EU funds: the risk of doing the right things wrong – the reform that changes the evaluation rules from 2028

Luca Menesini, however, takes a completely different view. He is a councillor for the province of Lucca and a Socialist member of the European Committee of the Regions, for which he served as rapporteur on this very dossier. “We are moving from an old, tailor-made model to a standardised one,” he argues. “The indicators currently in use are the result of a gradual process agreed in consultation with the managing authority of each programme in each country, whilst the 900 proposed are the product of a Brussels bubble,” he adds.

The new Performance Regulation will not only serve to assess the effectiveness of individual interventions, but will also contribute to the achievement (or failure) of the EU’s cross-cutting objectives. In fact, each intervention can contribute 100 per cent, 40 per cent or 0 per cent of its total amount towards meeting the minimum spending targets that the new budget is expected to set for climate, the environment and social issues.

For example, expenditure on building accommodation for homeless people counts 100 per cent towards meeting social targets, but also 40 per cent towards climate targets, because new buildings must meet certain energy efficiency criteria.

Finally, the Commission also proposes principles to be applied to all expenditure provided for in the EU budget: gender equality, respect for decent working conditions and the so-called DNSH, the ‘Do No Significant Harm’ principle. This principle is at the centre of a major row in the European Parliament, with Socialists, Greens and Liberals regarding it as sacrosanct, whilst the European People’s Party would like to at least water it down, if not abolish it entirely, through an alliance with the far right.

Concerns about the new regulation, however, do not relate solely to climate and environmental policies, but also to cohesion policy. “No assessment whatsoever has been carried out of the territorial impact of this new system, compared with everything that has been implemented to date,” adds Menesini of the Committee of the Regions.

Local authorities, already in a state of unrest due both to the new budgetary framework and the announcement of cuts to cohesion funding, fear that the performance regulation could make the situation even worse. “That is why,” Menesini continues, “we are calling for the inclusion of a ‘do no harm to cohesion’ principle, meaning that all policies implemented should be assessed from the perspective of territorial cohesion.”

Then there is the issue of bureaucracy. According to the Commission’s estimates, the implementation of the new framework should lead to a reduction of at least 25 per cent in administrative burdens. The EU Court of Auditors, however, is less optimistic and, in a recent report, emphasised that simplification can mainly be achieved between the Commission and the Member States, whilst the level of administrative burden at national, regional and beneficiary level could remain unchanged or even increase. This is a possibility that both Menesini and Razza strongly reject.

“Our bottom line is to avoid imposing additional burdens on local authorities beyond those they already face today, and to ensure that funding reaches the areas designated in the plans as quickly as possible,” explains Razza. This refers to the new National and Regional Partnership Plans (PPNR) which Member States will have to approve at the start of the new budget year, after agreeing them with the regions and negotiating them with the Commission.

The model they are drawing inspiration from is that of the National Recovery and Resilience Plans (PNRR), with payments based on targets achieved rather than on expenditure incurred. In practice, to give examples taken directly from the Italian PNRR, the Commission disbursed funds to Italia once a certain number of nursery schools or student residences had been completed, rather than on the basis of how many euros had actually been spent on building them.

According to a European Parliament report, this method “increases the risk of errors, double funding and fraud”, but it could also conceal a further problem, again linked to the choice of indicators.

Menesini fears that governments and local authorities will end up “spending as much as possible to show the European Union that they are performing well”, prioritising “a quantitative rather than qualitative assessment of spending”, which fails to take into account the complexity of certain initiatives, particularly those of a social nature. Razza, who also worked at regional level in Sicily before moving to Brussels, believes that his colleague’s concern is “well-founded”, but that “in practice, it is likely to have a minor impact”.

Yet, a paper from the European Parliament’s think tank warns the legislators who will be called upon in the coming months to reach an agreement on the Performance Regulation: “there is a risk that the Commission and the Member States will focus on what is easiest to measure and report on, rather than on what is most relevant from a political point of view”. The danger is that, once the system has been changed, we will find ourselves doing the wrong things well.

Then there is the issue of bureaucracy. According to the Commission’s estimates, the implementation of the new framework should lead to a reduction of at least 25 per cent in administrative burdens. The EU Court of Auditors, however, is less optimistic and, in a recent report, emphasised that simplification can mainly be achieved between the Commission and the Member States, whilst the level of administrative burden at national, regional and beneficiary level could remain unchanged or even increase. This is a possibility that both Menesini and Razza strongly reject.

“Our bottom line is to avoid placing any additional burdens on local authorities beyond those they already face, and to ensure that funding reaches the areas specified in the plans as quickly as possible,” explains Razza. This refers to the new National and Regional Partnership Plans (PPNR) which Member States will have to approve when the new budget comes into force, after agreeing them with the regions and negotiating them with the Commission.

The model on which they are based is that of the National Recovery and Resilience Plans (PNRR), with payments based on targets achieved rather than on expenditure incurred. In practice, to give examples taken directly from the Italian PNRR, the Commission released funds to Italia once a certain number of nursery schools or student accommodation blocks had been completed, rather than on the basis of how many euros had actually been spent on building them.

According to a European Parliament report, this method “increases the risk of errors, double funding and fraud”, but it could also conceal a further problem, again linked to the choice of indicators.

Menesini fears that governments and local authorities will end up “spending as much as possible to show the European Union that they are performing well”, prioritising “a quantitative rather than a qualitative assessment of spending”, which fails to take into account the complexity of certain initiatives, particularly those of a social nature. Razza, who also worked at regional level in Sicily before moving to Brussels, believes that his colleague’s concern is “justified”, but that “in practice, it is likely to have a minor impact”.

Yet, a paper from the European Parliament’s think tank warns legislators who will be called upon in the coming months to reach an agreement on the Performance Framework Regulation: “there is a risk that the Commission and the Member States will focus on what is easiest to measure and report on, rather than on what is most politically relevant”. The danger is that, once the system has been changed, we may find ourselves doing the wrong things well.