30 Apr 2020   |   News

EU pushes for bigger say on health in draft budget overhaul

New details on long-term budget redraft sees EU executive call for ‘standalone health programme’ in proposed reversal of decision by previous administration

Brussels is arguing for more power to make health policies and react in emergencies in the latest leaked version of the EU’s long-term budget redraft.

“Experience from the ongoing crisis has demonstrated that the EU would benefit from an ambitious stand-alone Health Programme that is fit for purpose,” the draft document, obtained by Science|Business, says.

The move to create a standalone health programme would reverse the decision by the previous EU administration under Jean-Claude Juncker to consolidate health spending with several other programmes into an enlarged programme called the European Social Fund.

According to the draft paper, which offers fresh details on the EU’s post-coronavirus budget redraft effort, this new programme would concentrate on “continuously improving health conditions across the member states, through better prevention, access and treatment which has already been pursued through the currently existing programme.”

A new strand of work would also envisage the EU “with greater capacity to act in health emergencies.”

The new EU budget proposal, called the multiannual financial framework, will likely go through several changes before it is presented on May 6 by Commission president Ursula von der Leyen.

EU governments jealously guard the right to make their own health policies, leaving the EU with a limited role in coordinating cross-border health threats. The COVID-19 crisis has laid bare just how small the EU’s role is in the sector, with member states largely going their own way in handling the emergency.

The Commission provides money – relatively small amounts by EU budget standards – for such things as health research, expert networks for rare diseases, and prevention policies against AIDS, smoking and other health problems.

Debate over EU influence in health is nothing new – there are always competing visions within the bloc over the role of the Commission. Some countries favour a more activist role for the Commission, while others are naturally wary of vesting Brussels with more political power.

EU law designates healthcare as a matter for the member states to manage on their own; but the Commission has always found ways – sometimes stealthily – to increases its role in the sector.

The previous Commission argued that the reason for folding health into this new social programme was to simplify the way its diverse programmes operate, by reducing the number of separate legal instruments and making it easier to transfer funds from one budget pot to another. The proposed budget for health for 2021 through 2027, €413 million, was down 8 per cent on the current period, however.

The shift at the time was characterised by one lobby group, Global Health Advocates, as a “downgrade in political ambition” on health.

Search for more financial headroom

The latest budget draft sees the Commission searching for more financial headroom and arguing for more discretion from governments to manage spending in a variety of areas.

“The unpredictability and the fallout of the health crisis furthermore calls for an even more flexible and agile budget, which is only possible through the mobilisation of special instruments,” the text says.

The draft re-write “proposes a radical change to the functioning of the EU budget. The next multiannual financial framework will have a much larger capacity to use innovative financial instruments leading to substantial reinforcements of key investment programmes,” the paper says.

What this translates to is the Commission borrowing hundreds of billions of euros on capital markets, so as to avoid going to EU governments for extra financial contributions, and using this money to strengthen liquidity guarantees and reallocate funds as part of a coronavirus recovery plan.

The draft argues for the current EU programme for regional investment to be extended by two years until 2022, allowing up to €50 billion in crisis money to flow to SMEs now. Since the COVID-19 crisis began, eastern and southern EU officials have been demanding more cohesion money to rebuild their local economies.

In addition to running the current programme longer, a new “emergency response provision” should be fitted to the next cohesion programme, to run from 2021 through 2027, “allowing the Commission to temporarily deviate from some rules in favour of some or all member states in a crisis,” the paper says.

Elsewhere, an array of new funding instruments are envisaged to help the continent recover from the massive coronavirus-induced economic shock. 

The InvestEU programme, which uses EU funds to guarantee private investment, will get new firepower and an extended mission.

The programme will continue to make strategic investments in “important projects of common European interest”. These are a type of project, involving multiple member states, companies and public-sector research organisations, that have come into favour in the past few years because they allow the governments to have more control over how the money gets spent than they normally get with conventional Commission projects. A recent example is a battery research and innovation project, granted special state aid exemption in December, allowing countries including Belgium, France and Germany to invest billions of euros in R&D for electric-car and electricity-grid batteries.

The fund will also offer credit support to aid general economic recovery in the bloc, while bolstering key European supply chains. A “solvency support instrument” will help repair the balance sheets of companies that have struggled to stay afloat following country lockdowns.

The new draft also argues that large parts of the original EU budget, published in 2018, “[are] still very much fit for purpose”, with investments earmarked for green and digital technologies and defence still deemed “essential”.

“We will also have to sustain investments in research and innovation to enable European companies to compete on a global scale,” the paper adds. According to the EU’s original seven-year budget proposal, published in 2018, the Horizon Europe research programme was earmarked to receive €94.1 billion, a rise from €77 billion in the current seven-year programme ending December 2020.

In its latest draft, the Commission warns that the budget won’t be ready to operate next year without swift approval from the 27 member states.

“It is essential to capitalise on the progress in the negotiations so far. To start from scratch would make an MFF agreement in time impossible,” the document says. 

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