While France has just passed the fateful milestone of 3000 billion euros in debt, making France one of the most indebted countries in the euro zone and the debt burden is expected to reach 75 billion euros by 2027, becoming the main item of State expenditure, it is urgent to reduce France’s debt.
“Debt reduction is no longer an option, it is a burning obligation to prepare the future for future generations” recalled Pierre Moscovici, first president of the Court of Auditors, Thursday during the presentation of a report calling for strengthen the quality of public spending. The debt burden “is the most stupid, most unproductive and most unjust public expenditure” he laments. Because it is as much that cannot be invested in education, health or ecological transition, three major projects.
Beyond this finding, hammered home many times, the Court indicates many possible avenues for savings: vocational training and apprenticeship, ecological transition, housing, tax expenditures, state aid to businesses… Through nine thematic notes, the report gives the keys to “spend less and better”, because the objective is also to improve the quality of public service. The Court thus intends to make its contribution to the review of public expenditure initiated by the government in January 2023, “in its place and in complete independence”, indicated Pierre Moscovici.
The main item of household expenditure, the housing policy mobilized 38.2 billion euros for the State in 2021, or 1.5% of GDP. “This is twice the average for the European Union” underlined Pierre Moscovici. And despite this very high amount, the results are not there.
New construction has fallen, and demand for social housing has increased but does not favor the most precarious households, the report says. Rising interest rates, increases in construction costs, rising land prices… The economic context is not helping the situation. In some urban areas, purchase prices and rents are increasingly disconnected from the real means of the French.
In this context, the Court of Auditors makes four recommendations. On the one hand, to refocus the social housing policy towards those who need it the most, even if it means reviewing the allocation criteria. For this, it is necessary to “strengthen the quality and reliability of data” to better target the objectives of housing policy. On the other hand, whatever the distribution of responsibilities between the State and the local authorities, it seems essential to strengthen the local management of the housing policy.
The Court also recommends simplifying the mechanisms and significantly reducing the number of public and parapublic players. Finally, financial magistrates advocate implementing targeting of the most effective aid. “This presupposes a better assessment of their effects and should lead to programming the extinction of tax expenditures whose effectiveness and efficiency have not been demonstrated,” they note.
Among the other avenues for savings, the report recommends cutting tax expenditures which, with 465 measures identified in 2022, represent a cost of more than 94 billion euros, or 3.6% of GDP. “Some devices have been under the radar for more than 10 years,” explains Pierre Moscovici. The Court recommends considering these expenses as ordinary expenses, with ceiling rules and a time limit.
Another concern for the financial jurisdiction: the ecological transition. This issue is usually never included in expenditure reviews. However, the “greening” of public spending is seen as a challenge to meet the challenges of the coming decades. Expenditure favorable to the environment has increased by one billion euros between 2021 and 2023. A sum deemed insufficient with regard to the 10 billion necessary for the climate transition, according to the Court which advises to integrate the cost of the ecological transition to the state budget.
With more than 20 billion in public funding, vocational training and apprenticeship are also in the sights. The proliferation of apprenticeship contracts has greatly benefited apprentices who were already trained. There is therefore a “gap between a high level of public spending and the quality of the result obtained” notes Pierre Moscovici. Here again, the Court advocates better targeting of these expenditures to priority audiences and strengthening the quality of training.