Does the Netherlands spend EU grants in accordance with the rules?
Not only must EU money be spent according to the rules, citizens must also be able to see that it actually is. After all, the huge amount of money involved comes from households and businesses.
Each year, the Netherlands contributes about €9 billion to the European Union (€10 billion in 2022, according to the 2022 Central Government Annual Financial Report). That said, the European Commission claims that the amount is considerably lower. This is because the Commission bases its figure on a different definition than the one used by the Dutch government. For further information, see our web page entitled ‘How much does the Netherlands pay into the EU budget and how much does it receive?’.
The Netherlands’ contribution to the EU is the sum of:
- traditional own resources of the EU (such as customs duties);
- a percentage of VAT resources;
- a contribution based on gross national income (GNI-based contribution);
- a contribution based on non-recycled plastic packaging waste.
What EU grants does the Netherlands receive?
The Netherlands receives grants in 2021-2027 from the European agricultural funds (the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD)), the structural and investment funds (the European Regional Development Fund (ERDF), the European Social Fund+ (ESF+), the Fund for European Aid to the Most Deprived (FEAD) and the European Maritime, Fisheries and Aquaculture Fund (EMFAF)) and the migration and security funds (the Asylum, Migration and Integration Fund (AMIF), the Integrated Border Management Fund (IBMF) and the Internal Security Fund (ISF)). And there is the Just Transition Fund (JTF). The Commission awards grants to member states after establishing where the green transition will have the most serious negative consequences. Lastly, there is the Brexit Adjustment Reserve (BAR). The Netherlands received about €1.0 billion from these funds under shared management in 2022. How will Brexit affect the Netherlands?
All EU member states, i.e. including the Netherlands, manage the money received from these funds together with the European Commission. This means that every country is jointly responsible for ensuring that the money is properly spent. All citizens must be able to see that there have not been any irregularities and that no mistakes have been made.
The Netherlands also receives funds under programmes where the European Commission has the sole responsibility for good management and correct spending of the funds. The most important programme is Horizon2020 (renamed Horizon Europe in 2021). Based on the European Commission’s Horizon 2020 dashboard, this programme awarded a total of €5.38 billion to organisations in the Netherlands in the period 2014-2020.
According to the same dashboard, a total of €1.42 billion had been awarded by April 2023 for the 2021-2027 programming period.
The Recovery and Resilience Fund (RRF, see also How much does the Netherlands pay into the EU budget and how much does it receive?) is another new source of income under direct management for the member states. The Netherlands is entitled to €4.7 billion. It expects to receive a further €750 million in the form of a REPowerEU supplement. The Netherlands will probably submit its first payment request in the third quarter of 2023.
Accounting for the use of EU money in the Netherlands
The Dutch government takes a serious view of its responsibility for the use of EU money.
On the third Wednesday in May, when the government submits its financial report and accounts to parliament, the responsible ministers declare that the euros the country received from the EU were spent in accordance with the rules. Until 2021, they had done so by means of a National Declaration in the Central Government Annual Financial Report. Since 2021, they have done so by means of a separate EU section in the annual reports of the ministers responsible for funds under shared management. The regular, efficient and effective use of these funds is a shared responsibility of the EU and the member state. According to the ministries’ annual reports for 2022, the audit authority’s reports indicate that the management and control systems in place in the Netherlands functioned satisfactorily in 2021-2022. The Central Government Audit Service found an uncertainty in the EAFRD and an error rate in the EAGF (agricultural fund) of 2.27%. As this is higher than the permitted rate (2%), it could not issue an unqualified report on the EAGF.
For our report on the National Declaration, we checked every year until 2021 whether the National Declaration met the requirements. Since 2021, we have audited the preparation of the EU section in the ministers’ annual reports as part of our annual Accountability Audit of the preparation of operational management information. The Court of Audit can carry out additional audits of the regularity, efficiency and effectiveness of expenditure if it thinks they are necessary.
Other EU member states do not report on the use of EU grants
Regrettably, it is far less clear whether EU grants are spent in compliance with the rules in all EU countries. It is not customary for EU member states to report to their national parliaments about the regularity of the use of EU funds in their countries. On the other hand, the EU has decided that each member state should submit to the European Commission an 'annual summary' of the audit findings for each fund. These summaries are not made public, however, and do not qualify as formal documents produced on behalf of a minister or government. The Court of Audit will continue to monitor the transparency of the use of EU funds.
Since 2016, the government has included a separate section in the Central Government Annual Financial Report on the contributions system.
Audit of EU spending by the European Court of Auditors
The European Court of Auditors performs an annual audit of the ‘regularity’ of the use of EU funds, i.e. whether EU funds have been spent in compliance with the rules. To date, it has never issued an unqualified opinion, as the EU member states make too many errors in their expenditure.
Until 2016, the European Court of Auditors issued an adverse opinion every year on spending from the European budget. In 2016-2018, it issued a qualified opinion. The error rate declined during this period from about 4.4% in 2014 to about 2.6% in 2018. In its latest report on the 2021 annual reports, the European Court of Auditors again expressed an adverse opinion, as it had for 2019 and 2020. The error level in expenditure increased from 2.7% in 2019 and 2020 to 3% in 2021 and the errors were concentrated in high-risk expenditure as in the previous years. See the blog by Board member Ewout Irrgang.