Does the Netherlands spend EU grants in accordance with the rules?
It is important that grants that the Netherlands receives from the EU are spent in accordance with the rules. And that citizens can also see that this is the case. These grants involve large sums of money. And every year that money has to paid by citizens and businesses in the EU.
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 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.
Each year member states receive grants from the EU for billions of euros. Most of these grants are provided under ‘shared management’. This means the European Commission and the member states’ national governments are jointly responsible for proper management and control of the grants.
The Netherlands receives grants in 2021-2027 from the following funds:
- the European Agricultural Guarantee Fund (EAGF)
- the European Agricultural Fund for Rural Development (EAFRD)
- the European Regional Development Fund (ERDF)
- the European Social Fund+ (ESF+),
- the Fund for European Aid to the Most Deprived (FEAD)
- the European Maritime, Fisheries and Aquaculture Fund (EMFAF)
- the migration and security funds (the Asylum, Migration and Integration Fund (AMIF)
- the Integrated Border Management Fund (IBMF) and
- the Internal Security Fund (ISF).
The Netherlands received about €1.0 billion from these funds under shared management in 2022.
And there is also the Just Transition Fund (JTF). The Commission awards grants from this fund after establishing where the green transition will have the most serious negative consequences. Some Dutch regions are eligible for grants from this fund.
Lastly, there is the Brexit Adjustment Reserve (BAR) to support businesses in EU member states impacted by Brexit.
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 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 €2.34 billion had been awarded by December 2023 for the 2021-2027 programming period.
Other new European grants (under shared management) for which the Netherlands is eligible are available under the Recovery and Resilience Facility. This facility is designed to reduce adverse consequences of the corona pandemic. The Netherlands is eligible for a total of €5.4 billion in the period to the end of 2026. This comprise the original amount €4.7 billion plus an amount of over €750 million that was added in 2023 as part of the ‘RePowerEU’ plan (designed to reduce our reliance on Russian fossil fuels). The Netherlands expects to submit its first payment request in the second quarter of 2024.
More information
The Dutch government takes its responsibility for the use of EU money seriously.
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 financial year 2019, they had done so by means of a National Declaration in the Central Government Annual Financial Report. Since 2020, they have done so by means of a separate EU section in the annual reports of the ministers responsible for funds under shared management.
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 Netherlands Court of Audit can carry out additional audits of the regularity, efficiency and effectiveness of expenditure if it thinks they are necessary.
Spending of EU grants should be more transparent
The Netherlands is transparent about its correct use of grants received from the EU. However, this does not apply in most other member states.
It is neither customary nor obligatory for EU member states to report to their national parliaments about the regularity of the use of EU funds in their countries. Therefore it is unfortunately not clear if EU grants are spent according to the rules everywhere in the EU. 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 Netherlands Court of Audit will continue to monitor the transparency of the use of EU funds.
Audit of EU spending by the European Court of Auditors
Each year, the European Court of Auditors assesses whether EU funds have been spent in accordance with the rules (regularity audit). As yet, it has never been able to issue a positive opinion. This is because of the too high error level, where member states have made payments that do not meet all the conditions for payment. These shortcomings are often due to regulatory complexity.
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 2022 annual reports, the European Court of Auditors again expressed an adverse opinion, as it had for 2019, 2020 and 2021. The error level in expenditure increased from 2.7% in 2019 and 2020 to 3% in 2021 and 4.2% in 2022 and, as in the previous years, the errors were concentrated in high-risk expenditure. According to the European Court of Auditors, the rules applying to this spending are complex, particularly in the case of reimbursement-based payments where beneficiaries have to submit claims for eligible costs they have incurred.
More information
- Annual reports concerning the financial year 2022, European Court of Auditors (05-10-2023)
European Court of Auditors
Annual reports concerning the financial year 2022, European Court of Auditors (2023)
National Audit Office of Austria
EU Financial Report 2017 and 2018 (2020)
National Audit Office of Slovenia
Weblog post by college member Ewout Irrgang, 07-12-2021
Weblog post by college member Ewout Irrgang, 06-10-2023