Special Report No 6/99 concerning the principle of additionality, together with the Commission's replies
Date: 1999-12-09
Institutions: European Court of Auditors
Subjects: EU control, European Commission, Structural Funds, principle of additionality

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 6/99

concerning the principle of additionality, together with the Commission(cid:146)s replies

(submitted pursuant to Article 248(4), second subparagraph, EC)

(2000/C 68/01)

CONTENTS

Paragraph

Page

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 6

Procedures for verifying additionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 to 11

Implementation at the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 to 22

Allocation of responsibility for verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 to 13

Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 to 17

Suspensive clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 to 21

Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22

The state of progress of work on the verification of additionality . . . . . . . . . . . . . . . . . . . . . . .

23 to 38

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23

The 1989 to 1993 period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24 to 28

The 1994 to 1999 period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29 to 38

Difficulties detected and their causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39 to 68

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

Expenditure to be taken into account and compiling the data. . . . . . . . . . . . . . . . . . . . . . . .

40 to 50

Overlapping of periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 to 57

Starting point and comparability of data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58 to 63

Geographical breakdown of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64 to 68

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69 to 75

The Commission(cid:146)s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

4

4

5

5

5

5

6

6

6

6

7

12

12

13

13

14

15

15

18

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SUMMARY

Introduction

This report concerns the principle of additionality, which is one of the four main principles governing the
Structural Funds. The Court has examined the verification of this principle for the 1989 to 1993 and 1994 to
1999 periods, for all the Structural Funds Objectives (1, 2, 3, 4, 5a, 5b and 6), in order to obtain an overall
view of its implementation. Checks were carried out at the Commission and on the spot in Spain, Germany,
France, Italy and the United Kingdom. Questionnaires were sent to the 15 Member States (see paragraphs 1
and 2).

Summary of the main findings

The main findings concerning the procedures for verifying additionality and their implementation at the Com-
mission and in the Member States are as follows:

(a) the principle of additionality, as defined in the regulations, allows differing interpretations by the Member
States (see paragraph 4). The obligations in the regulations have not been backed up by sanctions or other
consequences (see paragraph 6);

(b) the procedures for verifying the principle are inadequate, difficult to use and not always observed (see

paragraphs 7 to 11);

(c) the division of responsibilities at the Commission for monitoring and checking has not been laid down
(see paragraphs 12 to 13) and there is no coordination between the Directorates-General (DGs) involved
(see paragraphs 14 to 17); these failings have hampered the work on the verification of additionality.
Clauses suspending payments, because of the absence of information enabling the ex ante verification of
the observance of the principle, have been used in an unsatisfactory and, on occasion, irregular way (see
paragraphs 18 to 21);

(d) work on the verification of additionality for the 1989 to 1993 period is still unfinished for certain Member
States (see paragraphs 24 to 28). For the 1994 to 1999 period, it is difficult to establish whether the prin-
ciple has been observed by some Member States, because of the methodological weaknesses affecting the
data submitted (see paragraphs 29 to 38).

The main causes of the methodological difficulties in the verification of the principle of additionality are as
follows:

(a) the difficulties in determining the public structural expenditure, or comparable expenditure, to be taken
into account, the incompleteness of the existing statistical and budgetary data and problems in identifying
which expenditure headings to analyse and in compiling the data (see paragraphs 40 to 50);

(b) the overlapping of the periods makes it difficult to compare expenditure during the programming period
with a reference period. In fact, the actual programming period does not necessarily coincide with the
calendar years under consideration, because of possible extensions to the period in order to fulfil com-
mitments and the minimum extension of two years for making the payments, which always results in the
simultaneous implementation of at least two periods. This overlapping of the periods therefore results in
verifications being carried out on disparate elements and the impossibility of comparing the ex ante and
on-going verifications (see paragraphs 51 to 57);

(c) problems connected with comparing data from one period with the previous one and the influence of the
starting point chosen for the reference period. Thus, the potentially eligible expenditure or the eligible areas
may not be the same for the two periods, and certain special circumstances, such as privatisations, must
be taken into account (see paragraphs 58 to 63);

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(d) expenditure is broken down geographically in proportion to the population or the surface area of the

relevant zones, and this simplification leads to questionable results (see paragraphs 64 to 68).

Conclusions

The report(cid:146)s main conclusions are as follows:

(a) the difficulties encountered are caused by the limited development of the principle in terms of concepts
and methodology and the joint failure to find appropriate and effective procedures for verifying it (see
paragraph 69);

(b) the absence of any sanctions in cases where the Member States are in breach of their obligations has not

encouraged them to observe the relevant provisions (see paragraph 70);

(c) the identification of the structural assistance interventions in the eligible regions is unreliable, and this leads
to the inclusion of a large number of estimates and hypotheses which are difficult to verify (see paragraphs
71 to 72);

(d) verification of the principle of additionality is an exercise which is isolated from the on-going processes of
monitoring and evaluation of the structural measures, which means that the work done by the Commis-
sion and the Member States is of little practical use (see paragraph 73);

(e) deficiencies in the organisation and coordination of the Commission departments in this area have reduced

the effectiveness of individual efforts (see paragraph 73);

(f)

for the new programming period, and in accordance with the relevant regulations, procedures for verify-
ing additionality should be drawn up that are more workable, that are integrated into the programming,
monitoring and evaluation frameworks and that are suitable for use with the budgetary and statistical
information that is available. These data should be improved (see paragraphs 74 to 75).

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INTRODUCTION

1. This report concerns the verification of the principle of addi-
tionality in the Structural Funds (SFs). The Court(cid:146)s checks con-
cerned all the Objectives (1, 2, 3, 4, 5a, 5b and 6) and were car-
ried out by means of an inspection of the Commission(cid:146)s files,
questionnaires sent to the 15 Member States and meetings with
the responsible bodies in Spain, Germany, France, Italy and the
United Kingdom.

2. The operation of the SFs is based on four overall principles:
concentration, partnership, programming and additionality. Addi-
tionality is designed to ensure that SF appropriations do not take
the place of public expenditure by the Member State on structural
or comparable projects in the whole of the territory eligible under
an Objective (1).

3. Since 1975, the concept of additionality has been the subject
of numerous analyses. In Council Regulation (EEC) No 724/75 of
18 March 1975 (2) the view was already being expressed that (cid:145)the
assistance of the European Regional Development Fund (ERDF)
should not lead Member States to reduce their own regional
development efforts but should complement these efforts(cid:146) (11th
recital). Since then, subsequent ERDF and SF regulations have
attempted to give better and more precise definitions of the con-
cept of additionality. Thus, Article 36 of Regulation (EEC) No
1787/84 on the ERDF (3) defined two kinds of additionality (spe-
cific or overall) and the choice between them was left to the Mem-
ber States. During the reform of the SFs in 1988, overall addition-
ality, by Objective and by Member State, was chosen. In 1993, and
in response to the difficulties of implementing this principle, the
concept was reformulated. Finally, in 1998, in its proposals for SF
regulations for the period 2000 to 2006, the Commission sub-
mitted new guidelines (4).

4.
In spite of the successive reformulations of the principle of
additionality in each of the new SF regulations, it has always been
defined in terms that allow differing interpretations by the Mem-
ber States. Specifically, Article 9(2) of Regulation (EEC) No 4253/88
makes provision for taking account of (cid:145)the macroeconomic cir-
cumstances(cid:146), (cid:145)a number of specific economic circumstances(cid:146), (cid:145)an
unusual level of public structural expenditure undertaken in the
previous programming period(cid:146) and (cid:145)business cycles in the national
economy(cid:146).

5. The Commission attempted to make the contents of Article 9
more complete and precise by including a (cid:145)statement(cid:146) in the min-
utes of the Council meeting held on 20 July 1993, at which the
texts of the regulations governing the SFs were adopted. A state-
ment of this kind is only binding on its author, but has made it
possible to clarify certain points.

6. The Member States(cid:146) obligations are defined in the Regulation
as: to observe the principle of additionality, to ensure that struc-

tural expenditure is maintained and to provide the relevant infor-
mation. However, there are no specific provisions on the conse-
quences of failure to meet these obligations. In fact, the provisions
on payments, on financial control and on reduction, suspension
and cancellation of assistance concern decisions to grant aid under
the heading of individual forms of assistance (operational pro-
grammes, global grants or major projects), whereas verification of
additionality must be carried out at the general level of the Com-
munity support framework (CSF) (5).

PROCEDURES FOR VERIFYING ADDITIONALITY

7. Under the provisions of the regulations, the procedures for
verifying additionality are supposed to be agreed between the
Commission and the Member State concerned when the CSFs are
drawn up. However, these procedures, which either merely refer
to the provisions of the regulations or contain extremely brief
rules of a standard type, were not always established in the vari-
ous CSFs or single programming documents (SPDs) of Objectives
2 and 5b. Checks at the Commission and in the Member States
showed that the verification procedures are insufficient to enable
the principle to be verified.

8. These procedures should have been workable and adapted to
the particular institutional, administrative and statistical systems
of the Member States. The procedures laid down in the CSFs and
the SPDs did not tackle the real methodological and practical dif-
ficulties already encountered during the previous period. Some-
times they state that the previous period(cid:146)s method is to be used,
when in fact no method had been defined, or when it had proved
inadequate. For certain Member States, the process of drawing up
the CSFs/SPDs resulted in the presentation of incomplete tables or
numerical data (see paragraphs 29 and 30).

9. The verification procedures consist of the obligation to send
to the Commission on a regular basis global tables, covering all
the regions and areas concerned, which include the final or pro-
visional expenditure for the previous years and estimates and
forecasts for future years. A table of this kind is difficult to verify
without, on the one hand, a relevant breakdown of the data by
region and by expenditure category and, on the other hand, a dis-
tinction between actual and forecast expenditure.

10.
In a number of these procedures (6), if, in the Commission(cid:146)s
opinion, there appears to be a risk that the respect of the principle
of additionality is endangered the Commission may request that
the Member State communicate, within a specified time, details of
to take in respect of eligible
the measures

intends

it

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non-co-financed expenditure. The Commission will then decide,
in accordance with the procedures laid down in the regulations,
what measures it will take in respect of expenditure co-financed
by the Structural Funds. However, the regulations do not lay down
any procedures which allow the Commission to take measures.
Moreover, in the absence of a precise legal basis, there is no defini-
tion of the nature and content of these possible measures. For
these reasons, this provision has never been applied.

11.
Information to enable monitoring of the principle of addi-
tionality has rarely been sent within the periods specified in the
CSFs and the SPDs; for certain Member States and Objectives it
has never even been sent (see paragraphs 32 to 35). In the specific
cases of Objectives 2 and 5b, certain Member States stated that
the verification procedures did not lay down any precise timetable
for the sending of information.

IMPLEMENTATION AT THE COMMISSION

Allocation of responsibility for verification

12. Within the Commission, the division of responsibilities for
monitoring and checking the observation of the principle of addi-
tionality does not appear to have been adequately laid down or
formalised. Four Directorates-General (DG II, DG V, DG VI and
DG XVI) have to deal with additionality issues, and within these
directorates several departments are involved. Apart from a letter
sent by the Secretary-General to the Member States on 6 August
1990, explaining that the tables must be sent to the DGs in charge
with a copy to DG II (Economic and financial affairs), there is no
Commission document which sets out clearly the division of
responsibility between its departments.

13. The DGs in charge of each Objective are those responsible
for the management, and DG II plays an advisory role, owing to
its expertise in the economic sphere. It is supposed to receive the
reports sent by the Member States via the DGs in charge, and is
responsible for examining these documents and sending its con-
clusions to the relevant DGs. This arrangement is not very effec-
tive. The fact is that DG II carries out analyses, makes proposals
and requests modifications to certain decisions or to the supple-
mentary information, which are not always accepted, because,
formally, it does not engage in dialogue with the Member States
or react directly to them. DG II was not called on to participate in
the additionality verification exercise for Objectives 3 and 4 for
the 1994 to 1999 period because of the methodology adopted by
DG V. This methodology was based on samples and takes into
account the Objective 1 regions, for which the monitoring of
additionality is carried out within the framework of the Objec-
tive 1 CSFs.

Coordination

14. At DG VI (Agriculture), few arrangements were made for
verifying additionality. DG VI is of the opinion that the respon-

sibility for verifying additionality lies with DG II, since it does not
possess the necessary technical expertise to carry out this task.
For several Member States, DG VI was not able to provide any
documents on the verification of additionality.

15. At DG XVI (Regional policy and cohesion), a horizontal
department is responsible for monitoring the principle of addi-
tionality which relies, as far as technical aspects are concerned, on
the work carried out by DG II. However, this department is not
always informed of contacts between the geographical units and
the Member States. These deficiencies in coordination between
the horizontal department, the geographical units and DG II result
in documents being dispersed around several units and in several
different people communicating with the Member States. This
situation makes partnership with the Member States difficult, and
also makes it hard to obtain an overall view of the issue.

16. At DG V (Employment, industrial relations and social affairs),
in spite of the checks concerning Objectives 3 and 4 of the Euro-
pean Social Fund (ESF) carried out in 1996 by the Court (7), the
situation remains unsatisfactory. The results of the audit of the
observance of additionality for Objectives 3 and 4 for the 1990
to 1993 period, carried out by the (cid:145)Audit and inspection(cid:146) sector
of the financial unit of DG V, were very disappointing: for seven
Member States (B, EL, E, IRL, I, NL and UK) it was not possible to
complete the exercise and nothing has been done to rectify this
situation (see paragraph 28). With regard to the 1994 to 1999
period, where the geographical units did receive information, it
was not subjected to much examination.

17. Under these circumstances, there were serious failures of
coordination in all the DGs involved. The files are very incom-
plete and dispersed, making it very difficult for the Commission
administrators to know what the situation is. Interdepartmental
discussions and discussions with the Member States were often
informal, so that the results were not recorded in the files. Some
Commission departments asked Member States for information
which had already been provided to other Commission depart-
ments and which had obviously not been circulated. In order to
obviate these problems, one Member State decided to send infor-
mation to all the officials who might possibly be responsible for
the file by post and by e-mail.

Suspensive clauses

18. The use of suspensive clauses gives a clear illustration of the
consequences of this lack of coordination. This kind of clause
provides for the automatic suspension of payments after the first
advance if the relevant information needed for ex ante verification
of additionality has not been provided by the Member State. The
Commission inserted them in decisions granting assistance as a
means of exerting pressure. This is not a case of the application
of Article 24 of Regulation (EEC) No 4253/88, which is supposed
to govern the suspension of payments, but of a procedure

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lacking any procedures or fixed criteria stating when these clauses
are to be inserted and applied. Thus, clauses of this kind have
been employed for Objectives 2 and 5b, but not for the other
Objectives, although there are factors which might also, in some
circumstances, have justified their insertion. In the case of some
Member States, these clauses were inserted in some regional SPDs,
although additionality must be measured at the level of the entire
group of regions to which an Objective applies. The Commission
justified this practice as necessary to avoid penalising regions
which had provided the information required, but it resulted in
unequal treatment between Member States.

they have had to do a lot of work (8). On the other hand, the
absence of a reaction from the Commission does not necessarily
mean that it considers the information to be correct. It may hap-
pen that this lack of reaction is simply because of the lack of any
analysis by the Commission. In cases where the SFs are managed
by the regional SPDs and not by a CSF, the absence of a Monitor-
ing Committee at national level has made contact between the
Commission and the Member States more difficult. For Objective
1, this concerns France and the United Kingdom, for Objective 2,
all of the Member States except Spain are concerned and for
Objective 5b, all of the Member States are concerned.

In many Member States the verification of additionality for
19.
Objectives 2 and 5b was carried out by the same departments,
using identical approaches and sources. However, suspensive
clauses were only used for one or the other Objective. The only
explanation to be found for this lies in purely formal aspects and
in the fact that the DGs in charge and their counterparts in the
Member States differ.

20. The lifting of these clauses has not always been the subject
of formal procedures. This decision was communicated, on only
one occasion, to the relevant Member State by means of a letter
from the Commissioner responsible, which was accompanied by
the amended verification procedures and the corresponding tables.
On other occasions, the lifting of the clause was communicated
by means of a letter from the Director-General. On some occa-
sions, there was no written communication.

21. Since in the case of multifund assistance there is a single
decision to grant assistance covering all the Funds, the suspensive
clauses obviously apply to all of them. However, the lack of coor-
dination and the absence of appropriate monitoring and financial
control in respect of the files resulted in the payment of approxi-
mately ECU 140 million before the lifting of the suspensive
clauses. The payments in question concern the ERDF (ECU 4,3
million), the EAGGF Guidance (ECU 2,7 million) and the ESF
(ECU 133,5 million) for Objective 2 (ECU 42,4 million for the
1994 to 1996 period and ECU 87,8 million for the 1997 to 1999
period) and Objective 5b (ECU 10,3 million). The majority of the
files involved are the responsibility of DG V, which ought to have
monitored the suspensive clauses even though it is not in charge
of these Objectives. Despite the existence of suspensive clauses, all
the eligible requests for payments from the ESF submitted by the
Member States concerned were granted, revealing the weaknesses
of the control procedures used.

Procedures

THE STATE OF PROGRESS OF WORK ON THE VERIFICATION
OF ADDITIONALITY

Introduction

23. The Commission has issued very little information on the
state of progress of the work that has been carried out with the
aim of verifying the observance of the principle of additionality.
All that is available is a communication to the Consultative Com-
mittee on the development and conversion of regions (9), a single
annual report on additionality from 1990 to 1993, concerning
Objectives 3 and 4 (10) and a few paragraphs in the annual reports
on the SFs. These paragraphs are very brief and sometimes include
incorrect information. For example, the 1995 annual report (11)
states that (cid:145)Objective 5b was the only Objective for which it was
possible to confirm in 1995 that additionality had been observed
in all Member States(cid:146). However, most Member States have not car-
ried out any ex post verification operation concerning this Object-
ive, and, moreover, have not been asked to do so by the Commis-
sion (12).

The 1989 to 1993 period

24. Work on the ex post verification of the observance of the
principle of additionality for the 1989 to 1993 period is still
unfinished for certain Member States. The extremely long periods
over which data collection, processing and forwarding, and the
Commission(cid:146)s examination, the discussions and exchanges of let-
ters were spread have led to a gradual loss of interest on the part
of the Member States and the Commission in this exercise, which
is required by the regulations. In addition, the fact that the results
have not been formally stated or published makes knowledge of
the state of progress in each Member State and on each Objective
impossible.

22. As a general rule, the Commission does not send the national
authorities involved the results of its analyses of the documents
sent by the Member States. There is no procedure laid down to
cover this point. If the information is judged to be insufficient, the
Commission sometimes asks the Member State for additional
information. If the information is judged to be satisfactory, the
Member State is not always informed of the fact. The national
authorities are very often unaware of the status of a file on which

25. For Objective 1, two of the Member States (F and UK) out of
the seven involved (EL, E, F, IRL, I, P and UK) have not even begun
ex post verification. In the case of the others, the Commission has
accepted, although not without difficulty and occasionally with
reservations (EL), the data and results submitted by the Member
States (in some cases extremely late (cid:151) Italy in 1997). In Germany,
no verification was carried out for the 1991 to 1993 period on
account of the special circumstances of the new L(cid:228)nder.

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26. For Objective 2 (B, DK, D, E, F, I, L, NL and UK), the situa-
tion is less certain. Three Member States have not sent in the data
(F, L and UK), and for three others the data sent were inadequate.
The Italian authorities did not send in information on the year
1988 until May 1999.

27. The Commission has not taken any concrete steps to carry
out an ex post verification of the observance of additionality for
Objective 5b. The only analyses carried out concern the calcula-
tions of the baseline for the 1994 to 1999 period. Only one Mem-
ber State (E) has sent, of its own initiative, final data to the Com-
mission, but has received no reply.

28. For Objectives 3 and 4, the Commission published a
report (13) in 1995 setting out the results of an audit it had car-
ried out on the data provided by the Member States, which was,
in the majority of cases, insufficient (14). The 12 Member States
were examined, even though for the three to whom Objective 1
applied additionality was verified within the framework of the
CSF for this Objective. The Commission concluded that the prin-
ciple of additionality was being observed in four countries (D, F,
L and P), was less sure in three other countries (DK, I and NL) and
stated that the principle had not been observed at all in the five
remaining countries (B, EL, E, IRL and the UK). This situation has
still not been monitored and the process of verifying additionality
has therefore not been completed.

The 1994 to 1999 period

29. At the beginning of the 1994 to 1999 period, the initial
results of the ex ante verifications were set out in the majority of
the CSFs/SPDs, in varying degrees of detail. In many cases the data
needed were sent by the Member States only a few days before the
approval of the CSFs/SPDs, or afterwards. For example, the ex ante
verification of Objective 2 for 1994 to 1996 for Luxembourg was
only carried out during the summer of 1998.

30. The Commission carried out the ex ante analyses on the basis
of the tables sent in by the Member States. Usually these tables
had been created by putting together many items of data relating
to regions, sectors and other units. Their reliability can only be
properly evaluated if their sources and the methods used to draw
them up are known, which is not often the case. The lack of the
methodology and tools needed to examine the validity of the
results obtained by the Member States leaves the Commission no
alternative but to accept the conclusions reached by the national
authorities.

31. Tables 1 and 2 show the annual average expenditure on devel-
opment in the Objective 1 regions as given in the CSFs/SPDs. The
extreme variations that can be seen in these tables could, in some
cases, be the result of the quality and the quantity of the informa-
tion transmitted by the Member States. Thus, for example, accord-
ing to the data submitted by the Member States for the 1994 to
1999 period, the SFs financed 39,7 % of the ECU 919,9 million
of government expenditure connected with the development of
the French Objective 1 regions, whereas for the German regions,
this percentage was apparently 4,5 % of the ECU 50 646 million.

It turned out that the methodology used by these Member States
resulted in underestimating the expenditure connected with
regional development in France, and overestimating it in Ger-
many. However, given the lack of homogeneity in the data sub-
mitted by the Member States and the fact that the Member States
have varying socio-economic circumstances and priorities, it is
difficult to draw conclusions from such comparisons.

32. The on-going verifications were not carried out in the same
way for all the Objectives. For Objectives 1 and 6, all the Member
States except France converted their tables of expenditure to cur-
rent values, although the updatings were carried out after long
delays.

33. For Objective 2, 1994 to 1996, the on-going verifications
were not carried out until the ex ante verifications for the 1997 to
1999 period. Serious problems were posed by transfers of assis-
tance between the two periods, their overlapping and their rela-
tively short duration, and these have not yet been resolved. It is
doubtful whether two separate ex post verifications, for 1994 to
1996 and 1997 to 1999, are feasible, and some Member States
intend to carry out just one verification. The only advantage of
this would be to gain some time pending the necessary method-
ological reflections on the root of the problem.

34. With regard to Objectives 3 and 4, checks made with the
managers at DG V revealed failures to observe the timetables set
in the SPDs for sending in data. Several Member States had not
sent in any data at all. Following these checks, the Commission
reminded some Member States of their obligation to carry out the
on-going verifications for which provision had been made.

35. Four Member States (B, DK, F and L) had not carried out the
on-going verifications for Objective 5b. The Italian authorities
only did so at the end of 1998. Verification of additionality for
Objective 5a poses particular problems, since its implementation
procedures are different from those of the others. Specifically,
Community financing of the measures provided for in Regula-
tions (EEC) No 2328/91 (15) and (EC) No 950/97 (16) is carried out
through the refunding of expenditure effected, and not through
the use of an SPD. It was not until 1995 that the Commission
began discussing with the Member States the procedures for veri-
fying additionality for this Objective. These discussions have not
yet resulted in agreement on a suitable methodology.

36.
It is difficult to establish whether the principle of additional-
ity has been observed by some Member States for the 1994 to
1999 period. When the relevant CSFs were adopted, two Member
States (D and E) indicated that they could not guarantee they
would maintain their structural expenditure at the same level as
during the previous programming period, because of circum-
stances which permit observance of the principle of additionality
to be waived, as laid down in Article 9(2) of Regulation (EEC)
No 4253/88 (see paragraph 4). If one or more Member States
cannot ultimately maintain the same level of expenditure, they
will be inclined to make use of the derogations allowed for in the
Regulation.

Development expenditure in the Objective 1 regions according to the ex ante verifications carried out within the context of the CSFs or SPDs

Annual average 1989 to 1993

Annual average 1994 to 1999

(in million ECU, 1994 prices)

Table 1

Country

Public
(national +
EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net
of the Structural
Funds contribu-
tion (3)

Structural
Funds/Public
(%)

Public
(national +
EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net
of the Structural
Funds contribu-
tion (3)

Structural
Funds/Public
(%)

France

Spain

Ireland

Belgium

Greece

Portugal

Italy

Germany (1)

The Netherlands

Austria (2)

1

2

3

4=2+3

5=1-2

724,40

243,90

247,60

491,50

480,50

14 545,00

2 023,00

1 979,00

4 002,00

12 522,00

2 077,40

847,84

917,70

26,13

588,50

1 506,20

1 159,70

32,90

59,03

6 730,00

1 649,00

1 134,00

2 783,00

5 564,00

1 782,00

1 054,00

2 836,00

821,71

5 081,00

3 782,00

16 628,95

1 706,26

1 814,65

3 520,91

14 922,69

49 609,00

1 081,00

1 764,00

2 845,00

48 528,00

6=2/1

33,67

13,91

44,18

3,08

24,50

32,03

10,26

2,18

1

2

3

4=2+3

5=1-2

919,90

365,10

331,50

696,60

554,80

18 933,00

4 385,00

2 124,00

6 509,00

14 548,00

2 507,60

1 047,62

936,60

121,66

389,30

130,64

1 325,90

252,31

7 644,00

2 330,00

1 183,00

3 513,00

6 988,00

2 330,00

1 012,00

3 342,00

1 571,00

925,96

5 314,00

4 658,00

19 806,28

2 476,65

2 930,39

5 407,04

17 329,63

50 646,00

2 273,00

1 722,00

3 995,00

48 373,00

125,50

169,87

210,53

33,12

393,50

47,89

282,70

81,01

676,20

164,60

177,41

1 689,60

United Kingdom

1 822,00

303,30

260,10

563,40

1 518,70

16,65

2 083,10

(1) For Germany the data in the first section concern the period 1991 to 1993.
(2) For Austria the data in the first section concern the period 1993 to 1994 and those in the second section concern the period 1995 to 1999.
(3) Observance of the principle of additionality is measured by comparing these two columns.

6=2/1

39,69

23,16

37,35

11,61

30,48

33,34

12,50

4,49

15,73

18,89

C
6
8
/
8

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

.

.

9
3
2
0
0
0

Table 2
Development expenditure in the Objective 1 regions according to the ex ante verifications carried out within the context of the CSFs or SPDs (1)

Annual average 1989 to 1993

Annual average 1994 to 1999

(in million ECU, 1994 prices)

BELGIUM

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

GERMANY

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

GREECE

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

SPAIN

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

Total

Total

Total

Total

1

239,3
492,8
115,4
0,3
847,8

2

3,9
13,5
8,7
0,0
26,1

3

6,6
15,6
10,7
0,0
32,9

4=2+3

10,5
29,1
19,4
0,0
59,0

5=1-2

235,5
479,3
106,7
0,3
821,7

1

307,4
573,0
165,9
1,3
1 047,6

2

23,0
42,3
55,8
0,6
121,7

3

30,7
42,0
57,3
0,6
130,6

4=2+3

53,7
84,2
113,1
1,3
252,3

5=1-2

284,4
530,8
110,2
0,6
926,0

Annual average 1991 to 1993

Annual average 1994 to 1999

Public
(national + EC)

1

15 415,0
27 149,0
5 598,0
1 447,0
49 609,0

Public
(national + EC)

1

3 200,0
1 706,0
1 589,0
235,0
6 730,0

Public
(national + EC)

1

8 604,0
3 427,0
2 514,0
0,0
14 545,0

Structural
Funds
(CSF - SPD)

2

0,0
324,0
757,0
0,0
1 081,0

Structural
Funds
(CSF - SPD)

2

611,0
404,0
532,0
102,0
1 649,0

Structural
Funds
(CSF - SPD)

2

1 092,0
465,0
466,0
0,0
2 023,0

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

3

0,0
549,0
1 215,0
0,0
1 764,0

4=2+3

0,0
873,0
1 972,0
0,0
2 845,0

Annual average 1989 to 1993

5=1-2

15 415,0
26 825,0
4 841,0
1 447,0
48 528,0

1

11 758,0
22 410,0
10 981,0
5 497,0
50 646,0

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

3

507,0
226,0
319,0
82,0
1 134,0

4=2+3

1 118,0
630,0
851,0
184,0
2 783,0

Annual average 1989 to 1993

5=1-2

2 589,0
1 302,0
1 057,0
133,0
5 081,0

1

3 500,0
2 120,0
1 764,0
260,0
7 644,0

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

3

1 084,0
274,0
621,0
0,0
1 979,0

4=2+3

2 176,0
739,0
1 087,0
0,0
4 002,0

5=1-2

7 512,0
2 962,0
2 048,0
0,0
12 522,0

1

11 123,0
4 036,0
3 733,0
41,0
18 933,0

Structural
Funds
(CSF - SPD)

2

184,0
710,0
1 328,0
51,0
2 273,0

Structural
Funds
(CSF - SPD)

2

1 068,0
574,0
647,0
41,0
2 330,0

Structural
Funds
(CSF - SPD)

2

1 772,0
1 267,0
1 315,0
31,0
4 385,0

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

3

171,0
510,0
1 018,0
23,0
1 722,0

4=2+3

355,0
1 220,0
2 346,0
74,0
3 995,0

Annual average 1994 to 1999

5=1-2

11 574,0
21 700,0
9 653,0
5 446,0
48 373,0

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

3

658,0
191,0
308,0
26,0
1 183,0

4=2+3

1 726,0
765,0
955,0
67,0
3 513,0

Annual average 1994 to 1999

5=1-2

2 432,0
1 546,0
1 117,0
219,0
5 314,0

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

3

1 124,0
438,0
552,0
10,0
2 124,0

4=2+3

2 896,0
1 705,0
1 867,0
41,0
6 509,0

5=1-2

9 351,0
2 769,0
2 418,0
10,0
14 548,0

.

.

9
3
2
0
0
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
6
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/
9

FRANCE

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Annual average 1989 to 1993

Annual average 1994 to 1999

(in million ECU, 1994 prices)

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

IRELAND

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

Total

Total

1

266,8
231,8
165,2
60,7
724,5

2

75,8
69,3
76,7
22,2
244,0

3

102,5
66,3
77,0
28,9
274,7

4=2+3

178,3
135,6
153,7
51,1
518,7

5=1-2

191,0
162,5
88,5
38,5
480,5

1

305,6
260,0
256,7
97,6
919,9

2

101,6
99,1
124,7
39,7
365,1

3

112,5
73,2
104,4
41,4
331,5

4=2+3

214,1
172,3
229,1
81,1
696,6

5=1-2

204,0
160,9
132,0
57,9
554,8

Annual average 1989 to 1993

Annual average 1994 to 1999

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

1

762,2
731,7
565,0
18,5
2 077,4

2

205,5
361,8
339,0
11,4
917,7

3

133,5
245,8
202,1
7,1
588,5

4=2+3

339,0
607,6
541,1
18,5
1 506,2

5=1-2

556,7
369,9
226,0
7,1
1 159,7

1

1 121,2
833,4
499,0
54,0
2 507,6

2

184,8
411,6
305,2
35,0
936,6

3

130,0
138,0
105,5
15,8
389,3

4=2+3

314,8
549,6
410,7
50,8
1 325,9

5=1-2

936,4
421,8
193,8
19,0
1 571,0

Annual average 1989 to 1993

Annual average 1994 to 1999

ITALY

1. Infrastructure
2. Human resources humaines
3. Productive environment
4. Other

Total

Public
(national + EC)

1

11 563,7
1 460,0
2 409,0
1 196,3
16 629,0

Structural
Funds
(CSF - SPD)

2

650,6
419,6
630,2
5,8
1 706,3

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

3

792,9
234,5
783,1
4,2
1 814,7

4=2+3

1 443,5
654,1
1 413,3
10,0
3 520,9

5=1-2

10 913,1
1 040,4
1 778,8
1 190,5
14 922,7

1

11 261,6
2 060,9
6 029,0
454,8
19 806,3

2

736,7
530,7
1 194,6
14,6
2 476,7

3

978,0
280,7
1 665,4
6,3
2 930,4

4=2+3

1 714,7
811,4
2 860,0
20,9
5 407,0

5=1-2

10 524,9
1 530,2
4 834,4
440,2
17 329,6

C
6
8
/
1
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

THE NETHERLANDS

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

1

2

3

4=2+3

5=1-2

1

2

3

4=2+3

5=1-2

Annual average 1989 to 1993

Annual average 1994 to 1999

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

Total

125,5

125,5

164,4

.

.

9
3
2
0
0
0

Annual average 1993 to 1994

Annual average 1995 to 1999

(in million ECU, 1994 prices)

AUSTRIA

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

1. Infrastructure
2. Human resources humaines
3. Productive environment
4. Other

Total

1

107,1
23,1
39,7
21,6
191,4

2

3

4=2+3

5=1-2

107,1
23,1
39,7
0,0
169,9

1

97,7
36,6
74,6
1,6
210,5

2

6,6
8,6
17,1
0,8
33,1

3

11,5
10,1
25,5
0,8
47,9

4=2+3

18,0
18,7
42,6
1,7
81,0

5=1-2

91,1
28,0
57,4
0,8
177,4

PORTUGAL

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

UNITED KINGDOM

1. Infrastructure
2. Human resources
3. Productive environment
4. Other

Total

Total

Annual average 1989 to 1993

Annual average 1994 to 1999

Public
(national + EC)

1

3 258,0
1 114,0
1 005,0
187,0
5 564,0

Structural
Funds
(CSF - SPD)

2

518,0
582,0
649,0
33,0
1 782,0

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

3

458,0
274,0
311,0
11,0
1 054,0

4=2+3

976,0
856,0
960,0
44,0
2 836,0

5=1-2

2 740,0
532,0
356,0
154,0
3 782,0

1

4 320,0
1 173,0
1 277,0
218,0
6 988,0

Structural
Funds
(CSF - SPD)

2

691,0
685,0
832,0
122,0
2 330,0

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

3

421,0
220,0
320,0
51,0
1 012,0

4=2+3

1 112,0
905,0
1 152,0
173,0
3 342,0

5=1-2

3 629,0
488,0
445,0
96,0
4 658,0

Annual average 1989 to 1993

Annual average 1994 to 1999

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF- SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

Public
(national + EC)

Structural
Funds
(CSF - SPD)

National
counterpart

CSF - SPD
contribution

Public total, net of the
Structural Funds contribu-
tion

1

768,9
405,6
611,5
36,8
1 822,8

2

84,4
106,8
87,8
24,3
303,3

3

81,4
74,9
91,3
12,5
260,1

4=2+3

165,8
181,7
179,1
36,8
563,4

5=1-2

684,5
298,8
523,7
12,5
1 519,5

1

952,8
480,4
631,7
18,2
2 083,1

2

111,8
149,1
118,8
13,8
393,5

3

63,6
111,3
103,4
4,4
282,7

4=2+3

175,4
260,4
222,2
18,2
676,2

5=1-2

841,0
331,3
512,9
4,4
1 689,6

(1) The breakdown of expenditure by category is shown for information only, as additionality is measured globally.

.

.

9
3
2
0
0
0

E
N

O

f
f
i
c
i
a
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J
o
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n
a
l

o
f

t
h
e

E
u
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o
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a
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o
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u
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i
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s

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C 68/12

EN

Official Journal of the European Communities

9.3.2000

37. The 1994 to 1999 period was affected by the general envi-
ronment of reductions in budget deficits. Table 3 shows the trend
in the gross-fixed capital formation of governments, which is a
good indicator of the trend of government investment expendi-
ture. This dropped considerably in most Member States and, as a
whole, fell from 3 % of GDP in 1991 and 1992 to 2,7 % in 1994
and to 2,1 % in 1998. This is due, in part, to privatisations in the
fields of transport, energy and telecommunications. It should be
noted that expenditure is measured in absolute terms for the cal-
culations made to verify additionality and that economic growth
is thus not taken into account.

38. The trend of expenditure on active measures to promote
employment could be used as an indicator, in particular in the
context of verifying additionality for Objectives 3 and 4. For the
period 2000 to 2006, this expenditure will be the basis for veri-
fication work on the newly defined Objectives 2 and 3. However,
as it has few statistical data at its disposal, the Commission makes
use of data published by the OECD. The Commission plans to
create a database, expected to become operational during the year
2000, to improve the quality, reliability and comparability of data
on employment policies. In addition, the trend in expenditure in
connection with active measures depends to a great extent on
unemployment rates. On the one hand, a considerable reduction
in unemployment may cause a substantial drop in expenditure on
active employment policies, as has been seen in Finland in the
context of Objectives 3 and 4. On the other hand, an increase in
the unemployment rate may also lead to a reduction in expendi-
ture connected with active measures, because of their replacement
by passive measures, as has been seen in the new German L(cid:228)nder.

DIFFICULTIES DETECTED AND THEIR CAUSES

Introduction

39. Analyses of the Commission(cid:146)s files, on-the-spot visits and
answers to questionnaires reveal numerous methodological dif-
ficulties. There are several reasons for this: the absence of a theo-
retical basis for the principle, which would have enabled a precise
methodological framework well known to all the participants to
be built up; verification procedures which were unsuitable for the
particular circumstances of the Member States and for the infor-
mation available; hastily carried out ex ante verifications and fail-
ure to examine critically the problems encountered for the 1989
to 1993 generation. In addition, the information needed for the
verification of the principle of additionality, notably for Objec-
tives 2 and 5b, is collected from numerous sources of various
kinds, which are not always reliable or recent. The result of this is
that too many estimates and hypotheses are included. The diffi-
culties observed by the Court demonstrate the need to make the
work done to verify additionality clearer, simpler and more effec-
tive.

Government investment expenditure (gross-fixed capital formation of governments, as % of GDP)

Table 3

1990

1991

1992

1993

1994

1995

1996

1997

1998

1,4

2

2,2

2,8

5

3,3

2,1

3,3

5,4

2,7

3,2

3,4

3,6

3

2,3

2,9

1,4

1,9

2,5

3,2

4,9

3,4

2,2

3,3

4,9

2,7

3,3

3,5

3,7

3

2,1

3

1,3

2,3

2,8

3,5

4

3,4

2

3

5,5

2,8

3,3

3,9

3,5

2,9

2,1

3

1,5

2,2

2,5

3,1

4

3,3

2,2

2,6

5,4

2,7

3,2

4

2,8

1,1

1,9

2,8

1,6

2

2,4

3

3,9

3,2

2,3

2,3

4,4

2,7

3,2

3,6

2,8

3,1

1,8

2,7

1,4

1,9

2,2

3,2

3,7

3,1

2,4

2,2

4,7

2,7

3

3,7

2,6

2,9

1,8

2,6

1,2

2,1

2

3,1

3

2,8

2,4

2,3

4,8

2,6

2,8

4,1

2,7

2,1

1,3

2,4

1,4

2

1,8

3,4

2,9

2,8

2,3

2,3

4,7

2,7

2

4,2

2,8

2,5

1,1

2,2

1,5

1,8

1,8

3,8

2,9

2,7

2,5

2,5

5,4

2,6

2

4,2

2,5

1,4

1,2

2,1

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK (1)

EU-15

(1) Budget year.
Source: COM(98) 682 final of 2 December 1998.

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Expenditure to be taken into account and compiling the data

It is not easy to determine the public structural expenditure,
40.
or comparable expenditure, which is to be taken into account.
The relevant expenditure is that which, by its nature and purpose,
is capable of being co-financed by the SFs, including expenditure
which has not been co-financed in this way (). For this reason, it
is theoretically necessary to identify all the expenditure which is
potentially eligible under the relevant Objective (18).

41.
In practice, some of the tables submitted look more like an
attempt to demonstrate capacity to spend Community assistance
or to prove the existence of the co-financing than a verification
of additionality. There are cases where the expenditure to which
ex ante additionality applies which was taken into account is more
or less identical to that in the SPD(cid:146)s financing plan. In several
countries, in the context of Objectives 3 and 4, only co-financed
expenditure is analysed.

42. The expenditure to be taken into account is expenditure by
the national, regional or local government administration, or by
bodies carrying out a public service function, whether they are
public, semi-public or para-public or, where relevant, by private
undertakings.

43. No Member State has been able to identify all of the sums
spent by these administrations, bodies and undertakings. Expen-
diture by the relevant private undertakings (19) is very rarely taken
into account despite its increasing importance within the context
of SF financing and investment in infrastructure. The extent to
which expenditure by public bodies and undertakings is taken
into account varies. In some cases it has been excluded com-
pletely, while in others significant efforts have been made to try
to identify and evaluate it.

44. As far as public administrations are concerned, the majority
of the Member States have encountered difficulties in obtaining
complete data on expenditure at the local level. In several cases, it
was not taken into account at all, in spite of its size. Sometimes,
only expenditure carried out at a central or regional level was
identified. For Objectives 3 and 4, many Member States only take
into account central government expenditure.

45.
Identifying the expenditure headings to analyse also poses
problems. For Objective 1, the Commission proposed in 1993 a
list of functional categories of expenditure based on the United
Nations statistical classification (COFOG). In fact, though, there is
no Member State which compiles information on additionality on
the basis of the available statistics. It is done instead on the basis
of budgetary data, which are classified in a different way. Identify-
ing the relevant expenditure is a difficult task, which has to be car-
ried out on a case-by-case basis.

If the budgetary expenditure of central government is com-
46.
pared with that of the regions and other bodies, it can be seen
that the same expenditure may be recorded several times, particu-
larly in the case of subsidies and transfers from one public admin-
istration to another. Only a consolidated public administration(cid:146)s
account could prevent them being counted twice (20).

47. For Objectives 2 and 5b, the expenditure headings chosen
are in some cases identical; in other cases they are similar and
occasionally they are totally different. Because of the regional
nature of Objectives 2 and 5b and the national nature of Objec-
tives 3 and 4, double counting of expenditure also occurs fre-
quently. In addition, cases occur where expenditure which should
not have been taken into account is included in the analyses. In
Germany, for Objective 1, unemployment benefit was treated as
structural assistance.

48.
It is almost impossible to identify all of the relevant expen-
diture (21). For this reason, all the Member States have introduced
simplifications. However, the rationale for these simplifications is
not always economic, but is based on the availability of data, with
the result that a consistent approach cannot be guaranteed.

49. For example, the French authorities only took into account
expenditure recorded in national plan contracts between the State
and the regions. In the SPD No 1, they undertook to transmit to
the Commission, before 31 December 1994, a new indicative
financial table including an estimation of all of the public expend-
iture eligible for the SFs, based on significant information cover-
ing most of the expenditure at stake in the eligible areas. This
table would then be used as the basis of the monitoring of addi-
tionality. It has not yet been sent.

In the case of Objectives 3 and 4, the Commission had
50.
already acknowledged the difficulty, or even the impossibility, of
establishing all of the expenditure in the ESF(cid:146)s sphere of interven-
tion (22). For this reason, it decided to take a representative sample
of bodies as a basis for the period 1994 to 1999. However, since
its underlying hypotheses were not confirmed, this approach does
not enable the observance of additionality to be verified correctly,
because comparisons are made between dissimilar elements. In
fact, assistance in the field of Objectives 3 and 4 is especially vari-
able, being dependent in particular on the business cycle, and it
was not stable during the two periods under comparison. In addi-
tion, choosing the bodies which are among the largest beneficia-
ries of the Social Fund produces results more relevant to the veri-
fication of co-financing than of additionality.

Overlapping of periods

51. Another major difficulty concerns the overlapping of peri-
ods. The verification of additionality must in fact enable the
expenditure trend during the programming period to be

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compared with a reference period. But the actual programming
period does not necessarily coincide with the calendar years taken
into consideration. In fact, in addition to possible extensions to
the period in order to fulfil commitments, there is a minimum
extension of two years for making the payments, which always
results in the simultaneous implementation of at least two peri-
ods.

52.
If the aim is to match up the payments with the program-
ming period to which they belong, it is necessary to wait for at
least two more years, and also to make numerous additional
adjustments in order to charge expenditure which was completed
after the calendar years to which the relevant CSF refers. This
method would be possible as far as co-financed expenditure is
concerned, but it does not solve the problem of non-co-financed
expenditure, which must also be taken into account.

53. The other possibility is to deal only with expenditure during
the calendar years under consideration, without reference to which
CSF each item belongs to. This approach is a pragmatic one, but
it departs from the rationale behind the operation of the SFs. This
second option was chosen by the Commission in 1996, when
some Member States had adopted the first approach.

54. However, the ex ante verifications for the 1994 to 1999
period and the tables included in the corresponding CSFs/SPDs
assumed that final payments for all the appropriations would be
made during these years. This hypothesis was unrealistic in the
light of the implementing provisions of the Funds. As a result, the
ex ante verifications of additionality were based on an illogical
premise. It should be noted that numerous measures from the
1989 to 1993 period have not yet been closed, that there have
been delays with regard to the 1994 to 1996 period for Objective
2 which have resulted in large amounts of the Funds being trans-
ferred to the 1997 to 1999 period, and that the majority of mea-
sures for the 1994 to 1999 period will not be closed until 2002.

55. Most Member States analyse national expenditure on the
basis of payments. Other Member States, such as France and Bel-
gium, use budgetary commitments, at either the forecast or imple-
mentation stage.

56. Paradoxically, one of the weakest aspects of additionality cal-
culations are the figures established for expenditure under the
CSFs/SPDs, both with regard to the SFs and their national counter-
parts. Several Member States merely set out in the various tables
the SF financing plans and those of their national counterparts as
submitted in the CSFs/SPDs.

57. The ex ante and on-going verifications were therefore carried
out on the basis of very disparate items of data which could not
easily be compared. For the years that have already been closed,
payments are still mixed together with forecasts or commitments.

Starting point and comparability of data

58. A key factor in the verification of additionality is the start-
ing point. The structural expenditure trend for a period must be
compared with the previous situation. For the 1989 to 1993
period, the Member States were left to choose between the 1987
to 1988 period or the average of these two years. Leaving it up to
the Member State to choose the reference period, when the vari-
ous results are already known, does not seem very well advised.
In certain cases, such as Objective 2 in the Netherlands or Objec-
tives 3 and 4 in France, the choice of reference period may be
decisive, in that one may oblige the auditor to conclude that the
principle has not been abided by and the other may have the
opposite effect.

59. For the 1994 to 1999 generation, the reference period used
is the previous one, except for the new Member States, which
were able to decide on a period during the ex ante verification. For
Objective 6 in the 1995 to 1999 generation, the reference periods
chosen by Sweden and Finland were 1991 to 1992 and 1993
respectively.

60. One difficulty concerns the comparison of data from one
period with data from the previous one, for the potentially eli-
gible expenditure in one period is not necessarily the same as that
for the previous period, when changes in the provisions of the
regulations are taken into account. The same is true of the eligible
regions and areas. To make it possible to make reliable compari-
sons the tables must be adjusted to the new circumstances; for
example, the tables for the 1989 to 1993 period must be recal-
culated, taking into account the newly-eligible areas and cat-
egories of expenditure.

61. There are cases where, within the context of the new defini-
tion of Objective 4, expenditure categories for this Objective were
included in the data for the 1994 to 1999 period but were ignored
for the previous period. The result of this is an artificial increase
in expenditure (23). The same phenomenon occurs frequently in
other Objectives for certain expenditure categories.

62. Privatisations are one of the specific economic circumstances
which must be taken into account within the context of addition-
ality. Several verification procedures provide that the national
authorities are to notify the Commission of any partial or total
privatisation so that, working in partnership, they may establish,
on a case-by-case basis, the procedures for taking account of them.
Little use has been made of these provisions. As a general rule,
and in spite of the size of the privatisation phenomenon, few con-
crete steps have been taken to ensure that the bases for compari-
son are homogeneous. In most cases, verifications have continued
to be carried out as if nothing had changed, in the absence of a
precise methodological framework. In other cases, the Commis-
sion left it up to the Member States to choose between excluding
or including the relevant expenditure in the tables for the two
periods. In cases where this expenditure has decreased, it is entirely
in the interest of the Member State, which is already aware of the
results, to exclude it. Given the significance of the areas involved
(telecommunications, energy, etc.), this step alone may bring

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about a substantial change in the final result. It should also be
noted that the private sector is, to an increasing extent, taking
over investments which were traditionally the responsibility of
the public sector (24). This phenomenon has not been taken into
account for the comparisons either.

63. The significant efforts made by several Member States to
improve their methodology in recent years have not always been
accompanied by adjustments in respect of previous years, in par-
ticular the reference period, because of the complexity and cost
of doing so. For this reason, it is difficult to make correct com-
parisons, and extrapolations and estimates have had to be made.

have not dealt with this important issue. Few Member States, with
the exception of those which are eligible in their entirety under
Objective 1, took Community initiatives into account. While it is
true that identifying these initiatives and breaking them down on
a geographical basis cannot easily be done, the majority of the
Member States simply ignored the issue. As a result, assistance
which comes under this type of programme is classified as being
wholly nationally financed, so that the Member State(cid:146)s structural
assistance is artificially inflated. In addition, in two Member States
(F and UK), Community initiatives were duly taken into account
for the reference period (1989 to 1993), but not for the period
subject to verification (1994 to 1999), further distorting the
results.

Geographical breakdown of expenditure

CONCLUSION

64. For the geographical breakdown of expenditure, taking into
account the difficulty of identifying it by eligible area under
Objectives 2 and 5b, the Commission has agreed to a pragmatic
approach, which involves allocating regional or even national
expenditure to the relevant areas mainly in proportion to their
population or their surface area. This method compromises the
reliability of the verification of the principle of additionality
within the context of Objectives 2 and 5b.

65. The starting hypothesis is that structural expenditure is
divided equally between the eligible and non-eligible areas. This
is a simplification which, of necessity, gives rise to overestimates
or underestimates and thus makes it impossible to determine
whether, in the eligible areas, the SFs have replaced any national
expenditure or not.

66. The estimates made in allocating expenditure to the eligible
areas give results which are on occasion highly debatable: in
France, the method used results in the expenditure of one eligible
area being higher than that of the whole region for some cat-
egories; in the United Kingdom, the breakdown of rural expendi-
ture over a mainly urban population results in the allocation to
certain areas of expenditure lower than that of the SPD on its
own; in Italy, the expenditure is broken down globally, on the
basis of the eligible population for the 1994 to 1999 period, and
not region by region; moreover, for Objective 5b, it is compared
to the expenditure for the 1989 to 1993 period, calculated on the
basis of the eligible population for that period, which was, in the
main, smaller.

67. Some confusion concerning the eligible regions and areas
has also been detected. In Italy, expenditure for two areas which
were not eligible under Objective 2 (Trento and Bolzano) was
included. For Objective 5b for the 1994 to 1999 period, the
regions examined initially were those which had been eligible in
the previous period.

68. The treatment of Community initiatives and other Commun-
ity measures also poses many problems. The ex ante verifications

69. Although the principle of additionality (non-replacement of
national expenditure by Structural Funds appropriations) is rela-
tively clear, considerable difficulties have been encountered in its
application in practice because of the limited development of
concepts and methodology relating to its content. The partner-
ship between the Commission and the Member States has not
succeeded in finding effective procedures for verifying the prin-
ciple of additionality. In short, it is necessary for the content of
the principle of additionality to be properly established by seek-
ing appropriate, fixed methodology which would make verifica-
tion of the principle feasible. Furthermore, the Commission ought
to provide itself with the tools needed to analyse the consistency
and plausibility of the data sent in by the Member States.

70. The obligations imposed by the regulations on the Member
States to maintain structural expenditure and to provide the Com-
mission with the appropriate financial data have not been backed
up by sanctions or other legal consequences.

71. None of the Member States identify and register all the struc-
tural assistance interventions in the eligible regions by national,
regional and local government, bodies carrying out a public ser-
vice function and, under certain conditions, public and private
undertakings. This is done solely for the purpose of calculating
the additionality. Considerable individual efforts are made in vari-
ous Member States to attempt to record all cases of assistance, but
because of the size of the task the results can never be considered
reliable. In addition, it is difficult to verify the whole process
because of the large number of estimates and hypotheses included
therein.

72. The quality of the verification is also dependent on the num-
ber of eligible regions/areas and the number of participants. For
example, the task is easier in the countries which are eligible in
their entirety under Objective 1. When the eligible regions/areas
do not correspond to any statistical or administrative divisions,
the estimates made lead to artificial results.

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73. Verification of the principle of additionality is an isolated
task which is not integrated within the framework of either moni-
toring or evaluation. The efforts made by the Member States and
the Commission to verify the principle, which are often costly in
terms of human and physical resources, are of little use if no prac-
tical conclusions can be drawn from them. In addition, deficien-
cies concerning the organisation and coordination of the Com-
mission departments reduce the effectiveness of these individual
efforts.

74. The operation of the Structural Funds is based on the prin-
ciple of programming, as seen in the various plans (regional
development plans, regional and social conversion plans, etc.)
drawn up for each Objective. The difficulties detected reveal the
need to search harder for appropriate tools and to improve the
budgetary and statistical data, particularly at the regional level, so
that programming of a high quality and a sound analysis of the
trends in structural assistance can be produced.

In view of the difficulties detected, on the eve of the new
75.
2000 to 2006 programming period and in the light of the new
regulatory provisions governing the Structural Funds, which were
adopted on 21 June 1999 (25), the Commission, in partnership
with the Member States, ought to define procedures for verifying
additionality that are simpler, more concrete and more workable.
They should be clearly set out in the implementation provisions
of the CSFs and SPDs when these are being drawn up, thus
enabling the principle of additionality to be better integrated into
the programming framework. Verification of the principle of
additionality should also be closely coordinated with the pro-
cesses of monitoring and evaluation. Verification procedures must
be more suitable for use with the budgetary and statistical infor-
mation that is available. If these steps are not taken, it will not be
possible to carry out the ex ante evaluations of additionality for
the new generation under the right circumstances, and the efforts
made by the Commission and the Member States will once again
be in vain. Moreover, if financial sanctions or other penalties are
to be applied, they should be based on precise criteria, in accord-
ance with the provisions of the regulations.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 9
December 1999.

For the Court of Auditors

Jan O. KARLSSON

President

NOTES

(1) The principle of additionality is defined in Article 9 of Council Regu-
lation (EEC) No 4253/88, as amended by Regulation (EEC) No 2082/93
of 20 July 1993 (OJ L 193, 31.7.1993, p. 20):

(cid:145)1.
In order to achieve a genuine economic impact, the Structural
Funds and the FIFG appropriations allocated in each Member State
to each of the Objectives under Article 1 of Regulation (EEC) No
2052/88 may not replace public expenditure on structural or com-
parable expenditure undertaken by the Member State in the whole
of the territory eligible under an Objective.
2.
For this purpose, in establishing and implementing the Com-
munity support frameworks, the Commission and the Member
State concerned shall ensure that the Member State maintains, in
the whole of the territory concerned, its public structural or com-
parable expenditure at least at the same level as in the previous
programming period, taking into account, however, the macro-
economic circumstances in which the funding takes place, as well
as a number of specific economic circumstances, namely privatisa-
tions, an unusual level of public structural expenditure undertaken
in the previous programming period and business cycles in the
national economy.
The Commission and the Member States shall also agree, in estab-
lishing the Community support frameworks, the arrangements for
verifying additionality.
3.
To permit verification of the principle of additionality, the
Member State shall provide the relevant financial information to
the Commission at the time of the submission of the plans and
regularly during the implementation of the Community support
frameworks.(cid:146)

(2) Council Regulation (EEC) No 724/75 of 18 March 1975 establishing a
European Regional Development Fund (OJ L 73, 21.3.1975, p. 1).
(3) Council Regulation (EEC) No 1787/84 of 19 June 1984 on the Euro-
pean Regional Development Fund (OJ L 169, 28.6.1984, p. 1).

(4) COM(98) 131 final of 18 March 1998.
(5) See the Commission Legal Service(cid:146)s note of 20 January 1994 on this

subject.

(6) For example, the procedures established in the Objective 1 CSFs and

SPDs for the 1994 to 1999 period.

(7) Annual Report concerning the financial year 1996 (OJ C 348,

18.11.1997, paragraphs 7.30 to 7.34).

(8) For example, at the beginning of 1999, the Spanish authorities had
not been informed of the Commission(cid:146)s reaction to the ex post veri-
fications for the 1989 to 1993 period for Objectives 1, 2 and 5b, the
results of which had been given to the Commission at the end of
1995.

(9) Communication to the Committee on the current situation in the
field of verifying additionality. Item 5 of the agenda for the 25th
meeting, 18 October 1995.

(10) Annual Report. Additionality Objectives 3 and 4, 1990 to 1993. Audit

and Inspection Sector - DG V. B.1, 1995.

(11) Seventh Annual Report on the SFs (1995), p. 22 - ISBN 92-827-

8942-X, November 1996.

(12) On 15 May 1995, the Commission sent a letter to all the Member
States reminding them of their obligations concerning ex post verifica-
tion, but this letter was only in respect of Objectives 1 and 2.
(13) Annual Report. Additionality Objectives 3 and 4, 1990 to 1993. Audit

and Inspection Sector - DG V. B.1, 1995.

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(14) For France, information on the execution of ESF financing for 1987
to 1989 or on 1993 expenditure was missing. For Italy, only data on
the two regions were analysed. For two other countries (DK and NL)
the same report spoke of various circumstances limiting the validity
of the conclusions.

(15) Council Regulation (EEC) No 2328/91 of 15 July 1991 on improving
the efficiency of agricultural structures (OJ L 218, 6.8.1991, p. 1).
(16) Council Regulation (EC) No 950/97 of 20 May 1997 on improving
the efficiency of agricultural structures (OJ L 142, 2.6.1997, p. 1 to
21).

(17) Statement on Article 9, recorded in the minutes of the Council meet-

ing of 20 July 1993.

(18) A distinction should always be drawn between three different con-
cepts: expenditure potentially eligible under the provisions of the
regulations, expenditure eligible for co-financing under the forms of
assistance adopted and expenditure actually co-financed.

(19) Declaration on Article 9 in the minutes of the Council meeting of 20

July 1993.

(20) The fact that there is no consolidated account of this kind is one of

the reasons given by the French authorities for not using the meth-
odology suggested by the Commission.

(21) For example, the Spanish authorities considered that there were more
than 2 000 million items of data that ought to be taken into account
(reply to the questionnaire sent by the Court).

(22) Annual Report. Additionality Objectives 3 and 4, 1990 to 1993. Audit

and Inspection Sector - DG V. B.1, 1995.

(23) In Spain, the tables for Objectives 3 and 4 show a considerable
increase in national government expenditure from one period to the
next. This is mainly due to the fact that approximately 37,5 % of the
total expenditure for the new period is compared with the result
posted for the expenditure for the previous generation, namely zero.
(24) See the Communication from the Commission: (cid:145)Government invest-
ment in the framework of economic strategy(cid:146). (COM(98) 682 final of
2 December 1998).

(25) Article 11 of Council Regulation (EC) No 1260/1999 of 21 June 1999
laying down general provisions for the Structural Funds (OJ L 161,
26.6.1999, p. 1).

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THE COMMISSION(cid:146)S REPLIES

SUMMARY

Introduction

The Commission welcomes the fact that the Court of Auditors has undertaken a major examination of addi-
tionality, which is one of the four key principles on which the Structural Funds are based, along with concen-
tration, partnership and programming.

Summary of the main findings

With respect to the modalities of verification, the basic concept of additionality is rather simple while its imple-
mentation is more difficult. The Commission agrees that the lack of sanctions in cases of non-compliance with
the principle of additionality is a major weakness and regrets that Member States have rejected a Commission
proposal for such sanctions in the new Regulation.

In order to avoid disproportionately high administrative costs, the modalities of verification agreed between
the Commission and the Member States have to be pragmatic (cid:151) within a well-defined framework of minimum
methodological requirements (cid:151) to arrive at acceptable yet workable solutions adapted to the specific situa-
tions of individual Member States.

As regards methodological difficulties, which the Court of Auditors has rightly highlighted in its report, many
of these will be resolved to a great extent by the new provisions on additionality for the next programming
period. These provisions, including a reduction of the number of verifications and the simplification of the
system in Objective 2 and 3 regions, are intended to facilitate the application and verification of the addition-
ality principle while preserving the basic idea of the non-replacement of national spending by Community
funding.

Conclusions

Regarding the Court(cid:146)s main conclusions the Commission(cid:146)s comments are as follows.

(a) While the basic concept of additionality is relatively straightforward, its actual implementation clearly
involves some methodological complexities. However, most of these have been overcome in partnership
between the Commission and the Member States through pragmatic solutions within a clear methodological
framework.

(b) The Commission agrees that the absence of a sanctioning mechanism in the case of non-compliance with
the principle of additionality is a major weakness and regrets that its initial proposal in the new general Regula-
tion on the Structural Funds to link the verification of additionality to the allocation of the performance reserve
has been rejected by the Member States.

(c) The simplifying methodologies applied to avoid disproportionate administrative costs do not necessarily
reduce the overall reliability of the verification of additionality.

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(d) and (e) Many regions consider the verification of additionality to be an extremely important source of
information and a political tool to avoid reductions of national expenditure in the regions. The organisational
structure of the Commission obliges several services to deal with different aspects of the same matter, a situ-
ation that is certainly not unique to additionality. In regard to organisation and coordination, the Commission
wishes to underline the frequent contacts between the officials of the different Commission services and
between officials of the Commission services and the national authorities in the context of meetings of the
Monitoring Committees.

(f) The modalities for the verification of additionality in the forthcoming programming period as introduced
in the new Regulation will be more simple, concrete and operational. As in the past, the Commission(cid:146)s services
and the national authorities will find in partnership pragmatic solutions adapted to the specific situation of
the Objectives and the Member States.

INTRODUCTION

4. The 1993 general Regulation on the Structural Funds intro-
duced a clear definition of additionality and the general rules to
be respected by the Member States. Regarding derogations, these
were included at the insistence of the Member States. It should be
emphasised however that, in practice, such derogations are rarely
used.

5. The Commission underlines the usefulness of its declaration
on the modalities of verification of additionality which is con-
tained in the minutes of the Council(cid:146)s meeting of 20 July 1993
concerning the adoption of the Regulations. Notwithstanding its
(cid:145)non-binding(cid:146) nature, the document provides a basic framework
for the practical verification of additionality and, as such, has not
been contested by the Member States. The key provision of the
declaration is that additionality takes place globally at the level of
each Member State, and not at the level of each regional pro-
gramme.

6. The Commission shares the Court(cid:146)s concern at the absence of
effective sanctions for non-compliance with the principle of addi-
tionality. In this regard, it regrets that its initial proposal in the
new general Structural Funds Regulation to link the verification
of additionality to the allocation of the performance reserve has
been rejected by Member States.

administrative burdens by striking a balance between the need for
equal treatment and the need for flexibility to take account of the
specific circumstances of the different Objectives, Member States
and regions. The standard text in the CSFs and SPDs only reflects
the legal undertaking to comply with the Regulation and not the
details particular to each case.

General information explaining the common procedures and
methodology for the verification of additionality for all Objectives
was submitted to the Member States by letter of 6 August 1990
from the Secretariat-General and for Objective 1 by letter of 30
March 1993 from DG XVI. Information on the verification of
additionality for Objective 1 in the period 2000 to 2006 was sent
to Member States in August 1999.

8. The preparation of financial information necessary for the
verification of additionality and its submission to the Commis-
sion is the responsibility of the Member States. The Commission
recognises that certain Member States have difficulties in apply-
ing the system and has sought to take account of such difficul-
ties, notably on the basis of experience during the previous pro-
gramming period. Considerable improvements have been achieved
in 1994 to 1999 in comparison with 1989 to 1993.

PROCEDURES FOR VERIFYING ADDITIONALITY

7. The Commission wishes to underline that there has been a
considerable process of information, discussion and negotiation
with the Member States regarding methodological issues relating
to additionality. The aim has been to avoid disproportionate

With regard to Objective 1 in particular, and with just one excep-
tion which was subject to special requirements, the financial tables
provided were complete and contained sufficient detail and justi-
fication to allow the identification of the eligible expenditure to
be taken into account for the verification of additionality. In the
case of Objectives 2 and 5b, where the available information was
considered inadequate to establish an ex ante verification, (cid:145)suspen-
sive clauses(cid:146) were introduced in the programming documents.

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9. With regard to ongoing monitoring of the verification of
additionality, this takes place on the basis of financial informa-
tion prepared by the Member States and submitted to the Com-
mission following the same presentation as used for the ex ante
evaluation.

10. With regard to the procedure to be adopted when compli-
ance with additionality is in doubt, it is necessary to recognise
that the statutory provisions provide the Commission with very
few powers to deal with the matter.

Suspensive clauses

18 to 19.
In order not to delay the adoption of programmes for
Objectives 2 and 5b due to the absence of technical information
on additionality which is often difficult to prepare, the services
had recourse to the use of (cid:145)suspensive clauses(cid:146). The intention was
to provide the Member States with some extra flexibility in regard
to the provision of information rather than proceed with a formal
suspension of payments under the relevant provision of the Regu-
lation.

IMPLEMENTATION AT THE COMMISSION

20.
In order to facilitate the rapid payment of amounts due,
information regarding the removal of (cid:145)suspensive clauses(cid:146) was fre-
quently communicated to the Member State in an informal man-
ner.

Allocation of responsibility for verification

12. Similar to most issues related to Structural Funds, the final
responsibility for the verification of additionality rests with the
DGs which are chef de file for each Objective, while DG II provides
technical and methodological assistance in view of its economic
and financial expertise.

21. The Commission agrees that, once a (cid:145)suspensive clause(cid:146) is
included in a programming document, it covers all the Funds
concerned. Therefore, it is acknowledged that no further pay-
ments should be made in such cases prior to the removal of the
clauses. As is pointed out by the Court, a number of payments
were undertaken while (cid:145)suspensive clauses(cid:146) were still in force,
although in some cases only shortly before their formal removal.
Procedures will be put in place to avoid any repetition of such a
situation for the next programming period.

Coordination

Procedures

14. Similar to DG XVI, DG VI asked DG II for its assistance in the
analysis of information submitted by Member States. This does
not imply that DG VI considered DG II to have full responsibility
for the verification of additionality.

22.
Information relating to the verification of additionality is
often presented to the Member States in the meetings of the
Monitoring Committees and thereafter summarised in the min-
utes. Methodological issues are often discussed in informal techni-
cal meetings of the persons in charge before or after the Monitor-
ing Committee meetings.

15. While it is true that responsibility for additionality in DG
XVI is divided between a horizontal unit and the geographical
units, with the involvement also of DG II, the system in general
operates satisfactorily. In this regard, it is necessary in particular
to take account of frequent day-to-day contacts between the offi-
cials concerned.

THE STATE OF PROGRESS OF WORK ON THE VERIFICATION
OF ADDITIONALITY

Introduction

16. The audit performed by DG V was useful and resulted in
improvements in the reporting of additionality data from the
Member States. In those Member States where no firm conclu-
sions could be drawn due to lack of information, an effort was
made by the operational units concerned to collect the necessary
data and to complete the exercise as far as possible. The Commis-
sion agrees that the information received from the Member States
on additionality should be examined in depth.

23. There is no particular requirement for the Commission to
publish regular information on additionality. In addition, part of
the information submitted by the Member States is of a confiden-
tial nature and inappropriate for publication. As explained above,
most of the communication on additionality is done in the con-
text of the Monitoring Committee meetings.

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The 1989 to 1993 period

24. Regarding the 1989 to 1993 period, the majority of Member
States has submitted the required tables. When the data have been
accepted by the Commission, this has in general been communi-
cated informally to the Member States in the context of meetings
of the Monitoring Committees.

28. The audit referred to by the Court was indeed concluded but,
due to lack of information from the Member States, no follow-up
was carried out (see response to paragraph 16).

The 1994 to 1999 period

29. The Commission wishes to underline that there was in fact
an intensive process of information, discussion and negotiation
between Commission and Member States regarding the ex ante
evaluation of additionality for the programming period 1994 to
1999.

30. The Commission has successfully obliged Member States to
increase the transparency of additionality verification procedures,
and has made considerable progress in improving the quality of
information on data sources and methodological issues in 1994
to 1999 in comparison with the 1989 to 1993 period.

31. The Commission agrees that comparisons of additionality
tables between Member States are difficult, mainly for two rea-
sons. Firstly, they ignore the significant differences between Mem-
ber States(cid:146) expenditure in Objective 1 regions regarding political
priorities, organisation and the relative importance of the Struc-
tural Funds. Secondly, they do not take into account the fact that
the Commission has never encouraged Member States to include
100 % of their development-related expenditure in the additional-
ity table, which would have meant an excessive administrative
burden. The Commission(cid:146)s priority has been to have as many
identical expenditure categories as possible in the current and ref-
erence additionality tables, which may require the exclusion of
some expenditure.

32 to 35. The Commission acknowledges that the quality of
information submitted by Member States on the intermediate
verification of additionality varies considerably across the Objec-
tives. This situation is clearly linked to the relatively heavy admin-
istrative burden of the present system of verification and will
undoubtedly be improved by the considerable simplification of
the system introduced for the next programming period.

37. The indicator of gross-fixed capital formation (GFCF) of the
general government as calculated by the system of economic

accounts differs from the indicator of eligible expenditure as used
for additionality which limits the value of comparisons between
the two indicators. In particular, GFCF does not take into account
most of the expenditure on human resources.

38.
In the next programming period the verification of addition-
ality for Objectives 2 and 3 taken together will be based on expen-
diture on active labour market policy and, where justified, other
actions in accordance with the new Regulation on the Structural
Funds (Article 11). However, the verification will continue to be
based on information submitted by Member States. A harmonised
statistical database on labour market policy, which is at present
being established by the Commission, will complement the infor-
mation submitted by Member States

DIFFICULTIES DETECTED AND THEIR CAUSES

Expenditure to be taken into account and compiling the data

39 to 50. The Commission agrees that the verification of addi-
tionality should be as clear, operational and simple as possible. In
its relations with the Member States the Commission has there-
fore sought to be pragmatic to arrive at acceptable yet workable
solutions adapted to their specific situations, within a well-defined
framework of minimum methodological requirements. For the
future, the verification of additionality will be facilitated by the
considerable simplification of the system introduced in the new
Regulations.

Overlapping of periods

51 to 57. The Commission would like to recall that additionality
relates only to the spending of the Member State, and entirely
excludes the contribution of the Structural Funds. Therefore,
issues such as overlapping spending periods, delays in closing
programmes, etc. are not very relevant in verifying additionality.
In practice the overlap of spending between programming
periods does not significantly affect the assessment of additional-
ity and only does so to the extent that the time profile of Struc-
tural Funds(cid:146) spending has an impact on the time profile of a Mem-
ber State(cid:146)s own expenditure. For most Member States, the time
profile of Structural Funds spending can be expected to only have
a marginal effect. Finally, the pragmatic approach chosen by the
Commission has the major advantage that it allows the verifica-
tion of additionality in real time rather than several years after the
event.

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Starting point and comparability of data

58 to 59. The reference periods adopted as the baseline for meas-
uring additionality resulted from discussions between the Com-
mission and the national authorities and were not chosen arbi-
trarily by the Member States alone. The aim was to find the most
recent and reliable reference period taking into account the spe-
cific situation of each country. In the case of Sweden, for example,
which at the time had a financial year that did not coincide with
the calendar year, the most recent reliable data were for the finan-
cial year 1991/1992, including data at the municipal level.

62. Although the private sector is sometimes undertaking invest-
ment in areas traditionally considered to be within the remit of
the public sector, it would be extremely difficult to extend the
verification of additionality to include private investment. Such an
exercise would involve the collection and scrutiny of the accounts
of a range of private companies (cid:151) which would be under no obli-
gation to provide either the national authorities or the Commis-
sion with relevant information.

Geographical breakdown of expenditure

64 to 68.
In view of the small size of many areas eligible under
Objectives 2 and 5b, for which there are hardly any budgetary
data available, the Commission had no alternative but to accept
the pragmatic approach of estimating the expenditure in these
areas. This unsatisfactory situation was one of the main reasons
for the Commission to suggest a shift to expenditure on active
labour market policies at the national level for the verification of
additionality for Objectives 2 and 3 for the programming period
2000 to 2006.

68. The Community Initiatives have not been included in the ex
ante verification of additionality due to their relatively small bud-
getary impact and because they had not been allocated at the time
of the ex ante verification.

CONCLUSION

69. The Commission agrees with the overall conclusion of the
Court that the basic concept of additionality is relatively clear,
whereas its actual implementation involves some methodological
complexities. In most cases, however, these difficulties have been
overcome in partnership between the Commission and the Mem-
ber States through the identification of pragmatic solutions within
a broad methodological framework. Furthermore, it is important,
when examining the verification of additionality, to distinguish
between the different Objectives of the Structural Funds: in par-

ticular, between Objective 1, which accounts for 70 % of Struc-
tural Funds(cid:146) spending, and the remaining Objectives. In applica-
tion of the principle of proportionality, the Commission has been
much more rigid in assessing additionality for Objective 1 and
somewhat more flexible for the other Objectives, in order to avoid
imposing a disproportionate administrative burden on national
and regional authorities which have to overcome major problems
of data availability. In this regard, the Commission notes that the
greater number of difficulties identified in the present report con-
cerns non-Objective 1 regions.

70. The Commission agrees that the instruments available to
sanction non-compliance with the principle of additionality, i.e.
information to the public and the suspension of payments, are
insufficient. The Commission regrets that its initial proposal in
the new general Structural Funds Regulation to introduce a work-
able sanctioning mechanism by linking the verification of addi-
tionality to the allocation of the performance reserve has been
rejected by Member States, which are at the same time both leg-
islator and party to the verification of additionality.

71.
In view of the impossibility of taking into account all public
eligible expenditure, the Commission and Member States have to
be pragmatic in order to arrive at acceptable yet workable solu-
tions adapted to specific situations within a well-defined frame-
work of minimum methodological requirements. The Commis-
sion has never urged Member States to include 100 % of their
development-related expenditure in the additionality table, which
would have meant an excessive administrative burden, but to have
as many identical expenditure categories as possible in the cur-
rent additionality table and the reference table.

72. The Commission agrees that the verification of additionality
is much easier in Member States totally eligible for Objective 1
assistance, which receive the major part of Structural Funds.
However, the unavoidable recourse to estimates for smaller regions
and areas does not necessarily imply that the results are not reli-
able. In the forthcoming programming period, these problems
will be reduced considerably by the new concept for the verifica-
tion of additionality for Objectives 2 and 3 together.

73. Regarding the integration of additionality with the monitor-
ing and evaluation systems, the Commission would underline the
frequent contacts between the officials of the different Commis-
sion services and between officials of the Commission services
and the national authorities in the context of Monitoring Com-
mittee meetings. The Commission agrees that there is room for
improvement in the coordination of the actions of the different
services of the Commission dealing with additionality and steps
have already been taken to that end. At the same time, it must be
acknowledged that there will always be some difficulties in cir-
cumstances where the organisational structure of the Commis-
sion obliges several services to deal with different aspects of the
same matter, a situation that is certainly not unique to additional-
ity.

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74. There is certainly a general need for better regional informa-
tion and statistics. The situation will improve in the coming years
through the new European system of integrated accounts (ESA
95) which obliges Member States to provide improved and
extended regional economic statistics. Regarding additionality, the
need for regional data will be reduced considerably in the next
programming period by the change of concept for the verifica-
tion of additionality for Objectives 2 and 3 together.

75.
In the Commission(cid:146)s view, the modalities for the verification
of additionality in the forthcoming programming period as intro-
duced in the new Regulation will be more simple, concrete and

operational. Article 11 of the new general Regulation and the
information provided to Member States in August 1999 respond
to many of the points raised by the Court. The frequency of veri-
fications is reduced to a total number of three (ex ante, mid-term
and at the end of the period), the verification of additionality for
Objectives 2 and 3 will take place at the national level on the basis
of expenditure on active labour market policies, the derogations
apply only to the determination of the reference level ex ante, fail-
ure to submit satisfactory information on additionality ex ante will
lead to a delay in the approval of programming decisions. As in
the past, the Commission(cid:146)s services and the national authorities
will find in partnership pragmatic solutions adapted to the spe-
cific situations of the different Objectives and Member States.