Court of Auditors report on LEADER

The European Court of Auditors produced a report on the LEADER

Special Report No 5/2010 — Implementation of the Leader approach for rural development

EXECUTIVE SUMMARY

I.

Leader is a method to achieve the objectives

of the EU’s rural development policy

through bottom-up implementation

rather than the traditional top-down

approach. Compared with traditional

methods of funding, the Leader approach

involves higher costs and risks, owing to

an additional layer of implementation,

and giving the control of the EU budget

to a multitude of local partnerships

(LAGs: local action groups).

II.

The justification for Leader’s additional

costs and risks is the added value that

should flow from the bottom-up and

partnership approach — such as better

identification of local needs and local

solutions, more engagement on the part

of local stakeholders and greater scope

for innovation.

III.

The Court examined whether the Leader

approach has been implemented in ways

that add value, while minimising the

risks to sound financial management. The

Court assessed the LAGs’ performance in

implementing the 2000–06 Leader+ programmes,

for which the final expenditure

was in 2009. The Court also assessed the

LAGs’ Axis 4 strategies, which set out

their plans for implementing the Leader

approach in the 2007–13 period.

EXECUTIVE

SUMMARy

IV.

LAGs implemented the Leader approach

in ways that limited the potential for

added value in terms of the ‘Leader

features’ although the Court found

some examples of good practice. The

bottom-up approach was limited in the

LAGs that gave the majority of the grants

to their own member organisations; the

potential added value of a partnership

was not achieved in LAGs where the decision-

making was dominated by the local

authorities; few LAGs could demonstrate

innovation or interaction between different

sectors in their strategies or projects.

LAGs did not focus on achieving the

objectives of their local strategies.

V.

The Court also found weaknesses in the

soundness of the financial management

by the LAGs. In particular, LAGs gave

grants to projects without regard to

efficiency. Procedures were not always

transparent and did not sufficiently demonstrate

that the LAGs took decisions on

an objective basis, free from conflicts of

interest. These weaknesses echo those

observed by the Court in the Annual

Report of 2000.

VI.

The Commission and Member States have

not been sufficiently demanding and

share some responsibility with the LAGs

for limiting the potential added value

of the Leader approach. They have not

taken sufficient action to limit the costs

and risks. Ten years on from the Court’s

previous audit of Leader, the same weaknesses

persist.

VII.

The Commission has not yet demonstrated

the effectiveness or efficiency

of the expenditure, the added value

achieved through following the Leader

approach, the extent to which the known

risks have materialised or the real costs

of implementation.

VIII.

In view of the persistent weaknesses, the

Court recommends that the Commission

and Member States clarify and enforce

requirements to reduce the risk of deadweight,

ensure objective and properly

documented project selection procedures,

and that the partnership principle

operates in practice. Robust procedures

to avoid all risk of conflicts of interest

are needed to comply with the financial

regulation. This requires declarations

of interest, non-participation in project

assessment and selection, and referral of

cases of potential conflict of interest to

the managing authority.

IX.

For the remainder of the 2007–13 period,

the Commission should ensure that Member

States require the LAGs to set measurable

objectives, specific to their local

area, that can be achieved by the Leader

programme. The Member States should

require LAGs to account for achieving

their local strategy objectives, for achieving

added value through the Leader

approach, and for the efficiency of the

grant expenditure and the operating

costs.

X.

Monitoring should be refocused on the

added value of the Leader approach, efficiency

and effectiveness, and be complemented

by data from supervisory and

control systems such that the Commission

has sufficient, reliable and relevant

data to account for the added value

and sound financial management of the

Leader programmes.

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