THE FUTURE OF THE EC DEVELOPMENT BUDGET
The Common Service Directorate (SCR: Service Commune
Relex)
53. The Commission has recently taken steps to improve
the efficiency of its aid management systems, foremost among which
is the creation of the new Common Service Directorate (SCR: Service
Commune Relex): "the establishment of the SCR will bring
responsibility for implementation of activities after approval
within a single organisation."[107]
The SCR has yet to become fully operational, and several witnesses
have noted that it is not yet possible properly to evaluate the
effectiveness of the SCR in improving the effectiveness of the
aid management system. It seems to be the case that the SCR is
widely regarded as an interim measure. This perception already
appears to have inhibited the ability of the SCR to make a meaningful
impact: we were told during our visit to Brussels that finding
staff who were willing to relocate amid such uncertainty was proving
difficult, and that this was one of the main reasons for the failure
of the SCR to become fully operational.
54. Even at this early stage, some fundamental criticisms
of the SCR have emerged. Claire Godfrey of Oxfam told the Committee,
"one of my concerns about the Common Service is the separation
of implementation and policy. At the moment it is difficult to
say whether the separation of implementation of programmes and
policy is going to lead to ineffective aid but I think it is very
important that the Common Service officials and the officials
involved in policy making coordinate very well together so that
the outcomes of evaluations, for example, are fed back into policy
making."[108]
Richard Manning told us in evidence that the establishment of
the SCR "does mean splitting the project cycle, in other
words one lot of people design projects and other people implement
them. That is a recipe for a fair amount of contention if you
do not get it right."[109]
55. We have already commented upon the failure of
the Commission to take into account the ability of the various
programmes to spend the budgets allocated to them. We have also
heard criticisms relating to the extent to which project and policy
evaluations are fed back into the project design cycle.[110]
Helen O'Connell said that, "The European Community has been
slow..in evaluating what it does and actually learning from experience...We
need to find ways of ensuring that the Commission learns from
its mistakes and from its successes.[111]
Clare Short considered it "a political imperative to get
improvement and commitment to the evaluations."[112]
Several important reviews of EC external assistance are currently
underway, including a general review of external assistance, and
a review of the MEDA programme. It is, of course, essential that
the findings of these reviews are fed back into discussions on
the future of these programmes, and at a more detailed level into
programme design. We are concerned that the establishment of
the SCR, and the separation of policy and implementation which
it involves, may further erode the already fragile link between
evaluations and future programme design. Evaluations should not,
however, only influence future programmes but also future budgets.
We recommend that all future budgetary proposals for development
programmes include an account of past overspends and underspends,
and of all relevant evaluation reports, with a detailed justification
of the funds proposed in the light of this information.
56. The OECD DAC has recommended that "although
[the SCR] seems to simplify and rationalise procedures, it will
not be sufficient in itself to resolve the problems inherent in
the complexity of the organisation, the proliferation of budget
lines and regulations, and the heavy reliance on cumbersome financial
and formal controls."[113]
DFID endorses the findings of the OECD DAC[114]
but has, however, pledged its support to the SCR, at least in
the short-term: "we will, through support for the work of
the Common Service, seek to harmonise and streamline EC aid management
procedures, and strengthen evaluation, to reflect best international
practice, and to improve the quality and effectiveness of the
EC's assistance programmes."[115]
57. One potential benefit of the SCR is an increase
in the efficiency with which the Commission follows up contracts
with payments, and a significant reduction in the huge backlog
of late payments to consultants and NGOs. We have heard in evidence
that there are some 43 procedures for contracting and procurement
for the Commission's external relations budget.[116]
This can only increase inefficiency in disbursing funds to NGOs
and consultants. Richard Manning told us that the Director of
the SCR was in the process of formulating proposals for a single
set of procedures to be implemented in all the RELEX DGs: "He
is undertaking as his main priority a systemisation of all the
financial procedures and over the next 12 months most of these
financial protocols come up for review. There is an opportunity
to bring procedures together. We should like to see ... a single
tendering, a contract procedure for all the budget based programmes
... a single payment procedure instead of different ones."[117]
Such measures, if implemented successfully, would clearly assist
the Commission in clearing its backlog of payments, and prevent
such a backlog from occurring in the future.
58. The establishment of the new Common Service
Directorate (SCR) represents a welcome gesture on the part of
the Commission towards increased coherence in the management of
external action expenditure. We trust that once it is fully operational,
it will contribute to greater efficiency in the disbursement of
resources and in particular a significant reduction in the backlog
of undisbursed commitments and unmet contractual obligations.
59. The SCR will not, however, as DFID has pointed
out, resolve the various and far-reaching problems which currently
face the management system which is responsible for the disbursement
of the EC external action budget. The external action budget
is implemented by four Directorates-General and ECHO. Numerous
commentators have noted that the management of the external action
budget lacks coordination at a policy level. DFID has stated,
both in evidence to this inquiry[118]
and in its recent Institutional Strategy Paper on the EC, that
"there is no coherent overall approach to the management
of external assistance."[119]
DAC peer reviews of EC aid have repeatedly criticised the EC's
aid management system: "As the last review noted, no unit
or development official has overall responsibility for coordination
of Union development-cooperation below the level of Commissioners.
Although there are some elements of coordination deriving from
the existence in almost each area of development policy of various
policy papers, communications, conclusions, resolutions, guidelines
— this organisational framework has led to a splintered
aid management system."[120]
60. It is clear that a management structure which
is subject to no overall policy coordination cannot be conducive
to a coherent approach to policy, budgetary allocations, or implementation.
Against such an uncoordinated background, it is hardly surprising
that the allocation of resources within Category 4 of the EC budget
has not reflected the policy declarations of the Council of Ministers
in any systematic way, as we have demonstrated earlier in this
Report. Even within Directorates-General, there are conflicting
political pressures. This is particularly evident within DGIB,
which is responsible for the administration of both the ALA and
MEDA programmes. The creation of the SCR will not address these
problems because it will be responsible for implementation, not
policy or project design, and will presumably therefore have only
a minimal input into resource allocation. Nor will the creation
of a new budget category for pre-accession aid, and any subsequent
reorganisation of the remaining programmes within Category 4,
necessarily induce a change in the management structure of the
Commission.
61. We have heard in evidence that a new President
of the Commission is likely to be elected in June 1999, with the
allocation of Commissioner portfolios expected to take place by
October.[121] The
new Commission provides an ideal opportunity for an examination
and possible restructuring of the management of the EC's development
programme.
62. Richard Manning told us that "there is a
lot of talk in Brussels about what a new Commission might do when
it comes into being and how in particular it might want to restructure
the external services."[122]
Given this climate of change, it will be of vital importance that
the UK grasp the opportunity for far-reaching and fundamental
reform of the external action budget management structure. Whilst
the establishment of the new SCR may go some way towards improving
coherence and efficiency, it does not represent the full extent
of the reform which needs to take place if the EC is to fulfil
its enormous potential in making progress towards the international
development targets.
63. The DFID Institutional Strategy Paper on the
EC predicts that "the reorganisation of the Commission for
the year 2000, which will see the creation of a single vice-presidency
for external relations, provides an important opportunity to rationalise
the management of the EC's contribution to international development.
The current arrangements, with responsibility split between five
commissioners, do not foster a coherent approach. We will promote
the establishment of a single Directorate General in the Commission
responsible for external assistance programmes."[123]
We wholeheartedly support this aim. Within the new Vice-Presidency,
which will presumably coordinate the work of the various Relex
directorates-general, there must be a radical management structure
overhaul.
64. The only way to ensure that development priorities
receive due attention in future discussions surrounding budgetary
allocations is to create a separate Directorate-General for Development,
with exclusive responsibility for official development assistance.
We support DFID's promotion of the establishment of a single Directorate-General
for external assistance programmes. This Directorate-General should
be responsible both for budgetised EC aid and the EDF, and should
introduce all those tools of accountability taken for granted
in other organisations: a comprehensive and detailed policy statement;
an annual report; a transparent budget and a European Commission
document equivalent to 'British Aid Statistics'.
107 DFID Institutional Strategy Paper on the EC p.3 Back
108 Q190 Back
109 Q26 Back
110 Q174 Back
111 Q174 Back
112 Q262 Back
113 OECD
DAC Development Assistance Review series No. 30, 'European Community',
1998, para 37 Back
114 DFID
Institutional Strategy Paper on the EC p.2 Back
115 DFID
Institutional Strategy Paper on the EC p.7 Back
116 Q32 Back
117 Q30 Back
118 Q25 Back
119 DFID
Institutional Strategy Paper on the EC p.3 Back
120 OECD
DAC Development Assistance Review Series No. 30, 'European Community',
1998, para 133 Back
121 Annex
p.xlvii Back
122 Q26 Back
123 DFID
Institutional Strategy Paper on the EC p.6 Back
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