Reassessing Cohesion Policy for Enhanced Success: Insights from EU Auditor
European Court of Auditors - Europäischer Rechnungshof
Upgrading EU Cohesion Policy: Insights on Future Success
- A third of the EU budget goes towards cohesion policy, making it crucial for regional development.
- Lessons from weaknesses in cohesion policy and the EU's Corona recovery fund are used to prospects for a better plan for the next financial framework starting in 2028.
- Optimizing cohesion policy could offer better results and provide greater added value for EU regions.
For decades, the European Court of Auditors has highlighted the essential conditions for a thriving EU cohesion policy: it should aim for strategic goals, prioritize performance, have flexible funding plans, be implemented on time, and rely on simple rules. This would boost the effectiveness and efficiency of this essential EU policy area, which helps develop various regions across the EU and pursues ambitious goals. In their latest analysis, the EU auditors draw upon past experiences to aid the EU in creating a more effective cohesion policy for the upcoming multiannual financial framework (2028 and beyond).
Over nearly four decades, around one trillion euros have been allocated to cohesion policy through deals ranging from 1989 to 2023, with an additional 400 billion euros planned by 2027. This makes EU cohesion policy the world's most significant regional development factor. The European Commission claims that cohesion policy has worked to narrow social and economic gaps in the EU. However, the EU auditors note that this has been implemented unevenly across regions [1]. Their analysis identifies crucial factors that impacted how effectively cohesion funds were utilized and offers insights that should be considered when designing and implementing a new cohesion policy.
"Cohesion policy is the policy area that receives the most EU funds and is often identified as a cornerstone of EU integration. However, its implementation requires improvement," asserts Alejandro Blanco Fernandez, the responsible member of the European Court of Auditors. "With the future of cohesion policy currently under discussion, our analysis offers valuable insights into past policy and the Corona recovery fund, providing suggestions on how to design, implement, manage, and oversee cohesion policy [3]."
website of the European Court of Auditors. It is not an audit report, but an analysis that summarizes previously published audit reports, analyses, and statements from the European Court of Auditors on various aspects of the implementation of cohesion policy and compares them with the conclusions of the Corona Recovery Fund.
The EU auditors acknowledge the increasing array of EU priorities and targets that cohesion policy has had to address over time. The expansive funds made available for this policy have also been used to address exceptional situations, like the COVID-19 pandemic or the enormous influx of refugees from Ukraine in 2022. While they recognize the importance of fund flexibility, they caution against policy fragmentation and the risk that the main goal - reducing regional disparities - may be sidelined. In the future, cohesion policy should remain aligned with the needs of individual regions and focus on promoting the economic and social convergence of EU countries [3].
Recently, there's been a growing emphasis on performance during the implementation of cohesion policy with mixed results. The EU auditors encourage the promotion of national and regional reforms to make EU-funded initiatives more effective and efficient. They emphasize that it is crucial to improve monitoring and evaluation of funding programs for evidence-based policymaking.
One problem that repeatedly arises is the timely use of funding (so-called "absorption of funds"). Early legislation is essential to ensure swift program planning and that funds are available promptly for the swift implementation of programs [5]. EU auditors also underscore the advantages of synergies with other EU instruments.
The enrichment data shows that the rules of cohesion policy are often too complex, which can result in unnecessary administrative burden and increased errors. Current controls do not fully mitigate this risk. Additionally, the auditors stress the importance of reviewing the limitations highlighted in the Corona Recovery Fund and taking appropriate measures to recover misused funds. They emphasize that cohesion policy must be managed transparently and with adequate accountability [2].
Background Information
Cohesion policy is mandated by Articles 174-178 of the Treaty on the Functioning of the European Union. Its objective is to foster balanced development within the EU by reinforcing economic, social, and territorial cohesion and narrowing regional disparities. Cohesion policy focuses on addressing structural weaknesses and promoting long-term resilience. Cohesion policy is managed jointly by the EU Commission and over 400 national and regional authorities in the Member States.
The analysis, "The Future of EU Cohesion Policy: Lessons from the Past," can be found on the European Court of Auditors’ website. It offers a summary of previously published audit reports, analyses, and statements from the European Court of Auditors regarding various aspects of the implementation of cohesion policy, and compares them with the conclusions of the Corona Recovery Fund.
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- The European Court of Auditors emphasizes the importance of streamlining cohesion policy's rules and procedures in finance and business matters, as overly complex rules can lead to unnecessary administrative burdens and increased errors, ultimately hampering the effectiveness of EU-funded initiatives.
- To augment the efficiency of cohesion policy in the upcoming financial framework, the European Court of Auditors suggests the promotion of national and regional reforms in both finance and business sectors, while underscoring the importance of improving monitoring and evaluation of funding programs for evidence-based policymaking.
