Time running short for agreement on €80 billion Horizon 2020 package

As budget talks collapsed between the European Council and Parliament, some are starting to think what was previously the unthinkable: No deal may be better than a bad one, when it comes to funding research and innovation programmes.

At a Webcast conference organised by Science|Business in the European Parliament 13 November, five key MEPs concerned about R&D budgets debated whether the political equivalent of a default would be better or worse for European research. The default position: If European leaders reach no budget deal, all EU funding could go into a semi-automatic ‘roll-over’ procedure – with budgets held flat from 2012 to 2013 and possibly beyond. That could mean continuance of the status quo of EU R&D funding from the 2012 level of about €10 billion, rather than a rise to an average €11.5 billion requested by the European Commission; but at least it would prevent the kind of draconian spending cuts advocated by some member-states.

It is “very unlikely” any agreement will be reached at a European Council summit on 22-23 November, said James Elles, a member of the European parliament (ECR-UK) who sits on the Budget Committee. Though a roll-over could create a policy limbo, it would be better than a sharp cut in spending and could provide time to hammer out a much-needed consensus on EU spending priorities, Elles said. “The emphasis has to be on how to spend existing money better and where we can get the most value for money – rather than thinking about huge chunks of money that don’t exist.” Further, he argued that a few years of simple budget roll-overs would set things up for a more democratic result: The new European Commission to take office in 2015 would have the opportunity to write its own long-term spending plans from scratch, rather than have to inherit them from the current Commission.

Another MEP, Philippe Lamberts (Greens-BE), agreed a roll-over might be beneficial if it permitted better planning of spending priorities. But he and others, including Edit Herczog (S&D-HU), and MEP Maria Da Graca Carvalho (EPP-PT), urged continued support for the European Commission’s proposed budget increase.

Carvalho, an ITRE Committee member and rapporteur for Horizon 2020, also championed an €80 billion-plus Horizon 2020 package as a vote for Europe’s competitiveness. “Horizon 2020 is exactly the growth pact we need for Europe,” she said, arguing against a delayed decision. “We need a European budget. For many countries, it’s the only public budget available for R&D. We should have the courage to make a choice and select the right priorities.”

Stand-off

Acrimony over EU spending rose to a new high on 13 November when a European Parliament team walked out of negotiations on the EU’s 2012 budget, angered by the Council’s refusal to finance a €9 billion deficit. The stand-off came hours before conciliation talks were set to begin on spending plans for 2013.

Over the past six months the Commission’s proposal for a five per cent increase in the 2014-2020 EU budget, called the Multi-annual Financial Framework, has come under increasingly heavy fire as European governments reel from soaring debt, austerity budgets and on-going financial crisis in the Eurozone. The UK is calling for a real-term freeze in the budget, which amounts to up €200 billion less than the Commission’s proposal and Germany wants to limit the EU’s budget to one per cent of member states GDP, or a cut of €130 billion to the Commission proposal.

By contrast, the European Parliament has argued vociferously to raise Europe’s seven-year R&D budget to over €100 billion, calling it a vital investment in future competitiveness, jobs and growth. “Do we believe its wise to base our competitiveness on cost cuts and wage cuts. Do we believe we can compete in [global economic] race against low-cost countries? And is this a race we want to win? I don’t see the EU becoming yesterday’s China or Vietnam,” said MEP Philippe Lamberts (Greens-BE), speaking at the Science|Business debate and live broadcast, Horizon 2020: The Parliament Speaks.

Bigger than FP7

The Horizon 2020 programme requires a larger budget because its scope has expanded to include the entire innovation cycle through to demonstration projects, including expensive trials in areas such as energy, transport and health, several MEPs argued. It also includes new items such as the recently created European Institute for Innovation and Technology (EIT), and nuclear fusion and space research programmes, which were previously outside the Framework Programme.

The EIT was launched in 2010 and received approximately €309 million under FP7, but the institute is slated to receive a total of €3 billion under Horizon 2020. “The EIT was a new baby. We voted these programmes into the budget and now we have to get financial resources for them,” said MEP Edit Herczog, (S&D-HU) rapporteur for the Multiannual Financial Framework for the Industry, Research and Energy Committee (ITRE).

Herczog pointed out that the Commission’s €80 billion Horizon 2020 budget proposal represents only a six per cent real increase over 2013 research spending – not 46 per cent – because the overall programme expanded. She encouraged research community participants and webcast viewers to raise their voices and make the case for increased R&D spending to their governments: “Tell them this is a critical moment. Ministers of finance have to get the message before the November European Council. We have to recognize that with austerity, we cannot achieve our goals.”

Lamberts, a former IBM manager, agreed that bolstering R&D spending during an economic crisis was sound economic policy. But he concurred with Elles that if a freeze on EU spending at current levels prompted governments to engage in a real debate and build consensus for hard decisions, it would be worth delaying agreement on the Multiannual Financial Framework for the next two years. “There’s no question we need to shift more much more private and public funding … to activities that create more value. This needs to be done,” said Lamberts, adding that some white elephant programs like the nuclear fusion project ITER (International Thermonuclear Experimental Reactor) and Joint Technology Initiatives were a waste of money and should be cut.

Democratic deficit  

A delay in launching the Multiannual Financial Framework to 2015 would also bring the EU budget in line with the five-year term of the European Parliament and the Commission, giving both institutions a say over funds available for 2014-2019 –instead of having a budget set by the previous Parliament and Commission – and bolstering the democratic process in Europe, Elles said in a blog post. “The actual Commission that has to implement a budget in Europe has no say over it – yet we are in the midst of big debates on banking union, financial union – that’s fundamentally wrong,” argued Elles. “There is a bigger issue here than one programme.”

Lamberts warned, however, that postponing a more effective investment in R&D means postponing returns.  “It closes doors. We have to urgently step up investment in competitiveness activities.” In some areas money spent at the regional or national level may be more effective than spending at the federal level, he conceded. “But in areas where the EU is in competition with the US, China, Brazil or India, there is a good case for doing a significant part of our effort together... on average we do a better job by pooling our efforts at least in a number of areas where we want to be global leaders.” At €80 billion, Horizon 2020 would constitute some 5 per cent of all European-wide public research funding.

Nuclear fusion

MEP Peter Skinner (S&D-UK), a member of the Economic and Finance committee and the ITRE Committee and rapporteur for Atomic Research under Horizon 2020, defended Europe’s investment in nuclear fusion research (ITER). “Science is not run like a business. It’s more far-reaching. We have to be clear about the objectives we set for projects.”  He also noted that when it comes to cutting wasteful projects, the Common Agricultural Policy would be a good place to start. “Thirty-eight percent of the EU budget is literally thrown away,” Skinner said.

Bottleneck

A webcast participant suggested looming budget cuts put Europe’s credibility in research and innovation in question. Herczog was quick to pary: “The Commission and the Parliament are arguing for more Europe, more research. There is a bottleneck – the 27 ministers of finance.  We want to see where the Council wishes to cut, line by line. You can’t promise that you will do more and do the same or less.”

As panelists grappled with the tough question of where to cut, Lamberts pointed to agricultural and structural funds as ripe for reform. “Either we go for a systemic transformation of agriculture policy or we scale down spending significantly,” he said, adding that politicians had to show leadership and make the case to society that research is crucial to Europe’s survival. “I believe we can do better. We have to show we can operate in a leaner and meaner fashion. We have to show we are willing to shift money to value-creating activity.” 

That’s likely the only approach that will stave off cuts in European R&D when finance ministers tackle the EU’s 2014-2020 budget – now or later.