ECF must focus limited budget on key priorities, lead MEPs warn

The European Parliament’s co-rapporteurs for the European Competitiveness Fund (ECF) have urged MEPs to provide the fund with a clear focus, as the budget to be negotiated with EU governments later this year will not be sufficient to cover all sectoral interests.

In a hearing in the Parliament’s research and industry committee on May 6, Christian Ehler and Dan Nica both praised the European Commission for the initiative on principle, but also shared criticisms of how the ECF proposal had been made.

Dan Nica, of the Socialists and Democrats group, said that the Commission had promised too many stakeholders that their favoured programmes would be picked up by the ECF. This included continuing the EU4Health programme, and supporting sectors such as housing, agriculture and biotechnology. “They did that in 11 cases,” Nica said in his opening statement. 

He had been “ashamed,” he said, to tell rapporteurs from other committees that the ECF would not be able to reserve money for their sectors, as the Commission had promised.

While the research and industry committee is leading the Parliament’s work on the ECF file, 11 other committees have also been asked to provide an opinion, reflecting the wide-ranging nature of the new fund and the broad interests at stake.

Defining competitiveness

In his opening statement, Ehler, of the European People’s Party, emphasised the need to define competitiveness. Without such a definition, there was a risk the ECF would “permanently subsidise the cost gap between European industry and global competitors.” Instead, competitiveness should be strictly focused on productivity, Ehler said.

The question of definitions was also picked up by members of other political groups. Rihards Kols of the European Conservatives and Reformists Group applauded the decision to add a clear definition of competitiveness, while Benedetta Scuderi of the Greens-European Free Alliance said that the definition should not be reduced to “production and speed” but should also include “sustainability, resilience, work quality and independence from external shocks.” 

The hope that the final definition would be broader and include sustainability was shared by Stine Bosse of Renew, ECF rapporteur for the Parliament’s environmental committee. Ehler did not rule out including the green transition in the final definition.

Amendment battle

Ehler urged his fellow MEPs not to weaken the Parliament’s negotiating position with EU governments by including too many priorities and creating unrealistic expectations.

The rapporteurs are willing to look closely at the opinions of other committees, Ehler said, but he did not want to see an “amendment battle” when the Parliament votes on the ECF in plenary. “This is not our role in these severe times,” he said. 

The Parliament has a responsibility to make the Commission’s proposal more concise, with a clear focus and purpose, he went on. “Much beyond the actual funding, it’s the psychological signal that we did understand that the competitiveness of the European economy is under threat.”

MEPs have until May 11 to file amendments, and Nica said he expects to receive between 10,000 and 15,000 amendments.

The Commission wants to simplify funding and enhance flexibility by bringing 14 existing programmes together under the ECF, but the result in Parliament is likely to be a battle to protect various sectoral initiatives from falling by the wayside. The Greens, for example, are pushing to safeguard the Life programme, which supports biodiversity, the circular economy and climate action.

The Commission’s ECF proposal makes reference to Life activities, but in the Parliament’s draft report on the next long-term EU budget, the Multiannual Financial Framework (MFF), adopted last month, MEPs call for these to have a dedicated budget of €3.39 billion under the ECF.

Meanwhile, the Parliament’s public health committee is pushing for earmarked funding of €10.05 billion for actions currently funded under the EU4Health programme, which is also included in the MFF report.

Geographical balance

When it comes to the distribution of ECF funds, another key question raised during the debate was whether the EU should strive to achieve geographical balance, a topic that is currently dividing EU governments.

In its opinion on the ECF, the budgetary control committee says the fund “should address persistent innovation and digital divides and ensure the effective diffusion of innovation and the uptake of advanced technologies across all regions of the Union,” and should monitor the geographical distribution of funding to prevent excessive concentration. It also suggests that the participation of partners from less developed innovation regions should come into consideration when weighing proposals of equal merit.

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The committee on regional development also wants to ensure the ECF supports less developed regions. “We believe that excellence and geographical balance should be treated as essential criteria in the evaluation of project proposals,” said Dan Barna of the Renew group, rapporteur for the committee’s opinion on the ECF.

There are also voices that support geographical criteria within the industry and research committee. “One of the most important issues for us is to ensure fair access to funding, because there are countries that have historically lower success in directly managed funds but it’s not because of low innovation potential,” said Jana Nagyová from Patriots for Europe.

Ehler said he would consider the question of geographical balance, but that “a simplistic approach” based on percentage targets “is not going to fly.” Discussions should include the use of seals of excellence, which allow member states to identify well-reviewed projects that miss out on funding. These could then be funded under National and Regional Partnership Plans in the future EU budget, he said.

Ring-fencing vs flexibility

The Commission, represented in the debate by Kerstin Jorna, head of the directorate general for industry, said that too much ringfencing of ECF funds risked limiting its flexibility. “If there is too much ring-fencing, we will not be able to address the risks as they emerge in the future,” she said.

Ehler was supportive of the Commission’s position on this point, but said there was also a need to keep a dedicated budget for defence and space. Governments would not agree to the Commission’s wish for full flexibility, he added.

Governance

Overall, MEPs welcomed the draft ECF report as a significant improvement on the Commission’s proposal, but some expressed concerns about how much power is concentrated within the Commission.

“We will bring amendments giving Parliament and member states a binding role, especially in defence which is a member state competence,” said Kols.

At the other end of the political spectrum, the Left’s Marc Botenga said that the governance mechanisms and “excessive flexibility” would concentrate power in the Commission and make it more difficult for smaller actors to plan and gain access to funds.

Scuderi said the Greens would table amendments to make ECF governance more transparent. “We need full responsibility, with a fund structure that’s clearer and able to ensure democratic control,” she said.

Ties to Horizon Europe

A last topic of discussion related to ties between the ECF and the Horizon Europe programme. In her comments, Jorna reiterated the Commission’s position that Horizon Europe should be tightly linked to the ECF. This, the Commission hopes, will ensure “a seamless investment journey from research to market.”

The lead rapporteurs do not disagree on the goal, just on how it is best achieved. Where the Commission has proposed a single work programme to control the ECF and Horizon Europe’s Pillar 2 for collaborative research, the MEPs propose creating Horizon Europe Pathway Actions in the ECF to build on the results of Horizon Europe projects. “Synergies are not arriving from governance, synergies are arriving from practical instruments,” said Ehler.