12 Progress report on reform of the Commission
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COM(05) 668
| Commission Communication — Progress report on the Commission reform beyond the reform mandate
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| Legal base | — |
| Document originated | 21 December 2005
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| Deposited in Parliament | 18 January 2006
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM of 16 February 2006
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| Previous Committee Report | None; but see HC 23-xvii (1999-2000), paras 157 to 175 (15 May 2000); and HC 23-xiv (1999-2000), para 8 (12 April 2000) and HC 63-xvi (2002-03), para 9 (26 March 2003)
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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 | Not cleared; further information requested
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Background
12.1 Following the publication on 15 March 1999 of the first report
of the Committee of Independent Experts on allegations regarding
fraud, mismanagement and nepotism in the European Commission,
and the subsequent resignation of the Commission, a new Commission
instituted a programme of administrative reform to address the
criticisms which had been made. The Commission issued a White
Paper in March 2000, setting out details of this programme of
reform, which the then Committee considered on 12 April 2000.
12.2 The White Paper committed the Commission to a programme for
strengthening independence, accountability, efficiency, transparency
and the highest standards of responsibility within the institution
and contained a proposals for action in respect of a number of
themes, namely, creation of a more "service-based culture",
the setting of priorities and the efficient use of resources,
modernisation of human resources policy, overhaul of financial
management, control and audit and improvements in planning. The
White Paper indicated that the Commission would publish a review
of progress by December 2002. This was considered by the previous
Committee on 26 March 2003. The Committee welcomed the substantial
progress which had been made, and the Commission's intention to
develop performance indicators to quantify the progress being
made rather than merely relying on a description of its activities.
The Committee also welcomed the moves by the Commission to create
a greater sense of individual responsibility by Commission officials,
but considered that this should be accompanied by adequate protection
for officials who draw attention to instances of impropriety or
irregularity.
The Commission's communication
12.3 The communication from the Commission covers the period from
February 2004 to the present and is in response to a request made
by the European Parliament in its resolution on the Commission's
legislative and work programme 2005 for an account of the state
of implementation of the reform programme. The Commission describes
its communication as taking stock of progress achieved, and as
presenting its outlook for developments in the areas of strategic
planning, financial and human resource management and working
methods.
12.4 In the first part of the communication setting
out its review of progress, the Commission refers to the introduction
of its Strategic Planning and Programming (SPP) cycle (which seeks
to integrate both the planning and the budgetary process using
the principles of "activity-based management"), the
adoption of new Staff Regulations in 2004 and the introduction
of accrual accounting in January 2005, before giving more detailed
treatment of each of the themes of the reform programme.
12.5 On the theme of creating a "service-based
culture", the Commission refers to improvements in governance
and regulation, including minimum standards for public consultation,
increased emphasis on impact assessments of major legislative
and policy proposals and the screening of pending legislative
proposals, with 68 of these being withdrawn.[44]
The communication also describes progress in simplifying the Commission's
internal working methods, providing for electronic management
and archiving of documents and the creation of executive agencies
to implement particular programmes.
12.6 In relation to strategic planning, the communication
refers to the Commission's Strategic Planning and Programming
(SPP) cycle, which is described as putting "policy priorities
at the heart of the decision-making process, including resource
allocation". However, the communication also notes that managers
are required to "focus on delivering priority objectives,
to set related actions, and to monitor and report on performance",
but that there needs to be "more systematic use of performance
information (objectives measured by means of indicators) to improve
the day-to-day management of activities". The Commission
also draws attention to its strategic objectives for 2005-09 and
its work programme for 2005 and to the emphasis by its President
on communication, which it describes as "listening to the
citizens, and working for and with them".
12.7 On personnel policy, the communication refers
to the adoption of the new Staff Regulations in 2004, complemented
by implementing rules concerning the personal liability of staff
and their professional competence, as well as the treatment of
contract and temporary staff. It notes that the new staff appraisal
system has been in operation for three years and that guidelines
on mobility have led to an improvement in the way in which mobility
is managed within the Commission. The communications notes that
"good practices are being disseminated with the aim of bringing
about a system of career management through which the Commission
can ensure that the 'right person is in the right job at the right
time'". On training, the communication notes increases in
the budget, with an increase in training days per official from
6.9 in 2001 to 9.1 in 2004, the creation of the European Administrative
School in January 2005 and that an evaluation of management training
and development in the Commission has concluded that the training
provided by the Commission's Central Training Unit "is comprehensive
and highly regarded by trainees".
12.8 With regard to audit and financial management
and control, the communication notes that the Annual Activity
Reports of Commission Departments in 2004 "drew a globally
satisfactory picture of the management and control situation".
However, it is also noted that these reports contained "reservations"
relating to "serious weaknesses as regards sound financial
management, the legality or regularity of underlying transactions"
but that "most underlying problems are recurring and are
being resolved in a mid-term timeframe". The communication
notes that, following what it describes as "events"
at Eurostat,[45] the
2004 Code of Conduct for Commissioners requires that all Commissioners
be informed at least every six months of difficulties and risks
linked to financial management, the effectiveness of internal
control and audit, and of any issues raised by controlling bodies.
The communication does not indicate how many, if indeed any, such
reports have been made to all Commissioners, but goes on to state
that "as of 2004 the focus shifted from evaluating compliance
with regulations and procedures to analysing the effectiveness
of internal control with respect to the main control objectives".
12.9 The communication refers to the "overall
positive assessment" of the Commission's evaluation framework
by the Court of Auditors in September 2005 and states that Commission
Departments have continued to "expand and improve their evaluation
activities", concluding that "marked progress has been
made in the field of ex-ante evaluation, in particular in those
areas where evaluations of this kind had been combined with an
impact assessment". It adds that "at central level,
increasing importance has been attached to producing highly synthesised
papers on evaluation highlights so as to enhance higher level
use of evaluation data".
12.10 On financial management and accounting, the
communication refers to the adoption by the Commission of accrual
accounting in January 2005, noting that the new accounting system
complies with the International Federation of Accountants (IFAC)
standards for the public sector and that this "could help
the Commission become a leader in this field". The communication
also notes that the new system will provide accounting data from
2005 on assets and liabilities, thereby making a significant move
to "address concerns raised by the European Court of Auditors
over the years".
12.11 The second part of the communication describes
future policy developments in the areas of "creating a culture
based on service and efficiency", strategic planning and
programming, personnel policy and audit, financial management
and control. In relation to the first of these themes, the communication
refers to the decision by the Commission to launch a "European
Transparency Initiative" which is intended to increase the
trust and confidence of the public in European institutions by
making them more accountable and susceptible to public scrutiny.
It announces the publication of a Green Paper early in 2006 to
launch a public debate on how to improve transparency in the use
of Community funds, consultation with civil society and the role
of lobbies in the decision making process. The communication also
states that the Commission will itself continue to take action
to improve its transparency towards European citizens. The communication
also refers to continuing work on better regulation, the simplification
of procedures and working methods, including the use of executive
agencies.
12.12 Under the heading of "strategic planning
and programming" the communication indicates that the Commission
"will step up its efforts to improve the quality, relevance
and definition of objectives and indicators" and that "specific
attention will be given to the difficulties encountered by Commission
Departments in developing indicators that are meaningful for the
general public and to increasing their ownership by the top management
and the Commission itself". The need to define relevant and
understandable objectives and indicators is also referred to in
the context of communicating more effectively with the public.
12.13 In relation to audit, financial management
and control, the communication indicates that a new communication
on evaluation is being prepared, and that the amended Financial
Regulation is being discussed with the other institutions. Further
work is also being undertaken to simplify financial procedures
for Commission Departments. On internal audit, the communication
indicates that the "Commission's internal audit community
intends to intensify its efforts to make more of possible synergies
between the different stakeholders". The Commission's internal
audit service will continue to cover areas beyond financial management
and accounting, including planning and policy-making, policy implementation
and monitoring.
12.14 The communication promises "major initiatives"
in relation to OLAF, recalling that the Commission has proposed
amendments to the OLAF governing Regulations. The communication
also notes that, following a special report by the Court of Auditors
on the management of OLAF,[46]
the Commission is now planning a new legislative proposal "looking
at governance and control in particular". The communication
states that over the past years OLAF "has substantially reinforced
its service activities" including the fraud-proofing of legislative
proposals.
12.15 In a concluding paragraph, the communication
refers to the reform programme of 2000 as being now concluded
and to the view of the present Commission that the key principles
underlying the reform measures "remain sound". It notes
that the Commission is "determined to build upon its achievements
and ensure that its resources, both financial and human, are used
efficiently and effectively in an open and transparent manner
so as to facilitate control and build up the trust of Europe's
citizens".
The Government's view
12.16 In his Explanatory Memorandum of 16 February
2006 the Minister for Europe at the Foreign and Commonwealth Office
(Mr Douglas Alexander) summarises the communication and states
that "the Government has supported the comprehensive reforms
in the European Commission in its efforts to make the EU more
efficient and transparent, particularly in view of enlargement".
The Minister adds that the Government supports efforts towards
creating a culture based on service, and particularly the work
undertaken towards greater transparency.
12.17 The Minister makes these further comments in
relation to the management of finances and human resources:
"The Government welcomes the improved internal
control systems and structures including the Commission's overhaul
of financial management, control and audit developed in the period
covered by the report. From 2004 the focus shifted from evaluating
compliance with regulations to analysing the effectiveness of
internal control. In addition training was introduced with a view
to improving internal control and risk management. The Government
supports these measures.
"The Government continues to support the Commission's
efforts to modernise its human resources management. The Government
is encouraged by the Commission's aim to further develop human
resources management to include processes such as competency management,
organisational development, succession management and strategic
resources planning."
Conclusion
12.18 We note the almost complete absence of any
quantification of the results said to have been achieved, and
even of any kind of external independent evaluation. The previous
Committee welcomed the Commission's intention at the time of the
2002 review to develop performance indicators rather than relying
merely on descriptions of activities, so that it is at least disappointing
to see that this intention appears not to have been followed.
These shortcomings must call into question the value of this communication.
We ask the Minister for his comments on this point.
12.19 The introduction of accrual accounting is
to be welcomed, but we consider that, for an institution whose
accounts have been qualified for the last eleven consecutive years,
it seems ambitious for the Commission to aspire to become "a
leader" in the field of public sector financial management.
12.20 The previous Committee drew attention to
the weaknesses in protection in the revised EC Staff Regulations
for officials bringing maladministration and wrongdoing to the
attention of the EC institutions and the public. In particular,
the previous Committee pointed to the fact that a disclosure to
any Member of the Commission other than the President or the Commissioner
responsible for the particular area was not protected, and compared
this unfavourably with the rule in the civil service in the United
Kingdom where a protected disclosure could be made to any Minister
of the Crown.
12.21 We consider the protection of staff who
bring irregularities to light to be an important aspect of maintaining
and improving standards within an institution. We ask the Minister
to consider if the treatment by the Commission of a number of
officials involved at a senior level in financial management and
audit, including Ms Andreasen, Ms Dorte-Schmidt and Mr Jules Muis,
who have all been critical of the integrity and vulnerability
of the Commission's accounting systems, gives grounds for confidence
in the willingness of the Commission to accept and respond to
criticism.
12.22 We note that the communication speaks of
the Commission looking at the governance and control of OLAF in
the light of the comments made by the Court of Auditors, which
has called for a "serious re-examination of the regulatory
provisions concerning the governance of the Office". In this
connection, we recall the apparent readiness of OLAF to pursue
the investigation of a journalist, Mr Hans-Martin Tillack, following
the publication of articles by him which were critical of financial
management within the Commission. In evidence to our sister Committee
on 19 May 2004,[47]
the then Chairman of the OLAF Supervisory Committee stated that
the search and seizure of Mr Tillack's property "was purely
on the basis of hearsay evidence from an informant, one informant,
who happened to be in one of the public relations offices of the
Commission before he was sacked" and that "any normal
person would have to say that somewhere along the line OLAF were
probably trying to get back at this man". We ask the Minister
for his comments on this statement, and to explain what objectives
the Government will pursue in relation to improving the governance
of OLAF.
12.23 We shall hold the document under scrutiny
pending the Minister's reply.
44 The report does not explain that 22 of these proposals
concern the 2004 accession countries and which have become obsolete
in any event. Back
45
In their inquiry in 2003 OLAF investigators referred to these
events as constituting a "vast enterprise of looting". Back
46
OJ No C 202 of 18.8.2005, p.1. The Court of Auditors made a number
of comments including on the need for a "serious re-examination
of the regulatory provisions concerning the governance of the
Office". The Court also commented that "there is no
independent guarantee of the legality of investigative procedures
in progress or that the fundamental rights of persons under investigation
are safeguarded". Back
47
House of Lords European Union Committee, Twenty-fourth Report,
Session 2003-04, Strengthening OLAF, the European Fraud Office,
HL Paper 139 Oral evidence Q229. Back
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