An innovative approach to public policy‑making: resilience as a central pillar of the RRF
Over the years, the EU has launched numerous initiatives to address policy concerns and disruption, as well as crisis situations. The most recent example is the Recovery and Resilience Facility (RRF), whose major objective is to ensure resilience. How new is this instrument, how does it differ from earlier ones, and what is its purpose from a governance and audit perspective? Concepcion Campos Acuña, Associate Professor of Administrative Law at Rovira i Virgili University in Tarragona and expert in public management, has studied the management and governance conditions relating to the RRF extensively, including in relation to her work as editor and co‑author of the book La gestión de los Fondos Next Generation, in which she analyses RRF management in terms of its management concept. Below she provides the context in which the RRF was created, and describes how its governance model differs and the possible implications when the implementation and operation of the RRF are assessed.
By Associate Professor Concepcion Campos Acuña, Rovira i Virgili University.
A historical challenge triggering new solutions
The European Union’s adoption of the Recovery and Resilience Facility (RRF) in 2020 gave rise to a new scenario in the development of European policies, particularly in the approach under financial instruments intended to support and encourage Member States to move towards investment and reform. In this context, on 21 July 2020, the European Council agreed on an exceptional temporary recovery instrument known as NextGenerationEU for the amount of €750 billion. This instrument was initially conceived to guarantee an EU response, coordinated with the Member States, to the economic and social consequences of the pandemic. However, it will also demonstrate its effectiveness through the response to the demands that have arisen since the outbreak of the armed conflict in Ukraine, and the emergence of a serious energy crisis, which will redirect and shape the manner in which this instrument is implemented, particularly as regards the climate dimension.
The instrument is presented as constituting a historic opportunity to carry out the necessary investments and reforms, and so promote a transformative recovery in Europe. The underlying idea is also that, beyond the aggregated efforts of Member States, recovery will proceed in line with a single vision of Europe in terms of a productive and economic model based on management aligned with the ecological and digital transition, and founded on inclusive and egalitarian principles. This model is also built around the concept of resilience, which, although not new, is presented as an innovation in the field of public policies.
In this context, we must take into account that the governance model of the Member States using RRF funds offers different projections establishing multilevel and multilateral governance that relate mostly to:
− Member States’ internal arrangements, based on their territorial organisation, as well as social and economic factors;
− Member States’ arrangements with the European Commission;
− European citizens: a new model cannot be implemented in the Member States without the support of and ownership by EU citizens, and all the more so in view of the reforms envisaged.
Governance in the EU is an outstanding issue that was first addressed just 20 years before the outbreak of the COVID‑19 pandemic, in 2000, in the European Commission’s White Paper on European Governance (2001). In this paper the Commission sought to resolve the apparent paradox between citizens’ expectation that the European institutions would resolve society’s greatest problems, on the one hand, and their diminishing confidence or even lack of interest in the institutions, on the other.
The COVID‑19 pandemic first caused a health emergency, followed by a social and economic emergency. The way the pandemic evolved and spread to the Member States called for an innovative model, compared to traditional European financing mechanisms. One of the effects of this model, among various others, is that it is achieving such resolution by restoring trust and bringing about authentic governance that is tested through the RRF.
This model challenges us, as we shall see, because of the need to incorporate new metrics of efficiency and clear effects, both socially and economically. Returns that allow us to approach with seriousness and rigour, and a projection towards the future, the definition, execution and audit of these new public policies must mark the European Union of the 21st century.
Innovative management geared towards effectiveness
The different approach of the NextGenerationEU initiative is characterised by a series of conditioning factors which highlight the drive for modernisation in Member States, addressing transition objectives in the area of climate and digitalisation. Commitment to these transition objectives should be demonstrated by obligatory appropriation of a percentage of the funds, and the promotion of social and territorial cohesion, the ultimate aim being to prepare European economies and societies for recovery and resilience. This demonstrates the need to approach the present and the future with a VUCA vision (Volatility, Uncertainty, Complexity, and Ambiguity) when faced with a scenario of uncertainty that is clearly much more volatile, uncertain, complex and ambiguous than when this concept was first formulated.
The new philosophy and approach of the RRF have been integrated into National Recovery and Resilience Plans (NRRPs) and establish an accreditation system based on milestones and objectives. With regard to fund allocation, the related qualitative milestones and quantitative objectives will need to be certified, and the progress of the reforms and investments provided for in the respective NRRPs will need to be evaluated. Disbursements will depend directly on achievement of both milestones and objectives, in accordance with the agreed terms.
We can thus confirm that the reconstruction the RRF was intended to bring about following the COVID‑19 crisis does not seek to consolidate the previous model, but to promote and support the transformative process that was seemingly kick‑started upon the arrival of the 21st century. However, this process failed to progress at the rate required of society in order for it to keep pace with this dizzying evolution. This new and very real situation was precipitated by the extraordinary events that characterised the course of the second decade of this century.
Paving the way towards open government in EU reconstruction efforts
One of the keys to guaranteeing compliance with the above‑mentioned milestones and objectives is to have constantly updated information on the status and evolution of the RRF. To facilitate the monitoring of its implementation, the European Commission has established a table of indicators, which also serves as a tool for providing EU citizens with information on the RRF’s implementation in a transparent manner. This constitutes an exercise in accountability without precedent that should be viewed in the context of progress towards open government at EU level. In addition to this external dimension, the indicator scoreboard also serves as a basis for preparing the Commission’s annual reports on the implementation of the RRF, and the review report submitted to the European Parliament and the Council, as well as the report on the Dialogue on Recovery and Resilience conducted between the Parliament and the Commission.
In keeping with the innovative RRF model, the Recovery and Resilience Scoreboard is structured around:
- sections dedicated to the achievement of milestones and objectives and to RRF disbursements;
- specific data compiled by the Commission, such as spending by policy area and a breakdown of green, digital and social spending under the Facility;
- qualitative information compiled through thematic analysis of the implementation of plans in specific policy areas.
The RRF Regulation sets out six policy areas of European relevance structured in six pillars. The Recovery and Resilience Scoreboard displays the impact of the RRF on these six policy pillars (see Figure 1).
Figure 1 — The six policy pillars and expected impact of the RRF
The system’s purpose is to collect two types of information:
a) data collected by the Commission during its monitoring of the implementation of recovery and resilience plans;
b) data collected by Member States on 14 common reporting indicators.
Auditing resilience — moving towards the Van Halen clause?
In the wake of the pandemic, Member States have suffered different social, economic, and even governance impacts. We can view their reactions as constituting an exercise in social leadership that also demonstrates their capacity to react in an agile and flexible manner in the face of rigid and poorly suited approaches. Those who have managed to overcome the complex and changing scenarios with greater success are those that have shown a greater capacity for resilience. Resilience, as defined by the Sendai Framework for disaster risk reduction, is the ability of a system, community or society exposed to a hazard to resist, absorb, adapt, transform and recover from its effects in a timely and efficient manner. It considers risk management an important tool, particularly for the preservation and restoration of their basic structures and functions.
Resilience is thus presented as a tool with which to strengthen Member States’ management and capacity to react in the face of unprecedented scenarios, be they as a result of a health crisis or a military conflict or, as we currently see, when faced with a serious energy crisis. Resilience comes into play in particular when it has been verified that it is impossible to avoid all contingencies. The correct response strategy is to reinforce organisations so that, under an adaptive and flexible model, they can react appropriately to any situations that arise. The building of such organisational capacity must also take into account the need to prevent fraud, corruption and conflicts of interest, given the high risk inherent in disbursing considerable public resources, as in the case of the RRF.
The need to adopt this new approach entails changing the model comprising the rather formal approach that would hitherto have been taken to the audit and control of RRF implementation. The set‑up of the facility requires going beyond a mere formal audit of compliance and moving on to an audit of results and objectives connected with its purpose. To do so it is necessary to turn to innovative and new models, where creativity generates a real X‑ray of the short‑, medium‑ and long‑term effects of the economic injection that this new EU financial support is to deliver.
An example of managing a high-risk indicator through creativity is the renowned ‘Van Halen Clause’, a classic in business studies. What is this clause all about? The rock group, faced with the complexity of assembling and disassembling their equipment at the different venues in which they had to perform, decided to include ‘Article 126’, i.e. the ‘Van Halen Clause’, in all their contracts, the aim of which was to guarantee that the contracting parties had read the entire contract and that the group could therefore rely on compliance with the necessary safety standards.
The clause stipulated that there should be a bowl of m&m’s (yes, the sweets) in the dressing room, but under no circumstances any brown ones. This could only be achieved by removing them individually by hand. This meant that if they saw any brown m&m’s in the bowl when they arrived in the dressing room, they knew that the contract had not been read and, consequently, that the condition of the installations would have to be checked. In fact, in the event of non‑compliance, the Van Halens could freely cancel the contract and claim their fees in full. In contrast with the whim of a rock group, we are confronted with a real need for quality control in the face of a high‑risk indicator. Could we have a Van Halen clause in the RRF?
Bending towards a sustainable future instead of breaking away from it
Prior to the pandemic, sustainability and resilience were terms used infrequently. Today they are part of the vocabulary used daily in the lives of citizens and by the pillars of public management. They form the backbone of EU policy making, and not least under the RRF, whose general objective is none other than to promote the economic, social and territorial cohesion of the Union, thereby improving the ability to overcome adverse situations, and enhancing preparations for a future crisis. The idea is that an improved capacity to adjust, combined with optimal use of economic resources, will promote Member States’ growth potential in various circumstances, and reinforce the European pillar of social rights.
In this context, compared to a traditional spending‑verification model, the audit approach must also be reinvented. It must change from a mere formal justification of payment requests, based on verification of the actions carried out, to an assessment of whether projects have been carried out in line with the milestones and objectives set, and whether their results are the most satisfactory in terms of the development of the Member State concerned, and society overall. This will, at last, give rise to progress towards a different model of European governance, and the RRF comprises a first‑level test in this area.
It is about prospecting towards the future, from uncertainty to perspectives, turning flexibility into robustness, and using the capacity to react to effect proper adjustment and readjustment, just as in Jean Lafontaine’s fable, The Oak and the Reed. It is important for Member States in certain situations not to bend but be able to stand tall soon, even in the worst possible conditions. It must be ensured that it has the capacity to be resilient and bounce back, thereby guaranteeing social and economic cohesion, and a just digital and climate transition. If this is to be achieved, the challenge is to approach the audit from an innovative angle, focusing on the objectives and values that are to be supported, on which the success of the RRF and its governance will undoubtedly largely depend, and so it must resemble a reed rather than an oak.
This article was first published on the 2/2022 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.