Money looking for purpose


On 26 October 2021 the European Court of Auditors (ECA) published its annual report on the implementation of the EU budget for the 2020 financial year. A day later, after the ECA’s German president, Klaus-Heiner Lehne, had presented the report to the European parliament, Alex Brenninkmeijer, the ECA’s Dutch member, travelled to The Hague to brief members of parliament about the budget implementation. The House of Representatives showed little interest. Only 2 members of the Finance Committee attended the briefing.

That’s remarkable! The EU multiyear budget, its size and allocation can usually count on a lot of interest from the government and the House: witness last year’s heated discussions of the multiyear financial framework (MFF) for 2021-2027. With the House’s support, the Netherlands headed the ‘frugal four’ countries opposed to even a cent’s increase in the EU budget. EU expenditure for the coming period, however, has been boosted by an agreement on the Recovery and Resilience Facility – more commonly known as the EU recovery fund – and will now break all records. So you might expect a little more interest in how the money is actually spent.

On the other hand, lack of interest in the ECA’s annual report is understandable; it doesn’t contain a great deal of new information. Like last year, there is an adverse opinion on expenditure owing to the materially high level of error and a favourable opinion on EU revenue and, according to the ECA, the accounts give a true and fair view..

The most striking item this year was the amount of outstanding commitments (also known as the RAL, from the French Reste à Liquider). Outstanding commitments represent the gap resulting from the level of  commitments being higher than the amount of payments made. The high level of outstanding commitments has been a persistent problem in EU budget implementation for many years. By the end of 2020, it had reached a record level of more than  €300 billion, nearly a third of the amount available under the seven-year MFF. In a 2019 report, the ECA took a close look at the causes. Important factors were slow implementation of EU programmes and the overlap between the various multiannual budgets. The new MFF period has started but payments can still be made under the previous MFF until well into the new period.

The member states apparently can’t spend EU money quickly enough. Yet they must use it within a given timeframe (in this case, within 3 years of the end of the 2014-2020 MFF) otherwise they will lose their right to the money. In the previous period, nearly all the money had been spent by the end of extra time.

The Netherlands holds the middle ground among EU member states. At the end of 2020, it had received 53% of the EU funds budgeted for it. A substantial number of projects must therefore make a lot of progress in the next 3 years if the Netherlands is to receive its outstanding commitments. In addition to the outstanding commitments of more than €300 billion, funds will soon be released from the new 2021-2027 MFF. In addition, the Netherlands will receive nearly €6 billion if it takes full advantage of the EU recovery fund. You don’t have to be a member of a supreme audit institution to appreciate the risks involved here – and not only for the Netherlands. Good projects that create added value need thorough preparation and careful implementation.

The European Court of Auditors checks that EU expenditure meets the applicable criteria. This requires thorough audits by the ECA and also that the reports are read critically in both the European and the national parliaments. Alex Brenninkmeijer’s October 2021 presentation to the House of Representatives was his last briefing on the ECA’s annual report. Let’s hope his successor can count on more interest in the national parliament.