A review of the ECA report on LEADER and CLLD

The European Court of Auditors has recently published a special report on LEADER and CLLD and we have presented it HERE. The overall message from the ECA is that “LEADER and community-led local development facilitates local engagement but additional benefits still not sufficiently demonstrated”. The analysis and conclusions of the report merit a thorough examination and discussion. We now present below a commentary on the report by Robert Lukesch and Stefan Kah and would welcome other contributions.

General impressions:

The ECA based its analysis on valuable research questions (§19), positioning itself in the suite of audits already having taken place since 2010 (§17 and 18). The description of CLLD/LEADER is concise (§1 to 16).

The ECA had the intention to follow the intervention logic of CLLD/LEADER as laid down in the Evaluation Guidance document. However, admitting that the evaluation of social capital and governance – which we would call “systemic effects” of CLLD/LEADER – would pose unsurmountable methodological problems within the scope of this audit report (although before §61 it explicitly states that “it could be done” in principle), the report mainly boils down the evaluable effects mainly to single projects. All in all, 95 projects funded from CLLD/LEADER (of all cohesion funds under the 2014-20 regime) in ten member states, covering two LAGs per Member State (= 20 LAGs) have been examined. Apart from information on projects, organisational and procedural issues have been scrutinized at the level of LAGs, Member State and the Commission (§19-23).

As for the “systemic effects”, the ECA refers to an ongoing evaluation of the impact of LEADER on balanced territorial development carried out by the Commission (§53). According to the ECA the results are expected in 2023.

A side comment to the first observation “Local Action Groups involve additional costs” (§25 onward): we think even the first of the triad of expected effects (enhanced results / improved social capital / improved local governance) cannot by measured at project level alone. Singling out projects means to tear them apart from their embeddedness into a wider meaning space. Thus the argument that “CLLD projects incur higher costs than conventionally funded projects” cannot be underpinned by a breakdown of overall costs by project. The mere fact that there is a Local Action Group as a structuring element in the area is invisible if only projects are envisaged as “pieces of evidence”.

The description of implementation in the 2014-20 reveals weaknesses in programme management, sometimes considerable ones (lengthy process duration, lack of quality standards in selecting LAGs, underrepresentation of women and youth in decision-making bodies of LAGs, insufficient monitoring and lack of relevant indicators, which are rightly highlighted by the ECA. These shortcomings are mainly answered by the first of the two recommendations (page 41). So far the ECA report provides a strong incentive to improve the overall implementation of CLLD/LEADER.

It is also remarkable that the ECA points towards the possible negative effects of taking both agricultural/rural funds out of the European Structural and Investment Funds family, thereby losing their direct connection to Structural Funds (§67), i.e. missing the opportunity to incentivise a multi-Fund CLLD approach beyond LEADER

Arguably, the key change between 2007-13 and 2014-20 was opening up the LEADER approach to other ESI Funds, branded as CLLD. While the ECA touches on the related challenges and mixed experiences (§64-75), it remains at the level of questioning the usefulness of mixing different Funds (multi-Fund approach). However, beyond the specific experience of Sweden, it does not explore the implications and potential benefits of using – in multi- or mono-Fund models – other ESI Funds than EAFRD or EMFF.

Surprisingly, the report does not mention the urban dimension of CLLD at all. Urban CLLD is outside of rural development and purely supported by Structural Funds. Taken up by seven Member States (Hungary, Lithuania, Netherlands, Poland, Portugal, Romania, UK-England), urban CLLD constitutes an innovative way of implementing Structural Funds that is unique in many of these countries, thereby arguably providing significant potential added value.

Specific points:

Somehow the devil is in the details of the report, which makes CLLD/LEADER look weaker and worse than it should if we look at it in its entirety. Here are the points which we do not fully agree upon due to their too narrow handling:

• In some countries, it has been admonished that projects have been funded, which are of the mainstream type, covered by other funding streams (mostly other RDP measures) or simply statutory tasks of Member States. It is certainly important to look at the innovativeness of projects, but it is also important to look at the context:
  • Which are the wider circumstances and precise reasons that made the LAG support these projects? Are they part of a cluster whose innovativeness has to be scrutinised at the overall level and not at that of single projects?
  • In the case of Saxony, which has completely “leaderised” RDP implementation: as the mainstream funding has been largely devolved to the LAGs (which manage more than 41% of the RDP funding), there is no doubt that the LAG will have to decide on all kinds of “trivial” projects. What counts here is the “systemic effects” of the LAGs being entrusted such decision making powers!
  • Sometimes, LEADER may have been used as a stand-in because of bureaucratic or budgetary hindrances which made it difficult or impossible to use the “ordinary” measure for funding. Has this been examined? Earlier evaluations stated that LEADER has a “last resort” function in many regions (depending on the respective institutional arrangements governing EU funding support). This last resort function is part of its beneficial impact, but it also means that LEADER sometimes has to fund actions which seem to be trivial at first sight. It may be the particular circumstances that make actions like supporting “farm investment” justifiable.

We raise these aspects just to make sure that they have been taken into consideration while scrutinising “trivial” project funding. Of course, the fact that the main part of the LEADER budgets have been consumed by this type of funding (as exemplified in box 2) is something worth examining, but judgments should not be delivered without exploring the context in which the support had been granted.

Hence, we find the conclusion: “there is little evidence that the benefits of the LEADER approach outweigh the costs and risks it incurs” (§77) too early and too sweeping, considering that the most relevant part of the expected LEADER effects at systems level have not been evaluated so far.