A range of issues and deficiencies have been reviewed above. Rather than responding to specific problems (single-loop learning) there is a need to diagnose deficiencies in the organisation at a higher level of generalisation: what core values should be aimed at in any EU reform process (double-loop learning)? A basic framework is required defining the quality requirements. The EU’s good governance agenda[29] stresses quality standards in relation to evidence-based policy making and to ownership for objectives and reforms: Transparency, independence of monitoring and reporting, and subsidiarity. An organisational audit is necessary to assess the extent to which these good governance values are met.
There are many ways to diagnose the functioning of an organisation. Here we briefly introduce two approaches. Firstly, in the context of the EU, the assessment of the reporting on cohesion spending will be linked to the three core-values of good governance. Secondly, a comparative assessment monitoring and auditing in other EU policies. Officials and experts often think their policy area is unique in terms of ingrained interests, technical complexity, and political salience. In reality, these characteristics more or less typify any policy that has become stuck.
Independence
As discussed, the Commission combines many roles in managing and controlling programs. As responsible for executing cohesion funds, it also has to see to it that the funds are absorbed. Given the fact that the Commission has to find a balance between different roles and to assess overlapping and competing output indicators, the Commission is inherently political. Its decisions are hard to make transparent as it is involved in all interlinked stages of spending and auditing – some level of discretion is required.
Combined with the intransparencies in national auditing and in the communication between Commission and member states, the necessary checks and balances are less than perfect in the current ways of working. The Commission approves the national programs and has an interest in seeing that they are successfully completed. This includes defining management objectives and assessment of achievements even though it is often hard to set the management objectives sufficiently precise (ECA 2023c). This offers the Commission leeway to more or less always grant the subsidies also because it tends to avoid painful political discussions in which member states and regions end up with unpaid bills and disappointments in the EU more generally (see also Mérand 2021). The discussions between Italian Prime Minister Meroni and the Commission over the RRF are an example of the sometimes tens political relations concerning suspensions of payment (Hungary is another obvious example).[30]
Given its variety of roles, the Commission is less vigilant than ECA in assessing outputs and the legality of national spending. For example, ECA has criticised the way in which the suspending of payments has been diluted in cohesion policy also because the reasons behind Commission decisions to approve national reports and to avoid suspending payments are only partly transparent. These reasons may include the importance of cohesion for vulnerable regions and the political need to absorb the funds. However, the Commission is also under pressure from the member states to find compromises and give the member states what they think belongs to them (i.e. the financial envelopes).
When it comes to the assessment of national and EU added value, it is doubtful whether the current system of input and output indicators, and reports from the Managing Authorities and from the EU Commission, offer sufficient and reliable insights. To enhance the effectiveness and the transparency of cohesion funding in the member states with widely varying regions and idiosyncratic welfare functions, cohesion funds cannot do without independent assessments from fully equipped bodies such as the national Supreme Audit Institutions.
One of the problems with transparency is that the system as it currently operates, key actors each have an interest in showing that the funds are well spent. These actors are the DGs in the EU Commission (DG REGIO, DG BUDG, DG EMPL, but also DG ECFIN and the Secretariat General when the related RRF is included), the National Authorities and Audit Authorities linked to the national governments, and the national ministries. These interests may concern maximising financial ‘juste retour’, defending leeway, resistance to change current procedures, sometimes even fraud[31]. This implies that actors have reasons to show that the available resources and the national envelopes are well spent. Moreover, not all national institutions are sufficiently equipped to consider them to be fit for purpose. The term ‘independent’ can be frequently found in the documents but in this set-up the actors have interests in presenting outcomes in a good light, or as in the case of SAIs, have little interest in becoming involved.
Independence also relates to the actual assessment process through which national authorities themselves are scrutinised. Quality control is, again, in the hands of the multi-hatted EU Commission.
Subsidiarity
The term subsidiarity, in the European legal sense, refers to moving tasks upwards that can better be done at the European level. Legally, subsidiarity is about separating tasks in the EU’s multilevel system. In organisational theory, subsidiarity is akin to decentralisation: keeping tasks as much as possible at lower levels. Subsidiarity in organisational theory is about coordinating tasks instead of centralising tasks (Schout 2021a, 2022). The theory of decentralisation reminds us that subsidiarity is vital for strengthening national institutions and creating ownership for European objectives and values. It demands a shift in roles of the EU institutions. Working through national networks demands first of all coordinating and facilitating roles from the EU institutions to involve national actors, to ensure that network procedures are formulated by the network itself and that the procedures are followed and monitored through team-based inspections. In a subsidiarity-based system, the EU Commission remains responsible for the functioning of the system as a whole, for initiating new legislation, for reporting to Council and EP, for taking corrective actions in case member states to not meet the requirements or disregard the rules, and for taking (legal) actions.
Cohesion is not designed as a subsidiarity-based network organisation. Subsidiarity-based cooperation offers a profoundly different perspective on how cohesion policy could be organised. As discussed above, cohesion tasks are currently designed in centralised bilateral relations between national authorities and the EU commission. Moreover, the ECA’s tasks are carried out essentially by ECA itself (auditing national auditors, writing Special Reports).
As presented in more detail in Annex 1, drawing on the experience in other EU policy areas, control on national authorities in cohesion currently carried out by the Commission could be organised through mutual inspections carried out by the national MAs, AAs and/or SAIs. Moreover, in other EU policy areas, mutual inspection reports areas are made publicly available. These reports are usually published, for legal reasons, with some delays and to give member states time to adapt so that existing weaknesses cannot be exploited by outsiders in the meantime (see e.g. the management of border control, Schout and Blankesteijn 2020). Subsidiarity-based cooperation has contributed in other EU policy areas to creating a culture of independent monitoring and enforcement, capacity building at the national level, ownership, and transparency (also due to the separation of tasks and the related separation of responsibilities for reporting and decision-taking).