Cities, regions call out EU for ‘blind’ implementation of recovery funds

The implementation of the pandemic recovery funds remains mostly a top-down process, managed centrally and with limited attention to on-the-ground needs, according to local and regional authorities, who are calling out centralising tendencies in the management of EU funds.

European cities and regions have been largely ignored in the implementation of the recovery and resilience facility (RRF), the €800 billion EU pandemic recovery plan devised to help economies bounce back from the crisis, according to the annual report on the state of cities and regions published on Monday (9 October) by the Committee of the Regions (CoR).

“The transposition and implementation of the RRF has been largely blind to the needs of local and regional governments, putting at risk its relevance and efficiency,” reads the report, which includes a survey of over 2,900 local and regional authorities.

Over 70% of local and regional authorities surveyed said they had not been involved in the implementation of the funds. Of these, 44% were also not aware of the recovery funds, pointing to low levels of both participation and awareness around the EU’s plan.

Overall, the majority of member states managed the recovery funds centrally, setting the milestones and targets required to unlock the money, often without consulting lower levels of government, the report shows.

“The main problem is that the whole decision-making process seems [to be] only a dialogue between national governments and the EU Commission,” said Bruna Cañada Roca, who works at the Spanish municipality of Olot and represents Spain’s Debt Observatory in Globalisation.

“The amount of money that is being directly managed from the general [Spanish] state administration through its ministers is like 83%,” she said, adding that “much less money is going to the municipalities”.

A ‘territorially blind’ RRF

Concerns over the centralisation of RRF spending recently emerged in Italy, where during the summer the government proposed amendments to its national plan diverting funds away from municipalities.

Italy’s recovery funds saga a test for EU fiscal integration

The ongoing revision of Italy’s recovery plan, which triggered a confrontation with municipalities, carries deep implications for the country’s internal politics, its economy and the EU approach to fiscal integration, making a failure of the plan a no-go for Brussels.

The move sparked a bitter confrontation with local governments, also because both experts and auditors had pointed to the positive role played by municipalities in ensuring capillarity in redistributing resources throughout the territory, as well as their knowledge of the territory’s needs.

Italy, together with Spain and Portugal, was found to be one of the countries with the highest centralisation when it comes to RRF spending in the CoR report.

“Some [national recovery plans] are more or less space-blind, which might severely undermine their efficiency and their social and territorial cohesion,” the report reads.

To avoid space-blind policies, the report calls on member states and the European Commission to “take the necessary measures to change the current centralised narrative into a multi-level implementation approach”.

At the same time, the report recognises other reasons contributing to the top-down approach in RRF spending. In particular, the strict requirements to spend the funds in a short period of time and the limited flexibility of pre-defined targets and milestones made it difficult to allow in-depth consultations with local governments or measures tailored to the needs on the ground.

Similar results on the lack of involvement of civil society and its consequences already emerged in earlier research. Moreover, another report by the Citizens’ Observatory for Green Deal Financing also found a lack of involvement of European citizens in the design and spending of recovery funds as well as transparency over how the process works.

EU citizens poorly involved in recovery funds’ design and spending, report shows

NGOs warned of “opacities” in the way the pandemic recovery funds have been designed and spent across a number of European countries, which have often locked citizens out from decisions affecting them.

More concerns on the horizon

Meanwhile, some are already expressing concerns regarding both increased centralisation and performance-based distribution of EU funds, especially when it comes to place-based policies, such as cohesion policy.

“There are ongoing discussions on making cohesion policy look more like the recovery fund, which is more performance-based and not based on costs,” said Pietro Reviglio, policy advisor at Eurocities, adding that, if this is the case, “cohesion policy is in danger” of moving towards a more centralised model.

According to CoR’s president Vasco Cordeiro, excluding local and regional authorities from EU policies would undermine their overall implementation and effectiveness.

“The success of ambitious policies needs a crucial ingredient: trust. […] The data shows that [citizens] put more trust [in local and regional representatives] than they put in their national governments,” he said.

[Edited by Nathalie Weatherald]