EU misspent €6.3bn in 2014

By Annie Harrison-Dunn

- Last updated on GMT

'Policy makers need wholly new approach to the management of EU spending and investm​​ent,' says European Court of Auditors report
'Policy makers need wholly new approach to the management of EU spending and investm​​ent,' says European Court of Auditors report

Related tags European commission European union

The EU misspent €6.3bn in 2014 overall, according to a report from the European Court of Auditors that called for change. 

EU spending totalled €142.5bn in 2014 – or around €285 per citizen – and represented nearly 2% of total general government spending of member states.

However the annual report​ on overall EU spending recommended a total rethink of spending policy, which it said equated to a ‘spend first, check later’ strategy.

"Based on our findings, we believe policy makers need to develop a wholly new approach to the management of EU spending and investm​​ent,"​ the report concluded.

The greatest misspending came under ‘competitiveness for growth and jobs’ and ‘economic, social and territorial cohesion’.

Dr Luca Bucchini, managing director of Italian-based Hylobates Consulting, said he thought the Commission was spending too little on policy-making in the area of food, supplements and nutrition, and money that was directed to this sector was being misspent.

He said EU taxpayers would get the best return from EU investment if money was spent on good policy making and on developing the single market.

“For a food supplement SME, it is probably more important to have actual and easy access to all EU markets rather than a lump sum from the EC to develop botanicals it can't then sell across Europe.”

Last week we reported that Spanish botanical firm Monteloeder was shooting for a €2m grant​ ​through the EU’s Horizon 2020 innovation programme.

If successful this would add to the €50,000 already secured through the same scheme.

Errors on the horizon 

The Horizon 2020 innovation programme was noted in the audit report under ‘competitiveness for growth and jobs’, which accounted for a €13bn slice of the total €142.5bn EU budget.

‘Competitiveness for growth and jobs’ fell foul to an estimated 5.6% level of error – up from 4% in 2013 and the second highest level of error after spending on ‘economic, social and territorial cohesion’ (5.7%).

Horizon 2020 is the biggest ever EU research and innovation programme, with about €80bn of funding up for grabs between 2014 and 2020.  

European Court of Auditors: “The EU budget is financed by various means.​ The largest proportion is paid by member states based on their gross national income (€94.9 billion). Other sources include payments by member states based on the value added tax they collect (€17.7 billion), as well as customs and agricultural duties (€16.4 billion).”

The programme sought to improve research and innovation by supporting “education systems and promoting employment, ensuring a digital single market, promoting renewable energy and energy efficiency, modernising the transport sector and improving the business environment, especially for SMEs”.

Research and innovation accounted for about 60% of spending.

Yet the audit revealed holes in the assessment of reimbursed project expenses.

It gave the example of €764,000 in costs declared by an SME working with 16 partners on a renewable energy project.

“The SME owner had charged an hourly rate well above that set in the Commission’s guidelines. Moreover, we identified sub-contracting costs which were neither an eligible component of costs nor procured by means of a tendering procedure,”​ the report said.

“The declared indirect costs also included ineligible items, which were based on estimates and could not be reconciled with the beneficiary’s accounting records.”

Staffing challenges

In terms of spending from the European Commission itself, there were little complaints.

The auditors said the EU’s administrative costs of €8.8bn were relatively free of misspending.

However Bucchini said internal dealings were threatening efficiency of projects. 

“Turn-over of officers is relatively high, and it may be difficult to ensure leadership and ambition in policy-making in areas we care about if staff are not highly qualified and motivated,” ​he told us.  

“It's hard to keep together member states on issues if the Commission does not have the most qualified staff. Ensuring the functioning of the single market is another sore point, where skilled and motivated staff is necessary.” 

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