WhatsEUp? The Parliament supports local authorities’ requests, but the job is not finished

The European Commission proposed in July a 2 trillion-euro EU budget for the 2028-2034. In the proposal, several novelties are present, such ‘National and Regional Partnership Plans’ (NRPPs), including all the programmes related to cohesion, agriculture and home affairs, or a new huge ‘European Competitiveness Fund’ to boost EU industrial and innovational capacity as suggested by the Draghi and Letta reports.

The proposal opened new fractures in the negotiations, offering new political divides between and within the Parliament and the Council, while traditional fault lines have resurfaced as well.

Now, the Parliament overcame its internal division and approved an Interim report on the overall budget proposal. While non-legislative, the report it is fundamental in these negotiations, as it will define the Parliament’s position in its negotiations with the Council.

Indeed, the political groups decided that the Parliament’s position on the sectoral regulations of the Budget (such as the National and Regional Partnership Plans or the European Competitiveness Fund) will need to be “consistent” with this horizontal report.

But what contains the Parliament’s position? Energy Cities breaks it down for you.

Note: all the figures are expressed in 2025 prices, billion euros.

An increased budget with re-established priorities

As a first point, the European Parliament called for an increase of the overall budget, and thus of the majority of the sectorial envelopes. Indeed, the Commission proposed an EU budget of 1763 billions euros, including the Next Generation EU debt repayment. On its side, the Parliament asks a bit more of the same amount, plus the debt repayment – thus asking for 175 billion euros more, in 2025 prices.

Secondly, it praised the Commission’s proposal to increase its own resources, namely the share of the EU budget that doesn’t come from national contributions, but from EU taxes and levies.

Thirdly, it generally rejected the Commission’s proposal to leave huge lines of the budget free for ‘flexibility’, arguing that as a result would be allocated and spent without the Parliament oversight, losing democratic control over the budget expenditure.

Avoiding non-ringfenced envelopes in the National Plans to ensure budgetary oversight

In essence, the Parliament feels that increasing flexibility in the first pillar (the one with the national Plans) and the lack of true mandatory multi-level and stakeholder involvement, will weaken EU policies. They believe this will give Member States too ample a space for manoeuvre when implementing them.

For this reason, it is asking for some important changes to the proposal.

First of all, it calls for separate and ringfenced funding for agriculture, cohesion, fisheries and social funds. Concretely, this means re-establishing the European Social Fund (110 billion Euro), the Common Fisheries Policy (6.5 billion euro) and – for cohesion – both the Cohesion fund (10.34 billion euro) and the Regional Development Fund (42 billion euro).

The Parliament also asks to increase the agricultural policy, with 124 billion euros more for income support, and to re-establish the rural development fund (94.88 billion euros).

Against a re-nationalisation of cohesion and agricultural policies in the National Plans

The re-establishment of all these funds is seen as a necessary condition for ensuring long-term financing for EU policies. However, the Parliament goes further.

It asks for the involvement of local and regional authorities in the design, monitoring, implementation and evaluation of the plans. It calls as well for mandatory regional chapters, where possible, and nominating regions as managing authorities of parts of the Plans, thus ensuring direct negotiations with the Commission and removing part of the procedure from the Member States-Commission negotiations.

This is the only way that the partnership and multi-level governance principles are sure to be respected, and that investments are tailored to local needs.

A resized EU Facility with direct funding for local and regional authorities

In the first pillar, the only envelope with reduced budget would be the EU Facility, essentially an envelope managed directly by the Commission to finance crisis response and some ‘Union Actions’. The reduction is in great part due to the proposed move of the Union Safety Net (a reserve for agricultural crises) under the Common Agricultural Policy, together with the income support and rural development funds.

However, the EU Facility, while almost not mentioned in the report, contains some big proposal for municipalities. For this reason, the Parliament is calling for the expansion of direct funding streams within the EU Facility for local and regional authorities.

LIFE is back, but not as a standalone programme

The EU Facility is also of great importance for municipalities as the Parliament states that it should be used to finance part of the LIFE programme.

Indeed, after months of debates, the Parliament decided to formally endorse a ring-fenced LIFE envelope in the Competitiveness Fund. While civil society, local and regional authorities, as well as some political groups – such as the Greens and Renew – were asking for a standalone programme, Parliament’s common position is that LIFE should continue, even if without a dedicated programme.

For this reason, it calls for a 3 billion euros dedicated funding. Notably, the actions mentioned do not seem to include the Clean Energy Transition sub-programme.

In addition to this budget line, the Parliament says that the EU Facility should also implement LIFE actions to match the current level of financing of the LIFE programme. Considering that the budget for LIFE in the 2021-2027 budget was equal to 5,988 billion euros, this would mean a budget line in the EU Facility equal to almost 3 billion euros.

Smarter conditionalities to protect final beneficiaries from rule of law breaches

Lastly, the Parliament positions itself on the rule of law. On this, the Parliaments calls for increased protection of both EU funding and final beneficiaries.

On one side, it asks the Commission to be more objective and consistent in the suspension or reduction of EU funding over breaches of rule of law – freezing funding until the Member State demonstrates meaningful and true reforms.

On the other side, it asks that this approach does not penalise final beneficiaries, asking for a smarter conditionality approach. This would allow to fund final beneficiaries, such as local authorities, when Member States breach the rule of law – to avoid them getting caught in the crossfire of the Commission and to protect local development and economy.

What Energy Cities thinks about the Parliament’s position

The Parliament’s position includes several requests Energy Cities and other Local Alliance networks have brought forward until now.

In particular, Energy Cities greatly welcomes the emphasis on the mandatory regional chapter and multi-level governance as a principle in the design and implementation of the Plans.

Although this request greatly reinforces the territorial approach in the National and Regional Plans, Energy Cities observes that this approach is not reflected in the Competitiveness Fund as well, nor in its governance. Moreover, no target for territorial tools was mentioned, risking reducing the ambitions that ringfenced 8% of the ERDF in 2021-2027 for territorial development.

Additionally, Energy Cities welcomes the mention of direct funding for local authorities in the EU Facility and the budget line for LIFE in the Competitiveness Fund, even if it regrets the absence of a dedicated ringfenced envelopes for both in the EU Facility.

Lastly, it appreciates the Parliament’s stand on the smart conditionalities, as they are necessary to ensure access for local authorities to EU funds and to not penalise them for the decisions of their national governments.

Energy Cities will continue working to ensure that these points will be maintained in the sectoral files, and then in the negotiations, to put local authorities at the heart of the next EU budget.

Call to action

Do you want to know more about the Parliament’s position and how Energy Cities, with the Local Alliance, is working to defend the stance of local authorities? Register now for the next episode of our The MFF & You webinar series, focused on the positions of the Parliament and the Council. The webinar, taking place on the 8 June from 14.00 to 15.30 CEST, and it will have French interpretation. You can register here.