Changes from report parliamentary committee draft to plenary report

Added(xv) calls on the Commission to re-assess its decision to “unfreeze” EUR 10.2 billion of cohesion funds to Hungary and to refrain from disbursing any funds until the relevant legislation has been implemented and the adopted measures have proven to be effective in practice;

Added(xvi) make the use of IT tools such as EDES and ARACHNE mandatory and systematic for all Union funds including shared management and ensure better use of new technology in order to increase controls and protect the Union budget against fraud and misuse of funds in the context of the concluded revision of the Financial Regulation;

Added(xvii) grant the Court, OLAF and the EPPO access to a single integrated IT system for data-mining and risk-scoring provided by the Commission, in the terms agreed in the recast of the Financial Regulation;

Added(xviii) report on the early preventive system audits (EPSA) performed at the beginning of the programming period, in order to confirm the effectiveness of the control systems in the Member States, including the system in place to prevent irregularities;

Added(xix) report to the discharge authority how the use of flexibility measures in cohesion policy, that have improved absorption, has affected the structural cohesion objectives of convergence and cohesion;

AddedCulture and education

Added131. Welcomes the Commission’s and the European Education and Culture Executive Agency’s (EACEA) efforts to adapt Erasmus+, the European Solidarity Corps and Creative Europe to a changing reality, for instance by reviewing upwards individual support rates for grants to safeguard their inclusive character, extending application deadlines and project duration, and a voluntary refocusing of activities on Ukraine, and expects more efforts to further reinforce inclusion measures and support to facilitate the participation of vulnerable groups;

Added132. Appreciates that the Commission and the EACEA managed to achieve nearly full budget execution for Erasmus+ and full budget execution for the European Solidarity Corps in 2022, making it even necessary to redeploy credits from other programmes to cover payment needs; notes the challenges to the payment implementation of Creative Europe in 2022, with some EUR 50 million having been deferred to 2023 as a result of operational issues and delays in the granting processes; recognises DG Education, Youth, Sport and Culture’s (DG EAC) and the EACEA’s efforts to limit the impact of these delays and return to a normalised pace in 2023;

Added133. Reaffirms the need for increasing further the budgetary envelopes of the EU’s youth, cultural and educational programmes, in particular to increase the outreach to and involvement of young people, artists and professionals with fewer opportunities and to support citizenship education; in this respect, requests the Commission to continue cooperating closely with the Member States;

Added134. Welcomes the fact that, thanks to a EUR 3 million reinforcement of the 2022 European Year of Youth at the Parliament’s insistence, a number of actions under the Year could be strengthened, such as solidarity projects, volunteering and networking activities; underlines that the successful results of the Year should now be sustainably implemented to ensure its lasting legacy;

Added135. Notes the continued frontloading of the Creative Europe budget in 2022 for mitigating the persisting impact of the COVID-19 pandemic on the cultural and creative sectors; notes that, thanks to this frontloading, a higher number of European cultural cooperation projects could be selected in 2022 than ever before; is, however, concerned that the frontloading of 2021 and 2022 may lead to a shortage of funding from 2023 and deplores that the programme as a whole remains underfinanced in relation to the objectives to be achieved, notably given its high subscription rate;

Added136. Notes with concern the persisting challenges in 2022 with the e-Grant tools for beneficiaries of calls managed by the EACEA; strongly urges the Commission and EACEA to address these IT issues once and for all to avoid repercussions on target achievement, to reduce the risk of errors and to simplify procedures; believes that a more efficient and accessible IT infrastructure would also facilitate small beneficiaries’ access to programme resources;

Added137. Notes the positive development in the EACEA’s staffing situation, with a significant increase of staff by the end of 2022;

Natural resources

Change 65

Changed90.138. Notes that the budget for the programmes under MFF heading 3 ‘Natural resources’ was EUR 58,158,3 billion (29,7 % of the Union budget) distributed as follows: 65,9 % for direct payments under the European Agricultural Guarantee fund (EAGF), 26,2 % for the Agricultural Fund for Rural Development (EARDF), 4,7 % for market-related expenditure under the EAGF, 1,8 % for Maritime and Fisheries, 0,9 % for Environment and Climate (LIFE), and 0,5 % for other areas; notes that as of 31 December 2022, under MFF heading 3 ‘Natural Resources and Environment’ the final adopted budget commitments appropriations were EUR 56 681,11 million and 98,92 % of them were implemented (EUR 56 069,86 million); notes further that the final adopted budget payment appropriations amounted to EUR 55 781,71826,77 million and 98,9598,89 % of them were implemented (EUR 55 197,56205,48 million);

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Changed91.139. Notes that 2022 was the second and last year of the transitional period during which funds from the Common Agricultural Policy (CAP) 2021-2027 budget allocation and an additional EUR 8 billion of externally assigned revenue from the NextGenerationEU funds for the European Agricultural Fund for Rural Development Fund (EAFRD) could be usedcommitted by Member States for continued payments to farmers and other CAP beneficiaries in anticipation of the entry into force of the new CAP on 1 January 2023;2023 and that the related payments by Member States to farmers and other CAP beneficiaries can be made until 31 December 2025;

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Changed92.140. Notes that, in the financial year 2022, there were more than 5,9million5,9 million beneficiaries of direct support schemes, around 3,5 million beneficiaries of rural development measures and some 0,11 million beneficiaries of market measures; stresses that the resilience of the Union farmers and food system has continued to ensure food security in the Union and beyond, despite the challenges they faced in 2022;

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Changed93.141. Notes that Russia-sRussia’s unprovoked war of aggression against Ukraine triggered, among other actions, the activation of the crisis reserve in the form of a support package that amounted to EUR 500 million, out of which EUR 350 million was made available for affected producers from the reserve and another EUR 150 million from the EAGF; welcomes the high execution rate (above EUR 492 million) and the fast implementation; notes that Member States were given flexibility in deciding on the sectors they considered most hit by the market disturbance and also the types of aid schemes, which determined the control system applied;

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Changed94.142. Notes that the Court has examined a sample of 218 transactions covering the full range of spending under this MFF heading; notes that the Court also examined the regularity information given in the annual activity reports of the Directorate-General for Agriculture and Rural Development (DG AGRI) and the Directorate-General for Climate Action (DG CLIMA), as well as selected systems in 17 Member States and the United Kingdom; notes that the Court estimates the level of error for ‘Natural Resources’ to be 2,2 % (1,8 % in 2022)2021) and that the majority of the errors found affected rural development transactions; notes that DG AGRI estimates a risk at payment of 1,76 %;

143. Notes that the Court found 21 quantifiable errors in rural development, 7 in direct payments, 2 in expenditure related to market measures and 2 in non-CAP expenditure; is reassured by the fact that the Commission stated that 8 of the quantifiable errors have a financial impact below EUR 100 (over-declaration of areas) and for most of them, the amount misspent is below EUR 1 000;

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Changed96.144. Notes that the majority of errors found by the Court were related to the provision of inaccurate information on areas or animals (42 %) and ineligible beneficiary, activity, and project, expenditure; notes with concern, as in 2022,2021, that the Court found in several cases that the Member State authorities and the Commission had sufficient information to prevent, or to detect and correct the error before accepting the expenditure and thatthat, thishad wouldthe haveMember resultedStates' inauthorities aand lowerthe errorCommission ratemade estimatedproper use of all the information at 1,3their %;disposal, the estimated level of error for this chapter would have been 1.3 percentage points lower;

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Removed97. Welcomes the Commission’s statement that the 2023-2027 CAP delivery model aims to simplify rules and to emphasise the use of new technologies, such as the Area Monitoring System, that will help reduce errors; notes that, together with errors made by the farmers, the Land Parcel Identification System (LPIS) is the basis for the geospatial aid application and recalls the significant potential benefits of technologies for monitoring area aid for farmers, administrations and the environment;

Added145. Recalls that both the Commission and Member States are responsible for addressing fraud in CAP spending; Points out that anti-fraud measures should remain a high priority for the Union and Member States as fraud prevents Union resources from achieving the policy objectives.

Removed98. Notes the example of an incorrect declaration of agricultural activity presented by the Court in its annual report, quoted in several media as the “lemon trees’ case”, where a farmer declared to cultivate permanent crop, where in reality the plot was not cultivated for several years; notes the financial impact of this error was EUR 8 349,06 as reported by the Commission, along with the corrective actions taken by the responsible national authorities, including the recovery of the claimed amount; commends the thorough audit work of the Court and the Commission and the swift follow-up by the paying agency concerned;

Added146. Notes the Commission’s statement that the 2023-2027 CAP delivery model aims to simplify rules and to emphasise the use of new technologies, such as the Area Monitoring System, that will help reduce errors; notes that, together with errors made by the farmers, the Land Parcel Identification System (LPIS) is the basis for the geospatial aid application and recalls the significant potential benefits of technologies for monitoring area aid for farmers, administrations and the environment;

Removed99. Notes that SCOs are applied across the CAP, including in rural development where eligibility conditions are more complex and the risk of error is higher, and that there is still potential to simplify measures that are not based on area or animal declarations, where Member States can decide whether to reimburse actual costs or pay according to predefined outputs; notes that the Commission reports almost 92 % of Rural Development Programmes make use of SCOs;

Added147. Notes the example of an incorrect declaration of agricultural activity presented by the Court in its annual report, quoted in several media outlets as the “lemon trees’ case”, where a farmer declared to cultivate permanent crop, where in reality the plot was not cultivated for several years; notes the financial impact of this error was EUR 8 349,06 as reported by the Commission, along with the corrective actions taken by the responsible national authorities, including the recovery of the claimed amount; commends the thorough audit work of the Court and the Commission and the swift follow-up by the paying agency concerned; stresses though that this case should not be understood as an rare and individual coincidence but rather as a risk of systematic way allowing for fraudulent way to receiving the Union funds and should thus not be underestimated;

Added148. Notes that SCOs are applied across the CAP, including in rural development where eligibility conditions are more complex and the risk of error is higher, and that there is still potential to simplify measures that are not based on area or animal declarations, where Member States can decide whether to reimburse actual costs or pay according to predefined outputs; notes that the Commission reports almost 92 % of Rural Development Programmes make use of SCOs; calls on the Commission to disclose the amount disbursed through SCOs;

149. Recalls that the CAP assurance model includes the first level controls by the paying agencies, the audit work carried out by the independent certification bodies that provide annual opinions on the legality and regularity of the expenditure of paying agencies, and the Commission's work through the clearance of accounts; welcomes that, despite some inconsistencies due to the different update schedules of the control and payment datasets, the Court found that the selected paying agencies’ systems reliably calculated the aid payments, which is a testament to the overall quality and coherence of the Member States’ control statistics and payments data reported to the Commission;

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Changed101.150. Welcomes the increased interest in and use of the integrated IT tool for data mining ARACHNE by the Member States, with 13 Member States using the tool for at least some measures, and five Member States participating in a general introduction workshop on ARACHNE; regrets the fact that the use of the integrated IT tool for data mining ARACHNE by the Member States, is not compulsory; notes the obstacles reported by Member States and the continued efforts of the Commission to improve ARACHNE; regrets the selective adoption of ARACHNE by Member States;

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Changed102.151. Notes that, in 2022, the Commission reported an implementation rate of 99,69 %, for commitments under the European Maritime, Fisheries and Aquaculture Fund (EMFAF), a marked improvement from the 15,98 % implementation rate of its predecessor, the European Maritime and Fisheries Fund (EMFF)EMFAF in 2021; notes, however, that 94,76 % from the EUR 1 135,74 million committed appropriations in 2022 and 97,06 % from EUR 148,12 million in 2021 remained unpaid at the end of the corresponding year; notes further that the implementation rate of the authorised payment appropriations for EMFAF in 2022 was 99,99 % and for EMFF in 2021 was 86,55 %;

Change 74

Changed103.152. Notes the Court’s Special reportReport 09/2023 on securing agricultural product supply chains during COVID-19 and its conclusion that the Commission’s response to the threat posed to agricultural product supply chains by the COVID-19 pandemic was appropriate in most respects but insufficiently targeted; recalls that direct support, with a budget of EUR 712 million, was implemented quickly through reallocation of unused funds from EAFRD, which resulted in this measure mostly being taken up by the Member States with a significant portion of the EAFRD budget unused at the end of 2019; recalls further that 5 of the 14 member states made the Union funding available to all farmers that suffered losses, whereas the other 9 targeted selected sectors and supported beneficiaries irrespective of whether they had suffered losses;

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Added153. Notes that preliminary estimates (based on commitment appropriations) of the climate contribution of the main programmes show that 34,8 % of the Union budget in 2022 was dedicated to climate action, in line with the Interinstitutional Agreement plans for at least 30 % of 2021-27 MFF to be used for this purpose;

Added154. Notes the changes made to the Commission’s climate-tracking methodology in 2022 in response to the concerns expressed about the Court's finding in Special Report 09/2022, stating that the reported spending was not always relevant to climate action, that the amount reported as having been spent for that purpose had been overstated by at least EUR 72 billion, meaning that only around 13 % of the 2014-2020 budget was spent on climate related purposes; is of the opinion that this fact serves as a warning; urges the Commission to distinguish between climate mitigation and climate adaptation in the tracking methodology by breaking monitoring and reporting category into climate adaptation and climate mitigation;

Added155. Underlines the importance of proper scrutiny of climate and biodiversity expenditure in the Union budget, and holds the Commission accountable for the implementation of a robust and reliable methodology, in line with the commitments undertaken in the MFF agreement and paragraph 16d of the IIA of 16 December 2020; calls on the Commission to avoid misleading approximation of the spending contribution to climate and biodiversity objectives, lack of explicit targets, as well as only partial coverage of potential negative or unclear climate and biodiversity impacts; acknowledges that there are the interventions with common benefits but underlines the need to avoid double counting;

Added156. Calls on the Commission to provide Parliament with an annual report setting out in detail the contribution of each budget item to the climate mainstreaming and the biodiversity targets, in order to facilitate their monitoring; calls further on the Commission to report whether any budget item fails to respect the "do no significant harm" criterion as referred to in the Taxonomy Regulation;

Added157. Notes that the European Health Emergency Response Authority (HERA), following its establishment as an internal Commission service on 1 October 2021, increased its operations throughout 2022 and that its mission is to support the Commission’s priorities for public health, preparedness and crisis management in the sectors of health, research and innovation and industry; notes with concern the overlap of responsibilities and duplication of efforts between mandates of DG HERA with DG SANTE and the ECDC; calls on the Commission to ensure the added value of HERA as an integral part of the Commission and to prevent duplication of work and resources;

Added158. Regrets that the Commission’s decision on financing HERA heavily relied on the EU4Health Programme, cutting its budget by more than half with an EU4Health contribution of EUR 2,795 billion to HERA between 2021 and 2027; notes with concern that such reduction affected EU4Health’s capability of ambitious financing of other activities as foreseen by the Regulation (EU) 2021/522, including putting at risks actions under Europe’s Beating Cancer Plan and the necessary support for creation of the European Health Data Space; deplores that by assigning such significant amounts to HERA, the Commission breached the agreed funding ceilings for minimum and maximum spending set in the EU4Health Regulation;

Recommendations

159. Calls on the Commission to:

(i) devote explicit attention in the ex-post evaluation of the CAP 2014-2020 to the transitional period 2021-2022 and the additional requirements included in the transitional provisions in Regulation (EU) 2020/2220 ;

Change 76

Removed(ii) explain to the discharge authority why the implementation rate of commitments under the EMFAF is so much higher than the implementation rate of its predecessor;

(ii) keep the discharge authority informed on the use of SCOs in the current and new CAP and evaluate their use with Member States’ authorities and (potential) beneficiaries to understand the relatively slow uptake of these options;

Change 77

Added(iii) continue to promote the use of ARACHNE to increase both the number of Member States using the system, and to increase the extent of use to include all programmes in the context of the concluded revision of the Financial Regulation;

(iv) to carefully consider the risk indicators in ARACHNE with the aim of reducing the number of false indicators and make the remaining ones more efficient in detecting situations with a high risk for the protection of the Union’s financial interests; and

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Changed(v) promote, provide incentives and support the Member States’ paying agencies in using IT tools like checksCopernicus bySatellite monitoringimagery and other imaging technologies in the field of agri-monitoring;

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Added(vi) make better use and encourage the use of AI and data from new technologies such as the Union owned Copernicus Sentinel satellites to monitor and control the correct use of CAP funds;

Migration and Border management, Security and Defence

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Changed105.160. Notes that the budget for the programmes under MFF heading 4 ‘Migration and Border Management’ was EUR 3,4 billion (1,7 % of the Union budget) distributed as follows: 43,9 % for the Asylum, Migration and Integration Fund (AMIF), 23,1 % for the Integrated Border Management Fund (IBMF) and 33 % for three decentralised agencies: European Boarder Coast Agency (FRONTEX), European Union Agency for Asylum (EUAA) and European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (EU- LISA); notes that, as of 31 December 2022, the final budget commitment appropriations adopted amounted to EUR 3 410,39 million and 99,54 % of them had been implemented (EUR 3 394,69 million); notes further that the final adopted budget payment appropriations amounted to EUR 3 372,54 million and 976197,61 % of them have been implemented (EUR 3 292,03 million);

161. Notes that the budget for the programmes under MFF heading 5 ‘Security and Defence’ was EUR 1,2 billion distributed as follows: 45,6 % for the European Defence Fund (EDF), 17 % for the Internal Security Fund (ISF), 19,2 % for decentralised agencies The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), Europol and European Union Agency for Law Enforcement Training (CEPOL), 6,8 % for nuclear safety and decommissioning, and 11,4 % for other areas; notes that, as of 31 December 2022, the final adopted budget commitment appropriations were EUR 1 813,03 million and 99,8 % of them had been implemented (EUR 1 809,43 million); notes further that the final adopted budget payment appropriations amounted to EUR 1 158.67 million and 97,54 % of them have been implemented (EUR 1 130,20 million);

162. Notes that a significant portion of the spending under MFF headings 4 and 5 in 2022 concerned the completion of projects remaining from the 2014-2020 MFF; notes that significant amounts of AMIF and ISF national programmes for 2014-2020 remain undisbursed (26 % for AMIF and 33 % for the ISF at the end of 2022) while funding for 2014-2020 has to be spent by June 2024;

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Changed108.163. Notes that the Court examined a sample of 23 transactionstransactions, thatwhich is not representative enough of the spending under MFF headings 4 and 5 and, therefore, cannot provide an estimate of the error rate; notesstresses with concern that the Court’s audit results show that the expenditure is affected by eligibility and procurement issues and that it is a high-risk area (11 out of 23 transactions audited, i.e. 48 %, were affected by errors);errors) and thus, invites the Court to provide a clear estimation of the error rate for this chapter; notes that the Court quantified nine errors which had an impact on the amounts charged to the Union budget and that it also found four cases of non-compliance with legal and financial provisions, which had no impact on the Union budget; notes that the Commission concludes that the risk at payment is below 2% for the expenditure on migration and border management, as well as for security and defence;

Change 82

Changed109.164. Welcomes the progress identified by the Court in its review of the work done by six Member States’ audit authorities in preparation for the 2021-2027 AMIF, the Border Management and Visa Instrument (BMVI) and ISF annual accounts; notes the Court’s observation that, at the time of its visits (between September 2022 and February 2023), the six Member States’ audit strategies had not yet been adopted, which is a prerequisite for submitting an ‘assurance package’; notes that, at the time of the Court’s visit, the IT systems to store information and documentation needed for audits of the six Member States’ managing authorities were either under development or yet to be developed;

165. Notes that DG DEFIS’ anti-fraud strategy was updated in February 2022 and its implementation is being monitored and reported to the management annually; welcomes that 100 % of OLAF’s recommendations regarding DG DEFIS were implemented and that no incidences of fraud have been reported at the Commission level or by its partners; notes that the last update of the Directorate-General for Migration and Home Affairs (DG HOME)’s anti-fraud strategy took place in October 2021 and is currently being implemented; welcomes that, by the end of 2022, 72 % of OLAF’s financial recommendations from the previous year were fully implemented and 28 % were under implementation;

Migration and border management

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Changed111.166. Notes that in 2022 the funds under MFF heading 4 were instrumental in addressing the impact of theRussia’s war inof Ukraine;agression takesagainst noteUkraine; notes that more flexibility was introduced under the 2014-2020 funds to enhance Member States’ possibilities to channel funding towards new needs, and EUR 400 million of Emergency Assistance was triggered under the Thematic Facilities; notes that the adoption of the Member States’ programmes for 2021-2027 allowed them to access to more than EUR 10 billion under the new funds for the programming period;

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Changed112.167. Notes that more than 16 million people from Ukraine and Moldova have been recorded as having entered the Union since the beginning of theRussia’s war inof aggression against Ukraine, and over 4 million persons fleeing the war obtained protection in the Union; notes that the Commission provided financial support to the International Organisation for Migration to support the process, as part of a EUR 15 million project facilitating transfers offrom vulnerableMoldova personsof fromvulnerable Moldovapeople fleeing Ukraine; notes further that on 30 November 2022, the Commission announced the decision to award financial support of EUR 5,5 million to a project to be carried out by the International Federation of the Red Cross and Crescent Societies (IFRC) to support hosts and all those involved in providing private accommodation to displaced people, putting together good practices for future needs; takes notenotes that, in 2022, in the context of financing Ukraine, the Commission adopted decisions authorising the use of the funding not linked to costs amounting to EUR 248 million (May 2022) and EUR 137 million (August 2022), as well as for smaller grants, safe homes and psychosocial support amounting to EUR 15 million;

168. Notes that in 2022 DG HOME provided EUR 27 million for the exchange of security-related information and EUR 25,5 million for combatting and preventing crime, including terrorism; notes further that in July 2022, through the Internal Security Fund (ISF), the Commission allocated EUR 15,7 million to Member States to further support long-term projects and activities within the European Multidisciplinary Platform Against Criminal Threats (EMPACT) - a security instrument “driven” by Member States to identify, prioritise and address threats posed by organised and serious international crime,

Security and defence

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Changed114.169. Welcomes that the participation of SMEs in the EDF (European Defence Fund) (in particular the cross-border participation of SMEs in industrial consortia) is being facilitated through targeted EDF calls, financial bonuses, specific award criteria, and the use of SCOs to decrease the administrative burden; notes that in the 2022 EDF calls, 38,2 % of the participating entities were SMEs, and 20 % of the total funding available through these calls will be for SMEs (EUR 166 million);