Original publication: June 2017
Authors: European Policies Research Centre, University of Strathclyde, Glasgow: Martin Ferry, Stefan Kah
Case studies: Stefan Kah (DE, Bavaria OP), Kaisa Granqvist (FI, West Finland), Timothée Lehuraux (FR, Centre OP), Eleftherios Antonopoulos (GR, Reinforcement of Accessibility OP), Laura Polverari (IT, Lombardy OP), Martin Ferry (PL, Pomorskie OP), Cristian Surubaru (RO, Transport OP) and Rona Michie (UK, West Wales and the Valleys OP).
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The importance of closure

This study provides a comprehensive and systematic analysis of the closure process for programmes funded under the European Regional Development Fund (ERDF) and the Cohesion Fund (CF) in 2007-13. Programme closure is often seen as a purely technical process. It involves shutting down the operation of a programme, finalising the reporting and recording of results, and ensuring sound financial management. This includes the preparation of a series of documents for each Operational Programme (OP) that together form the ‘closure package’: an application for payment of the final balance, a Final Implementation Report and a closure declaration. This required contributions by three main programme management bodies in the Member States (MSs): Managing Authorities (MAs), Certifying Authorities (CAs) and Audit Authorities (AAs).

 

Closure also plays an integral role in the successful implementation of programmes. Key strategic decisions are taken by programme authorities at this stage in the allocation of remaining funds; in securing and raising awareness of achievements and legacies; and, in ensuring a smooth transition to the next programming period. These decisions are taken in the context of considerable pressures: to absorb the maximum funding available; to respond to financial controls and audits that often take place around programme closure; to deal with issues arising from the implementation of specific projects; and, to ensure adequate administrative resources at a time of overlap between programming periods.

Closure in 2000-06: a review of experience

A review of the experiences of programme closure at the end of the 2000-06 showed that programme authorities faced challenges related to efficient spending of EU funds against closure deadlines. Challenges were also encountered in the closure of specific types of project, including major projects (MPs). There were also difficulties in allocating sufficient human and organisational resources to closure tasks. Programme authorities developed a range of responses to these issues: the establishment of closure coordination mechanisms; the dissemination of guidance and advice to implementation bodies and beneficiaries; strengthening the focus on financial monitoring, audit and control; and, implementing different initiatives to address absorption pressures. These issues and responses provide the basis for the framework applied to the analysis of closure in 2007-13.

Closure 2007-13: the regulatory framework

Responding to experiences from closure in 2000-06, regulatory provisions were introduce (Regulation 1083/2006, Articles 88-91), as well as guidance and support for 2007-13. These set the regulatory framework and timetable, and included specific guidance (based on Commission Decision C(2015) 2771 final) to ensure timely and regular spending. It included: allowing an OP to overspend 10% in a particular Priority Axis without formally amending it; the option for MAs to develop a project pipeline that is bigger in volume than the financial scope of the programme to create a financial ‘buffer’ or reserve list of projects; and the option of ‘phasing’ projects across two programming periods. Of particular importance are audit aspects to ensure that any irregularities are not delaying financial absorption. For 2007-13, the ‘single audit’ approach put in place a multi-level control system integrated on the basis of clearly defined responsibilities for EU level and MS auditors, established standards for the work required, and reporting systems and feedback mechanisms. Provisions and guidelines to deal with specific types of operation included the extension of eligible spending and additional reporting requirements for FEIs, as well as potential phasing for MPs.

The EC’s closure guidelines also made provision for the treatment of non-completed projects. Provisions directly related to governance and administration included the strengthened role of AAs as dedicated bodies in charge of OP auditing. The EC adopted a proactive approach to the closure of the 2007-13 programming period, with an increased focus on training and capacity-building for programme authorities. A dedicated Closure Unit was established in the Directorate-General for Regional and Urban Policy to coordinate closure procedures and provide support to MS.

Closure 2007-13: Member State experiences

Programme authorities have taken measures to balance the demands of effective absorption and efficient closure but, generally, a focus on the former has put pressure on the latter. The impact of absorption pressures during the closure process on the strategic quality of interventions was limited. The implementation of certain types of intervention has had implications for the closure process. This applies particularly to FEIs, MPs and non-functioning projects. In spite of EU provisions and MS actions attempting to address these issues, challenges remain, largely related to uncertainties in regulations and guidance and in some cases limitations in capacity and experience.

The quality of the closure process has been determined by the administrative capacity and governance approaches of programme authorities. Efficient programme closure has relied on the coordinated input of actors and structures at EU, national and programme levels at a time when administrative resources are constrained or in flux as a result of the launch of OPs for the next programming period.

MS approaches to address these tensions included the establishment of guidance and coordination mechanisms between programme and national level, and coordination arrangements at programme level (e.g. through working groups). Programme authorities have developed systems to identify and target at an early stage projects at risk of non-completion. They also looked to ensure sufficient capacity for closure through: recruitment, outsourcing, appointing closure managers etc. Programme authorities are increasingly aware of the communication advantages of closure documents and the opportunities to disseminate programme achievements through the closure package.

Conclusions

The formal closure of ERDF and CF programmes in 2007-13 was carried out efficiently. However, beyond this formal process, closure should be perceived as an integral part of programme implementation and this role is conditioned by financial absorption pressures, the type of operations included in programmes and administrative capacities. Financial absorption pressures are prominent as closure approaches. These relate to specific types of intervention with complex associated regulations and where MS capacity or experience is limited (e.g. FEIs and MPs). EC initiatives and MS arrangements have addressed these pressures. Across MSs, the quality of the closure process has depended on administrative capacity and governance approaches.

EC closure guidance was valued by MSs in 2007-13. However, programme authorities noted that it has to be provided at an early stage, be clear and consistent. Looking forward, some key recommendations for 2014-20 can be made:

Linking closure more closely to the reporting of programme achievements and outputs would strengthen efforts to communicate achievements ‘on the ground’.

  • The EC’s efforts to build capacity for closure should continue, especially for AAs.
  • MS guidance, support and structures should be established, building on or working alongside EU-level support for closure.
  • For MAs, closure should be regarded as an issue for the lifetime of a programme, not just for the final years.
  • Closure should remain a priority for programme authorities and project sponsors, and to ensure commitment from all those involved in closure.
  • Close formal and informal coordination between programme authorities involved in closure is recommended.
  • Given that administrative tasks associated with closure are substantial, MS and programme authorities must ensure that sufficient capacities are made available (training, recruitment, outsourcing etc.).
  • The UK case is exceptional. Closure arrangements will depend on the Withdrawal Agreement to be negotiated after triggering Article 50 in March 2017. The two-year withdrawal process indicates that the programming  period will be shortened in the UK, creating significant challenges. First, regulatory procedures around N+3 and closure mean that the UK would still be subject to EU regulations for at least three years after withdrawal. Second, the process will be complicated by audit requirements that continue beyond closure and therefore after Brexit. Third, these issues will be played out in a context of organisational flux and reduced capacity as UK programme authorities break up and shed staff.

Link to the full study: http://bit.ly/601-984

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