- The EU’s pandemic recovery fund finances similar actions to standard EU programmes
- The new mechanism, which breaks the link between funding and costs, has increased the risk of double funding
- The checks in place are not fit to prevent and detect such cases
There is an increasing risk that EU money could be handed out twice for the same action. This is the worrying conclusion of a report published today by the European Court of Auditors. The unprecedented amounts of money available under the EU’s post-pandemic recovery programme, which has seen the first wide-scale use of a newfunding mechanism that is not based on actual costs incurred, can overlap with financing from the traditional EU budget. However, the control mechanisms in place are not sufficient to properly mitigate the increased risk of double funding.
Strengthening economic, social and territorial cohesion between and within EU countries has historically been the sole remit of the Cohesion Policy funds and the Connecting Europe Facility. These will provide €358 billion and €34 billion, respectively, in the 2021-2027 EU budgetary period. However, the €648 billion COVID recovery fund – in the form of the Recovery and Resilience Facility (RRF), established in 2021 – also finances similar actions in similar areas, such as transport and energy infrastructure. Furthermore, the RRF represents the first ever large-scale rollout of EU financial support with no link to actual costs, thereby increasing the risk that the same item could receive EU money twice.
“Double funding is a misuse of EU funds and a waste of EU taxpayers’ money. And yet, the safeguards in place are largely insufficient”, said Annemie Turtelboom, the ECA member responsible for the audit. “The RRF funding model was supposed to bring simplification. But simplification should not come at the cost of weakening the protection of the EU’s financial interests.”
The EU auditors note that the legal framework has not been adapted to the different spending models that now exist. The fact is that its definition of double funding is not fit for purpose when it comes to the RRF funding model, where disbursements are not linked to costs, but rather reward the fulfilment of milestones and targets. Additionally, a significant part of RRF financing – where reforms and other activities are considered ‘cost-free’ – is simply overlooked, because the European Commission considers it free of the risk of double funding. However, the EU auditors do not agree. As confusion prevails over the double-funding provision, there are also uncertainties about which checks could address this risk effectively.
From the member states’ perspective, the many layers of governance involved make coordination and oversight very challenging. In this context, checking the absence of double funding largely relies on self-declarations by recipients of EU money. Any cross-checks carried out are mainly manual, thus limiting the ability to check at scale. As IT tools are not interoperable, this makes double funding difficult to detect. EU regulations call for synergies and coordination between programmes. In practice, member states tend to avoid combining RRF support with other EU funds for specific measures.
As far as the European Commission is concerned, the assurance it provides about the absence of double funding is based on limited evidence. This is due to a blind spot in the RRF design itself, which results in an accountability gap, according to the EU auditors. Because payment is linked to the achievement of milestones and targets at national level, in effect the Commission is absent from the details of spending on the ground. For instance, it does not even have direct access to the full list of final recipients in countries. This example illustrates how the capacity in place is insufficient to prevent and detect potential cases of double funding.
Shortly after the ECA’s audit report was completed, the European Commission revealed that it had identified the first two potential cases of double funding involving RRF money. Based on this report, the auditors believe the identification of only two cases in one member state highlights the haphazard nature of the detection system, and is arguably an indication that the tools available are neither suitable for nor effective at detecting double funding.
Background information
Special report 22/2024, “Double funding from the EU budget – Control systems lack essential elements to mitigate the increased risk resulting from the RRF model of financing not linked to costs”, is available on the ECA website.
This audit also draws on other RRF-related reports, reviews and opinions which the ECA has published in recent years and months.