European recovery funding train arrives
New legal tools to tackle the road to European money by simplifying administrative procedures.
The health crisis, which has been going on for more than nine months now, has put our economy in the doldrums. In response to this situation, the European Union has reacted with the initial mobilisation of an emergency package of 540 billion euros, which was subsequently increased to 750 billion euros through the “Next Generation EU” recovery programme, of which 390 billion euros are expected to come from grants and 360 billion euros from loans.
It is estimated that Spain could be due 140 billion (until 2026), of which 72 billion will be non-refundable aid that will materialise during 2021-2023.
The first injection of 34,000 million euros is expected to enter our country next year, of which 27,000 will be channelled through the 2021 Budget, and the rest will go directly to the coffers of the autonomous communities. They will arrive at least at the end of March or beginning of April, although it is very likely that the first calls for aid will not be closed until the summer.
A survey conducted by KPMG, in collaboration with the Spanish Confederation of Business Organisations (CEOE), shows that 45% of Spanish companies say they want to apply for European Recovery Plan funds. According to this report, there is a certain lack of knowledge regarding the operation of the funds, as almost half of the companies surveyed do not know if they have eligible projects, i.e., susceptible to being helped, a percentage that rises in the case of SMEs, while among large companies, four out of ten still have doubts about the opportunities available.
With the approval of Royal Decree Law 36/2020 of 30 December, in force since 1 January, bureaucracy and deadlines are reduced, processes are simplified and the relationship between companies and the Administration is greatly changed through greater public-private collaboration.
The Plan for the Recovery, Transformation and Resilience of the Spanish Economy is structured around three pillars that the Government has placed at the centre of its Economic Policy Strategy:
– The adoption of instruments to support Member States’ efforts to recover, repair damage and emerge stronger from the crisis.
– The regulation of measures to boost private investment and support companies in difficulty.
– Strengthening key EU programmes to learn the lessons of the crisis, make the single market stronger and more resilient and accelerate the double green and digital transition.
The magnitude of these challenges and the timeframe for their development has required the adoption of urgent measures aimed at articulating a governance model for the selection, monitoring, evaluation and coordination of the different investment projects and programmes. This is the main objective of Royal Decree-Law 36/2020 of 30 December, approving urgent measures for the modernisation of the Public Administration and for the implementation of the Recovery, Transformation and Resilience Plan.
Among the innovations approved, we highlight the following:
– The creation of a Commission for Recovery, Transformation and Resilience, to be headed by the President of the Government. It also establishes a Technical Committee to support this Commission, a Plan Monitoring Unit and a Sectoral Conference with the Autonomous Communities and Cities, to be chaired by the Minister of Finance.
The Committee will be made up of “a maximum of 20 members” who will be chosen by the Commission on the basis of technical criteria, according to their experience in the management of European funds “provided that they are employees or managers of the General State Administration”.
– The definition of the authority responsible for the Recovery and Resilience Mechanism, which falls within the Ministry of Finance. This body will be “responsible to the European institutions” for the recovery and resilience plans, will act as coordinator between the different ministries and public bodies involved in the plan designed by the government, while supervising its progress and directing the Technical Committee.
– The search for projects of a strategic nature (tractors) with the potential to have a knock-on effect on the rest of the economy, which also require collaboration between administrations, companies and research centres.
The main strategic projects are likely to be aligned with the objectives advanced by Europe, particularly the orientation towards green transition and digital transformation.
The conditions to be met are not known, but we can only say that the model for tractor projects designed by the Ministry of Industry requires the participation of at least five companies, of which 40% must be SMEs, an investment volume of at least 40 million euros and the involvement of more than one autonomous community.
– The creation of an online “one-stop shop” for companies and public administrations to facilitate the presentation of projects and the resolution of doubts both for the different public administrations and for private companies interested in participating in the reconstruction plan.
At present, the idea of a ‘one-stop shop’ to organise access to funds seems to have been discarded. The government will use all the levers of the administration to turn the 8,131 city councils, the 17 autonomous communities and the 22 ministries in Spain into open windows for entrepreneurs. A new web portal will be developed, but it will be to group information “in a didactic way” so that interested parties can contact the corresponding administration.
– The imposition of a time limit for the approval or rejection of initiatives. The resolution of applications must be made within a maximum period of five working days with the guarantee of the General Intervention of the State Administration (IGAE). At the same time, the deadlines set for the open procedure are reduced by half, except for the deadline for submitting proposals, which will be 15 calendar days.
The protocol requires grant recipients to prove that they are up to date with their social security and tax payments.
– The establishment of public-private groupings and consortiums, the promotion of mixed economy companies, under which the State will have a majority shareholding, and the so-called Strategic Projects for Economic Recovery and Transformation, “PERTE” and their corresponding state registration. With this new figure, the aim is to strengthen those projects that clearly contribute to the economic growth, employment and competitiveness of our country, correcting the market failure of underinvestment when private initiatives do not materialise due to the significant risks and the necessary public-private collaboration that they entail.
The criteria to be assessed in order to declare a project as PERTE will be, among others, the following:
– That it represents an important contribution to economic growth, job creation and the competitiveness of Spanish industry and the Spanish economy, given its positive spill-over effects on the internal market and society.
– Combining knowledge, expertise, financial resources and economic actors in order to remedy major market or systemic failures and societal challenges that could not otherwise be addressed.
– It has an important innovative character or provides significant added value in terms of R&D&I, e.g. by enabling the development of new products, services or production processes.
– It is quantitatively or qualitatively significant, particularly large in size or scope, or involves a very high level of technological or financial risk.
– To favour the integration and growth of small and medium-sized enterprises, as well as the promotion of collaborative environments.
– That, where appropriate, it contributes in a concrete, clear and identifiable way to one or more objectives of the Plan for the Recovery, Transformation and Resilience of the Spanish Economy, in particular with regard to the objectives set at European level.
It seems that the Executive is sounding out the market to identify areas where relevant and large projects exist, with a view to grouping them together. Recall that Brussels has always been more inclined to finance projects in consortia.
– The recovery of the figure of state agencies as public bodies, allowing the reintroduction of an organisational formula in the Administration endowed with a greater level of autonomy and flexibility in management, with mechanisms for controlling efficiency and promoting a culture of accountability for results.
– The application of the exceptional regime of urgent processing, with the consequent reduction of deadlines and speeding up of the procedure, to all contracts financed with the Funds received by Spain under the recovery plan.
Reporting and authorisation requirements are eliminated, although the agreement of the Council of Ministers will be necessary to authorise the granting of subsidies of more than 12 million euros.
– Simplifying the processing of administrative agreements by eliminating authorisations by the Council of Ministers and reducing the time required for the issuance of mandatory reports. Early processing is permitted for agreements to be executed in the following year or later. The term of these agreements may have a longer duration than that legally established, and may reach a maximum of ten years, with the possibility of a seven-year extension.
– Increasing the economic thresholds for the use of simplified, ordinary and abbreviated open procedures so that they are applicable to a larger number of contracts.
– The possibility of advance payment by the Government of 50% of the funds associated with each of the projects to be financed prior to the start of their implementation. That is, once the Recovery Plan management approves its implementation.
– The payment of salary allowances to project management staff based on the achievement of objectives and the opportunity to hire specific staff if necessary to drive the plan forward.
Review your company’s objectives and be realistic because Europe will be looking very closely at what you are spending your money on. It is very likely that our big brother will require that reports accompanying applications must be “escorted” by monitoring indicators, and if the investment received is not properly justified, it will have to be returned.