Less affluent EU countries often find it difficult to take up the structural and cohesion funds allocated to them. This is often not through lack of interest on the part of member states or regions, but because of the red tape that burdens the administrative procedures that are part of the process for claiming these funds. The EU is aware of this phenomenon and has often tried to simplify the process.
According to Parliamentary Secretary Ian Borg, “Malta was given €988 million by the European commission in 2006, but by 2013 less than €296 million had been spent on EU projects, the third worst absorption rate”. Current absorption rates range between 11 per cent and 60 per cent. So Malta has a lot of catching up to do to ensure that it utilises more effectively what is allocated to it.
One piece of good news is that the European Commission “has adopted a Partnership Agreement with Malta setting down the strategy for optimal use of European and Investment Funds by the country”. The EC and the European Parliament have listed job creation projects as the most important priority for the use of EU funds by individual member states.
It is encouraging that in the coming five years EU investment funds “will help tackle unemployment and boost competitiveness and economic growth through support to innovation, training and education”.
This is the way to promote entrepreneurship, fight social exclusion and help to develop an environmentally friendly and resource-efficient economy.
As the Commissioner for Regional Policy, Johannes Han, said, “commitment is needed on all sides to ensure good quality programmes are put in place”. This is a very important reflection as often good policies are frustrated by bad execution on the part of officials who have the duty to turn good ideas into real benefit for people.
Red tape can indeed mess up the implementation of good plans.
In 2011 the European Parliament passed a resolution on ‘Absorption of Structural and Cohesion funds: lessons learnt for the future cohesion policy’.
The MEPs urged the Commission to put more emphasis on payments for delivery of results and creation of new jobs instead of chasing up irregularities of form, rather than substance. They insisted that “controls should focus on detecting real frauds”.
Although the government has the means to rope in the expertise that it needs to tackle the bureaucracy connected with applying for EU funds, many small organisations find the process quite Draconian even when they decide to pay for expert advice on how to submit their projects to the EC for consideration.
One piece of advice that the European Parliament has given to the Commission is that audit requirements should be proportional to the amount of funding required. Introducing a single, once-only audit to turn cohesion policy into a truly performance-oriented and cost-efficient tool should be one option for achieving effective governance in the granting of funds processes.
The formula used by the Commission to grant funds often relies on a significant contribution through national funding by member states to support a project. This often amounts to 25 per cent of costs.
Errors and delays due to the complexity of rules at EU and national levels have been aggravated by the economic recession that has created shortage of national funds to meet EU project financing requirements.
If the Commission was to cut red tape and raise temporarily the EU’s share of the co-financing in order to boost take-up, this would facilitate much needed structural investment.