A snowball effect, which means that each year the European Commission finds itself with far more bills than money to pay them, has left European member states - currently poring over the EU’s budget for next year - threatening a €1 billion cut in the research budget.
Such a fall would mean the EU’s research directorates (DGs) failing in their contractual obligations to thousands of scientists who have applied for funding through Horizon 2020, the EU’s €79 billion research and innovation programme, said the Commissioner.
“In practical terms, this will impact around 600 collaborative projects under Horizon 2020, involving more than 7,000 participations, of which around 1,400 are SMEs,” Geoghegan-Quinn said.
The news has made some small businesses apprehensive and eager for reassurance. “Even a three or four month slowdown in payments could precipitate liquidations for SMEs,” said one benefactor of EU research money. “Horizon 2020 was supposed to encourage SMEs – if payments are delayed, it might have the opposite effect.”
With public spending under pressure everywhere, and EU expenditure far from a priority for most member governments, it was something of a triumph for science that Horizon 2020 emerged from last year’s political bargaining with an €80 billion funding commitment.
But the Commission has recognised that a similar level of political pressure is needed again. The Commissioner’s trip to Strasbourg was about drumming up urgency in members of the European Parliament (MEPs), who will have a strong say on where the axe will fall on payments next year.
In a speech that was striking for its blunt language, Geoghegan-Quinn said, “The approach of putting off to the future has reached its limits.” Failure to find a solution for cascading budget commitments, “Would seriously put into question the reputation of the EU as a reliable funder of research,” she added.
Kicking the can into 2015 and beyond
The EU’s current budget cycle from 2014-2020, opened with a massive backlog of payments. With outstanding bills to pay, every directorate in Brussels starts the budget year with less in the coffers than expected.The EU’s research DGs have not been immune. “Since 2011, research and innovation programmes have suffered from recurrent and accumulating lack of payment appropriations,” Geoghegan-Quinn said.
Geoghegan-Quinn’s office has calculated that a full 60 per cent of its spending in 2014 and 2015 will be for the previous EU research programme, the Seventh Framework Programme (FP7) which ran between 2007 and 2013. As a result, “The full rollout of Horizon 2020 is de facto being pushed ever further to the future,” said the Commissioner.
Legacy payments of FP7 are not particularly alarming, in fact, they are expected. Since a lot of projects are still open and running, a huge overlap was planned for.
However, with the Commission playing catch-up on these payments and the Council, which represents the member states, insisting that directorates stick to tighter annual spending ceilings, an unexpectedly large cut of €1 billion would leave little room for manoeuvre.
As things stand, and additional plug of €230 million, “Is urgently needed before the end of the year for the Research DGs to avoid payment delays,” Geoghegan-Quinn said. Seeking additional money through amended budgets like this is common practice for DGs.
MEPs have their say
Having €1 billion less to work with next year would be a massive blow to the research community, members of the parliament (MEPs) said on Tuesday.
The Council’s proposal is a disproportionate hit on research, said Ashley Fox, a UK MEP. “I note that the Council is proposing a significant cut of 11 per cent. In contrast, cuts to Cohesion Policy amount to just 0.4 per cent and to agriculture 0.1 per cent,” he said.
“This is the money which universities, Erasmus, SMEs and local authorities depend upon,” said José Manuel Fernandes, MEP. “These are implemented projects and programmes in member states whose bills have not been paid. “We consider that the EU budget should pay what it owes.”
Fingers of blame are pointing in two directions. “It’s the treasuries of the rich countries, like the UK and Denmark, which make the trouble here,” said Claude Turmes, a Green MEP. “But this is another blame-Brussels game.”
Fox disagrees and wants to see a more cost-effective operation in the DGs. “The Commission has been too liberal [in making] commitments without tracking payments. The result of this poor management is suffering for EU research,” he said.
The Commissioner said, “drastic measures” have already been taken to ensure the research directorates are stick to their budgets. Under Horizon 2020, pre-financing rates, the amount the Commission pays a project up-front, have been tapered back, and closing dates for proposal submissions have been postponed to put off spending into the future.
An official from the Commission’s DG Budget was unable to say how much of the Council’s proposal was grandstanding and how much the final cut will be. The final vote is scheduled for 26 November.
Receive the Funding Newswire each Tuesday, our Policy Bulletin each Thursday, and news about bridging Europe’s east-west innovation gap twice a month in The Widening. 
