7 Effectiveness of rural development
investments
| (27823)
12857/06
—
| Special Report No. 7/2006 of the European Court of Auditors on the effectiveness of Rural Development Investments
|
| Legal base | — |
| Document originated | 15 September 2006
|
| Deposited in Parliament | 26 September 2006
|
| Department | Environment, Food and Rural Affairs
|
| Basis of consideration | EM of 17 October 2006
|
| Previous Committee Report | None, but see footnote
|
| To be discussed in Council | Shortly
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
7.1 The Community's rural areas are characterised by population
densities and per capita levels of GDP which are significantly
below those in urban areas, as well as by their remoteness, high
dependence on agriculture and poor levels of infrastructure and
basic servicesGovernments view. Consequently, Council Regulation
(EC) No. 1257/1999[25]
provides support for rural development from the European Agricultural
Guidance and Guarantee Fund (EAGGF), under which contributions
of more than €60
billion have been made from the Community budget in the period
2000-06 —
a figure which it is proposed should be increased to almost €70
billion for 2007-13. About 40% of the budget available[26]
for this Regulation relates to what are known as "rural development
investments", covering investment in agricultural holdings,
improving the processing and marketing of agricultural products,
and promoting the adaptation and development of rural areas, and
the European Court of Auditors has sought in this Special Report
to assess the extent to which these measures have effectively
addressed the problems of rural areas.
The current document
7.2 The Court notes that, prior to 2000, the measures
were part of the Structural Funds, with their objectives specifically
defined, according to whether they were to support the agricultural
sector or to address the problems of rural areas. However, since
2000, rural development has formed the so-called "second
pillar" of the Common Agricultural Policy (CAP), which has
resulted in a decentralised approach, giving Member States a wide
range of options to finance national or regional policies, subject
to two main objectives —
the improvement of agricultural competitiveness and sustainable
land management, and the structural adjustment of regions which
are lagging behind or facing other structural problems. The Regulation
also specifies that investments in agricultural holdings must
contribute to the improvement of agricultural incomes and of living,
working and production conditions, whilst those for improving
the processing and marketing of agricultural products must contribute
to increasing their competitiveness and added value. However,
no specific objectives are set for rural development measures.
7.3 In its assessment, the Court addressed four key
issues:
- whether the Community has had
a clear strategy and coherent approach, which is adequately defined
in Member States' programmes;
- whether the projects selected
for Community funding are based on criteria which best address
the needs of rural areas;
- whether the projects have been
implemented, and have had an impact; and
- whether the outputs, results
and impacts are properly monitored and evaluated.
It did so by a study of the relevant documents, evaluating
a random sample of 300 projects under the EAGGF, and audit visits
to the Member States[27]
among those with most payments in the sample.
7.4 On each of these questions, the Court concludes
in turn that:
- the flexibility of the Regulation,
with its broad objectives and lack of priorities, and the absence
of a clear strategy in the Member States' programmes, has led
to a situation where it is unclear to which objective the funds
have contributed, with Member States largely focussing on the
agricultural sector and taking insufficient account of the general
characteristics of the area supported;
- there is a lack of effective
eligibility conditions and selection procedures to target funds
on the most needy geographical areas and beneficiaries, which
also leads to a risk of increased "deadweight" effects,[28]
thereby reducing the effectiveness of the aid;
- a significant part of the expenditure
has been implemented in areas which are not predominantly rural,
to the detriment of the amounts available for such areas: and,
whilst it is not always possible to identify the effect of the
projects, the key consideration was their synergy with other projects
and their being located in rural areas; and
- the monitoring and evaluation
systems adopted by the Commission and the Member States do not
provide adequate or reliable information on the outputs, results
and impacts of rural development investments.
7.5 The Court therefore recommends that, for the
next programming period, the Commission should ensure that Member
States have identified clear strategies which relate to specific
objectives, and which will allow the cost effectiveness of the
investments to be assessed; that, as regards the period 2007-13,
appropriate attention should be given to the balance between the
Regulation's two core objectives relating to the CAP and the reduction
of territorial imbalances; that the Commission should ensure that
Member States' programmes prioritise the allocation of funds according
to their needs, with a clearer identification of the most needy
areas and beneficiaries; that the Commission should, when approving
rural development programmes, make sure that Member States have
clearly identified the areas in which investments are most needed;
that the Commission should encourage Member States to analyse
key factors influencing the success of investment projects and
disseminate cases of good practice; and that the Commission should
improve data collection and reporting in order to be better informed
on the effectiveness of the investments.
COMMISSION REPLY
7.6 In its reply to the Court, the Commission says
that, although rural development deals with territorial cohesion,
it also includes other objectives, and that there is a strong
inherent focus on agriculture since the present policy has evolved
from the structural problems of the farm sector and the multiple
roles of farming in rural society. It also points out that the
subsidiarity principle places the responsibility for identifying
eligible areas and beneficiaries on the Member States. However,
it stresses that the Regulation (EC No 1698/2005) governing the
next programming period includes a clearer targeting towards smaller
enterprises in order to limit deadweight effects, seeks to encourage
integrated projects combining several measures, and takes a more
strategic approach by defining three core objectives for rural
development. In addition, serious efforts are being made to remedy
shortcomings in Member State's monitoring data, and a Common Monitoring
and Evaluation Framework has been established.
The Government's view
7.7 In his Explanatory Memorandum of 17 October 2006,
the Minister for Biodiversity, Landscape and Rural Affairs at
the Department of Environment, Food and Rural Affairs (Barry Gardiner)
simply points out that the Report makes a number of recommendations
to the Commission as regards the design of the arrangements and
the approval of Member States' programmes for the programming
period 2007-13, that there are no policy implications arising
directly from it, but that his department and the devolved administrations
are current preparing rural development programmes for their individual
territories for this new period.
Conclusion
7.8 This Report by the Court of Auditors identifies
a number of criticisms in the way in which these measure have
been implemented by the Community, which will clearly be helpful
in their operation for the next programming period. As the Commission
is taking steps to address most of these points, we do not think
there is any need for this document to be considered further,
but, as it deals with a significant area of expenditure, we think
it right, in clearing it, to draw it to the attention of the House.
25 OJ No. L 160, 26.6.99, p.80. Back
26
The rest of the budget relates to agri-environment measures, Less
Favoured Areas and forestry. Back
27
France, Germany, Italy, the Netherlands, Portugal and Spain. Back
28
Where an investment would have happened anyway without the assistance. Back
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