Ireland efficient at getting funds, EU auditors find

Ireland remains among the EU member states most efficient at applying for, absorbing and using EU funds, the annual report of the union's Court of Auditors reveals.

The report, published by the Luxembourg-based audit office, warns, however, that some €267 billion in the EU budget allocations for the 2014-20 period, remain untouched – a huge figure that represents twice the annual spend of the EU.

In 2017 EU commitments of €159 billion had been planned but payments of only €125 billion were disbursed mainly due to member states submitting fewer applications for structural and investment funds.

In 2017 Ireland drew down €297 million in funds tentatively allocated to it in the current budget period, while some €926 million remains unclaimed. The outstanding commitments represent some 1.2 per cent of Government expenditure.

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The court is confident that 98 per cent of the overall budget allocations will eventually be claimed and spent, but warns that the lateness of such spending reflects poor planning, unrealistic expectations and will seriously complicate budget management. Not least in the negotiations for the next budget which are currently underway.

The worst offenders are Poland and Italy whose unclaimed allocations run to €33 billion and €21 billion respectively – in Poland’s case some 17 per cent of its annual government spending.

The EU spent some €137 billion in 2017 – Ireland received €1.5 billion in agriculture subsidies out of its total receipts of €1.8 billion. It contributed €2 billion to EU coffers, making it a net contributor with the smallest of the union’s net contributions of only 0.07 per cent of GNI.

The auditors concluded that the EU accounts present a true and fair view of the EU’s financial position for the second year in a row. The level of irregularities in EU spending continued to decrease, with the estimated level of error in payments during 2017 down to 2.4 per cent from 3.1 per cent in 2016 and 3.8 per cent in 2015.

Error rate

The error rate reflects funding that was misspent – ie on projects that were outside a programme’s remit – or misaccounted for, for example, farmers submitting an incorrect agricultural area, project promoters not adhering to public procurement rules, or research centres claiming for reimbursement of costs not linked to EU-funded projects.

It does not reflect fraud, indications of which the court found in only 13 cases out of 700 programmes sampled, and which it reported to the EU anti-fraud office, Olaf.

The underclaiming by member states reflects a number of different problems that need to be addressed by the commission in its budget planning, Ireland’s member of the court, Tony Murphy argues.

Some states, notably in eastern Europe, do not have the “absorption” or administrative capacity yet to handle the EU grants system and the planning required; others face budgetary problems finding co-funding for programmes, and the figures reflect money spent but not claimed.

The court’s president, Klaus-Heiner Lehne, warns politicians that the EU budget must be seen in a diferent perspective:

“Arguably, the EU achieves most of its impact through regulatory actions and, for example in the area of trade, international agreements. Its budgetary significance is much smaller. Although the total EU budget of some €140 billion annually is very large, it is no more than about 1 per cent of the gross national income of the entire EU. Total government spending by the EU countries themselves is 50 times greater....

“ Yet at the same time we have to be realistic about what can be achieved with the money entrusted to the EU, all the more so as we approach the next MFF [budget]. If we generate expectations which cannot be achieved, we lose credibility in the eyes of our citizens; more importantly, we lose their trust. The conclusion is straightforward: the EU should not make promises if it cannot deliver. “