Mr. Tony Murphy:

I used the word "flexibilities" twice in my introduction in respect of the Brexit adjustment reserve and NGEU. There is an awful lot of flexibility because every member state will propose its own plan tailored to its own needs. It will not be like a diktat coming from Brussels where we want something implemented across the board. It is very specific. In that regard, if it is done well, it should be more effective than having a one-size-fits-all approach.

The housing crisis comes up every time I am in Ireland and I fully appreciate the gravity of the situation. All I can say is that state aid is not included in NGEU. It will not feature at all so there is some scope there in that NGEU is not applicable. As members of the committee will know, some of our errors referenced by Deputy Ó Murchú, such as the 2.7%, are in fact related to state aid. We have state aid issues in different member states. There is very thorough system in place in the Commission. There is a whole Directorate-General, DG, for Competition, that follows all this. Any time we have a problem, we have to sit down with DG members and talk out each individual case. A very serious process is in place. State aid issues are not taken lightly, even in the Commission. It is an issue but, hopefully, NGEU may give some leeway as we move forward, specifically on housing.

I was asked what I thought about as we go forward. In my opinion, there is now no turning back. The tap has been turned on and there is no way to go back. We will not go back to former days. It seems that even the German mentality has changed in that regard, which was one of the bigger obstacles to the idea of borrowing to fund current expenditure. There will be a lot of flexibility in future. It brings problems because we need to get the balance right between flexibilities, and Deputy Haughey also asked about this, and making sure EU funds are spent reasonably. We mentioned figures of €2 trillion over the next seven years for NGEU and MFF. There is also an awful lot of money still to come from the 2014-20 period, which has not been absorbed yet. All these funds are available and, in a way, projects are competing for different funding sources that are now available. There are also issues of urgency and the exceptional nature of some projects. All these things, unfortunately, lead to a higher risk of fraud, for instance. There is no getting away from the fact that the risk is there although I am not saying it will materialise. We have to be aware of that.

On Deputy Haughey's point, we are a net contributor and without a shadow of a doubt our contributions will increase. That is why the work of this committee and the work we do should be more important from an Irish perspective. We do not put systems in place for forms and grants but we criticise them and sometimes state that systems are overly complex. In some cases, member states actually go over and beyond what is required by the EU, which is so-called gold plating. There are many valid reasons for this. As Deputy Howlin said, they possibly want to be deadly sure that the EU will not come along later and ask for money back. Members states are possibly being overcautious. Where we see some potential for progress, and we always talk about simplification, is in grants being replaced by, for instance, simplified cost options or lump sums, where the application process is much easier. If certain criteria are met, a member state is entitled to a certain amount of money. It happens, for instance, with Erasmus grants and all sorts of other areas. It makes things much easier. I fully agree that, at the end of the day, forms should not discourage beneficiaries. We want them to benefit from available EU funding.

Deputy Haughey also asked about the audit strategy and whether we will have capacity in resources. It will depend on the scope of the audit we can do. As I said, we are looking to see what we can do now. There is also the complexity of other funds competing with NGEU funds. It is different from the MFF, for which we give an opinion on the overall budget. For the NGEU, we will be validating claims from each member state. To return to Deputy Richmond's question at the start on whether there would be auditing of the bar for member states, there will not be auditing of the bar but there will be for NGEU because there are specific claims for each member state and they are all different. The plans are established by dealing with these milestones and targets and the claims are then submitted for payment. We will have to look to see that the Commission has done enough work to be able to validate those payments so we can give assurance, in some shape or form, that the money has been spent in compliance with the rules, even if these may be very limited.

To finish on Deputy Howlin's point, there is room for optimism in future in terms of the current mentality being maintained. As he said, there is a big awareness of the social issues throughout Europe, generally, and the problems they have caused in the political dimension too. It is not from a lack of awareness.