85. Bureaucracy constitutes a hurdle for those
wishing to apply for EU funding. Several witnesses raised this
concern: Mr Meadows, former Director General of DG Regio,
highlighted this issue as one which gave the policy a "bad
reputation" (p 74). Items that we have considered under
our scrutiny remit highlight the tension that exists between the
need for audit and control of expenditure, and the burden of administration.
In particular, following the European Court of Auditors report
on the 2006 Budget,
the Commission and Member States noted that there was some disagreement
between the Court of Auditors, the Commission and Member States
over the interpretation of the audit and management requirements.
Action to provide more guidance and clarification is being taken.
86. The Commission emphasised that they have
to strike a balance between calls from the European Parliament
for more rigorous auditing and complaints by the regions which
find the mechanisms in place far too rigorous, restricting and
bureaucratic. Mr Ahner added that the Commission is looking
for ways to address the problem of bureaucracy and invited both
regions and recipients of funds to table "concrete suggestions"
on how the administration of the funds can be made less bureaucratic
87. We were told that the EU regional policy
is run in a very decentralised manner (pp 74, 76 QQ 25, 250).
The local and the regional level are extensively involved, not
just in administering and spending the funds allocated to them,
but also through input into the decision making process at EU
and Member State levels. Several witnesses emphasised that there
is a dialogue between all levels regarding the design of operational
programmes and projects to deliver the Funds' priorities (pp 123,
QQ 9, 268). The Government noted that the partnership approach
enhanced transparency, cooperation and coordination in the design
and delivery of policy (p 58). Professor Bachtler argued
that the Commission probably has less influence now than at any
time since the expansion of the Structural Funds in 1988 (Q 108).
88. However, this decentralisation can increase
the administrative burden. Some Member States add their own layers
of bureaucracy to the Commission's (QQ 285, 314). Scotland
Europa told us that the experience of applicants was that the
layers of audit bodies involved in the programmes (local, regional,
national, European) was increasing the burden upon them (Q 29).
This does not mean that obtaining public funds is necessarily
more cumbersome and bureaucratic than obtaining private sector
investment: the Spanish region of Valencia told us that obtaining
funding for their projects from the EU is less complicated than
obtaining it from the banking sector in Spain (Q 360).
89. An underlying theme in the evidence we
received was the tension between reducing
administrative cost, and maintaining high quality financial management.
The evidence we received did not demonstrate that the cost of
administration, relative to the total size of the budget, is significant
in the United Kingdom. Extrapolation to countries receiving larger
contributions from the funds might suggest further efficiencies
and we dismiss witnesses' claims that the regional policies are
beset by a costly bureaucracy.
90. We welcome the trend towards the Commission
taking a strategic view of policy and the regions drawing up the
local spending plans. There does appear to be significant bureaucracy
for applicants to the funds; while some clarification is needed,
we are content that it is not excessive. We note that the Commission
is aware of the balance it needs to strike between control and
ease of distribution and that it is actively seeking ways to address
the bureaucracy. We support their invitation for suggestions of
how the administrative burden can be alleviated, at each of the
EU, national and regional level.