Opinion of the Committee of the Regions on ‘New Multiannual Financial Framework post-2013’
Date: 2012-10-09
Institutions: European Committee of the Regions
Subjects: administrative check, administrative formalities, budgetary procedure, commitment of expenditure, financial management, general budget (EU), interinstitutional cooperation (EU), simplification of formalities








C_2012391EN.01003101.xml










18.12.2012   


EN


Official Journal of the European Union


C 391/31





Opinion of the Committee of the Regions on ‘New Multiannual Financial Framework post-2013’
2012/C 391/07
THE COMMITTEE OF THE REGIONS






—


advises against putting off the agreement on the Multiannual Financial Framework (MFF) until after the beginning of 2013;










—


stresses that a considerable share of public investment in the Member States is conditional on the Structural Funds, and draws attention to the commitments made in the context of the Compact for Growth and Jobs adopted at the European Council on 28 and 29 June 2012;










—


supports, based on the Commission's updated proposal of 6 July 2012, the European Parliament's call for the next budget to represent 1.14 % of the EU's GNI (including the accession of Croatia);










—


regrets that the vast majority of subjects covered by the Council's negotiating box, including any form of macroeconomic conditionality, are ones which should be adopted by co-decision and not by the consent procedure;










—


condemns the fact that the method for distributing the national allocations and the capping levels for cohesion policy and rural development are included in the Council's negotiating box; it considers that this is an area for co-decision, and one where referral to the CoR is mandatory. It reserves the right to appear before the Court of Justice of the European Union if the European Commission does not introduce a legislative proposal on which the CoR has an opportunity to give an opinion;










—


welcomes the Council's current negotiating method whereby expenditure and resources are dealt with jointly in the negotiating box, and reiterates its support for the two new own resources proposed by the Commission: a VAT-based resource and the new financial transaction tax (FTT);










—


fully supports the Council's proposal to turn cohesion policy into a subheading rather than a sub-ceiling, and reiterates its request for an increase in the budget allocated to it (whose level should be at least constant with that for 2007-2013), and its support for the creation of a new category of "transition regions";










—


welcomes the Council's proposal to bring the Galileo, ITER and GMES programmes under heading 1, and reiterates its request for the European Globalisation Adjustment Fund (EGF) to be included in the MFF.










Rapporteur-general


Mercedes BRESSO (IT/PES), member of Piedmont Regional Council




Reference documents


Amended proposal for a Council Regulation laying down the multiannual financial framework for the years 2014-2020
COM(2012) 388 final
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on a Simplification Agenda for the MFF 2014-2020
COM(2012) 42 final




I.   POLICY RECOMMENDATIONS

THE COMMITTEE OF THE REGIONS






1.


takes note of the Commission's publication on 6 July 2012 of its amended proposal for a Council Regulation laying down the multiannual financial framework for the years 2014-2020, which takes into account the accession of Croatia and the calculations based on the most recent statistics (2007-2009);










2.


welcomes the adoption on 13 June 2012 by the European Parliament plenary session of a resolution on the multiannual financial framework and own resources, and is pleased to see the stress placed on the fact that 94 % of the EU budget is effectively an investment budget and that its administrative expenditure is proportionally extremely low; emphasises the multiplier and leverage effects of this investment, via private and public co-financing at local, regional and national levels; and stresses the irreplaceable role played by the EU budget as a stable multiannual public resource to support growth and jobs;





Current inter-institutional negotiations







3.


is gravely concerned about current developments in the negotiations at the Council regarding the total sum of the Multiannual Financial Framework (MFF), policy content and resources; there is a risk that these could compromise continued funding for the three cohesion policy categories. It therefore hopes that it will be possible to secure a positive outcome by the extraordinary EU summit on 22 and 23 November 2012. This could break the deadlock between the two co-legislators and thus help both prevent a damaging delay for the European Union and implement the Europe 2020 strategy for smart, sustainable and inclusive growth without delay;










4.


in this connection, stresses the evident inconsistency between the commitments made by the Member States in the context of the Compact for Growth and Jobs adopted at the European Council on 28 and 29 June 2012 and some of the positions taken in the negotiations;










5.


points out that the gravity of the economic and social crisis facing the EU makes it especially urgent for programming to begin in 2014, as this is the only way of delivering European funds that are vital for making investment in the Member States, regions and cities;










6.


stresses the shrinkage of the EU budget size in relation to the national budgets while at the same time the competences and tasks conferred on the Union by the Lisbon Treaty, in particular in the fields of external action (Article 27(3) of the Treaty on European Union), climate change (Article 191 TFEU), energy (Article 194 TFEU), sport (Article 165 TFEU), space (Article 189 TFEU), tourism (Article 195 TFEU) and civil protection (Article 196 TFEU) have been extended;










7.


stresses that a considerable share of public investment in the Member States is conditional on the Structural Funds, which account for over 30 % of all public investment in 13 Member States and over 60 % in six Member States;










8.


recognises that the Treaties (Article 312 TFEU) contain specific provisions to deal with the possibility of the MFF not being adopted before the legal bases of all the EU's multiannual expenditure programmes, apart from the first pillar of the Common Agricultural Policy (CAP), expire at the end of 2013; stresses that under these specific provisions, the various branches of the budgetary authority are legally obliged to pursue the negotiations; emphasises, however, that the options of either adopting new sectoral programmes without an MFF regulation or extending the existing programmes, would be extremely complicated;










9.


would advise against putting off the agreement on the MFF until after the beginning of 2013, as this would make it impossible to programme and allocate Common Strategic Framework funds after 2014, which would have a negative impact on the EU's economic, social and territorial cohesion. It considers that putting off the agreement on the MFF until after the beginning of 2013 would also cast doubt on the 2014-2020 programming period hitherto envisaged by the Commission, the European Parliament and the Council, and would, in particular, necessitate a reconsideration of the option advocated initially by the CoR of introducing a programming period of 5+5 years, following a transition period of one or two years;










10.


reiterates its previous position, namely that the EU must have a credible budget of at least 1 % so that it can achieve major European objectives in accordance with Europe 2020 goals and the needs of local and regional areas. It recalls that the Council set in 2000 the ceiling of own-resources at 1.29 % GNI in commitment and 1.23 % in payment appropriations, and underlines that since then the gap between the own-resources ceiling and the MFF ceilings has been constantly widening and stands at 25 %. It stresses, moreover, that the MFF only sets maximum levels of expenditure, while the EU annual budget has always remained far below these levels both in terms of commitments and payments. It consequently supports, based on the Commission's updated proposal of 6 July 2012, the European Parliament's call for the next budget to represent 1.14 % of the EU's GNI, including the accession of Croatia;










11.


welcomes the fact that the proposal to abolish the food aid programme for the most deprived has been removed in the 18 September 2012 negotiating box, but regrets the lack of clarity concerning the funding for this programme and reiterates its position that it should remain under heading 2 of the MFF;










12.


welcomes aspects of the Cyprus Presidency Issues Paper (30 August 2012) but has particular concerns about the proposals for discussion on cohesion policy, most notably on the eligibility, scope and coverage of the "safety nets" for regions and Member States; and rejects the disproportionate adjustments for transition and more developed regions;





Co-decision areas







13.


regrets that the vast majority of subjects covered by the Council's negotiating box (version of 19 June 2012), and in particular points 21 to 47 and 53 to 78 thereof, are ones which should be adopted by co-decision and not by the consent procedure; stresses that the European Parliament must be fully involved in the ongoing negotiations;










14.


condemns the fact that the method for distributing the national allocations and the capping levels for cohesion policy and rural development are included in the Council's negotiating box (points 30 to 45) but do not appear in the draft regulation laying down common provisions for the five Funds covered by the Common Strategic Framework; is also surprised that point 35 of the 18 September 2012 negotiating box makes the Europe 2020 strategy targets one of the criteria for deciding the weighting of Structural Fund allocations between the Member States; as well as raising the issue of whether these targets really reflect regions' development needs, this also raises substantial questions about governance and methodology, especially since this redistributive function was certainly not envisaged when the targets were set in 2010;










15.


considers that, in accordance with Article 177 TFEU, this is not only an area for co-decision: it is also one where referral to the CoR is mandatory; and therefore, in defence of the powers conferred on it by Article 263(3) TFEU, will further assess the legal background of this matter and reserves the right to appear before the Court of Justice of the European Union if the European Commission does not introduce a legislative proposal on which the CoR has an opportunity to give an opinion;










16.


following the opinions which it has adopted since the beginning of 2012 on the Commission's various legislative proposals, reiterates that:






a.


With regard to sub-heading 1b and the Funds covered by the Common Strategic Framework (CSF): it supports the proposal to establish a new category of "transition regions" and the need for account to be taken of the specific and unique situation of the outermost regions regarding access to structural funds, in line with the provisions of Article 349 TFEU (point 25 of the negotiating box); it supports a threshold of 300 km for European territorial cooperation, except for the outermost regions, to which the distance criterion will not apply (point 27, ibid.); it supports the creation of a "safety net", equal to at least two thirds of their allocation for the 2007-2013 period, for regions which will no longer come under the convergence objective (point 44, ibid.); it supports the Commission's proposals on co-financing rates, apart from a raising of the rate to 85 % for programmes under the "European territorial cohesion" objective, and endorses the increase in the co-financing rate for inter-regional cooperation in the outermost regions from 50 % to 85 % (point 46, ibid.); it supports continuation of the food aid programme for deprived people under heading 2 of the MFF rather than its inclusion in the European Social Fund under heading 1 (point 48, ibid.); it supports the establishment of a co-financing rate that is 10 percentage points higher for Member States facing temporary budgetary difficulties (point 47, option a, ibid.); it supports the creation of a CSF for the three Structural Funds and the Cohesion Fund, the EAFRD and the EMFF (point 65, ibid.); it supports pre-financing rates of 2 % in 2014, 3% in 2015 and 3 % in 2016 (point 75, ibid.); and it supports non-recoverable VAT being eligible expenditure for a contribution from the CSF Funds (point 78, option c, ibid.);










b.


With regard to heading 2: it supports more rapid convergence and a precise calendar for convergence between Member States (point 53, ibid.); capping of direct payments at EUR 200 000 rather than EUR 300 000 including greening, with tapering starting at EUR 100 000 instead of EUR 200 000 (point 54, ibid.), and a rate of 30 % for greening (point 56, ibid.); it supports the option of budgetary transfers from the 1st to the 2nd pillar (point 57, ibid.); it is, however, opposed to any transfer in the other direction, given the need to improve the budgetary balance between the two CAP pillars (point 58, ibid.); it supports the inclusion of transition regions in the rural development regulation (point 62, ibid.); it opposes the creation of a new reserve, as proposed, for crises in the agriculture sector (point 64, ibid.);














17.


reiterates, with regard to the funds allocated to the European territorial cooperation objective, its proposal that the funds should be allocated by cooperation programme and not by Member State; consequently, calls for a review of point 40 of the 18 September 2012 negotiating box, particularly since, as things currently stand, the result of negotiating solely on the allocation of the cross-border and transnational cooperation strands is that interregional cooperation is considered only after these two strands;










18.


supports the proposal to make more use of lending, rather than relying predominantly on non-repayable subsidies, in order to stimulate the involvement of beneficiaries; also considers that the loan repayments should then be made available once again, through the use of revolving funds;





New own resources







19.


reiterates its call for a reform of the present own resources system as a means to reduce Member States’ direct contributions to the EU budget whilst increasing the EU’s own resources available to tackle future challenges (1) and respond to the need to abolish the current financial corrections and exemptions; therefore considers that in the interests of transparency, balance and sustainability, the new multiannual financial framework must, as the European Parliament has said, be based on an agreement on new own resources;










20.


welcomes the Council's current negotiating method whereby expenditure and resources are dealt with jointly in the negotiating box, and reiterates its support for the two new own resources proposed by the Commission: a VAT-based resource and the new financial transaction tax (FTT);










21.


in this context, urges some Member States not to disadvantage their populations, businesses and local and regional authorities by refusing to commit to the new financial transaction tax, as any such refusal would lead to reinforced cooperation and the creation of a two-speed budgetary Europe;










22.


considers that an FTT under the reinforced cooperation procedure could legally provide the basis for a new EU own resource and that countries participating in it could transfer some of the revenue collected to the EU budget. However, these countries' contribution to the GNI-based budget would have to be reduced by an equivalent sum, without affecting the rules used to calculate the national contributions of non-participant countries;










23.


reiterates its support for simplification of the extremely complex system of rebates and corrective measures, and for replacement of the current rebate system by a general correction mechanism;





Macro-economic conditionality







24.


is surprised that the Commission's "technical" amendment to the Council regulation includes such a fundamental element as the extension of macro-economic conditionality from the Cohesion Fund to all five CSF Funds (see Article 8 of the amended draft regulation);










25.


reiterates its clear, firm opposition to any form of macro-economic conditionality, and considers that the option of extending it to all budget headings as requested by some Member States is inapposite;










26.


points out that this is a matter for co-decision and should be decided in the context of the regulation laying down common provisions for the five CSF Funds;





Structure, duration and flexibility of the multiannual financial framework







27.


fully supports the Council's proposal to turn cohesion policy into a subheading rather than a sub-ceiling, but urges that the Connecting Europe Facility be excluded from this subheading, given its different nature; regrets once again that the opportunity has not been taken to group all EU territorial development financing (i.e. the five CSF Funds) under a single heading;










28.


reiterates its call for flexibility within each heading and the creation of a flexibility reserve to which appropriations or margins not used in the first half of the period could be transferred, rather than returning them to the Member States; believes that a flexibility reserve of this kind could, in particular, be used as an instrument for macroeconomic and financial interventions to anticipate asymmetric shocks within the European Union;










29.


again notes that the proposal provides for an "assessment" of the implementation of the multiannual financial framework in 2016, and reiterates that it would be advisable to conduct a full-scale mid-term review in 2017 (of which the proposed assessment would form a part);





Capping of commitments and payments







30.


reiterates, with regard to the sums for the main MFF subheadings:






a.


its support for the Commission proposals on the Connecting Europe Facility (EUR 50 billion), the Horizon 2020 programme (EUR 80 bn), the first two pillars of the CAP (EUR 372 bn at constant prices), the Creative Europe programme (EUR 1,6 bn) and the instruments for financing the EU's external action (EUR 70 bn);










b.


its request for an increase in the budgets for cohesion policy (whose level should be at least constant in real terms with those laid down in the 2007-2013 financial perspective), the European Maritime and Fisheries Fund (EMFF) and the LIFE programme, and its request for a more balanced budgetary distribution between the two CAP pillars so as to support rural development;









Programmes outside the multiannual financial framework







31.


reiterates its request for the European Globalisation Adjustment Fund (EGF) to be retained and included in the MFF but, like the European Parliament, insists that due to its non-programmable nature it should be entered in the budget over and above the ceiling of the relevant heading; equally opposes any extension of its scope to offset the effects of bilateral or multilateral trade agreements on agricultural activity (point 95, ibid.);










32.


welcomes the Council's proposal to bring the Galileo, ITER and GMES programmes under heading 1 of the multiannual financial framework (Annex I, ibid.), as requested in its Opinion on the new multiannual financial framework post-2013;










33.


calls for the sums corresponding to the abovementioned reserve mechanisms also to be transferred to the MFF;





Simplification programme







34.


considers that the calls by both the Member States and the European Parliament for better quality expenditure have not been satisfactorily addressed for the moment, as the response involves new monitoring and audit procedures, more complex procedures and an excessive focus on performance and quantitative take-up, rather than on high-quality strategies; in the final analysis, this will lead to growing centralisation and will disadvantage the lower tiers of governance vis-à-vis the higher tiers;










35.


hopes that the communication on the quality of expenditure announced by the Commission will make it possible to differentiate accounting of public investment spending under the stability pact;










36.


opposes the excessive use of delegated acts by the Commission, for instance those proposed for the indicative actions of the Common Strategic Framework; this will exclude the CoR from the EU's consultative and decision-making procedure, when crucial issues for local and regional authorities may in fact be being discussed;










37.


however, fully agrees with the Commission that EU simplification will only be truly effective if it is backed by a parallel drive at national and subnational level, while stressing that the main effort has to be made at national level;










38.


welcomes the rationalisation of programmes proposed in the context of the multiannual financial framework, particularly the reduction in the number of financing programmes proposed and the grouping of programmes and sub-programmes in a number of fields;










39.


advocates closer involvement of the European Investment Bank in implementing projects financed by the Structural Funds.




II.   RECOMMENDATIONS FOR AMENDMENTS


Amendment 1

COM(2012) 388 final
Third "Whereas" clause






Text proposed by the Commission


CoR amendment




Special instruments, the Emergency Aid Reserve, the European Union Solidarity Fund, the Flexibility Instrument, the European Globalisation Adjustment Fund, the Reserve for crises in the agriculture sector and the Contingency Margin, are necessary to allow the Union to react to specified unforeseen circumstances, or to allow the financing of clearly identified expenditure which could not be financed within the limits of the ceilings available for one or more headings as laid down in the financial framework. Specific provisions are therefore necessary to provide for a possibility to enter in the budget commitment appropriations over and above the ceilings set out in financial framework where it is necessary to use special instruments.


Special instruments, the Emergency Aid Reserve, the European Union Solidarity Fund, the Flexibility Instrument,  and the Contingency Margin, are necessary to allow the Union to react to specified unforeseen circumstances, or to allow the financing of clearly identified expenditure which could not be financed within the limits of the ceilings available for one or more headings as laid down in the financial framework. Specific provisions are therefore necessary to provide for a possibility to enter in the budget commitment appropriations over and above the ceilings set out in financial framework where it is necessary to use special instruments.





Reason

As the EGF should be incorporated in the MFF and the reserve for crises in the agriculture sector should be replaced by a proper regulation, these two financial instruments should be deleted from the list.

Amendment 2

COM(2012) 388 final
Article 8






Text proposed by the Commission


CoR amendment




In the case of the lifting of a suspension of budgetary commitments concerning the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund in the context of macroeconomic conditionalities linked to the coordination of Member States' economic policies, the Council, in accordance with the Treaty and in compliance with the relevant basic act, shall decide on a transfer of suspended commitments to the following years. Suspended commitments of year n may not be re-budgeted beyond year n+2.


In the case of the lifting of a suspension of budgetary commitments concerning  the Cohesion Fund in the context of macroeconomic conditionalities linked to the coordination of Member States' economic policies, the Council, in accordance with the Treaty and in compliance with the relevant basic act, shall decide on a transfer of suspended commitments to the following years. Suspended commitments of year n may not be re-budgeted beyond year n+2.





Reason

As has been the case since its origin, the Cohesion Fund should continue to be the only fund affected by macro-economic conditions.

Brussels, 9 October 2012.


The President of the Committee of the Regions

Ramón Luis VALCÁRCEL SISO




(1)  Point 65 of the Opinion of the Committee of the Regions on The new multiannual financial framework post-2013, adopted at the 93rd plenary session of 14-15 December 2011