Own-initiative opinion of the Committee of the Regions on Reforming the budget. Changing Europe
Date: 2008-04-09
Institutions: European Committee of the Regions
Subjects: Community budget, budget policy, financing of the EU budget

5.7.2008

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Official Journal of the European Union

C 172/1

III

(Preparatory Acts)

COMMITTEE OF THE REGIONS

74th PLENARY SESSION 9 AND 10 APRIL 2008

Own-initiative opinion of the Committee of the Regions on ‘Reforming the budget. Changing
Europe’

(2008/C 172/01)

THE COMMITTEE OF THE REGIONS

— considers it imperative to maintain a strong political and economic framework, with sufficient
resources in the medium to long term, in order to be able to give expression to the collective will to
achieve the goals which have been set,

— considers that the future Community budget must be based on the EU competences laid down in the
Lisbon Treaty and on the subsidiarity principle and must reflect the enlargement of the legal bases of
the Treaty and rejects the idea of competition between pre-existing policies on the one hand and the
new areas of European activity on the other, or new policies made necessary by new global chal-
lenges,

— suggests that the development of the budget should, rather, be considered in the light of gradual
in clear

progress towards integration, based on Community actions of an experimental nature,
contrast to the current trend to cut the size of the European budget,

— calls for the objective of exploiting the full potential of multi-level governance to be placed at the
heart of the strategy of the European budget review and points out that the design, programming, co-
financing and implementation of European policies can gain significantly from the contribution of
regional and local authorities,

— is particularly concerned that the renationalisation of Community policies could result in insufficient,
ineffective and incoherent responses at EU level and the loss of the leverage effect of the Union's
financial intervention,

— reiterates that a stable multiannual financial framework, covering significantly more than five years, is
an essential precondition for ensuring the effectiveness of the European Union's action and proposes
therefore that the programming period of the multiannual financial framework be extended to 10
years, allocating all the funds only for the first five years and reassigning the amounts kept in reserve,
for example 25 % as part of a genuine mid-term review; this approach would make it possible to
ensure consistency with the European electoral timetable,

— considers that the new system of financing the Community budget must be based on transparency
and on own resources which guarantee the principles of fairness, solidarity, stability, visibility, clarity,
accuracy and simplicity with as few exemptions as possible.

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Rapporteurs: Michel DELEBARRE — Mayor of Dunkirk (FR/PES)

Luc VAN DEN BRANDE — Member of the Flemish Parliament (BE/EPP)

Reference document

SEC(2007) 1188 final — Communication from the Commission — Reforming the budget, changing
Europe — a public consultation paper in view of the 2008/2009 budget review

Political recommendations

THE COMMITTEE OF THE REGIONS

EU budget review, strengthening Europe

1.
considers that, in order to respond in an ambitious way to
the expectations of Europeans, the EU budget review must serve
primarily to reinforce the democratic pact of trust which binds
the people to the Union, and thus to renew the partnership
between the institutions responsible for policies at the various
territorial levels;

points out that the European Union strives to create a
2.
global model for prosperity and cohesion, where a Europe-wide
political blueprint is reconciled with the preservation of identity,
and the promotion of participation and democracy at local and
regional level;

is convinced that

3.
the European Union's added value
resides in the peace, protection and stability it guarantees its citi-
zens; the opportunities it offers Europeans to develop their full
potential as individuals beyond national borders and at a Euro-
pean level; the creation of a European consciousness and soli-
darity between citizens of different nationality and culture
through the promotion of economic, social and territorial cohe-
sion; the creation of a space for Europeans to trade with each
other in a single market; and the pursuit of common approaches
to the challenges of the 21st century;

considers that the challenge of the budget review is to
4.
allow this economic and social model to progress, avoiding the
dismantling of its foundations and drawing more on Europe's
territorial wealth and its diversity, including cultural diversity, in
the interests of its cohesion;

5.
considers it imperative to maintain a strong political and
economic framework, with sufficient resources in the medium
to long term,
in order to be able to give expression to the
collective will to achieve the goals which have been set;

its multiannual

6.
draws attention to the value of the Community budget
which, being based on the principles of solidarity, the stability
of
framework and the conditions
attached to its benefits, is essential for ensuring the effectiveness
and continuity over time of the action of the European Union
as a whole;

financial

7.
is convinced that it is the multiannual financial framework
of the EU budget which ensures long-term strategic continuity

of the broad lines of European policy and provides certainty for
local investment;

8.
reiterates in this context its support for the new Treaty,
which represents progress in the process of European integra-
tion, with the reinforcement, updating or redefinition of policies
which are already at the centre of European integration and
with the communitarisation of other major policies;

considers that

9.
the future Community budget must be
based on the EU competences laid down in the Lisbon Treaty
and on the subsidiarity principle and must, wherever necessary,
reflect the enlargement of the legal bases of the Treaty and
rejects the idea of competition between pre-existing policies on
the one hand, the objectives of which are still relevant, and the
new areas of European activity on the other, or new policies
made necessary by new global challenges;

10.
suggests that the development of the budget should also
be considered in the light of gradual progress towards integra-
tion, based on the implementation of measures conducive to
social, economic and territorial cohesion;

11.
would like to see the future European budget being able
to accommodate Community actions of an experimental nature;

12.
firmly believes in the need to adopt a global vision of
public intervention and finances, against a general backdrop of
budget constraints, at European, national,
local and regional
level. Means of financing other than pure subsidies should also
be included, including the use of fiscal measures, and account
should be taken of the contribution of other financial partners,
such as the European Investment Bank;

considers that

13.
the European budget
the objective of
review is clear: equipping the European Union with financial
instruments appropriate to the political, economic, social and
territorial tasks and prospects conferred on it by the Treaties
and providing it with a simple and transparent system which
makes European added value clearly visible to the general
public;

14.
considers that Europe must seize this opportunity to
become a more coherent political entity, to which our fellow
citizens will be proud to belong, and which will give them
confidence in the future and in their relations with the rest of
the world.

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THE COMMITTEE OF THE REGIONS

The regional and local authorities, partners in changing Europe on the
ground

23.
considers that it is often up to the local and regional
authorities to coordinate the various national and European
policies, by combining the various sectoral policies on a regional
and urban scale;

15.
stresses that the new Treaty represents major progress in
terms of multi-level European governance, with the extension of
the subsidiarity principle to the local and regional levels and the
addition of the territorial dimension of cohesion. This reinforces
the link between the Union and its citizens and makes it
possible to go forward while respecting identities and diversity;

24.
stresses the need to achieve the objective of social,
economic and territorial cohesion, by assigning to it the neces-
sary financial resources, using as a basis the principles of soli-
darity, integration, multi-level governance and territorial coop-
eration already implemented in Europe and drawing on the
experience of extended institutional partnership already accumu-
lated;

16.
stresses that the partnership between the European insti-
tutions, the Member States and the regional and local authorities
constitutes a model of governance which is more appropriate to
our era, where opportunities and challenges are often local
while their repercussions are more widely felt;

25.
considers that the Treaty's new territorial cohesion objec-
tive gives an additional impetus to the process of designing and
implementing all the policies of the European Union on a terri-
torial basis. This impels us on the one hand to exploit the diver-
sity of our regions and, on the other hand, to seek solutions to
the disparities which persist at different levels of governance in
the European Union;

17.
points out that the design, programming, co-financing
and implementation of European policies can gain significantly
from the contribution of regional and local authorities, and in
particular from their transnational, interinstitutional and inter-
sectoral experience;

26.
calls for the objective of exploiting the full potential of
multi-level governance and the contribution of the regional and
local authorities to be placed at the heart of the strategy of the
European budget review.

18.
calls therefore for a credible European budget which
makes it possible to adapt the major European objectives to
specific local needs;

THE COMMITTEE OF THE REGIONS

The leverage effect of the Community budget

19.
draws attention in this context to the fact that, as a result
of a general trend towards devolution and decentralisation in a
number of our Member States, the regional and local authorities
have taken on more and more powers and responsibilities
which are essential for their intervention in the areas which are
most directly affected by the major challenges facing Europe;

27.
considers that the European Union is currently going
through a period of profound socio–economic change as an
enlarged and still growing Community and major global player,
and that
it has to face major environmental, energy-policy,
demographic, technological and security challenges;

20.
also points out that the local and regional authorities
have become leading public financial players on which the Euro-
pean budget can exert a considerable leverage effect in both
quantitative and qualitative terms. In 2004 they were already
responsible for more than 60 % of total public investment in
the enlarged Europe;

21.
agrees with the statement contained in the European
Commission's Fourth Report on Economic and Social Cohesion
that
in a large number of Member States responsibility for
public investment often lies as much with the local and regional
authorities as with central government. They are also respon-
sible for investment in the fields of education, housing, research
and development, transport, public infrastructure and environ-
mental protection. This trend has been reinforced over the last
decade;

28.
notes that, in the light of these changes and challenges,
the Member States are not always able to provide appropriate
responses separately;

29.
observes that, in most areas, the ‘open method of coordi-
nation’ has not yet demonstrated its ability to make good these
shortcomings, even when used in a complementary way;

30.
reiterates that common or Community policies and the
‘Community method’ are still an effective way of pursuing a
collective political objective;

31.
is particularly concerned that the possible — total or
partial — renationalisation of policies financed by the Union
could result in insufficient, ineffective and incoherent responses
at EU level, or in a lag between global changes and fragmented
developments on the ground;

22.
points out that, faced with the demand for integrated
and flexible implementation of European policies, the regional
and local authorities can translate strategic policies agreed at
European level into specific action, working together with the
European and national institutions;

32.
draws attention to the fact that the renationalisation of
Community policies would result in the loss of the leverage
effect which the Union's financial intervention brings by multi-
plying the beneficial
impact on the financing of the specific
measures implemented;

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33.
points out that renationalisation would also impede the
coherent and sustainable development of cross-border activities;

sustainable development,
Europe's territorial richness and cultural diversity;

fairness and inclusion, drawing on

34.
reiterates that the leverage effect of the Union's financial
intervention goes well beyond financial multiplication, which is
traditionally fed by systems of public co-financing; the leverage
effect, from the operational and financial point of view, is also
felt in the facilitation of public-private partnerships;

43.
calls for the Union, in order to promote its values and
achieve its political objectives, to work to make the political life
of the Union more democratic, promoting the development of
local and regional autonomy and of civil society;

also stresses that

35.
the lever of Community financing
supports the strategic orientation of other public investment
policies carried out locally. It helps to improve substantially the
programming and management capacities of public administra-
tions and private operators and it is an essential part of the
process of Community integration and of the public perception
of this;

points out that the new challenges make it necessary, on
44.
the one hand, to get to grips with globalisation and, on the
other hand, to ensure territorial cohesion throughout the Euro-
pean Union and at its frontiers;

36.
calls for an evaluation of added value which takes proper
account of the various levels of governance (European, national,
regional and local);

45.
stresses that, putting socio-economic gaps aside, the local
and regional authorities of Europe have to face similar chal-
lenges, taking account of the specific forms which these take in
different areas;

37.
notes that the added value of European financial inter-
vention may also derive from activities which are not necessarily
regarded relevant or priority at national or sub-national level,
such as, for example, cross-border cooperation;

recognises that, in this process, which must be based on
46.
a system of multi-level governance, the local and regional autho-
rities must also find room for exploiting their unused potential;

considers that added value is closely linked to the appli-
38.
cation of the additionality principle, according to which Com-
munity intervention must not be used as a pretext for with-
drawing financing at national level. The cohesion policy is an
example of this;

calls for recognition of the general

incentive value of
39.
Community budget
intervention which, by encouraging the
countries and regions lagging furthest behind to catch up with
the others and modernise, generates benefits for the whole
European socio-economic system.

THE COMMITTEE OF THE REGIONS

A budget reflecting the values of Europe, responding to major chal-
lenges and guaranteeing territorial cohesion

40.
recognises that Europe has to face major challenges, such
as cohesion and competitiveness against a background of inno-
in the quality and level of human
vation,
resources and employment, climate change, modernisation of
our energy model, demographic imbalances and migration pres-
sures and security in Europe and worldwide;

improvements

41.
stresses, however, that the Union's mission must not be
restricted to responding to new challenges but must also pursue
its objective of integration;

42.
therefore considers it essential that the Union continue
work on completing the internal market in the interests of

believes that

47.
must be able to ensure:

the new Community budget

framework

a. that the least developed European regions as well as specific
territorial entities with a permanent geographical handicap
are able to consolidate their convergence path, e.g. by
improving their competitiveness and thus ensuring more
and territorial development
balanced economic,
throughout the European Union;

social

b. that wherever regions lose eligibility for support, fair and
appropriate transitional arrangements are to be in place so
that the results which EU cohesion policy has helped to
achieve are not jeopardised. The regions concerned should be
given equal treatment throughout Europe, irrespective of the
Member States in which they are located;

c. that such regions also receive targeted support for the devel-
opment of skills, particularly in the field of innovation, as
these already play an important part in ensuring EU competi-
tiveness in a globalised world;

d. that priority is given to a European policy for sustainable
regional growth and competitiveness in which all EU regions
would participate. Such a policy would enable all local and
regional authorities to obtain appropriate strategic guidelines
and financial resources for achieving the innovative invest-
ment needed to encourage the adaptation of their commu-
nities to structural changes in the economy, society and tech-
nology, as well as to exploit the specific conditions and
potential of their territories in a global context, particularly
SMEs, which form the backbone of the European economy;

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e. that a solidarity-based policy can be established to ensure
equal access for all to infrastructure and services in the fields
of education and vocational qualifications in order to guar-
antee all our talented people the opportunity to profit from
the most advanced research opportunities. Local, regional,
national and European authorities need to join forces to
bring about a meeting at local level between the worlds of
academia, research and business in order to encourage their
networking at European and global level;

f. that freedom of movement, which underpins the European
integration project, is given a new impetus by stepping up
in trans-European transport networks. Policy
investment
must be used to promote sustainable transport,
links
between different transport systems and,
in particular, an
interconnected trans-European rail network, which would
help to reduce CO2 emissions and travel times and costs for
both passengers and goods. There is also a need to foster the
development of sustainable sea transport;

g. that all European territories are equally well-equipped to face
climate change, with the resources needed to prevent its
causes and to adapt to its consequences, in particular for the
the people and economic players hardest hit.
benefit of
is needed in sustainable development models
Investment
local opportunities and
which clearly take account of
constraints;

h. that

the Europe Union is equipped with a Community
energy policy that is based on solidarity between Member
States, security of supply and sustainability of generation,
transport and consumption models and respects the freedom
of Member States to choose energy providers The local and
levels are best placed to provide innovation and
regional
radical changes in consumer behaviour;

on cross-border cooperation, given its importance as a
means of consolidating peace,
identifying and establishing
joint goals and values, and promoting territorial cohesion.

THE COMMITTEE OF THE REGIONS

A reactive, effective, efficient and transparent budget

48.
considers that in the Lisbon Treaty the European Union
potentially has a more effective decision-taking mechanism to
determine the structure of the budget;

reiterates that a stable multiannual financial framework,
49.
is an essential
covering significantly more than five years,
the European
precondition for ensuring the effectiveness of
Union's action and for enabling players to plan their invest-
ments in the long-term and to carry out territorial development
projects;

financial

proposes therefore that the programming period of the
50.
multiannual
framework be extended to 10 years,
without allocating all the funds immediately. In order to ensure
consistency with the European electoral timetable, one possible
way forward could be to divide the period in two: funding for
the first five years would be fully allocated and there would then
be a mid-term review to reassign the amounts kept in reserve,
for example 25 %, to new expenditure in order to launch new
initiatives or reinforce those policies which have the greatest
need;

51.
considers that flexibility offers useful ways of maximising
the impact of Community spending and that it is necessary in
order to be able to adapt to any changes in the situation, but
that it also carries the risk,
if it is not properly managed, of
opening up the way to a multi-speed Europe;

i. that there should be a European response to the management
of migration flows, using the best of the solutions already
tried out at local and regional level. It is essential that those
facing emergencies locally on a day-to-day basis should be
able to count on European solidarity and cooperation;

considers that targeting mechanisms, such as those tried
52.
out for the 2007-2013 cohesion policy, can make it easier to
coordinate key policy objectives through different budget head-
ings;

j. that the local and regional authorities should be recognised
for their key role in the implementation of measures for
adapting to the effects of demographic change;

53.
calls for a specific percentage of the future Community
budget to be allocated to support for experimentation, with this
amount being separate from the resources earmarked for
backing up general measures;

k. that Europe should have modern, competitive, diversified
and sustainable agriculture which ensures European food
security and preference and maintains its presence in world
trade, without omitting the concept of Community prefer-
ence. Agriculture should be given the necessary support to
to become an instrument which improves our
enable it
quality of
future generations and
contributes to the fight against global warming, the preserva-
tion of our environment, biodiversity and the quality of our
countryside;

life, preserves that of

l. that Europe should be able to continue its neighbourhood
policy and carry out joint projects with more distant part-
ners. The Union's external relations should be able to count
on increasing transnational and devolved contributions from
the regional and local authorities. Emphasis should be placed

calls for clarification of

54.
the control mechanisms and
more direct and effective application of sanctions, where neces-
sary;

55.
reiterates the need to implement the partnership prin-
ciple practically during both the planning and implementation
phases of the Community budget;

56.
points out that the European Commission has launched
and developed the idea of tripartite contracts and agreements
on objectives, reiterates its proposal that these instruments be
revised and, on the basis of the lessons learned from the experi-
mental phase of tripartite agreements launched by the European
Commission, proposes the establishment of European territorial
pacts;

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57.
stresses that there can be no real partnership without a
financial contribution from each of the parties to the agreement;
proposes that the discussion of the question of the financing of
European territorial pacts focus on possible synergies between
the existing budget headings in the areas concerned and the
Structural Funds at European level, and the available budget
headings at local, regional and national
level, considering the
added value this could create; this should be done without estab-
lishing an additional Community regional policy financial
instrument or calling for additional financial resources for this
purpose;

considers that

58.
the European budget should aim for
greater transparency, reinforcing partnership at local level and
stepping up communication efforts at local, regional and Euro-
pean level.

THE COMMITTEE OF THE REGIONS

A new system of financing the Community budget

59.
Shares the view that Europe must reorientate its political
action framework and financial resources, aiming for a suffi-
ciently long time horizon, between 2020 and 2030;

points out that the agreed ceiling on own resources is

60.
currently set at 1.24 % of EU gross national income;

61.

notes that the EU budget:

a. has tended to shrink significantly throughout the previous

and current programming periods;

b. will, at the end of the 2007-2013 programming period, fall

below the level of 1 % of EU GNP;

62.
regrets that the gap between the resources actually avail-
able in the budget and the agreed ceiling on own resources
continues to grow;

draws attention to the fact that calculations of a ‘fair
63.
return’ have progressively trapped the Member States in a

Brussels, 9 April 2008.

narrow mindset which is far removed from the European ideal
and the interests of the people;

rejects any exacerbation of this mindset on behalf of the
64.
representatives of local and regional authorities. Such authorities
are the essential driving force behind wealth creation at national
level and which,
in a number of cases, are also institutional
players directly involved in drawing up national tax systems;

65.
considers that a qualitative jump in the system of finan-
cing the Community budget has become essential in order to
enable the various institutions concerned to share a forward-
looking view of the same budget;

66.
considers that the new system of financing the Com-
munity budget must be based transparency and on own
resources which guarantee the principles of fairness, solidarity,
stability, visibility, clarity, accuracy and simplicity;

67.
asks the institutions with budgetary powers to draw up
and implement a new financing formula which has as few
exemptions as possible and is aimed at achieving the objectives
that have been set out in connection with the promotion of the
economic and social model;

68.
announces its intent to continue to participate actively in
the European discussions and debates on the budget review, e.g.
in connection with the examination of the European Commis-
sion's review proposal;

considers that

the review of

69.
the EU budget and its
sources of financing must be accompanied by a strong and
transparent communication policy aimed at the general public
and the institutional and socio-economic actors most closely
concerned. In this way the people would be better informed as
to how their money is being used, which would bring them
closer to the institutions responsible for the management of
Community programmes and projects. The Committee is willing
to engage with the other institutions in this democratic effort.

The President

of the Committee of the Regions

Luc VAN DEN BRANDE