As many of the Member States of the European Union painstakingly, and in many cases painfully, deal with the aftermath of the global financial crisis, the Commission attempts to facilitate and aid their recovery in any way it can. The latest attempt to do so is the establishment of the European Fund for Strategic investment (EFSI). Unfortunately this new creation did not receive the collective round of applause across Europe that one might have expected. Quite the contrary. The reason is rather suspicious accounting. The money, apparently, not only has to come from somewhere, but rather astonishingly, from education. In the wake of last year’s internecine institutional strife in which many, including the Commission, battled valiantly to ring-fence key chunks of the education budget (ironically delaying 2014 Jean Monnet applications until the Parliament had approved the MFF), education and its ancillary R&D and innovations budgets appear to have become a prime target for ambitious, but as-yet ambiguous plans by Commission President Juncker. Is this particularly wise? The result may ultimately transfer €2.7 billion from Horizon2020 (currently 3.5% of the overall 2013-2020 budget), to the new EFSI to take effect between 2015-2020, with the apparently bulletproof intention of creating jobs, and boosting economic growth but at a cost of hundreds of millions of Euros to universities across Europe.
Sustained growth and new jobs are, indeed, a key precondition for the wellbeing of all Europeans. There’s no argument there. As Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness pointed out, “we need fresh investments in Europe and for this we need to mobilise extra private finance.” The approach however, seems recklessly short-termist. Achieving investment, monetary fluidity and commercial momentum is a huge part of sustained attention to the education sector. Sustained investment of education is also a first-class method of in-house job creation in an ever-developing sector ultimately gives Europe a hard-won edge over other regions of the world, many of whom still focus on manufacturing rather than innovation and research. Achieving such benefits at the expanse of world-class research, teaching and learning, which itself is a genuine catalyst of EU innovation and competitiveness however makes little sense.
So, congratulations to Britain. At a time when the UK is convulsing over its national future and international vocation, the danger to education funding, set against the backdrop of European recovery was the prime concern for the single largest UK delegation of university Vice Chancellors who at the end of April travelled without delay to Brussels to voice their concerns. Among them was Sir Ian Diamond, principal and vice-chancellor of the University of Aberdeen, who argued that “excellence in research is being challenged in every way by these cuts.” Sir Leszek Borysiewicz, Vice-chancellor of the University of Cambridge, stated that the cuts would hit pure research in UK universities, who would then be unable to borrow money to replace lost funds despite the existence of a loan scheme designed for this purpose. “There are programmes in Horizon2020 focused on pure research that cannot get this money back,” he said, adding that “€2.7 billion is a lot to give up from a programme we know works”. Similarly, Kurt Deketelaere, Secretary-General of the League of European Research Universities, was involved in a similar lobbying effort in Brussels. “I’m not sure it’s going to end well,” he said. While lawmakers in the European Parliament are inserting text into the legal proposal to ensure a greater link between the fund and research and innovation spending, the window for finding a compromise on budget cuts is closing according to Deketelaere.
The British backlash is not, in this sense, an isolated one. A variety of other institutions lent their voices to the Commission’s proposal. A joint statement was released by Science Europe, the European Association of Research and Technology Organisations (EARTO), the European University Association (EUA), the League of European Research Universities (LERU) and the Conference of European Schools for Advanced Engineering Education and Research (CESAR), stating that while they supported the Commission’s actions to boost economic growth and job creation through R&I investment, Horizon2020 remained “the only strategic European-level instrument supporting R&I activities” and actors. As the joint statement made clear: “Horizon2020, much like national R&I funds, is based on granting funds recognising that R&I actors such as universities, research performing organisations (RPOs) and research and technology organisations (RTOs) have specific business models requiring strong public support (that cannot primarily come from loans).
What informs the Commission’s perspective on this latest funding fracas? According to Commission President Jean-Claude Juncker, “if Europe invests more, Europe will be more prosperous and create more jobs – it’s as simple as that.“ Thus, by re-allocating funds from Horizon2020 to the EFSI, Europe will “attract much more important sums that will then be reinvested in innovation,” thereby “delivering higher returns” utilising the same amount of money. Moreover, the Commission argues that “the overall amount of investment on innovation mobilised by the EU budget in the next years will be higher than with Horizon2020 only”. More importantly, funding initially foreseen for Horizon2020 will allegedly not be lost, that is “not lost for innovation.” The arcane mysteries of bookkeeping aside, one can argue that ESFI-branded funding, according to the Juncker proposal will now be dispersed amongst different projects, which in real terms dilutes the funding designed to underwrite Horizon2020 projects.
ESFI and Horizon2020 simply do different things, and neither they, nor their funding structures can realistically reinforce each other. EFSI primarily aims at attracting private investors, while Horizon2020 funds mostly research undertaken by universities and research institutes and centres, many of which are publicly funded and work on a different “business model” than private companies. Even the briefest of glances at how universities do, or indeed ought to operate, makes this much clear. Therefore, regardless of the Commission’s enterprise-led discourse, projects undertaken by higher education institutions across Europe are likely to be negatively affected. Ironically, more astute research could have enlightened the commission on this point: a decent assessment regarding the impact of funds diverted from Horizon2020 would indicate which projects could potentially benefit from EFSI funding, and which (arguably the lion share) of projects must be ring-fenced within the original structures of Horizon2020.
Retrospective accounting is never popular. And infrequently effective. The creation of new jobs may yield higher employment in the short-term, but it does not ensure that these new jobs will not be subsequently reduced or re-located elsewhere, or indeed that the commercial boost of the ESFI will not fall onto the presently fallow commercial ground of the Eurozone. Research is project-specific, dedicated, rarely fungible given its capital-intensive nature and largely conditioned exclusively to the institutional dynamic from which it first emerges, i.e. the presence of faculty-based facilities and higher-education expertise. Its purpose is not to underwrite a faltering Eurozone in raw funding from the bottom up but to boost the top-down ideas, projects, dynamics and outputs that are themselves the catalyst to enhanced productivity, jobs and competition.
What now? The usual standoff between ardent voices from a key sector attempting to persuade the Commission and key Member State governments to block the re-allocation of funds? Our hope lies, for now, in the European Parliament, where a considerable number of MEP currently oppose the idea of hollowing out Horizon2020 funding. We should remember that MEPs backed amendments safeguarding research funding for programmes like Horizon2020 being used for EFSI-supported projects. As MEP Van Brempt argued, “our researchers, our universities around the EU, need this money if we want to keep our future-oriented vision and to enhance the EU’s competitiveness and global strength.” Last ditch hopes rest also with a motivated educational sector, and key voices being heard. Unfortunately, apart from the charge of last week, and some immediate media coverage, there has been virtually no public discussion or sustained media attention regarding the proposed changes.
Funding reallocations are hardly glamorous, admittedly. But a full-frontal assault on the funding structures underwriting innovation (much of it connected to sustaining Eurozone industry and commerce) is worthy of attention. Insights beget illumination, illumination sustains innovation. And innovation keeps things efficient and effective. Not tinkering with the most important hands-off budget in Europe. Universities have survived the storm necessitating corporate benchmarking and impact and knowledge exchange in bidding for funding; but hollowing out Horizon2020 and any related educational budgets risks substituting instrumental forms of performance for genuine progress.
 With profound thanks to CCCU Politics/IR Graduate Michal Gloznek. Having gradauted with distinction from Politics/IR here at CCCU in 2014, Michal is completing the first year of his MPhil in Latin American Studies at the Latin American Centre, School of Interdisciplinary Area Studies, St Antony’s College, Oxford.