Agencies told to put their financial houses in order

Date: 15/10/1998

By Rory Watson

TWENTY years ago, there were only two satellite agencies helping the various European institutions with their many activities.

These were the European Centre for the Development of Vocational Training in Berlin (CEDEFOP), which has since moved to Thessaloníki in Greece, and the European Foundation for the Improvement of Living and Working Conditions in Dublin.

Since then, their number has surged to 11. Whether they are called agencies, foundations, centres, offices or observatories, they all have the same function of employing experts in their field to implement EU policies from a decentralised base.

The greatest increase came in 1993 when, after protracted wrangling at a summit in Brussels, Union government leaders eventually managed to find homes for enough agencies to ensure that one would be despatched to almost every member state.

That deal saw the establishment of specialised centres for the environment, health and safety at work, training, evaluation of medicines, drugs monitoring, trade marks and designs, and translation. Since then, two more have joined their ranks: the Plant Variety Office in Angers and the Monitoring Centre for Racism in Vienna.

That expansion has had major budgetary consequences for the Union. Combined staffing levels have now reached more than 1,000 and are expected to climb to 1,200 next year, with an inevitable knock-on effect not only on salaries but also on pensions.

According to UK Labour MEP Michael Tappin, who has carried out a special investigation into the various agencies, providing pensions for all the current staff would cost 58 million euro - a difficult sum to find given that only two of the agencies have until now been paying pension contributions for their employees.

But pensions are only one of the aspects of the agencies' existence which are worrying the Parliament's budgetary experts. They are also determined to inject a greater degree of financial harmonisation and budgetary transparency into the existing structure.

“Decentralisation does not mean political independence nor budgetary autonomy according to the agencies' basic regulations, given that their purpose is to implement Union policies as a result of the subsidy they receive (or may receive) from the EU budget,” noted Tappin in a report on the 1999 budget.

MEPs have already managed to introduce a greater degree of consistency into the agencies' budgetary practices, but they are now looking to go further as they enter the final stages of negotiations on EU spending in 1999.

Tappin's report slaps some of the agencies on the wrist for introducing supplementary budgets on three separate occasions during the past 18 months without advance warning to either the Parliament or member state governments, who share responsibility for the budget.

In order to tighten up parliamentary control over the agencies' budgets, which have increased at a significantly higher rate than the average rise in overall Union spending, MEPs will next week invite their governing boards to subscribe to a code of conduct.

This would require each agency to set out its budgetary needs for the following year in a report to the Commission before the end of March. Any proposed changes would have first to be communicated to the Parliament and EU governments.

It would be the Parliament alone which would determine afterwards whether the funds had been properly spent, as it does with the EU budget as a whole in its annual discharge.

As an incentive to the agencies to agree to this closer scrutiny, MEPs are planning to freeze 10&percent; of their Union funding until they sign the proposed code of conduct.

The Parliament has also asked the Commission to come up with an assessment of what impact enlargement will have on the activities of the agencies and to confirm that there is no overlap or duplication between their work and that of the Commission.

Agencies' budget breakdown

Preliminary draft budget 1999 (in thousands of euro)

AgencyTotal staffEU subsidyOther income

Translation centre13145013,053

Community plant variety office 25to be decided7,058

CEDEFOP8112,700 331

Centre for racism173,7500

Foundation for the improvement of living and working conditions8514,100 300

Safety and health246,500210

Drugs457,8000

Environment6316,800300

Internal market407to be decided75,256

Medicines20312,00027,350

Training13015,700 0

Total1,21189,800123,858

Source: European Parliament

Proposed European Union budget for 1999 (in millions of euro)

Budget 98Financial perspectives 1999 (legal ceiling on expenditure) Draft 1999 budget tabled by European CommissionDraft 1999 budget agreed by EU governments

Common Agricultural Policy40,43745,18840,44040,440

Structural operations33,46139,02539,02539,025

Internal policies 5,756 6,386 5,926 5,449

External Action 5,731 6,870 5,884 5,992

Administrative expenditure 4,353 4,723 4,520 4,423

Reserves 1,176 1,192 1,192 1,192

Compensation9900 0

Total91,013103,38496,98796,521

Source: Council of Ministers