made specific proposals designed to simplify, clarify, coordinate and make more flexible the management of the Structural Funds, all of which represent ways of improving their implementation.

(1) OJ L 161, 26.6.1999.