Financial accountability & Railway operability: April Plenary Session

Written by Clare Ferguson,

Following the first item on the agenda (the 2014 annual report of the European Investment Bank, in the presence of Werner Hoyer, the bank’s President), Members will debate a massive 53 reports regarding the discharge procedure for the EU’s annual budget for 2014. This procedure allows for political scrutiny of the use of EU funds – whether the budget was implemented correctly, and whether principles of sound financial management were followed. Members will consider the accounts of the Council and other institutions, including those of Parliament itself, and the European Commission. As use of the discharge procedure has become more robust, the focus has grown to include monitoring of the results of EU policies, including the effectiveness of funding provided for the management of crises. Members will therefore also take into account spending by the EU’s decentralised agencies. Voting will take place the following day.

On 28 April, a joint debate will take place regarding the Fourth Railway Package – a set of legislation intended to improve interoperability of the railway system, including safety aspects which are the responsibility of the EU Agency for Railways. Harmonising Europe’s national rail systems has generally met with consensus between the Commission, co-legislators and stakeholders. To strengthen the European Railway Agency’s capacity to issue safety certificates and vehicle authorisations throughout the EU, the Commission has opted for a dual system whereby ERA acts as a one-stop shop for cross-border operators, and national domestic rail companies can choose between ERA and their National Safety Authorities.

While no insoluble problems were encountered regarding the technical pillar of the legislative package (listen to our podcast) to be voted this month, the market pillar was considerably more controversial. Reaching a compromise between liberalising the railway market and consideration of national reservations proved rather difficult, particularly (but not only) for smaller Member States. Major sticking points were the type of governance structure, the need for, and the extent of liberalisation, and the award of public service contracts. The social impact of the package was another issue, with concern expressed regarding working conditions and job security due to the proposed tendering procedures, and disagreement as to whether operating rail routes on a purely commercial basis does in fact provide a better deal for rail passengers. The Italian, Latvian, Luxembourg and current Dutch Council presidencies encouraged considerable progress on these files to find a common position, on which a vote is expected during the July plenary session.

Finally, a final vote is expected on the Economic and Monetary Affairs Committee report on indices used as benchmarks in financial instruments and contracts. The need for greater regulation of these indices became apparent in the light of the manipulation by banks of the Libor and Euribor benchmarks at the height of the rate-fixing scandals between 2012 and 2014. The EU intends to protect future financial market stability by increasing the supervision of such benchmarks. However, the Parliament is concerned to limit onerous procedures to critical indices with large trade volumes, requiring them to be authorised by the European Securities and Markets Authority, whereas less critical benchmarks would require registration only.