Opinion of the European Committee of the Regions — The Multiannual Financial Framework package for the years 2021-2027
Date: 2018-10-09
Institutions: Commission for Territorial Cohesion Policy and EU Budget, European Committee of the Regions
Subjects: budgetary procedure, commitment of expenditure, financial control, financial management, general budget (EU), interinstitutional cooperation (EU), multiannual financial framework, own resources, rule of law




C_2018461EN.01007001.xml










21.12.2018   


EN


Official Journal of the European Union


C 461/70






Opinion of the European Committee of the Regions — The Multiannual Financial Framework package for the years 2021-2027
(2018/C 461/10)












Rapporteur-general:



Nikola DOBROSLAVIĆ (HR, EPP), Prefect of Dubrovnik-Neretva County





Reference documents:



Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions — A Modern Budget for a Union that Protects, Empowers and Defends The Multiannual Financial Framework for 2021-2027
COM(2018) 321 final
Proposal for a Council Regulation laying down the multiannual financial framework for the years 2021 to 2027
COM(2018) 322 final
Proposal for a Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management
COM(2018) 323 final
Proposal for a Regulation of the European Parliament and of the Council on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States
COM(2018) 324 final
Proposal for a Council Decision on the system of Own Resources of the European Union
COM(2018) 325 final
Proposal for a Council Regulation on the methods and procedure for making available the Own Resources based on the Common Consolidated Corporate Tax Base, on the European Union Emissions Trading System and on Plastic packaging waste that is not recycled, and on the measures to meet cash requirements
COM(2018) 326 final
Proposal for a Council Regulation laying down implementing measures for the system of Own Resources of the European Union
COM(2018) 327 final
Proposal for a Council Regulation amending Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax
COM(2018) 328 final








I.   RECOMMENDATIONS FOR AMENDMENTS

Proposal for a Regulation of the European Parliament and of the Council on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States
COM(2018) 324 final

Amendment 1

Article 2, point (c)






Text proposed by the European Commission


CoR amendment










(c)


‘government entity’ means all public authorities at all levels
of government, including national, regional and local authorities, as well as Member State organisations within the meaning of [point 42 of Article 2] of Regulation (EU, Euratom) xx/xx (the ‘Financial Regulation’).












(c)


‘government entity’ means all central government authorities, as well as Member State organisations within the meaning of [point 42 of Article 2] of Regulation (EU, Euratom) xx/xx (the ‘Financial Regulation’).










Reason


Need to exclude all directly elected local or regional authorities’ administrative bodies and entities from the application of the regulation.

Amendment 2

Article 3, point (1)(f)






Text proposed by the European Commission


CoR amendment










(f)


the effective and timely cooperation with the European Anti-fraud Office and with the European Public Prosecutor’s Office in their investigations or prosecutions pursuant to their respective legal acts and to the principle of loyal cooperation.












(f)


the effective and timely cooperation with the European Anti-fraud Office and, where applicable, with the European Public Prosecutor’s Office in their investigations or prosecutions pursuant to their respective legal acts and to the principle of loyal cooperation.










Reason


The provisions relating to the European Public Prosecutor’s Office can, after its establishment, only be applicable to the participating Member States.

Amendment 3

Article 4, point (1)(b)(1)






Text proposed by the European Commission


CoR amendment











(1)



a suspension of the approval of one or more programmes or an amendment thereof;






 






Reason


A suspension of the approval of one or more programmes or of an amendment thereof would have no direct punishing financial effects on a Member State concerned. On the contrary, a suspension of commitments and/or payments, while keeping the obligation of government entities to implement the programmes and to make payments to final recipients or beneficiaries pursuant to Article 4(2) of the proposed regulation, would have imminent effects on national budgets. In addition, a lifting of a suspension of the approval of one or more programmes or of an amendment thereof would considerably delay the implementation of concerned programmes, because all subsequent procedures would be put on hold as well.

Amendment 4

Article 5(6)






Text proposed by the European Commission


CoR amendment





6.   Where the Commission considers that the generalised deficiency as regards the rule of law is established, it shall submit a proposal for an implementing act on the appropriate measures to the Council.




6.   Where the Commission considers that the generalised deficiency as regards the rule of law is established, it shall submit a proposal for an implementing act on the appropriate measures to the Council. The Commission shall attach to this proposal an indicative financial programming of the EU budget concerned by the proposed measure, for the following years, structured by category of expenditure, policy area and budget line. Such indicative programming shall be the basis of an impact assessment of budgetary implications on the national and subnational budgets of the Member State concerned.








Reason


The European Commission should assess the possible budgetary implications of a reduction in EU funding for the national and subnational budgets of the Member State concerned with due regard to the principles of proportionality and non-discrimination.

Amendment 5

Article 6(2)






Text proposed by the European Commission


CoR amendment





2.   The Commission shall assess the situation in the Member State concerned. Once the generalised deficiencies as regards the rule of law which on the grounds of which the appropriate measures were adopted cease to exist in full or in part, the Commission shall submit to the Council a proposal for a decision lifting those measures in full or in part. The procedure set out in paragraphs 2, 4, 5, 6 and 7 of Article 5 shall apply.




2.   The Commission shall assess the situation in the Member State concerned. Once the generalised deficiencies as regards the rule of law which on the grounds of which the appropriate measures were adopted cease to exist in full or in part, the Commission shall submit to the Council a proposal for a decision lifting those measures in full or in part. The procedure set out in paragraphs 2, 4, 5, 6 and 7 of Article 5 shall apply. In order to gather substantial evidence for the lifting of measures, the Court of Auditors shall, through a fast procedure, issue a special report on the matter concerned pursuant to paragraph 4, second subparagraph of Article 287 TFEU.








Reason


The lifting of measures needs to be accompanied by solid, impartial and timely evidence in order to proceed with the implementation of programmes concerned without any unnecessary delays.

Amendment 6

Article 6(3)






Text proposed by the European Commission


CoR amendment





3.   Where measures concerning the suspension of the approval of one or more programmes or amendments thereof referred to in point (i) of Article 4(2)(b) or the suspension of commitments referred to in point (ii) of Article 4(2)(b) are lifted, amounts corresponding to the suspended commitments shall be entered in the budget subject to Article 7 of Council Regulation (EU, Euratom) xx/xx (MFF Regulation). Suspended commitments of year n may not be entered in the budget beyond year n+
2
.




3.   Where measures concerning the suspension of the approval of one or more programmes or amendments thereof referred to in point (i) of Article 4(2)(b) or the suspension of commitments referred to in point (ii) of Article 4(2)(b) are lifted, amounts corresponding to the suspended commitments shall be entered in the budget subject to Article 7 of Council Regulation (EU, Euratom) xx/xx (MFF Regulation). Suspended commitments of year n may not be entered in the budget beyond year n+
3
.







Reason


This solution will make it easier to use the resources unblocked from the suspension procedure, and will mean that these resources are not lost.
II.   POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS

General comments









1.


welcomes the Commission’s proposal for the Multiannual Financial Framework (MFF) for the post-2020 period, which, in view of the United Kingdom’s withdrawal from the EU and other internal and external challenges, provides a sound basis for negotiations; acknowledges the work carried out, but is of the view that, before it is adopted, the proposal must be developed further and improved in order to meet the expectations of EU citizens and the needs of local and regional authorities;












2.


notes that there is no obvious successor to the Europe 2020 strategy, meaning that the strategic objectives of the individual programmes are not sufficiently clear and the link between the overall MFF and the sustainable development goals is inadequate; therefore calls on the Commission, in the context of the discussions on the proposed MFF, to spell out the strategic objectives for the various EU policies and their expected impact. A structured approach at national, regional and local level will be needed to make a clear link between local and regional strengths and efforts and common European objectives;












3.


notes with regret that, in view of the imbalance between obligations arising from the objectives laid down in the Treaty, as well as current and future challenges, on the one hand, and the scope of the future MFF, on the other, the Commission proposal is not ambitious enough; reiterates the Committee’s position, which is shared by the European Parliament, that the future MFF should be set at at least 1,3 % of GNI; notes with concern that in previous cases the final size of the MFF turned out to be smaller than the Commission proposal, which, if repeated, would further erode the final desired impact in individual EU policy fields;












4.


considers it unacceptable that the financing of additional priorities is to be at the expense of existing EU policies with proven EU added value, such as the Cohesion Policy, the Common Agricultural Policy and, in particular, rural development policy. The proposed cuts are the wrong way of resolving the issue of how to finance the additional priorities and challenges;












5.


welcomes the Commission’s proposal to make rules more coherent and drastically reduce the administrative burden for beneficiaries and managing authorities in order to facilitate participation in EU programmes and accelerate implementation;












6.


regrets the Commission’s lack of transparency as regards the comparison between the figures of the current and future financial framework; welcomes, in this context, the efforts of the European Parliamentary Research Service to produce a comparative financial analysis of both MFFs;












7.


takes note of the results-focused approach of the newly proposed MFF structure, which seeks to answer needs on the ground and provide greater European added value; opposes the removal of the common heading for economic, social and territorial cohesion, since this will further weaken the position of the Cohesion Policy within the MFF and pave the way for a possible separation of the ESF+ from Cohesion Policy. If such outcome would occur, the synergies and the link between various funding sources, which are of particular importance for local and regional authorities, would be further diminished;












8.


notes with concern that the Commission’s proposals point towards further strengthening programmes under direct or indirect management at the expense of programmes under shared management by the Commission and the Member States. In the long term, this will make implementation of EU policies less transparent at local and regional level; stresses that the principles of partnership and multi-level governance have to be fully respected, and put in place in order to ensure that the local and regional authorities are involved in all relevant stages from the design until the implementation of EU policies;












9.


regrets the mismatch between the adoption of an 8th EU Environment Action Programme (EAP) and the MFF post 2020. The decision-making process of the future EAPs and the duration of the programmes should be aligned with the timeframes of the MFF so that the allocated funding well reflects the sustainability priorities and objectives;












10.


is concerned about the lack of planning certainty with regard to the MFF in case there is no timely, clear and workable agreement on the withdrawal of the United Kingdom from the European Union;












11.


supports the Commission’s proposal to establish closer links between regional funds and the European Semester as long as a regional perspective is added to the European Semester, because this is the only viable way to establish clear and meaningful links between them;





Reform of the own resources system









12.


welcomes the Commission’s proposal to introduce three new own resources, but notes with regret that the Commission, on the basis of proposal of the High Level Group on Own Resources, has accepted only two further sources, and takes the view that the Commission proposal could have been more ambitious in this respect; therefore suggests that work to seek out new sources to finance the budget be continued as a matter of urgency;












13.


welcomes the Commission’s efforts to simplify the revenue side of the budget, and in particular the proposal to phase out all rebates linked to Member States and to streamline VAT-based revenue;












14.


finds it regrettable that the Commission proposal to introduce new own resources does not provide a sufficient assessment of compliance with the subsidiarity principle and the proposal’s potential impact on the financial situation of local and regional authorities has not been evaluated;












15.


emphasises that the proposal for a Common Consolidated Corporate Tax Base (CCCTB) has considerable potential to increase the proportion of own resources, provided that it is made binding for a large number of companies. This is not the case at present, however, and it is also unclear when this source of own resources is expected to be introduced; has concerns relating to income based on non-recycled plastic packaging waste, since one of the EU ‘s main objectives is to avoid such packaging waste altogether, which would lead to a loss of revenue from this own resource or more fluctuations in budgetary income;












16.


welcomes the proposed cut to the amounts retained by Member States to meet the costs of collecting traditional own resources, but calls on the Commission to go even further and not to set the amounts for collection costs at 10 %, as proposed, but in accordance with actual costs;





Rule of law, flexibility and stability









17.


takes the view that respecting the rule of law is a necessary condition for sound financial management and efficient use of the EU budget; welcomes in this context the Commission’s efforts to put in place effective mechanisms to ensure respect for the rule of law, legal certainty in all Member States and effective measures against fraud and corruption;












18.


agrees with the Court of Auditor’s opinion that the proposed mechanism for ensuring compliance with the rule of law goes further than the procedure under Article 7 TEU and can be implemented more quickly;












19.


welcomes the European Commission’s efforts to ensure seamless financing for EU final beneficiaries, by making sure that the EU Member States also meet their financial obligations to beneficiaries in the event that a procedure to safeguard the EU’s financial interests is initiated; expects the Commission to develop further resources to protect final beneficiaries’ interests;












20.


recommends that the Commission consider introducing additional procedures with uniform effect across the various Member States, such as one-off fines, in order to safeguard the financial interests of the Union;












21.


considers, having regard to the opinion of the European Court of Auditors, that the Commission’s current legislative solution allows too much discretion in relation to the initiation of procedures, and calls on the Commission to set clear criteria to determine what constitutes a generalised deficiency as regards the rule of law which puts sound financial management at risk;












22.


recommends a stronger role for the European Court of Auditors in implementing the proposed procedure, in conformity with Article 287 TEU;












23.


welcomes the Commission’s proposals to make the MFF more flexible, which will certainly help address new and unforeseen challenges in a timely fashion; stresses, however, that greater flexibility in the use of funds must not be at the expense of long-term planning certainty and the strategic direction of programmes, especially those under shared management; therefore calls for an assessment of whether greater flexibility in the section relating to the Commission’s enhanced powers to reallocate funds, is not at odds with the principle of subsidiarity and multi-level governance, also calls for the involvement of regional and local authorities in the decision making whenever funds that are under shared management are to be reallocated;





The individual EU budget headings









24.


welcomes the proposals to increase the budget for policies relating to major new challenges such as migration and border management, as well as the creation of a specific heading for security and defence;












25.


supports the increase in resources for research and innovation, the continuation and expansion of the current EFSI to include the new ‘InvestEU’ fund, the increase in funding for the Erasmus+ programme, and the further increase in investment in climate protection across all EU policies; reiterates, however, that the proposed increase in resources should not be at the expense of the Cohesion Policy and rural development policy;












26.


strongly opposes the proposed 10 % cut to the Cohesion Policy budget, in particular in relation to the Cohesion Fund, whose funding is to be reduced by as much as 45 %; also views the proposed cuts to the Common Agricultural Policy — particularly the cuts of 28 % to the EAFRD and of 13 % to the EMFF — as unacceptable. Such a steep reduction in areas that continue to demonstrate European added value and that, for citizens, are among the EU’s most visible policies, would ultimately be extremely detrimental to the growth and development of the European regions;












27.


instead, and in line with the declaration on rural development adopted in Cork in September 2016, calls for the EU’s overall financial support for rural development to be increased above 5 % of the EU budget for the benefit of rural and intermediate areas, which account for over 90 % of the EU’s area, are home to 58 % of its population and account for 56 % of its jobs;












28.


stresses that the proposed cut to Cohesion Policy resources would call into question the achievement of one of the key objectives of the Treaty, namely the creation of economic, social and territorial cohesion. As a result of such an approach, the disparities between Europe’s regions would increase further, affecting in particular less developed regions, and those regions which have serious structural and demographic problems. Such an approach also underestimates the Cohesion Policy’s important role to date in fields such as innovation, digitalisation and climate protection; warns that cuts to funds for territorial cooperation programmes put at stake the objective of strengthening territorial cohesion and the most important instruments in this area, such as the EGTCs and macro-regional strategies;












29.


regrets that despite the fact that more than one third of EU citizens live in border regions and given that these regions face numerous territorial challenges, the budget allocation for cross-border cooperation is projected to decrease in real terms despite its proven European added value;












30.


highlights the extremely detrimental effects of the MFF proposal for European farmers and the inhabitants of rural areas. If the proposed cuts to funds under the second pillar of the CAP were to be accepted, rural development policy would no longer be able to fulfil its mission, notably in terms of reducing differences in living standards between rural and urban areas; in addition, calls for the European Agricultural Fund for Rural Development to remain under the management system provided in the Common Provisions Regulation so as to continue to ensure consistency between the different funding sources and strengthen the CAP’s territorial dimension;












31.


is opposed in particular to the proposal to reduce allocations to the POSEI programme which assists the outermost regions, undermining its objective of providing a targeted response to the specific challenges faced by agriculture in each region, in its role as a financial instrument for direct support to farmers;












32.


finds it regrettable that the commitments for the ESF+ have not been increased in real terms, although this is supposed to cover additional tasks such as the integration of third-country nationals; points out that the European Social Fund (see CoR opinion on the ESF+ (1)) should remain anchored in cohesion policy, the EU’s main instrument for investing in people and human capital, promoting gender equality and improving the lives of millions of EU citizens;












33.


notes that the European Globalisation Fund (EGF), despite the existing overlaps and trade-offs with the ESF+, has not been incorporated into the latter; holds the view that the added-value of the measures financed by the EGF is contingent on whether these measures will be complemented by conversion and restructuring processes implemented through long-term regional development programmes, particularly anticipative measures as those offered by the ESF+;












34.


is opposed to introducing the n+2 rule instead of n+3 rule as the timeframe for the use of amounts transferred annually, as there is a considerable risk that legislation could be adopted late. In the event that the n+2 rule is applied, this could undermine the absorption of transferred funds;












35.


strongly rejects the proposed solutions, which will further exacerbate the situation of local and regional authorities compared with today when it comes to the time limit for using annual allocations from EU programmes and to the level of pre-financing and, in particular, co-financing of projects, as many local and regional authorities do not have the financial capacity to raise the necessary proportion of own funds;












36.


calls on the Commission to calculate the transfer of Cohesion Policy funds to Member States on the basis of the latest breakdown of NUTS-2 regions, for which Eurostat can provide the necessary data, in order to ensure a better match between the socioeconomic conditions in NUTS-2 regions and the calculation of the national transfers;












37.


also urges the European Commission to consider factors other than GDP per capita when amending the criteria for cofinancing and allocating Cohesion Policy funds, since it is not an accurate measure of a society’s ability to tackle issues that concern it, such as demographic change, and calls for the establishment of international, national, local and regional indices to measure progress beyond GDP. In terms of addressing the demographic challenge, the following may be considered possible: changes in the population (intense and sustained loss), territorial dispersion, ageing, over-ageing, emigration of young people and the adult population and a resulting fall in birth rates;












38.


rejects the proposed cuts to the budgets of transport infrastructure under the Connecting Europe Facility (CEF), especially in light of the unfounded reduction in the Cohesion Fund budget, since these are unjustified given the objectives and requirements to ensure a green, secure and well connected transport system;












39.


considersthat the proposed allocation for the new instrument ‘European Investment Stabilisation Function’ — in the form of a budget heading within the EU budget enabling up to EUR 30 billion in loans so as to be able to respond appropriately in the event of any new economic and financial market shocks that affect Member States that are part of the euro area or the exchange-rate mechanism (ERM II) — is too small. The CoR therefore proposes a substantial increase in relevant funds to protect the EU’s investment potential and that this should be outside the EU budget;












40.


has concerns about the proposed Reform Support Programme for structural reforms. Given that the proposal is based on Article 175 of the Treaty, which deals with cohesion, the programme should be confined to reforms that bolster economic, social and territorial cohesion and deliver European added value. The programme should also be part of a new long-term EU development strategy following on from the Europe 2020 strategy and structured around the Sustainable Development Goals; furthermore, the same requirements as for the structural and investment funds — in terms of partnership and the involvement of local and regional authorities in the planning and implementation of reforms — should apply; finally, is not in favour of the option provided for in the framework regulation on the structural and investment funds of transferring up to 5 % of the allocations to EU funds and financial instruments that are unrelated to the cohesion objectives and, moreover, are for the most part under direct management without local and regional authority involvement;












41.


stresses that the cuts to Cohesion Policy, rural development policy and the CAP will have a significant detrimental effect on efforts to meet territorial cohesion and environmental protection objectives. Despite the almost 60 % increase in funds for the LIFE programme, the proposed overall budget for climate protection and adaptation in the energy field is smaller than that of the current financial perspective. Instead of tapping the considerable potential of agricultural and especially cohesion policy in promoting investments with positive effects for the environment and climate protection, the proposed MFF cuts funds for the cohesion and agricultural policies and thus calls in question the achievement of EU environment policy objectives;












42.


notes the proposal to increase the funding for the LIFE Programme (see CoR opinion on the LIFE Programme (2)), which is of crucial importance to local and regional authorities in terms of helping them to combat biodiversity loss, develop a green infrastructure solution and promote sustainability; regrets, however, that the proposed increase is partly cancelled out by the inclusion of measures previously funded by Horizon 2020 on the clean-energy transition; calls, therefore, for the total funding for the LIFE Programme to be increased by the corresponding amount; also calls for actions for capacity building supporting the clean energy transition to retain the same co-financing rate as they have under Horizon 2020;












43.


points out that the planned objective, namely to use 25 % of the EU budget to help meet climate change goals, is not enough to achieve the objectives of the Paris Agreement. Efforts should be made under the next financial framework to ensure the possibility of increasing the share of expenditure that goes towards the decarbonisation of the energy sector, industry and transport to over 30 % and towards the transition to a circular economy;












44.


welcomes the increase in funds for the ‘Horizon Europe’ sub-heading, as compared to the current budget; furthermore, recommends that a framework be established to govern the options regarding budgetary transfers from other instruments under the MFF to Horizon Europe, with due regard, in particular, for the freedom of initiative of the managing authority concerned, the joint framing of measures co-financed in this way, and the return of funds to the territory of the managing authority;












45.


welcomes the inclusion of a specific heading on migration and border management and the substantial increase in funding to carry out measures in these areas; regrets that the issue of border security is given much greater importance than other issues relating to migration such as the granting of protection and asylum for migrants, support for legal migration and integration. The CoR therefore calls for the budget allocated to the Asylum and Migration Fund (see CoR opinion on the Asylum and Migration Fund (3)) to be increased by the same percentage (240 %) as for the budget for the protection of external borders, in order to ensure that it issufficient to adequately deal with the challenges of integration;












46.


points out — in view of the unambitious overall size of the MFF, which limits even more so the scope for action in this extremely important area for the EU’s political and social stability and security — that this is particularly important for local and regional authorities, which are responsible for many of these measures; also points out here that the budget for the European Social Fund (ESF+), which should cover the long-term integration measures for migrants, should consequently be increased to cover this new task;












47.


also draws attention to the fact that the new Rights and Values programme, which is to fund efforts to protect the EU’s fundamental rights and values and encourage active European citizenship, is of great importance to local and regional authorities in these areas. For this reason, the CoR proposes that the general basis of that programme be increased to meet the huge challenges in this regard;












48.


welcomes the simplification of the external action instruments and the allocation of resources, which contribute to a more efficient and effective EU external and development policy; highlights in this regard the important role of local and regional authorities in improving cooperation with neighbouring and third countries in a whole range of areas and in achieving Agenda 2030 for Sustainable Development as a whole; calls forthis role to be taken into account in the MFF more explicitly, preferably through directly allocated budget;












49.


considers that a strong, efficient and high-quality European public administration is indispensable to the delivery of Union policies and to restore trust in the EU added value and strengthen dialogue with citizens at all levels; underlines the important role of the institutions made up by democratically elected members in that respect;












50.


calls on all EU bodies to reach swift agreement on the next multiannual financial framework so that EU programmes can be adopted in good time before the beginning of the next MFF.





Brussels, 9 October 2018.


The President of the European Committee of the Regions

Karl-Heinz LAMBERTZ




(1)  CoR opinion 3597/2018, not yet adopted.

(2)  CoR opinion 3653/2018.

(3)  CoR opinion 4007/2018.