EU Cohesion Policy – poor supervision and lessons not learned

The European Union's Cohesion Policy - the bloc's main spending area, which accounts for a huge part of its funds - is still characterized by poor quality controls and persistent errors. This is the conclusion of the auditors of the European Court of Auditors who carried out an "Overview of the assurance framework and the key factors contributing to errors in 2014-2020 cohesion spending".

Both levels of protection for the spending of European money – national auditor bodies and member states’ governments – fail to enforce sufficient control over the spending of money from Brussels and it ends up not being spent according to national and European rules.

What are the errors?

The level of errors in cohesion spending for the period 2014-2020 is lower than for the period 2007-2013, but remains substantial, the report said. The auditors also noted that the "assurance framework" - a set of measures aimed at reducing the "error rate" in spending compared to previous budgets - helped reduce the level of misspending from 6% to 4.8%, but this remains quite above the level that the EU wants to achieve – 2%.

The ECA identified three main causes of errors: problems related to insufficiently good administration by Member States' authorities; issues related to negligence or (alleged) intent; and issues related to the regulatory framework at the beneficiary level.

Half of the additional errors identified by the ECA fall under the category of "insufficiently capable administration" and are expressed in inappropriate decision-making and control practices by managing authorities, as well as weaknesses in the work of audit authorities.

Which countries make the most errors?

There are substantial error rates in most member states receiving the bulk of cohesion funding. Italy and Hungary have the largest share of violations in the field of public procurement during this period.

The Commission and Member States are working together to deliver benefits for citizens from EU Cohesion Policy, but they need to do more to ensure that spending follows the rules," said Helga Berger, the ECA member responsible for this review. "When we talk about control measures, there are many actors in this area, but there are simply no results."

The ECA's review of the findings of previous reports and of the information published by the Commission for the 2014-2020 spending period shows that the assurance framework for the Cohesion Policy has not effectively reduced errors. This therefore points to the need for further improvements in the way the framework is implemented by both Member State authorities and the Commission.

The auditors recommend providing clearer guidance to member states, simplifying rules and carrying out more compliance checks.

1/3 of the EU budget

Cohesion Policy is a major spending area, accounting for over a third of the EU budget for the 2014-2020 period. It aims to promote the development of the EU through measures to strengthen economic, social and territorial cohesion and to reduce inequality between the regions. Financial support is provided through three main funds, namely the European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social Fund (ESF), complemented by the Youth Employment Initiative (YEI) and the Fund for European Aid to the Most Deprived (FEAD). Cohesion policy funding usually requires co-financing from member states to ensure that the funds are spent properly.

In the period 2014-2020, according to the Cohesion Policy, 409 billion euros were spent for all member states. At the end of 2023, take-up rates varied widely between them though, from 74% in Spain to 100% in Hungary, Cyprus, Lithuania and Estonia. By the end of 2023, 852 million euros or 11% of unabsorbed funds remain in Bulgaria.

There are nine member states that account for 76% of the funds spent on cohesion policy: Poland, Italy, Spain, Portugal, Hungary, Czech Republic, Romania, Greece, and Germany. These member states account for 91% of the error rate calculated by the ECA. In addition, the majority (90%) of all errors with a high impact were found in said countries.

Co-financed by the European Union. The views and opinions expressed, however, are entirely those of their author(s) and do not necessarily reflect the views and opinions of the European Union or the European Commission. Neither the European Union nor the European Commission is responsible for them.

Translated by Tzvetozar Vincent Iolov