Budget row goes on as MEPs call for reshuffle of pandemic recovery fund to boost frontier research

MEPs are demanding money from the pandemic recovery fund should be distributed across the entire Horizon Europe programme, and not just to the priorities set by the European Commission, as member states insist they will not put any more money into the budget as a whole.

“We want the recovery [fund] to be put in the same pot as [the multiannual financial framework],” Horizon Europe rapporteur Christian Ehler told Science|Business.  

Horizon Europe is slated to get €5 billion from the recovery fund, but the commission and member states are planning to use that money on top-down projects that are intended to help the EU tackle the pandemic and recover from the economic crisis. Significant parts of Horizon Europe, such as the European Research Council (ERC) and Marie Skłodowska Curie Actions (MSCA) will not get money from this source. 

The ERC lost 15 per cent of its proposed 2021 – 2027 budget in July, when EU leaders agreed to allocate €75.9 billion to Horizon Europe. MSCA researchers also complained that their budget for 2021-2027 would be smaller than in the previous framework programme Horizon 2020.

ERC president Jean-Pierre Bourguignon has previously said  that cuts to the ERC budget could be reversed if policymakers agree that the parts of the programme which are set to receive extra support from the recovery fund get a smaller share of the long-term budget. That would compensate for major cuts made to the ERC and other fundamental research funding.

Currently, MEPs are holding back on trilateral talks on Horizon Europe, to debate the final details of the programme – including the internal distribution of the budget – agreed by research ministers last month. According to Ehler, a second ‘trilogue’ could happen in the last week of October or in the first week of November if there is a breakthrough in the wider budget talks and which – if successful – could translate into higher budgets for ERC and MSCA.

MEPs are getting behind the idea of putting the recovery fund in the same pot as the long-term budget, after the German ambassador to the EU Michael Clauss warned last week that member states are “extremely hesitant” to pay more into the EU budget than was agreed in July, in order that the budget for Horizon Europe, Erasmus+ and other future-oriented programmes can be increased.

Last-ditch proposal

On Tuesday evening, MEPs in the budget negotiation team sent a new proposal to the Council of the EU advocating for a €39 billion increase for 15 flagship programmes – including Horizon Europe – in the long-term EU budget. They want budget ceilings raised by €9 billion and asked for an estimated €13 billion in financing costs of the pandemic recovery fund to be counted above the long-term budget. MEPs also want unused recovery funds to be reallocated to the INvestEU programme, and a mid-term adjustment for cohesion programmes focused on a “just transition” to a carbon-free economy.

Even if member states agree to this new plan, Horizon Europe would only get a small piece of the proposed top-ups for the entire long term budget, because the money would be distributed across 15 flagship programmes. “There is not a lot in there [for Horizon Europe] and we would suggest [there is a need] to have a good reflection on how to allocate this,” said Thomas Estermann, director for governance, funding and public policy at the European University Association.

“The parliament has moved down in the negotiations and the council is trying [to bring] this further down,” Estermann said. “We are talking more about shifts than topping up.”

On Wednesday, MEPs and a spokesman for the German presidency of the council took to social media where they debated their diverging views on the budget in a thread of snappy tweets. German spokesman Sebastian Fischer dismissed the parliament’s last-ditch proposal saying the total additional costs would amount to €90 billion.

“Thanks for double-checking, but you’re in fact double-counting!” replied José Fernandes, one of the parliament’s budget negotiation team. “If you don’t use your pocket money this month and use it next month instead, you’re not spending it twice!” he said.

Later on, the parliament published a statement saying the council floated the €90 billion figure “in an attempt to undermine” its proposal.

As the conflict between the council and the parliament is moving in the Twitter-verse, it is becoming clearer that member states will not agree to any significant changes to the deal they reached in July.

Representatives of member states in Brussels are wary of any top-ups. According to diplomatic sources, any top-up means member states will have to pay more into the EU budget. The additional money could be gathered by raising taxes or by reducing national spending. If member states have to reduce national spending by the same amount as the EU budget is raised, “What is the improvement?” one diplomat said.

According to Kurt Deketelaere, secretary general of the League of European Research Universities (LERU), MEPs do not want to settle yet for anything less than their most recent proposal despite mounting opposition from member states. “I am really curious where this is going to end, but am pessimistic,” said Deketelaere.

Getting ready for a delay?

According to Estermann, Horizon Europe could start on time in January 2021 if parliament and the council reach agreement on the long-term budget before the end of the month and if the internal allocations inside the research programme stay the same. All the formal procedures needed between the time the budget is approved and the launch of the programme mean that, “There will be a tipping point,” said Estermann.

The commission has the legal means to handle a budget delay, but the pandemic has forced Brussels to allocate most of its remaining money to emergency programmes in Horizon 2020. According to Estermann, a delayed deal on the new budget could open a gap in EU research funding. “The commission has emptied all pockets to feed the calls related to the pandemic,” he said. There is always a little bit of margin for maneouvre in the commission, but said Estermann, “We really need for the new budget to be there.”

But other research stakeholders are wondering if a delayed deal on the long term budget could actually provide a better outcome for research funding. According to Deketelaere, in the absence of a budget deal, the commission would have to come up with a plan B, which usually references the previous budget year.

“That would be better for research, since the budget proposed by the council for 2021 is below that of 2020,” said Deketelaere. “So no, [I’m] not afraid of a certain delay if that results in a better deal for seven years.”

However, MEPs are hoping all wrinkles will be ironed out in due time. “We are optimistic that we will reach an agreement in time to start [Horizon Europe] as planned,” said Ehler.

A risky bet on EU levies

Should all else fail, the parliament hopes it can boost the Horizon Europe budget if EU institutions agree on a plan to allow the European Commission to collect new levies. According to parliament estimates, an EU levy on financial transactions would bring in extra revenue of €200 billion from 2021 – 2027. That could be distributed across strategic programmes, including Horizon Europe.

But that is a risky bet, given the long and difficult legal process through which any new EU tax would have to be agreed. “Counting on a part of the revenues of those taxes for a Horizon Europe or Erasmus top up is absolutely uncertain and undetermined,” said Deketelaere.

“These are promises for the future and there are quite a lot of legal uncertainties,” said Estermann.