Original publication: June 2016
Authors: Blomeyer & Sanz: Mike Beke, Roland Blomeyer, Nicolò Franceschelli, Elsa Perreau, Antonio Sanz
Short link to this post: http://bit.ly/2EGZSh4
Introduction – objectives, scope and methodology
Further to a request by the European Parliament (Policy Department for Structural and Cohesion Policies), this study was prepared between December 2015 and April 2016.
The study reviews the performance of the Simplified Cost Options (SCOs), with focus on the achievement of the SCOs’ immediate objective of simplifying and reducing administrative burdens and the wider objective of re-focusing resources from administration and financial control to the achievement of policy objectives. The focus is primarily on the European Regional Development Fund (ERDF), and to a lesser extent on the European Social Fund (ESF), covering the programming periods 2007-2013 and 2014-2020. The report was prepared on the basis of desk research and interviews with Structural Funds authorities and beneficiaries in nine Member States (referred to as stakeholders in the remaining text) and with the European Commission.
Simplified Cost Options – rationale and regulatory framework
The rationale underlying the introduction of the SCOs relates to concerns over administrative burdens and related consequences, with the SCOs aiming to simplify the use of the Structural Funds and, thus, reduce administrative burdens. Moreover, the SCOs are expected to reduce error rates, enhance the access to the Structural Funds of small beneficiaries with limited capacities and, in the medium-term, allow for a refocussing of resources towards the achievement of policy objectives.
The Structural Funds’ regulatory framework for 2007-2013 progressively introduced three types of SCOs, namely flat-rate financing of indirect costs, standard scales of unit costs and lump sums. The 2014-2020 regulatory framework has largely maintained the acquis, whilst addressing identified deficiencies and providing additional detail.
Stakeholder feedback on the regulatory framework is generally positive, noting, inter alia, enhanced clarity and flexibility. However, stakeholders have suggested that further regulatory improvements are required, e.g. in the form of additional detail, flexibility or the adaptation of requirements to specific Member State conditions. Despite the progress made, legal uncertainty remains an issue, with room for interpretation discouraging Member States from using more innovative types of SCO. Stakeholders have also noted ‘gold plating’ issues with regard to EU-level audit of the SCOs. Finally, and in more general terms, there is a need for further harmonisation of regulatory requirements between the different European Structural and Investment (ESI) Funds, with different requirements affecting multi-fund programmes.
Enhanced uptake and achieving the immediate and wider objectives of SCOs
- As regards uptake, systematic data on the actual uptake of the SCOs under the ERDF (2007-2013 and 2014-2020) was not available at the time of writing. Whilst DG REGIO research covered uptake via a survey, this research is only due for publication in September 2016. DG EMPL research confirms an increase in uptake from 7 % in 2007-2013 to 35 % in 2014-2020.
- In terms of achievement of immediate objectives, simplification in general did not substantially reduce administrative burdens during the 2007-2013 programming period. Existing research indicates that Member States have experienced regulatory and methodological constraints when introducing SCOs. This notwithstanding, stakeholders consider the SCOs to have reduced administrative burdens and costs, contributed to reduced error rates and bolstered data protection. With regard to the programming period 2014-2020, stakeholders have provided positive feedback on EC guidance, while still perceiving guidance as being too general to ensure legal certainty. Indeed, while some stakeholders have expressed appreciation for EC advice, others have noted a need for more practical support. Some Member States have opted for an informal validation of their methodology by national auditors.
- As regards the use of SCOs, stakeholders have confirmed that the selection of SCOs is motivated by concerns over avoiding risks. Legal uncertainty is considered the main constraint for establishing SCO calculation methods. Overall, stakeholders have associated the SCOs with positive effects in terms of reducing administrative burdens, speeding up payment processes and reducing error rates. However, the SCOs have not been found to have made much of a difference with regard to attracting new beneficiaries.
- Finally, with regard to the wider objectives, desk research confirms the SCOs’ potential in terms of reallocating resources to policy objectives, and this was validated by interview feedback, with, however, some exceptions.
Conclusions and recommendations
- At the time of writing, there is still limited experience with the SCOs, and further research (ideally starting in 2017) is required to provide a systematic assessment of their performance. For example, the stakeholder feedback collected in this study is not always conclusive, e.g. some Member State authorities and beneficiaries criticise the regulatory framework for a perceived lack of clarity, with provisions leaving room for interpretation, and note the need for more legal certainty. Other stakeholders consider that the framework needs to be more flexible to allow the SCOs to be better adapted to specific Member State contexts. This notwithstanding, the 2014-2020 programming period is witnessing an increased uptake of SCOs, and this is largely explained by improvements in the regulatory framework and enhanced EC guidance. The Member States’ greater willingness to use SCOs in a systematic way in 2014-2020 is also explained by their often tentative, but largely positive, experiences in the 2007-2013 programming period.
- The aforementioned improvements of the CSOs notwithstanding, interviews conducted for this study suggest that further efforts are needed at design level, and in the context of guidance on, and the promotion of, the SCOs. On that basis, the study concludes with four recommendations, addressed both to the European Union institutions, responsible for the regulatory framework and related guidance, and to the Member States’ Structural Funds authorities, responsible for implementation: (1) address regulatory obstacles to the use of the SCOs; (2) strengthen guidance and advice; (3) promote the SCOs; and (4) consider further harmonisation of different ESI Funds.
Link to the full study: http://bit.ly/573-447
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