Reform of EU funds payments under way

Date: 10/04/1997

By Rory Watson

AS WORK on a wide-ranging review of the effectiveness and efficiency of EU regional and social funds gets under way, the European Commission is set to adopt new rules to tighten up payments from Union coffers next week.

The reforms, which are designed to ensure that EU regulations are evenly applied throughout all 15 member states, are part of a wider exercise to guarantee the sound and effective management of the Union's multi-billion-ecu finances.

At the same time, a parallel exercise is investigating more radical reforms to increase the funds' efficiency and ensure they can cope with enlargement.

Pressure for reform has come from the Court of Auditors and the Commission's own internal audits, which have uncovered various anomalies leading to similar schemes being given EU finance in one member state but not in another.

“We are trying to get a more consistent approach in a number of areas which were not clearly defined in the original legislation and have led to differences in the way applications are handled. It is all very technical and detailed, but it is important people get it right,” explained one official.

The new rules, drawn up after close consultation between the Commission and member states, will spell out the elements of regional and social programmes which are eligible for Union funding.

The regulations will be followed later this year with a clear policy for recouping structural fund money wrongly paid out in the first place.

While the Commission and member states are busy plugging technical loopholes in the existing rules for regional and social payments, work is beginning on an in-depth review of the funds, which now account for one-third of the Union's annual 90-billion-ecu budget.

“We are still very much in the foothills of the discussions. We are really only starting to examine the issues now and aim to present our formal proposals in a year's time,” explained one official.

The range of options available to strengthen the impact of the funds will be discussed by EU governments, national and local authorities, research institutes and others at a 'cohesion forum' to be hosted by the Commission at the end of the month.

But Social Affairs Commissioner Pádraig Flynn has already begun to shape the debate by calling for “a radical redesign of the architecture of the structural funds as a whole”.

“The simple fact is that the existence of four funds, seven objectives, 14 Community initiatives and a multiplicity of operational programmes at central, regional and sectoral levels within member states does create undue complexity and absorbs a disproportionate amount of administrative effort,” he explained.

Calling for less bureaucracy and more focus, Flynn is campaigning for a better link between EU investment in physical infrastructure and in human resources.

He is aiming to convince his colleagues to target structural fund spending on two main activities after the current programmes end in 1999.

The first would concentrate on the Union's poorer regions and those facing special problems of industrial change and rural development. The second would focus on developing human resources through training and other programmes.

Regional Policy Commissioner Monika Wulf-Mathies shares Flynn's view that the funds should be better targeted.

She has consistently argued that the proportion of the EU population which should be eligible for assistance should be reduced from 51&percent; to nearer 35&percent;.

The Commissioner believes this can be achieved by phasing out aid to regions which have successfully used Union cash to improve their economic standing, and through better financial management and geographical concentration.