The battle for the European budget is in full swing

The new Commission will be officially convened in early December but its President has already taken on the most burning issue of the upcoming mandate: the 2028-2034 budget. Her staff are testing reactions and rapidly moving their pawns.

Two main ideas should be at the heart of the spending review: moving from a “programme-driven” to a “policy-driven” approach. The other major innovation would be to disburse the European budget directly at national level, along the lines of the Recovery and Resilience Facility. This would involve setting major European goals. These would be negotiated in the context of a big national plan, as was the case of the Recovery Plan.

What remains of the place-based approach? Out it goes …  At this stage, there is no indication of how the big policy goals will actually be implemented at the local level. At the same time, none of the new Green Deal obligations can be met unless they are applied at the level of each city. How could cities with more than 45,000 inhabitants be forced to implement a heating and cooling plan, or renovate 3% of public buildings every year without being given the means to do so?

At this stage, the main policy areas that would form the core of the budget are still very much sectoral in nature. However local actors, having come together in the Local Alliance, have called for the opposite: European funds to support integrated local transformation strategies. “Prosperity Pacts” like “One Health 4 Cities” would provide a shared vision of cities in 2034, backed up by an action plan and an investment plan. This vision includes several sectoral goals: 100% renewable energy, protected nature, health for all through a healthy living environment, access to quality food, resilient cities prepared for future climate shocks, economical in their use of resources. Cities that truly protect citizens by ensuring access to goods and services and by promoting the local economy.

The European Environment Agency’s latest report effectively outlines the interactions between the European Commission’s new political agenda – “security, competitiveness and social fairness” – and the limits of our planet. In addition to the European budget, the report also points to the need to review all budgetary and public finance rules. All instruments – state aid, debt rules, public procurement – need to be adjusted to take into account the new challenges of resilience, strategic autonomy and secure supply of resources.

Here, therefore, are the two areas of work that we will explore with the expertise and experience of our member cities to inspire and influence the debates on the future of public funding:

• a European budget that supports local integrated transformation strategies: local Prosperity Pacts
• an overhaul of public finance instruments and of budgetary rules to take into account the limits of our planet and climate inequality, the new strategic challenges facing Europe

To this must be added the fundamental pillar of local public action, which has been completely left out of the discussions: : all these strategies and all public spending should be co-produced, investigated, tracked by… humans, capable of negotiating, managing and designing. However, we are seeing a very strong trend towards budget cuts in sub-national administrations.

If local and regional authorities do not have the resources to fulfil their obligations – and by resources we mean the powers and budgets necessary for their mission, and corresponding taxation – and if the European Union does not ensure that local governments in each State have those resources, the whole edifice of the Union will be weakened.

And weakened here is an understatement… It will be our third priority area of work.