Documents considered by the Committee on 7 December 2016 Contents
Summary and Committee’s conclusions
Cleared from scrutiny
European Court of Auditors Special Report on maritime transport in the EU
14.1In its Special Report 23/2016 about EU and Member State funding mechanisms for maritime transport the European Court of Auditors has identified a significant degree of ineffective and unsustainable investment linked to EU funding that may have ultimately been detrimental to EU maritime and port business. The Court makes seven key recommendations for action, mainly by the Commission.
14.2The issues identified in the report are not directly comparable to the UK port sector, which was not part of the audit and which operates largely on a commercial basis without government involvement in port investment, development, funding or subsidy, as distinct from the model in many Member States where the state and public sector is more regularly involved.
14.3The Government notes that the overall policy implications for the UK are minimal and, at the EU level, are a positive incremental step forward for funding processes and governance. It suggests that the Court’s recommendations, if taken forward by the Commission, have potentially positive implications for UK ports in relation to their competitive position with other EU ports in receipt of public funding.
14.4While content to clear this document from scrutiny, we draw it to the attention of the House because of its possible implications for the UK ports sector.
Full details of the document
European Court of Auditors Special Report 23/2016: Maritime transport in the EU: in troubled waters — much ineffective and unsustainable investment: (38174), —.
14.5In addition to its annual audits of the reliability of the accounts and the legality of the transactions of all EU institutions, the European Court of Auditors (ECA) undertakes management audits of EU institutions and programmes. These audits result in Special Reports, of which it publishes about 20 each year.
14.6The ECA’s Special Report 23/2016 concerns EU and Member State funding mechanisms for maritime transport, largely focusing on investments in port infrastructure. The Court has identified a significant degree of ineffective and unsustainable investment linked to EU funding that may have ultimately been detrimental to EU maritime and port business.
14.7The ECA is highly critical of implementation of Commission grants for maritime transport in the EU, and their ineffectiveness in promoting the Commission’s maritime policy. For the most part this concerns the European Regional Development Fund, with small awards coming from Trans-European Network or Connecting Europe Facility funding. While funding is the backdrop to the report, the Court also considers whether policy objectives are being achieved through the use of funding, and notes that Commission and Member States strategies for port development do not provide a robust basis for planning the capacity of EU ports, or public funding of that port infrastructure.
14.8UK projects and UK port development policy were not part of the audit. The issues identified in the report are also not directly comparable to the UK port industry that operates largely on a commercial basis without government involvement in port investment, development, funding or subsidy. This is distinct from the model in many Member States where the state and public sector is more regularly involved, either directly in port operations and investment decisions; or in providing or promoting financial support.
14.9The ECA lists recommendations designed to address the issues that it has identified. These are largely aimed at the Commission, but some are applicable to Member States (or what the Commission should require of Member States). There are seven key recommendations for action, mainly by the Commission:
- revise the current number of 104 core ports, monitor capacity, and set out an EU-wide port development plan;
- consider the exclusion of EU funding for port infrastructure for container transhipment and storage as well as for superstructure which is not within the public remit;
- ensure that all essential loan information on proposed European Investment Bank (EIB) loans is shared between the EIB and the Commission;
- prioritise core ports and key waterways with EU support for investment only where EU added value is clear and there is sufficient private investment;
- issue port-specific state aid guidelines and monitor and follow up earlier state aid decisions;
- reduce administrative burden and delays by promoting national “one stop-shops” for issuing permits and authorisations; and
- improve the competitive position of maritime transport compared to other transport modes by further simplifying maritime transport and customs formalities.
The Government’s view
14.10In his Explanatory Memorandum of 14 November 2016 the Minister of State, Department for Transport (Mr John Hayes), says, following the Government’s ritual statement about the UK’s pre-Brexit situation, that:
- the Government considers that the report provides appropriate scrutiny of Commission transport funding practices for maritime transport, particularly for ports, and the impacts on the EU maritime industry;
- the main points of concern identified by the ECA are broadly areas where the Government also welcomes additional focus;
- the Government welcomes the Court’s emphasis on the need for clearly demonstrating the value added by a project, and ensuring transparent and appropriate use of EU funds;
- similarly, the recognition of potential distortive effects of funding, both EU and Member State, on inter- and intra-Member State competition, is welcome and in line with the UK policy position on state aid;
- the Government also considers that the recommendations to improve governance and accountability for those administering/approving the funding at an EU level, and for those in receipt of funding at a Member State level, are sensible; and
- on this basis the overall policy implications for the UK are minimal and, at the EU level, are a positive incremental step forward for funding processes and governance.
14.11The Minister says that the Government feels that the Court’s recommendations would not be unduly burdensome for the EU to implement. He comments on the recommendations, as follows, saying in relation to:
- revising the current number of 104 core ports, that the Commission has accepted this, for which there is a review mechanism in place within the Trans-European Transport Network Regulation;
- the Commission working with the Member States to reduce administrative burden and delays for projects by promoting the principle of a national ‘one-stop-shop’ for the management of permits and authorisations, which has been accepted by the Commission and which it considers partially implemented via a study to examine ways of streamlining procedures for Trans-European Transport Network projects, with next steps being an impact assessment and a potential legislative proposal—the Government will engage with this Commission work-stream, which is wider than the maritime focus of the ECA report, and it already has an established maritime planning system that aims to provide a ‘one-stop-shop’ for UK port developments as far as is possible, dependent on the project;
- the Commission examining the exclusion of container-related infrastructure from EU funding as well as funding for superstructures which are not within the public remit, which the Government welcomes, as consistent with existing UK port policy, and which the Commission has partially accepted and on which it says it will review the requirement for further support for this sector;
- improvement of reporting by Member States of all public financial support to ports in accordance with state aid rules, which is already an obligation, but which the ECA suggests that Member States may not be fully compliant—the Government believes that more systematic notification would encourage both greater transparency and less market distortion, and therefore it supports the recommendation; and
- the Commission gathering comparative information on customs procedures at core ports by requiring Member States to report this data, which the Commission has not accepted this proposal as it believes it would impose a disproportionate additional reporting requirement on Member States—the Government agrees with the Commission that the proposal has the potential to introduce additional administrative and cost burdens for little benefit and therefore would not support this being taken forward.
14.12The Minister comments further that:
- the ECA recommendations do not of themselves have financial implications, but are dependent on the Commission accepting them and taking them forward;
- the Commission has largely rejected the recommendations that would present an additional financial or administrative burden;
- the ECA recommendations seek to enhance the value for money of projects, and encourage better decision-making and management of funding;
- the focus is on tightening the type of infrastructure subject to public investment and state aid rules in this area, reducing potential market distortion and ensuring a level-playing field for the EU maritime industry; and
- the recommendations, if taken forward by the Commission, have potentially positive implications for UK ports in relation to their competitive position with other EU ports in receipt of such funding.
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