Select Committee on European Scrutiny Seventeenth Report


PART V

INSTITUTIONAL REFORM OUTSIDE THE SCOPE OF THE IGC

156. The UK Government has emphasised that a number of developments taking place outside the IGC are as important for adapting the institutions to enlargement as are any Treaty changes[197]. Chief among these are the measures being taken to reform the Commission, and the review of the operation of the Council of Ministers.

Internal Commission Reform

157. Following the two reports of the group of "Wisemen" on the financial management of the Commission[198], President Prodi initiated an extensive review of the Commission's operation. A Task Force for Administrative Reform was established, headed by a high ranking Commission official, Claude Chêne. It holds monthly meetings to consider proposals for reform based on the advice of the Reform Group of Commissioners[199]. The Group will define the reform strategy and oversee the implementation of agreed measures.

158. At its first meeting, on 18 September, the new Commission adopted a series of texts on internal reform: a Code of Conduct for Commissioners; a Code of Conduct for Commissioners and Departments; Rules of Procedure of the Commission; Principles for the establishment and operation of working groups of Commissioners; Principles for closer internal co-ordination; and Rules of conduct for appointments to posts in grades A1 and A2 (senior management grades in the Commission)[200].

159. The Commission started to put its programme of reform into effect in the autumn. One of the better publicised developments was a re-organisation of the Directorates, particularly in the area of external relations, to try to rationalise the administration, and to provide clearer parameters of responsibility. It is as yet too early to see the benefits, if any, of these changes. In addition, to promote coherence and a common ethos, and to break the habit of regarding certain posts as the birthright of particular nationalities, there was a reshuffle of Directors General, particularly focussing on those who had stayed too long in one post[201].

160. At the same time, it was decided that Commissioners should no longer have offices together but instead should be physically based in their own departments. The size of their Cabinets was reduced and they were required to make their Cabinets more international[202]. The Commission also felt that there had been insufficient demarcation of the rôles of the Cabinets and the departments: the new Code of Conduct for Commissioners and Departments lays down the division of responsibilities between Cabinets and departments[203]. Commissioner Kinnock emphasised to us that these changes are designed to allay any suspicion that Commissioners can build their own 'empires'[204].

161. Overall, the Commission has emphasised that, in order to provide good service to both European taxpayers and their representatives in the other European institutions, it needs to promote an ethos of independence, responsibility, accountability, efficiency and transparency. It has highlighted a number of specific actions to develop this culture: a proposal for an Inter-Institutional Agreement for a 'Committee on Standards in Public Life'; new rules on public access to documents[205] (these have already been published, and are being criticised in some quarters as being at least as, if not more, restrictive as the present rules); a code of conduct for relations with the EP; and measures to ensure prompt payment of money owed by the Commission.

162. The Commission has now turned its attention to more detailed reforms. On 19 January Commissioner Kinnock published a consultation document entitled Reforming the Commission[206], a blueprint for a "comprehensive Reform Strategy" on which he sought the views of the Commission staff, the European Parliament and the Council, and which was a precursor to a White Paper issued by the Commission on 1 March[207]. The consultation document and the subsequent White Paper have been criticised in some quarters as trying to force an alien "northern" (or even "British") model of public service management on the Commission. Some elements in the original consultation document were abandoned or modified in the White Paper[208], but the core proposals remained.

163. In his preface to the consultation document, Commissioner Kinnock analysed the problem as follows:

    "Over the decades, ever-increasing obligations — particularly executive functions — have been given to the Commission. Against that background the systems and procedures of the Institution have become outdated, the burdens of work have been unevenly distributed, responsibility has been fragmented and sometimes obscured, and the skills of management were not always given the necessary premium".

164. The White Paper sets out a programme to tackle this problem in the form of three strands: action on priority setting, the allocation and efficient use of resources; "human resources development"; and changes to audit, financial management and control.

165. On priority setting, the White Paper states[209]:

    "Resources have not generally been linked to priorities for two reasons. First, the Commission's own decisions on activities have generally been taken separately from those on the allocation of resources. Second, the Council and [European] Parliament have given additional tasks without approving extra resources. Moreover, the prevailing management culture emphasises control rather than objectives. The fact that results and responsibilities are not always adequately defined or assigned further compounds the problem".

166. The first action the Commission is taking is to conduct an overall assessment of its priorities, activities and resources, including the identification of activities "which can be stopped because they are not priorities with sufficient value-added at European level"[210]. This assessment is to be completed by September 2000. However, the Commission considers that "these issues [of prioritisation] need to be addressed on a more continuous basis", and is therefore proposing three further improvements. First is the establishment of a comprehensive system of "Activity Based Management"[211]. This is intended to be fully operational by July 2002[212]. (The Commission has already decided to adopt Activity Based Budgeting, which directly links objectives and activities to budgetary resources.) The second improvement relates to delegating and contracting-out functions, or, as the Commission puts it, "developing an externalisation policy". Some of the most astringent criticisms of the Committee of Wisemen were directed at Commission control over functions contracted-out (chiefly to the Technical Assistance Offices (TAOs)). As Commissioner Kinnock told us, TAOs present intrinsic difficulties of financial management simply because there is a longer chain of management and therefore weaker accountability[213]. The White Paper emphasises that the Commission is not necessarily planning to contract out more functions — nor can it totally abandon contracting out[214] — but to bring dependability and order to what already occurs by better defining what can be 'externalised'[215] and what core tasks must be retained by the Commission, and by ensuring proper public accountability for contracted-out tasks. The third area of reform is the promotion of more efficient and performance-oriented working methods by simplifying procedures, reducing the number of layers in decision-making, better co-ordination between Directorates-General and sharing best practice[216]. The aim is to draw up an Action Plan by the end of 2000. The Secretariat-General is to have the main responsibility for these tasks and, as a result, the Commission intends to appoint a second Deputy Secretary General to supervise this area.

167. A large section of the White Paper is devoted to personnel issues[217]. It commits the Commission to giving more weight to the criterion of management abilities in both selection and promotion procedures. The Commission proposes to introduce systematic evaluation of managers, and appointments will at first be for a probationary period[218]. Special training will be introduced. Managers not reaching the required standard of managerial capability "would revert to a non-management position at the same grade"[219].

168. Previous Commissions had not established strict promotion on merit[220]: there was both an over-emphasis on seniority as such and a tendency to take too much account of the nationality of potential post-holders — indeed, there were accusations that some posts had permanent "national flags" attached to them. Moreover, Commission officials were not circulated from Directorate to Directorate in the same way as, for example, senior civil servants are in the UK. As a result, it was thought, officials identified too much with the (narrow) interests of their own Directorate and took too little account of wider interests. And it was felt that women were under-represented in the senior management grades. The proposed agenda for reform therefore includes detailed provisions about recruitment, training, equal opportunities[221], performance appraisal of post-holders, the breaking down of barriers between grades so that talented individuals can be more easily promoted, and procedures for dealing with individuals who underperform. The Commission is also keen to pursue secondment (both ways) between the Commission and national administrations[222]. The consultation document summed up the new attitude: "mobility should be expected, encouraged and regarded as a career asset"[223].

169. Another element of the package of reform is initiating an effective disciplinary system[224]. As part of this a new Whistleblower's Charter is being proposed[225].

170. Not least because of reports that Commission staff were very concerned about the proposed changes to the career structure and promotion procedures, we asked Commissioner Kinnock about staff reactions. He said that he and his team were devoting a lot of time and energy to explaining the proposals to staff in order to win their understanding and acceptance. He was optimistic that staff would understand the need for the changes and the benefits to themselves[226]. He also commented that the very tight financial constraints on the Commission would not be relaxed — and therefore it would be impossible to recruit extra staff — unless and until he could convince the Member States and EP that the existing staff were being used as effectively as possible[227].

171. The perceived weaknesses in the area of financial management and control by the Commission are a primary reason for the proposed reform. Such weaknesses have been systematically identified by the European Court of Auditors for years[228], as well as by the "Wisemen", and include such matters as the current separation of financial and operational management controls (which, it is alleged, discourages managers from taking proper responsibility for their decisions[229]); overlapping responsibilities for financial control and internal audit, with the result that it may be the same person who both approves and audits items of expenditure; over-detailed procedures and rules; insufficient effort to 'fraud-proof' procedures (for example in drafting legislation relating to Structural Funds or for tendering); a culture of measuring performance by whether appropriations have been fully spent rather than on evaluating outcomes against set objectives; and slow and ineffectual action against irregularities or fraud.

172. The Commission concludes that procedures need to be "simpler and faster, more transparent and decentralised"[230]. Much of the White Paper is devoted to proposing solutions such as ensuring that managers in DGs take financial responsibilities for operational decisions; separating internal audit functions from financial authorisation; establishing the internal audit function in each DG but as part of a Commission-wide Audit Service overseen by an Audit Progress Board; and improving co-ordination between the anti-fraud office (OLAF) and other services[231]. Commissioner Kinnock assured us that responsibility for financial control would not be handed over to the DGs until the Commission was confident that all the necessary staff were in place and training had been completed[232]. However, the Commission also emphasises the need to improve co-operation with Member States as "it is in the Member States that the 'vast bulk' of expenditure that is not properly used and/or accounted for takes place"[233].

173. The Commission has set itself a tough timetable for achieving the White Paper reforms. It aims to complete internal consultation on all aspects of the White Paper by early 2001, and then immediately to start implementing measures that do not require changes to the Staff and Financial Regulations[234]. The amended Staff Regulations, covering personnel policy and pay and pensions, are to be presented to the Council by December 2001. The new Financial Regulation[235] was to be brought forward in April 2000, but has not yet appeared. The Commission underlines its dependence on the other institutions to achieve its timetable, especially the Council and the European Parliament which have to approve the new Financial and Staff Regulations[236]. "On this basis, the full implementation of the Reform proposals set out in this White Paper should be achieved by the second half of 2002."[237]

174. The UK Government has deposited in Parliament an Explanatory Memorandum[238] in which it warmly welcomes the White Paper proposals, while noting that the reforms will take time to deliver and "real change will require a political commitment throughout the lifetime of this Commission."

175. We also welcome the Commission's proposals, which seem a sensible, balanced attempt to bring the administrative structure and culture of the Commission more into line with widely accepted concepts of good practice in both the private and the public sector elsewhere in Europe. However, like the Government — and Commissioner Kinnock[239] — we note that the White Paper is just a first step. Once the Commission's immediate review of priorities is complete (in September this year) and proposals are made to axe, scale down or devolve areas of current activity, existing support for the reform process from the Commission staff, individual Member States and the EP is likely to crumble. The divisions will only be made worse if the interests of some Member States are perceived to be affected disproportionately. And the recent EP debate on the Commission's legislative programme, in which a number of interest groups suggested significant additions to the programme, does not augur well for self-restraint and a realistic view of the Commission's capacity by the other institutions in the future. Furthermore, according to press reports, some Commission officials remain deeply worried by or even hostile to the proposed reforms. Therefore, although we commend the Commission's initial approach, we anticipate considerable difficulties before long. However, given the crucial importance of this programme of reform to restoring public confidence in the Commission and — as a consequence — the legitimacy of the EU institutions in general, we urge both the Commission and the Government to continue whole-hearted support for this process.

Reform of the Council

176. Like the Commission, the EP and the Courts, the Council has been experiencing strains even before EU enlargement. Commentators have expressed general concern over whether the various formations of the Council[240] operate effectively (whether they all have a reasonable workload, whether there is sufficient co-ordination between different formations in areas of common interest), the degree of overall supervision of the different formations, and the lack of continuity engendered by the system of six-month Presidencies (and, connected with this, the adequacy of the administrative back-up to provide continuity)[241]. There have been frequent criticisms of the Council — in which we concur — on the grounds that a body with such extensive legislative powers ought not to meet in private[242]. There have also been concerns over the detailed administrative arrangements for coping with meetings of 20 or more Ministers and their officials after enlargement, ranging from the issue of interpretation to the simple need to find rooms large enough to accommodate all the participants. As a result, the Council Secretariat has undertaken an initiative to examine the working methods of the Council and put forward options for improvements.

177. In March 1999, a Working Party set up by the then Secretary-General of the Council, Jürgen Trumpf, issued its report entitled Operation of the Council with an enlarged Union in prospect, known as the Trumpf-Piris report. The report concluded that, even before enlargement and despite previous efforts at reform, there are major weaknesses in the way the Council functions. It highlighted three principal weaknesses. First, the complexity of EU affairs now makes it very difficult for a single Presidency to handle the business of the Council in all its compositions: the burden is heavy for both Ministers and their civil servants, and will increase after enlargement. Secondly, the report concluded that the system of six-monthly Presidencies has significant drawbacks for continuity. Finally, it suggested that it is increasingly difficult for the General Affairs Council to play its co-ordinating rôle[243] because the other Councils have gained in autonomy; the result is that, where Councils disagree and there is inadequate co-ordination among national government ministries, then Councils often seek arbitration from the European Council, which is not its real job.

178. The report put forward a number of options for consideration by the Member States. On the Council's legislative rôle, it advocated that the Council adopt greater openness by making public at a later time all documents relating to preparatory work on legislation, opening some legislative debates to the public and improving the provision of information on its work. It also suggested some practical changes to enable the co-decision process to function more smoothly (such as fewer and better focussed meetings, the use of sub-committees to do detailed negotiation and drafting, and more use of written exchanges).

179. The report made several suggestions intended to ease the burden on individual Presidencies; some of these entailed greater influence for the Council Secretariat itself at the expense of the successive Presidencies, but others were simply intended to promote co-ordination[244].

180. On the question of the efficiency of the current organisation of the Council formations (which is not set out in the Treaty, and is therefore for the Council itself to determine), the Trumpf-Piris report suggested that the Tourism, Youth and Civil Protection Councils could be abolished; and other Councils could be merged, with different Ministers attending according to the agenda[245]. The report recommended no longer holding joint Council meetings (because of the number of participants); and tightening procedures by Councils refraining from issuing purely declaratory texts (as a waste of time and potential source of legal difficulties) and severely limiting the use of Resolutions.

181. Co-ordination of the Council formations is currently the responsibility of the General Affairs Council, which has been criticised for not exercising it properly. There also appears to be a developing power struggle between the General Affairs Council and the Economic and Financial Affairs Council ("ECOFIN"), which is increasingly taking the view that it should have a significant rôle in co-ordinating initiatives which have financial implications. The report suggested that Member States should consider splitting the General Affairs Council into two separate compositions, with a new Institutional and Horizontal Affairs Council (composed of either junior Foreign Affairs/Prime Minister's Office Ministers or Deputy Prime Ministers) to deal with co-ordination. The other formation would then be able to concentrate on foreign policy issues[246]. On ECOFIN, the report suggested that the real problem lay at Member State level: some Member States were better at internal co-ordination over financial issues than others. If such national co-ordination took place, then, the report said, there should be clearer demarcation of the areas to be dealt with by ECOFIN. The implicit threat is that, unless Member State Governments organise their approach to EU business better, ECOFIN must be given an increased rôle in financial co-ordination by examining every proposal that has financial consequences.

182. The over-riding principle of the report's approach to the European Council is the need to uphold that Council's real rôle, which the report defines as being "a source of political impetus, an arbiter and a final decision-maker for key issues in the life of the Union: revision of the Treaties, enlargement, general guidelines for internal policies, medium-term financial perspective, certain appointments and decisions specified in the treaty". The report sought to defend the European Council from being dragged into more detailed disputes between Council formations[247].

183. Finally, the report suggested that it is necessary to face up now to the increased translation requirements and other practical difficulties arising from enlargement.

184. Not surprisingly, the Trumpf-Piris report does not tackle such key issues as the fundamental principle that a legislative body should meet in public, or the question of whether the current system of six-month Presidencies is too inefficient to be sustained. However, within its remit, the report does make a number of sensible suggestions, many of which could be put in hand by the Secretariat and Member State officials without the need for endorsement by Member State Governments[248]. We hope that these have already been put in hand because, judging by events so far, there seems little will or capacity on the part of the Member States to agree the more ambitious parts of the package. Perhaps because of the Council's addiction to secrecy, very little information has emerged about any actions that are being taken on the report's proposals; but what information there has been is not encouraging. To some extent, this is confirmed by the conclusions of the Helsinki Summit (which took place nine months after the publication of the Trumpf-Piris report), which state:

    "Substantial changes in the Council's working methods are necessary and must be gradually introduced starting now [our italics] so that by the time of enlargement, the Council can smoothly accommodate a larger membership."[249]

The Conclusions go on to endorse a large number of detailed recommendations set out in an Annex, which include the statement "the number of Council formations shall be reduced to a maximum of 15"[250]. The Bulletin Quotidien Europe of Saturday 18 March[251] reported that the General Affairs Council meeting on the following Monday would consider the question of the merger of certain Council compositions; however, in the event, the Council was inquorate and therefore could reach no decision on this subject[252]. (During our visit to Brussels, we were informed that there are fairly frequent problems with obtaining a quorum for meetings of the General Affairs Council.) When a later meeting of the Council finally did reach an agreement, the British Government together with some other Member State Governments declared some disappointment that the total number of Council formations had been reduced only to 16, instead of the 15 envisaged by the Helsinki Summit. Presumably[253], individual Member States were unwilling to surrender pet Council formations even in the interests of greater efficiency and effectiveness.

185. If this type of delay and unwillingness to think radically are typical of Member States' approach to Council reform, little of significance will be done before enlargement takes place. We think that it would be disgraceful if the Council missed this opportunity for reform. It is still the primary decision-taking body in the EU, and comparatively minor amendments to its administrative arrangements and procedures could significantly improve the quality of EU legislation. We urge the UK Government to press for implementation of the recommendations made in the Trumpf-Piris report and endorsed by the Helsinki Council.



197   QQ 34 and 71. Back

198   More properly called the Committee of Independent Experts. This was convened, following a Resolution of the EP, under the auspices of the EP and the Commission. Its first report (on allegations regarding fraud, mismanagement and nepotism in the Commission) was published on 15 March 1999 and led to the resignation of the Commission headed by President Santer; its second report (Analysis of current practice and proposals for tackling mismanagement, irregularities and fraud) was published on 10 September 1999. Back

199   This Group is chaired by Mr Kinnock and comprises Commissioners Loyola de Palacio, Michaele Schreyer, Mario Monti, Franz Fischler, Poul Nielson, Pascal Lamy, and Antonio Vitorino. Back

200   Copies of these papers have been deposited in the Library and are available on the Commission's website at http://europa.eu.int/comm/reform/refdoc/index_en.htm Back

201   For Commissioner Kinnock's comments on Member State reactions to the reshuffle, see Q 168. Back

202   The rules on size and composition of Cabinets form part of the Code of Conduct for Commissioners. The Code describes the rôle of Cabinets, and lays down the ethical standards expected of Cabinet staff, the appointment procedure, the number of staff (maximum of nine advisers in the President's office, maximum of six advisers for other Commissioners), and requires a mix of at least three different nationalities among the advisers (with preferably either the Chef de Cabinet or the Deputy Chef de Cabinet being of a different nationality from the Commissioner). Back

203   For example, some Cabinets had intervened frequently in the work of departments and some Directors-General had been denied direct access to their Commissioner: all communication had to be via the Cabinet. The new Code makes it clear that Directors-General have full management responsibility for their departments, and they must have frequent and direct contact with Commissioners. Back

204   Q 169. Back

205   Draft Council Regulation regarding public access to documents of the European Parliament, the Council and the Commission: see (20968) 5817/00: HC 23-xiii (1999-2000), paragraph 7 (5 April 2000). One of the critics of this proposal is the EU Ombudsman.  Back

206   Deposited in Parliament: document (20962) 5638/00. Back

207   For our previous consideration of this, see (21070) 6302/00 and (21071) 6302/00 ADD1: HC 23-xiv (1999-2000), paragraph 8 (12 April 2000). This document is referred to in the form "Commission's White Paper, p. x". Back

208   The changes mainly relate to personnel policy. Back

209   P. 4. Back

210   Commission's White Paper, p.1. The Commission recognises that it will be difficult to get all the institutions to agree the results of this assessment: Q 171. Back

211   Which aims at clearly defining the desired end results, and planning the allocation of human, administrative, IT and financial resources accordingly, and conversely allows "decisions about policy priorities to be fully informed by the related resources requirements". Activity Based Management is also intended to promote clearer lines of responsibility and thus accountability. Back

212   For further details, see the Commission's White Paper, pp 5-6. Back

213   Q 176. Back

214   QQ 176 and 185. Back

215   For example, the Commission's White Paper says: "Increasingly .., experience shows that many operations are best delivered close to the target group rather than centrally from Brussels": p 6; see also Q 185. Back

216   Commission's White Paper, pp. 7-8. Back

217   See especially pp. 8-15. Back

218   New rules for appointments to the most senior management grades (A1 and A2) have already been adopted. Back

219   Commission's White Paper, page 9. Back

220   Despite the fact that there is an explicit requirement in the Staff Regulations that promotions should be based on merit: Q 168. Back

221   The Commission has set itself a minimum target of doubling the number of women in top management by the end of its mandate. Back

222   Q 163. Back

223   See also Q 162. Back

224   QQ 173 and 175. Back

225   Commission's White Paper, pages 13-14; Q 161. Back

226   QQ 167 and 172. Back

227   Q 170. Back

228   See our Reports on Court of Auditors reports, for example on the Court of Auditors Annual Report for 1998: (20764): HC 23-vi (1999-2000), paragraph 11 (26 January 2000). Back

229   The central unit currently responsible for financial control can examine no more than 30% of transactions per year: Q 184. Back

230   Commission's White Paper, p. 15. Back

231   The Commission emphasises that the majority of Member States already employ these methods of financial administration themselves: Q 184. Back

232   Q 184. Back

233   Commission's White Paper, page 16. Back

234   Ibid., pp. 20-22; and Q 183. Back

235   Which will, amongst other things, deal with the new internal audit arrangements. Back

236   Q 183. Back

237   Commission's White Paper, p 21. Back

238   Explanatory Memorandum of the Foreign and Commonwealth Office dated 28 March 2000 on the Commission White Paper: Reforming the Commission, Council Document No. 6302/00. Back

239   QQ 160 and 170. Back

240   The Treaty refers simply to "the Council" which is to consist of "a representative of each Member State at ministerial level". The Council meets in various "formations" when considering different topics, so that, for example, transport issues are decided by the Council meeting in the formation of the Transport Council, which is attended by Member States' transport ministers. Back

241   A lively account of the problems, from the perspective of the Council Secretariat, was given to the EP's Constitutional Affairs Committee in April by M. Pierre de Boissieu, Deputy Secretary-General of the Council: see Agence Europe's Bulletin Quotidien Europe, 6 April 2000, pp 12-13. M. de Boissieu expressed the same views equally forcefully when we met him in Brussels in December. Back

242   We are pleased to note that the UK Government shares our views: Q 74. Back

243   The Council consists of Foreign Office Ministers and deals with both EU external relations issues and 'horizontal' questions, that is, those that affect more than one Council formation. Back

244   Such as improving the handover by entrusting preparatory work for the next Presidency to the next President, and, in the case of long-running issues, involving future Presidencies beyond that; and, in some cases, giving national officials a remit to continue with a specified task beyond their country's Presidency in order to complete it.  Back

245   Such as General Affairs with Development; ECOFIN with Budget; and a jumbo Council resulting from the merger of four (Industry, Telecoms, Energy and Research) under the heading of an Internal Market and Competitiveness Council. Back

246   The report made more detailed suggestions about the 'external relations' Council, such as that it should make full use of the scope offered by the Amsterdam Treaty to give real authority, responsibility and prestige to the new Secretary -General/CFSP High Representative; organise the Council's meetings more efficiently; and use delegated authority to ensure continuity between Council meetings. (Again, these suggestions tend to give power to the Council Secretariat at the expense of the Member States, and particularly their Permanent Representations in Brussels.)  Back

247   The report also made some practical suggestions about arranging the European Council's business more efficiently.  Back

248   We are thinking here particularly of the proposals about the preparation of Council meetings and the practical arrangements necessary for an enlarged Council. M. de Boissieu, the Deputy Secretary-General of the Council, has recently confirmed that the Secretariat has embarked on implementation of at least some of these proposals: op.cit. in footnote 234. above. Back

249   Presidency Conclusions, paragraph 20. Back

250   Annex 3, paragraph 9. Back

251   P.8. Back

252   Bulletin Quotidien Europe, 22 March, p. 5.  Back

253   As we suspect will also happen when the Commission tries to end certain initiatives on the grounds that they are an inefficient use of resources: see paragraph 166 above. Back


 
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