In line with the distinction between the authorisation and appropriation of expenditure – well known, for example, in the United States Congress – all spending entered into the EU Budget must have a legal base, not just in the conventional sense that it needs to derive from powers accorded to the Union by the Treaties, but also in that it has to be provided for separately and specifically in routine legislation, before it can take effect. This principle was confirmed by the European Court of Justice (ECJ) in 1998 and underpins the annual budgetary process. However, under Article 49 of the Union’s Financial Regulation, the budgetary authority – the European Parliament and Council of Ministers – is allowed each year to adopt a number of ‘pilot projects and preparatory actions’ for specific new policies not already sanctioned in law. In these cases, as the Parliament has put it, ‘the relevant budgetary decision typically precedes and may later give rise to the associated legislative decision, reversing the usual order’. (Certain other internal administrative expenditure may also be undertaken on this basis).
The Financial Regulation defines a pilot project as an initiative ‘of an experimental nature designed to test the feasibility of an action and its usefulness’ and permits appropriations for it to be entered in the Budget for two successive financial years. If a pilot project is deemed successful, it may evolve into a preparatory action, with funding for up to three further years, during which time a legal base needs to be established if the policy is to become a fully-fledged EU policy. Once a total of five years has expired, a legal base in a piece of authorising legislation is required, otherwise the initiative automatically lapses.
In the 2006 Inter-Institutional Agreement (IIA) setting the financial perspectives for 2007-13, the Parliament, Council and European Commission agreed to limit annual appropriations for pilot projects to € 40 million, and those for new preparatory actions to € 50 million, with no more than € 100 million in total committed to all preparatory actions in any one year. In the 2010 EU Budget, there were 40 pilot projects and 37 preparatory actions.
Several pilot projects have evolved over time into major EU spending programmes. A recent example is the field of internal and external ‘security research’ which started as a small pilot project in 2004 and soon after was given seven-year (2007-13) funding of € 1.4 billion under the Union’s seventh Framework Programme for research and development policy.
Copyright: Anthony Teasdale, 2012
Citation: The Penguin Companion to European Union (2012), additional website entry