17 Reform of the Commission
| (25395)
6378/04
COM(04) 93
| Commission Communication — Completing the reform mandate: Progress report and measures to be implemented in 2004
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| Legal base | — |
| Document originated | 10 February 2004
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| Deposited in Parliament | 25 February 2004
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM of 26 April 2004
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| Previous Committee Report | None; but see (23534) 8456/02 and (25078) 15185/03: HC 42-xi (2003-04), para 7 (25 February 2004), HC 42-xiii (2003-04) para 1 (17 March 2004)
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but relevant to the debate already recommended on the Staff Regulations and to any debate on the management of Community finances
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Background
17.1 Following the resignation of the Commission headed by Jacques
Santer in 1999, the European Councils in Berlin and Cologne charged
his successor with the task of reforming the Commission. The present
Commission adopted a White Paper in 2000 which set out five principles
of reform, namely, efficiency, accountability, transparency, responsibility
and service. The White Paper also defined three main objectives:
first to introduce a better system for setting priorities and
allocating resources, secondly to overhaul financial management
within the Commission, and thirdly to modernise personnel policy.
17.2 The modernisation of personnel policy includes
a revision of the Staff Regulations of EC officials and the conditions
of employment of other servants of the European Communities. We
considered the revised Staff Regulations on a number of occasions,
paying particular attention to the rules on "whistleblowing",
which we considered were too circumscribed in their scope and
likely effect to inspire confidence. On 17 March 2004 we recommended
the current version of the Staff Regulations for debate in European
Standing Committee B.
17.3 As part of the reform, the setting of priorities
and the allocation of resources is to be achieved by means of
a Strategic Planning and Programming Cycle (SPP), which informs
the Commission's Annual Work Programme. In 2002 we stated that
we intended to make an examination of the Annual Work Programme
an important part of our own programme and we took evidence from
Commission officials in 2002 and 2003.[33]
17.4 A review of progress was published by the Commission
in January 2003. It provided a statement on progress achieved
by 31 December 2002, referring to 98 items of action identified
in the 2000 White Paper of which no fewer than 87 were said to
have been implemented. We considered this progress review on
26 March 2003.[34] We
noted that some of these items in the White Paper were clearly
expressed and were of major importance, with measurable indicators
of progress, such as the adoption of minimum standards for consultation
or the introduction of strategic planning. Others were less clear
and less measurable, such as "promoting a learning culture"
or "supporting the reform process", where progress was
measured in terms of activities undertaken rather than achievement.
Overall, we welcomed that report, which showed the substantial
progress which had been made in the Commission's reform programme,
and we welcomed the Commission's intention to develop performance
indicators to quantify the progress being made, rather than relying
on a description of activities.
The Commission's progress report
17.5 The report provides an overall review of progress
in implementing the reform programme in 2003 and on the outlook
for 2004. It recalls that the March 2000 White Paper referred
to "four main pillars", namely, a culture based on service,
strategic planning and programming, personnel policy, and internal
control and audit. The report reviews progress in 2003 under each
of these "pillars" , with a corresponding outlook
for 2004, and then discusses measures to be taken in the wake
of the Eurostat crisis.
A CULTURE BASED ON SERVICE
17.6 One of the aims of the action plan to give effect
to the White Paper was to improve the Commission's relations with
the public and to "achieve a more service-oriented culture"
inside the Commission. The report states that good progress has
been made in this respect, both internally and externally. As
evidence of improvements in the Commission's efficiency in dealing
with the public the report refers to a reduction in the average
time to make a payment from 54 days in 1999 to 43.7 in 2002 and
42.9 in 2003 and to an increase from 70% in 2002 to 80-90% in
2003 of the proportion of mail from the public which is responded
to within the deadline. The report also refers to the fact that
a detailed directory of the Commission's services is now available
on-line for the first time. The report also points to an increase
in demand from the public for access to Commission documents.
17.7 The report also indicates that the Commission's
Action Plan of 2002 on Better Regulation (which includes principles
and minimum standards for consulting the public) has been integrated
into the working methods of the Commission and that a commitment
to conduct impact assessments for all major legislative and policy
initiatives is now "embedded" in the Strategic Planning
and Programming cycle. Procedures and working methods are also
being simplified within the Commission, including simplified rules
for the signature of documents, greater use of Service Level Agreements
between central departments and operational services and further
delegation in the field of external relations.
STRATEGIC PLANNING AND PROGRAMMING
17.8 On Strategic Planning and Programming and policy
coordination, the report notes that an Annual Policy Strategy
was adopted for the third time in 2003 so as to permit the redeployment
of a substantial number of staff. Managers are required to focus
on the need to deliver results on priority objectives and to report
on achievement and performance. The report notes that "delivery
of the Commission's Legislative and Work Programme was below expectations
and must be improved". On policy coordination, the report
refers to the creation of an Activity Based Management (ABM) group
chaired by the Secretary-General, which brings together the Directors-General
and cabinets of central departments and which coordinates
policy and strategy related to reform and to the promotion of
cooperation between services.
PERSONNEL POLICY
17.9 On personnel policy, the report identifies the
revision of the Staff Regulations as a major event. The report
describes these as modernising working conditions and pension
rules and upholding the principle of merit, while new measures
on discipline and whistleblowing ensure high ethical standards
and provide clear rules. The first staff appraisal based on a
new career development review system was carried out across the
Commission in 2003. The report explains that this seeks to reinforce
the link between merit and career advancement in the Commission
and to make promotion decisions more transparent, but notes that
the Commission services perceived the exercise as "administratively
burdensome" and that the difficulties which had been encountered
with the quantitative marking system have now been addressed.
17.10 On the mobility of staff, the report notes
that the Commission intends to identify holders of a "sensitive"
post in the financial or personnel area and to move holders of
such posts where they have been held by the same person for more
than seven years. The process has presented "a number of
practical difficulties", particularly where the post-holder
has a "specialised profile". On training, the report
notes that the average number of training days per official has
increased from 6.9 in 2002 to 8.32 in 2003 and that the general
training budget has increased by 37% for 2004. There were around
3,800 participants in financial training courses in 2001, but
this increased to around 7,100 in 2003.
17.11 The report also refers to a draft Commission
Decision on the role of Heads of Unit , which will clarify their
role and position, provide for a probationary period and make
appointment dependent on prior management training. In relation
to the most senior officials, the report points out that no Director-General
has held post for more than five years, compared with the position
in 1999 when 12 had been in post for more than five years and
eight for more than seven years.
INTERNAL CONTROL AND AUDIT
17.12 The report notes that a new Financial Regulation
entered into force on 1 January 2003, leading to changes in internal
control systems in the Commission. The Commission has set up the
Financial Irregularities Panel in accordance with Article 66(4)
of the Financial Regulation. The Panel is intended to function
independently of the Commission and determines whether a financial
irregularity has occurred and what the consequences are to be.
It is chaired by Mr Jan O. Karlsson, the former President of the
European Court of Auditors. Standard form agreements have also
been devised to simplify public procurement and the issue of grants.
17.13 The Central Financial Service of the Directorate-General
for the Budget is now required to provide an overview of financial
controls across the Commission and each Director-General is in
turn required to designate a "contact officer" to provide
it with the necessary information. Following the Eurostat crisis,
the annual overview of internal controls has to be updated every
six months, and on a DG by DG basis. The implementation of recommendations
of the Internal Audit Service is monitored by an Audit Progress
Committee chaired by the Commissioner for the Budget and attended
by the Commissioner for Personnel and Administration and two other
Commissioners as well as an external expert on internal audit.
THE OUTLOOK FOR 2004
17.14 The report indicates that the main emphasis
of the reform programme for 2004 will be on the implementation
of changes already agreed, particularly those in the new Staff
Regulations. The Commission also proposes, in the context of the
preparation of new Financial Perspectives, to simplify and rationalise
the number of financial instruments it uses and will be submitting
proposals to that end. With regard to personnel policy, the Commission
intends to focus on ensuring support by staff for the new Staff
Regulations, including the implementation of the new career structure.
The report also points out that the Commission will need to recruit
740 new officials to cope with enlargement and that it will need
to demonstrate in 2004 that the new system of performance appraisal
works to the advantage of the deserving and that the reward of
promotion is attainable.
17.15 On internal control and financial management,
the report indicates that further steps are necessary, notably
in the area of accounting, where the new Financial Regulation
requires the production of accounts on an accruals basis by 2005.
This is described as an ambitious objective, but the implementation
plan is said to be on track.
MEASURES TO BE TAKEN IN THE WAKE OF THE EUROSTAT
CRISIS
17.16 The report notes that the Commission has taken
several decisions on the reorganisation of Eurostat and has strengthened
financial management and control over that body. A provisional
Memorandum of Understanding was reached in July 2003 between the
Commission and OLAF[35]
to clarify the rules about information on OLAF internal investigations.
The reports stresses that Commissioners and Directors-General
should have an "ongoing dialogue" about a service's
policy objectives and internal control and that specific information
about the results of internal audits should be communicated to
the "political level" at least twice a year, this information
to include issues arising from the work of the Internal Audit
Service, the European Court of Auditors, the Directorates-General
and OLAF.
17.17 The report also describes a number of complementary
measures to ensure that the Commission has at all times the information
necessary for it to exercise its political responsibility. The
code of conduct for Commissioners, their cabinets and services,
which was adopted by the present Commission in 1999, has been
amended to emphasise the political responsibility of the Commissioner
as well as the responsibility of the Director-General to the Commissioner
and to specify further the nature of the information which the
Commissioner must receive from his or her services.
17.18 The report states that while the investigation
of allegations of fraud and irregularity has benefited from the
"total operational independence" of OLAF, a central
Internal Audit Service and the creation of a Disciplinary and
Investigative Office (IDOC), the Eurostat affair "has shown
that the current system does not provide the Commission with a
sufficiently complete overview of all available information concerning
a specific matter". The report comments further that "As
a matter of fact, the Commission's knowledge of all the information
available on Eurostat was for a long time too partial and fragmented,
which prevented it from taking rapid precautionary measures at
an early stage".
17.19 The Commission proposes to entrust a group
of Commissioners with the task of ensuring that all information
relating to allegations of fraud, irregularity and other reprehensible
acts will be followed up by the services concerned. The group
of Commissioners is to bring the most important cases to the attention
of the Commission. The group is to consist of the President and
the Commissioners responsible for Personnel and Administration
and for the Budget, and will be supported by a high-level inter-service
group. The report notes that the group will require the co-operation
of middle and senior management, and, above all, of Directors-General
or Heads of Service, "who are also the first interlocutors
of whistleblowers".
17.20 Following the Internal Auditor's recommendations
on the Eurostat crisis, the report notes that the Commission is
taking further measures to improve the central supervision of
and communication between internal control and audit structures,
as well as communication between Commission auditors.
17.21 The Commission observes in its report that
staff are still often choosing not to follow the new whistleblowing
procedures. (Since 1999 every official who becomes aware of possible
evidence of "serious reprehensible acts" has been obliged
to inform his Head of Service or Director-General, or the Secretary-General
or OLAF.) The Commission therefore plans to increase staff awareness
and confidence in the new rules through better internal publicity
and protective measures to ensure careers are not adversely affected.
It indicates that it will facilitate a move by an official to
another Department if he requests this "in order to safeguard
him or her against hostile reactions from his immediate work environment"
and that particular care will be taken during staff evaluation
and promotion procedures to ensure that the whistleblower suffers
no adverse consequences in this context.
17.22 The Commission notes the need for new monitoring
techniques as its programme of reform moves into a second phase.
It points to indicators such as speed of payments and quantity
of and response to training as showing improved performance,
but it recognises that a change in culture is a concept which
is difficult to monitor. The report also highlights efficiency
gains made through reinforced inter-institutional co-operation.
17.23 The report points out that monitoring arrangements
for internal control are continuing to evolve. While conducting
their annual review of these arrangements, Directorates General
have been carrying out self-assessments, most recently on compliance
with Internal Control Standards. These are likely to suggest a
need for further work on documentation of procedures, risk assessment
and supervision. The Directorates-General are also analysing the
effectiveness of their systems of control. The annual overview,
starting in April 2004, will collate information from all services
bringing together information on internal control processes on
a DG by DG basis.
The Government's view
17.24 In his Explanatory Memorandum of 26 April
2004 the Minister for Europe (Mr Denis MacShane) explains that
the Government has supported fully the comprehensive reforms in
the European Commission as part of the wider effort to make the
EU more efficient and transparent, particularly in view of enlargement.
It welcomes this report on further progress made in implementing
the Prodi Commission's reform programme. The Minister makes the
following detailed comments:
"The Government is encouraged by further improvements
in creating a culture based on service, and particularly the commitment
to greater transparency which has resulted this year in better
public access to a wider range of documents and the successful
introduction of impact assessments.
"Policy co-ordination and prioritisation has
improved with the operation of the Strategic Planning and Programming
Cycle and Activity Based Budgeting, leading to a better allocation
of resources. The Government recognises the value of the inter-institutional
dialogue and inter-service co-ordination groups in the ongoing
development and implementation of reform, but agrees that further
work is needed to realise efficiency gains through prioritisation
and in delivering the Legislative and Work Programme. New measures
to streamline the number of financial instruments will help.
"The Government continues to support the Commission's
measures to create a modernised human resources policy and recognises
the effectiveness of its efforts, not least through the EPSO,[36]
to recruit new staff for enlargement. The entry into force of
the new Staff Regulations, following their adoption by the Council
in March 2004, will make a substantial difference, realising significant
savings as well as providing a more modern career structure based
on merit. Reform in the areas of appraisals and training within
the existing Regulations has also had visible results. A derogation
to the recruiting rules will mean that, while competitions will
be held to recruit staff from the accession countries, there will
also be competitions held in the languages of the current Member
States. Competitions for those with English as their main language
will therefore continue to take place throughout the enlargement
and settling-in of the new Member States.
"The Commission's overhaul of financial management,
control and audit has progressed in 2003, with the operation of
the new Financial Regulation, the new Financial Irregularities
Panel and new standard models for procurement contracts and grant
agreements. There is now a greater onus on individual Commissioners
and Director Generals to take responsibility for internal control
alongside better developed overview procedures, clearer and more
stringent reporting requirements and a fuller range of co-ordinated
monitoring bodies.
"The Government welcomes the improved internal
control systems and structures and the additional complementary
measures which have been made in follow-up to the Eurostat crisis.
In addition to the re-organisation of Eurostat, these include
the revision of the Code of Conduct, provisions for systematic
dialogue between services, Director-Generals and Commissioners
and the establishment of the group of Commissioners and the inter-service
group with responsibility to ensure serious follow-up of allegations.
The improved communication flow and clear responsibility at senior
level in particular should help prevent fraud and ensure that
allegations of fraud and irregular activity are treated more quickly
and effectively. But the Government will seek assurances from
the Commission that their proposals will in no way undermine the
investigative independence of OLAF and that evidence accumulated
by OLAF will not be compromised.
"While the Government supports the new whistleblowing
procedures, it is reassured by the Commission's recognition that
further efforts are needed to ensure whistleblowers are confident
to make use of these procedures through better publicity and safeguarding
against hostile reactions that might adversely affect their career."
Conclusion
17.25 We agree with the Minister that there is
much to welcome in this report, and it is apparent that some real
progress has been made. We also acknowledge that the Commission
is taking steps to address the weaknesses which became apparent
in the operation of Eurostat.
17.26 Nevertheless, we think the report draws
too comfortable a conclusion as regards Eurostat when it states
that the information available to it was for a long time too fragmented
and partial and that this prevented it from taking precautionary
measures. The practices which were the subject of the Internal
Auditor's report persisted over a period of years, and must have
been known to a number of officials.
17.27 In our view, the episode underscores again
the necessity to have a robust system of reporting and protection
for "whistleblowers". For reasons explained in our recent
report on the EC Staff Regulations, we believe the protection
given to whistleblowing is excessively circumscribed and we have
recommended the subject for debate in European Standing Committee
B.
17.28 We are content to clear this document, but
we consider that it would be relevant to that debate as well as
to any debate on the management of Community finances.
33 Fourth Report of Session 2002-03, HC 63-iv, para
16; and Sixth Report of Session 2003-04, The European Commission's
Annual Work Programme for 2004, HC 42-vi. Back
34
(24250) 5984/1/03; see HC 63-xvi (2002-03) para 9 (26 March 2003). Back
35
The Commission's anti-fraud organisation. Back
36
The European Personnel Selection Office which coordinates recruitment
to the EC institutions. Back
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