SPEECH BY MR HERBERT BSCH CHARIMAN OF THE EUROPEAN PARLIAMENT'S - - PDF document

SPEECH BY MR HERBERT BÖSCH CHARIMAN OF THE EUROPEAN PARLIAMENT'S COMMITTEE ON BUDGETARY CONTROL AT THE EUROPEAN COMMISSION SEMINAR FOR MANAGING AND CERTIFYING AUTHORITIES "CONTROL OF STRUCTURAL ACTIONS - MEETING THE CHALLENGE" 10 JUNE 2008 CHARLEMAGNE BUILDING BRUSSELS

1 Commissioner, Ladies and Gentlemen, The role of the European Parliament's Committee on Budgetary Control which I am privileged to chair is - among other things - to draw up a report on the discharge to the European Commission vis-à-vis the way in which it implements the EU-budget. The Committee has basically two options: either to grant discharge or to postpone discharge until the Commission complies with certain conditions. In April of this year Parliament granted discharge to the Commission for the 2006 financial year. During the whole process leading up to the final vote in plenary it was not a given thing that Parliament would grant discharge. On the contrary. When the European Court of Auditors in its 2006 Annual Report stated that - and I quote - "at least 12% of the total amount reimbursed to Structural Policies should not have been reimbursed" (paragraph 6.39) it was clear that the discharge procedure for the financial year 2006 would be different from previous years. Very early in the process both the rapporteur and the shadow rapporteurs stated that it would be "very difficult" to grant discharge under these circumstances. The idea of a possible "postponement of discharge" arose. Parliament noted in particular that the Court's findings showed that of the 19 control systems audited 13 were "ineffective", 6 were "moderately effective" and 0 - none - were effective. (Table 6.4). Ladies and Gentlemen, when Members of the European Parliament grant discharge we are saying to the European taxpayers and to our voters that EU money has been properly used. The recently finished discharge procedure highlighted the continued and unacceptable weakness in the control of money for structural funds and I think we were very generous and very comprehensive when in April we granted discharge for the 2006 financial year. Finally discharge was granted because Parliament felt that the Commission had done what was possible in order to put pressure on Member States to make improvements. The Committee on Budgetary Control is following very closely the implementation of the Commission actions and the concrete results at the level of Member States and our appreciation of signs of progress will be a key issue for the next discharge process. We expect to be able to see firstly that the closure of programmes for the 2000-2006 period will be done rigorously, so as to ensure that any past errors have been corrected.

2 Secondly, for the new period for 2007-2013, we are looking for evidence that the "stronger" - according to the Commission - control framework in the General implementing regulation (Council Regulation No 1083/2006) is delivering results. Under that regulation 308 billion euros are available for Structural Operations. 308 billion is equivalent to the Gross Domestic Product of Belgium. It is sufficient to buy about 15.000 High Speed Trains or - if you prefer to fly - about 1.400 Airbus A 380s. It is an enormous amount of money and you, ladies and gentlemen, are in the front line as regards the control of these funds. The first level of control is the most important one in any system. If this level is weak then there is a high risk of error and there is never the certainty that the errors will be detected and corrected by other levels of control. I therefore very much welcome the organisation of this seminar which focuses on the role of managing authorities responsible for the first level controls, and on the certification process. As regards the Managing Authority the Court stated in its 2006 Annual Report that the main weaknesses were "the insufficient on-the-spot checks of the reality of expenditure and the failure to identify that cost statements were not supported by appropriate evidence." As regards the Paying Authority (under the new regulation "Certifying Authority") the main weakness was "the failure to identify that the Managing Authority had not carried out adequate day to day checks." (Paragraph 6.33). My conclusion is that the room for improvement is large. It seems that the problem does not lie in the legal framework as such but in the implementation of the legal framework. The implementation, ladies and gentlemen, is in your hands and I sincerely hope that you will take up the challenge. I also hope that the Commission will give you the means necessary to assure that there is a shared understanding of the standards and benchmarks. The Cohesion Policy will take the most important share of the Community budget. It is implemented under shared management which means that actions are implemented by authorities and bodies belonging to and located in the Member States but that final responsibility for the money used, and therefore for the functioning of these national bodies lies with the European Commission. I think it is fair to say that so far the experiences with this management mode have not being overwhelming positive.

3 If shared management can be improved here you have the chance to do it. It is essential for the credibility of shared management that, right from the beginning of the new programmes, there is clear evidence of better and more effective management. We have just begun a new programming period. In my view your efforts in relation to the successful closure of the 2000-2006 period and sound start up of the new programmes will have significant influence on the future debate on the nature and shape of a possible next programming period for structural actions. Member States must accept their responsibilities and they must demonstrate this in a clear and concrete way. It was to this end that Parliament already in its 2004 discharge report proposed the introduction of national management declarations. The Council - and that means national finance ministers - has decided that this is not

• necessary. Instead we now have the annual summaries in which Member States give

an account of the controls that have been carried out each year. Parliament considers the annual summaries to be an important accountability instrument and a significant step in achieving the more ambitious objective which is the implementation of national management declarations. Ladies and gentlemen, If you find the tone of my intervention a little pessimistic I will not contradict you, because it is becoming increasingly difficult to explain to the public the problems that we face in the implementation of Structural Policies. You are a very important part in the solution of this problem. Will you accept the challenge? I very much hope that your future work with implementation under the new regulation will show that there are good reasons for being optimistic. I wish you all the best of luck and a successful and profitable seminar. Thank you for inviting me to speak here today and thank you for your attention