epp group position paper

on the MFF Mid-Term Review and Revision

EPP Group Position Paper

EN

EPP Group Position Paperon the MFF Mid-Term Review and Revision

on the MFF Mid-Term Review and RevisionThe purpose of this Position Paper is two-fold: firstly, to identify the legal framework and political context in which the MFF (Multi-annual Financial Framework) Mid-Term Review/Revision will take place; and secondly, to set out the position of the EPP Group as regards the overall scope, content and objective of this exercise, including the identification of specific priority areas and demands both for the second half of the MFF cycle, as well as the post-2020 MFF.

EPP Group Position Paper

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Table of Contents

1. General background and legal framework . . . . . . . . . . . . . . . . . 5

2. Recent political developments push the current MFF to its limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3. Framing the MFF Mid-Term Review and Revision . . . . . . . . 9

4. Identifying political priorities and budgetary requests for the second half of the MFF period . . . . . . . . . 13

5. Addressing open questions for the post-2020 MFF . . . . . 17

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1. General background and legal framework

In the 2014-2020 MFF negotiations, the European Parliament insisted not only on a Mid-Term Review (meaning an assessment and evaluation of the functioning of the MFF), but also on a Revision that implies a legislative proposal to modify the MFF Regulation.

As a result, Article 2 of the MFF Regulation obliges the European Commission to present a review of the functioning of the MFF before the end of 2016 that shall be accompanied, as appropriate, by a legislative proposal for a revision of the MFF Regulation. The review should serve the purpose of a reassessment by the institutions of the priorities of the EU, while taking into account the current economic situation and the macroeconomic forecast. In a separate declaration annexed to the MFF Regulation, the Commission confirmed its intention to submit legislative proposals for the revision of the MFF Regulation.

The only limitation to the scope of such a revision is that it shall not result in a reduction of pre-allocated national envelopes (e.g. cohesion, rural development).

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Two years after the start of the 2014-2020 MFF period, the context in which the current framework applies has evolved and new crises and priorities have emerged that require a substantial amount of additional funding from the EU Budget (e.g . migration and refugee crisis, external crises, internal security, backlog of unpaid bills, funding of the European Fund for Strategic Investments (EFSI), continuation of Youth Employment Initiative, the crisis in agriculture). As a result,

the current MFF has already been pushed to its limits, with an unprecedented recourse to special instruments for flexibility over the past two years. The special instruments were mobilised to address the refugee crisis (Flexibility Instrument, exhausted in 2016) and the problem of shortage of payments and unpaid bills (Contingency Margin in 2015), as well as to finance the EFSI Guarantee Fund (Global Margin Commitments in 2016).

2. Recent political developments push the

current MFF to its limits

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The EPP Group demands a comprehensive, wide-ranging review of the functioning of the MFF that subsequently leads to a compulsory legislative revision of the MFF Regulation (and the accompanying Inter-institutional Agreement).

The MFF Mid-Term Review should be carried out based on its actual implementation, the new economic situation, macroeconomic projections and emerging new priorities. It should pay particular attention to the operation of all MFF flexibility provisions and special instruments, including the Global Margin for Commitments and the Global Margin for Payments.

The Commission should draw concrete lessons on how the EU Budget is being spent and whether it is delivering on key policy priorities. The notion of Performance-based Budgeting should be at the forefront of this exercise, with the Commission making concrete proposals to that effect.

As regards specific EU policies and programmes, the Commission is obliged to present mid-

term evaluation reports in the course of 2017, followed, in some cases, by the mid-term revisions of their respective legal bases. While acknowledging that the MFF Mid-Term Review will not, as such, be the occasion to revise the substance of the EU legislation that underpins EU policies, the EPP Group considers that this exercise provides a unique opportunity for the European Parliament and its respective Committees to launch a debate on the performance and functioning of all EU policies and programmes.

The EPP Group stresses that the identification of EU programmes for which additional investment is considered necessary for the second half of the MFF, should go hand-in hand with an in-depth analysis of their performance against stipulated targets and objectives, absorption capacity and EU added-value. Whilst respecting the pre-allocated national envelopes, the EPP Group calls for the structural funds to also contribute to addressing arising challenges, like the consequences of the refugee crisis. Furthermore, it stresses the need to optimise synergy between the ESI

3. Framing the MFF Mid-Term Review

and Revision

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(European Structural and Investment) Funds and financial instruments, including the EFSI.

The EPP Group considers that the findings of the MFF Mid-Term Review should serve as the basis for the legislative revision of the MFF Regulation. Given the exhaustive use of the MFF flexibility provisions and mobilisation of special instruments over the past two years, the EPP Group believes that the ceilings of the current MFF have de facto been exceeded, for instance, in the fields of migration and security (Heading 3), leading to the creation of unsustainable conditions for the functioning of the MFF during the second half of its cycle. The EPP Group advocates, therefore, in favour of a genuine mid-term revision, both of the MFF ceilings and of the specific provisions of the MFF Regulation, which takes proper account of the findings of the review and provides the EU with a viable budgetary framework to address its political priorities and challenges.

The Commission should present its proposals on the MFF Mid-Term Review and Revision by the end of 2016. The EPP Group strongly believes that scarce resources should not result in a reduction of EU common priorities. It is convinced that now is the time for more Europe, which should be confirmed during the upcoming MFF Revision. The Group considers that the MFF Revision should be swiftly concluded, to allow for sufficient time to prepare the Commission proposals for the post-2020 MFF, due to be presented by 1 January 2018.

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4. Identifying political priorities and

budgetary requests for the second half

of the MFF period The EPP Group considers that delivering on the Europe 2020 Strategy remains the main priority to be supported by the EU Budget. Yet, recent political developments - as set out above – also require particular attention. Consequently, the following priority areas should be at the centre of the upcoming MFF Review and Revision:

> Promoting growth, jobs and competitiveness through targeted research and infrastructure investment at EU level. The European Structural and Investment (ESI) Funds have this goal as a first priority. Moreover, the EPP Group stresses the importance and unique contribution of key EU programmes, notably Horizon 2020 and the Connecting Europe Facility. The MFF Review and Revision should tackle the issue of fully compensating for the EFSI-related cuts to those programmes, in order to

allow them to accomplish their respective objectives, agreed only two years ago.

> Effectively addressing the problem of unem-ployment, and in particular youth unem-ployment, in the European Union. The EPP Group reaffirms that the fight against unem-ployment is at the top of its political agenda and calls for the continuation of the Youth Employment Initiative, following a fully- fledged assessment of its performance and subsequent adjustments to overcome existing implementation impediments. This entails the provision of new commitment appropria-tions as of 2017, given that the entire original envelope of this programme was frontloaded in the years 2014 and 2015. A strong message to young people that they remain a priority.

> Effectively addressing the migration and refugee crisis at European level, both its internal

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and external dimension, with a comprehensive approach including sufficient means from the EU Budget as well as appropriate legal measures. The aim must be to remedy the current shortcomings/impracticalities of EU asylum policy (in particular regarding external border and coastal protection and distribution) and to satisfy the principles of solidarity and fair burden-sharing stipulated by Article 80 of the Treaty. With reference to the budget, this should entail an adequate upwards revision of the MFF ceilings for Headings 3 (“Security and Citizenship”) and 4 (“Global Europe”). Given the dramatic recent events and the magnitude of this crisis, it is impossible to tackle the challenges ahead with the financial decisions of 2013.

> Ensuring internal security in the EU and fighting terrorism. To address the budget needs, an upward revision of the MFF ceilings in Heading 3 could be envisaged.

Taking account of evolving priorities and their additional budgetary needs, the EPP Group considers that an assessment of all EU policies should be conducted, in order to confirm the level of political engagement and commitment that they represent for the Union.

The EPP Group also believes that the MFF Review and Revision should effectively tackle a number of outstanding budgetary issues that relate directly to the functioning of the MFF:

> Preventing a future payment crisis in the EU Budget, considering especially the very difficult situation that lies ahead for the last years of the MFF (such as the compulsory offsetting of previous and already foreseeable new mobilisation of the Contingency Margin and the delayed start of the cohesion programmes). The EPP Group considers that a new 2016-2020 payment plan should be decided to prevent a future backlog of unpaid bills. The issue of budgeting for the payments of the MFF special instruments should be resolved during the MFF Revision and those should be calculated over and above the MFF ceilings. Further, the EPP Group is convinced that the transfer of the unspent surplus resulting from the annual implementation of the EU Budget, including fines, to the following years, would contribute to easing the payment problem.

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> Assessing all the flexibility provisions of the MFF Regulation so as to remove constraints that might impede their full utilisation and improving their performance. This includes assessing the restrictions imposed on the transfer of unspent appropriations to the following years, or the compulsory offsetting in the mobilisation of the Contingency Margin.

A special procedure should be set up to guarantee the availability of the necessary financial resources, either at EU or at national level, to allow the full implementation of the political decisions taken by the European Council.

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The EPP Group stresses the need to address, in the course of the MFF Mid-Term Review and Revision, a number of issues that will only apply in the post-2020 MFF. The urgency of settling these matters now is linked to the very tight timeframe between the MFF Mid-Term Revision and the Commission proposals for the next MFF. Those topics include:

> The duration of the MFF cycle after 2020. The EPP Group supports a solution that aligns the MFF duration with the political cycle of the European Parliament and the Commission, while preserving the need for stability for the programming cycles of the multiannual programmes under shared management.

> A system of genuine own resources. While waiting for the results of the High-Level Group on own resources in 2016, the EPP Group reaffirms its political commitment to a genuine system of own resources for the EU Budget. This entails the introduction of new own resources in the post-2020 MFF, which will reduce the share of GNI national contributions to the EU Budget. Such reflection needs to take place as part

of the MFF review, in order to pave the way for the political endorsement of new own resource initiatives, in time for them to be applicable in the next MFF. The new system should end the anti-European and purely accounting vision of “fair return” that places disproportionate emphasis on net-balances between Member States and has regrettably dominated the budgetary debates in the Council for many years.

> Unity of the budget. The EPP Group strongly defends the notion of “unity of the EU Budget” on the grounds of democratic accountability and transparency. It reiterates, therefore, its call for the integration in the EU Budget of the European Development Fund, while ensuring the financing of the APF (African Peace Facility) and security-related operations. The integration of such ad-hoc instruments in the EU Budget implies that their financial envelopes are added to the respective MFF ceilings. The recent creation of ad-hoc instruments outside the EU Budget, resulting from the recent refugee and migration crisis, should also be addressed in this light during the MFF Review and Revision. In this context,

5. Addressing open questions

for the post-2020 MFF

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the EPP Group considers that any possible, new budg etar y capacit y spe cif ica l ly for Eurozone Member States must be developed within the Union framework and must be subject to proper democratic scrutiny and accountability through the existing institutions. Financial assistance from this capacity must be conditional upon the implementation of agreed structural reforms.

> Maximum flexibility. Notwithstanding the important progress on flexibility marked by the inclusion of new provisions in the 2014-2020 MFF, the experience of the past two years shows that further effort is needed to make the budget more flexible and responsive to unforeseen events. For the post-2020 MFF, the EPP Group envisages more internal flexibility between the headings and years that will also allow for the maximum utilisation of the new MFF ceilings.

> Added Value. The EPP Group is convinced that EU spending should be guided by the generation of clear European added-value rather than national interests. Hence, an unbiased discussion of the future political priorities of the Union should be launched with the MFF Review and Revision.

> Timely agreement on the next MFF. The EPP Group insists that the legislative process to adopt the next MFF should start by the end 2017, to be concluded by the end of 2018, following substantial negotiations between the European Parliament and Council. It calls for effective MFF negotiations to avoid deadlocks and ensure a timely conclusion of the MFF agreement, providing space to negotiate sectorial EU legislation before the next programming period, to avoid delays in the implementation of new programmes.

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Published by: EPP Group in the European Parliament Press and Communications Service Publications Team

Editor: Pedro López de Pablo

Responsible: Greet Gysen

Coordinator: Daniela Bührig

Revision: Mark Dunne

Address: European Parliament, 60 Rue Wiertz, B-1047 - Brussels

Internet: www.eppgroup.eu

E-mail: [email protected]

Copyright: EPP Group in the European Parliament

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