The Court of Accounts has published the first report on PNRR: we have selected the key contents for you.
A meaty and important document for understanding the NRP
The Court of Auditors has recently published the First Report on the Status of Implementation of the National Recovery and Resilience Plan (NRP). . It is a meaty document (381 pages), still partly provisional because, as it is the first report and the first year of implementation, not all information is available. However, it provides, perhaps in part because of this, a lot of interesting structural information that provides a more specific understanding of how the NRP works.
We have tried to draw from it the main and precisely more “structural” points, especially from the perspective of those working on European projects. We organized them into three sections:
- A. The basic message of the report and the issue of absorptive capacity (already addressed in our other speeches);
- B. Summary data from the report, which aids understanding of the NRP, with quantitative information and commentary;
- C. An overview of the most representative interventions of each mission (explanation of the “broad outlines” of the NRP taken verbatim from the report).
We will delve into the specific perspectives of Third Sector entities in the next post.
The background messages
Overall assessment and absorptive capacity
An extreme summary of the report is available in the press release Of the Court of Auditors, which confirms that “Implementation is proceeding without any particular delays“; but which also emphasizes how crucial it is to, among other things “a high level of planning capacity that can assist and guide implementing entities” And how it is still limited “the availability of technical facilities to support the planning capabilities of territorial governments.”
As we have argued on other occasions , it is a historical moment in which the ability to design significantly affect our country’s development prospects, both at the central (implementing entities) and decentralized (territorial governments) levels. This concept, which can be traced back to the so-called “ absorption capacity “, is reiterated in some important points in the final part of the report:
“The overall availability offered by the European Union’s integrated financial instruments, while on the one hand it represents ‘the spur to growth’ and thus to a virtuous path for the Union’s economy, is also a challenge for Italy. The resilience of each member country will also depend on the absorption capacity Of NGEU funds, in a relatively short time. In fact, the available allocations are represented not only by the NGEU Funds, but also by the remaining allocations from the 2014-2020 MFF and the new 2021-2027 MFF.”
The need for a “change of mindset”
The same section of the report makes it clear how the PNRR and Recovery Instrument require a real change of mindset in terms of design and monitoring of projects: they in fact apply “A regime of conditionality (also referred to as “aggravated”)” reported “no longer to the demonstration of expenditures made, as for the EIS funds [i.e., for Structural Funds] but to the results achieved, which involves special attention to both the design phase and the actual implementation of the steps of the interventions and their timing“. The concept of “absorption” should not only be thought of in the (already problematic for Italy) terms of resource utilization, but also and above all in terms of goals and results achieved.
Finally, the report points out, in the case of the NRP, “dysfunctional” spending not only implies a waste of resources, but also poses the additional problem “of having to repay debts for which the expected return on investment has not been realized in returns.” . And in the Italian case, “a risk of inadequate absorption could also potentially arise from some of the way the Recovery and Resilience Plan was constructed, characterized by a top-down process, tending to lack sub-national involvement in the implementation and evaluation phases, and with centralization of major public investments.”
So all is well at the moment: but the most important year for grasping the great challenges and opportunities of the NRP is right now.
Summary data that aid understanding of the NRP
The planning analysis of the NRP
An important part of the report is devoted to tables of analysis related to the planning of the NRP and amounts allocated, based on various parameters. For example:
- Amount of funds by mission, by year, and by incumbent administration;
- Contribution of NRP funds to “common challenges” (power up, renovate, recharge and refuel, connect, modernise, scale-up, reskill and upskill) by incumbent administration;
- Contribution of NRP funds to “cross-cutting objectives” (youth, territorial gaps, gender equality, no significant harm to the environment) by incumbent administration;
- Contribution of the NRP to the most important goals, related to climate and digital
The insight on regional governance
Of particular interest to local and civil society actors is a section devoted to the regional governance of the NRRP, with summary sheets for each region describing the composition and mandate of each of the regional structures dedicated to the PNRR.
We invite you to read the text of the report and focus, next, on the structural data that we find most interesting for understanding the logic and mode of operation of the NRP.
Types of Milestones and Targets
As we know, the path of the NRP is marked by Milestones and Targets, i.e., intermediate and final goals used to monitor its progress not only from the point of view of financial disbursement, but also and especially from the point of view of content (a key aspect, as explained above). The analysis of Milestones and Targets allows us to truly understand. “what’s to be done” about the NRP from the perspective of institutions and managing authorities; and consequently, what kind of impact and contribution we can expect in terms of design (see Chart 17, page 68 of the report).
| Milestone e Target normativo-amministrativi | % |
|---|---|
| Accordi e protocolli d'intesa | 4,6 |
| Atti amministrativi | 16,9 |
| Normativa governance | 2,7 |
| Normativa settoriale | 47,0 |
| Semplificazione | 11,0 |
| Studi preliminari e linee guida | 17,8 |
| Milestone e Target operativi | % |
| Monitoraggio | 8,3 |
| Piano di riparto e trasferimenti | 4,2 |
| Piano operativo | 4,2 |
| Procedure ad evidenza pubblica (≈ appalti) | 53,2 |
| Progetti | 30,2 |
The distinction made between Regulatory-Administrative Milestones and Targets and Operational Milestones and Targets echoes (in broad strokes) the organization of the NRP into Reforms and Investments. Le Reforms absorb 3 percent of PNRR resources but can have a great systemic impact on all Italian actors and territories. The Investments are obviously more specific (although they too are thought of in terms of systemic impact) and absorb 97 percent of NRP resources (see Table 4, page 29 of the report).
In terms of planning, the most relevant part is therefore the following Milestones and Operational Targets, which will be largely constituted by public procedures (i.e., basically by procurement procedures) and to a large extent by projects (53% and 30% of Milestones and Operational Targets, respectively).
Data reported refer to the total of Milestones and Targets, i.e., those arising from the monitoring needs of EU funds and those arising from the needs of Italian administrations and monitoring of the Italian Complementary Plan. Narrowing the analysis to EU funds alone, the distribution does not change dramatically, but there is a higher weight of sectoral regulations under administrative targets; and procurement at the expense of projects (58 percent and 24 percent, respectively) under operational targets (see Chart 13, page 65 of the report).
Implementing parties at the national and territorial levels
A second aspect that the report helps clarify with some summary data is who manages the PNRR funds, at the national and territorial levels, including any calls when provided as part of the intervention (see Table 1, page 26, Table 2, page 28 and Table 22, page 59 of the report). In this sense, it is necessary to make a distinction between two levels of implementation:
- (Higher) level of theHolder Administration (Ministry or structure of the Presidency of the Council of Ministers responsible for the implementation of reforms and investments, sub-investments and Measures envisaged in the NRP);
- Level (most operational) of the Implementing Entity (public or private entity responsible for the initiation, implementation and functionality of the intervention/project financed by the NRP and the Supplementary Fund).
Projects managed directly by the titular administration are called “titular,” those managed by other Implementing Entities are called “directed.”
| Fondi per Soggetto attuatore (PNRR) | Milioni di € | % | ||
|---|---|---|---|---|
| Ministero | 43.773 | 22,9 | ||
| Presidenza del Consiglio | 2.673 | 1,4 | ||
| Regione | 24.629 | 12,9 | ||
| Comune e Unione di comuni | 34.700 | 18,1 | ||
| Ferrovie dello Stato | 25.597 | 13,4 | ||
| Società private | 1.800 | 0,9 | ||
| Società pubbliche | 14.989 | 7,8 | ||
| Ente pubblico | 1.910 | 1,0 | ||
| Agenzia nazionale | 21.345 | 11,1 | ||
| Autorità indipendente | 1.257 | 0,7 | ||
| Ente o autorità portuale | 270 | 0,1 | ||
| Ente parco | 100 | 0,1 | ||
| Istituto e scuola pubblica | 7.250 | 3,8 | ||
| Istituto o ente pubblico di ricerca | 2.560 | 1,3 | ||
| Università pubblica | 8.646 | 4,5 | ||
| TOTALE | 191.499 | 100,0 | ||
| Fondi e interventi per Amministrazione titolare (PNRR+PC) | Milioni di € | % | Interventi | % |
| Infrastrutture e mobilità | 49.462 | 22,3 | 65 | 20,3 |
| Transizione ecologica | 39.246 | 17,7 | 39 | 12,2 |
| Sviluppo economico | 25.041 | 11,3 | 18 | 5,6 |
| Salute | 18.013 | 8,1 | 24 | 7,5 |
| Istruzione | 17.594 | 7,9 | 16 | 5,0 |
| *Innovaz. tecnologica trans. digitale | 15.737 | 7,1 | 34 | 10,6 |
| Interno | 12.700 | 5,7 | 6 | 1,9 |
| Università e ricerca | 12.232 | 5,5 | 17 | 5,3 |
| Lavoro e politiche sociali | 7.250 | 3,3 | 12 | 3,8 |
| Cultura | 5.730 | 2,6 | 24 | 7,5 |
| Pol. agricole, alimentari e forestali | 4.883 | 2,2 | 5 | 1,6 |
| Giustizia | 2.854 | 1,3 | 9 | 2,8 |
| Turismo | 2.400 | 1,1 | 14 | 4,4 |
| *Terremoti | 1.780 | 0,8 | 1 | 0,3 |
| *Sud e coesione territoriale | 1.695 | 0,8 | 6 | 1,9 |
| *Pubblica amministrazione | 1.269 | 0,6 | 11 | 3,4 |
| Affari esteri e coop. internazionale | 1.200 | 0,5 | 1 | 0,3 |
| *Protezione civile | 1.200 | 0,5 | 1 | 0,3 |
| *Sport | 700 | 0,3 | 1 | 0,3 |
| *Politiche giovanili | 650 | 0,3 | 1 | 0,3 |
| Economia e finanze | 340 | 0,2 | 10 | 3,1 |
| *Affari regionali e autonomie | 135 | 0,1 | 1 | 0,3 |
| *Pari opportunità e famiglia | 10 | 0,0 | 1 | 0,3 |
| *Segretariato generale | - | - | 2 | 0,6 |
| *Disabilità | - | - | 1 | 0,3 |
| TOTALE | 222.121 | 100,0 | 320 | 100,0 |
| * nell'ambito della Presidenza del Consiglio |
The data reveal that :
- Although the ownership of the interventions is entirely in the hands of national government structures, their implementation is well distributed and is entrusted equally (about one-third each) to Central entities (Ministries, Council Presidency and National Agencies), Local governments (Regions, municipalities and unions of municipalities) and other entities (State railways, public and private companies, other entities, schools and institutes) ;
- The ownership of about half of the funds and interventions is vested in the ministries in charge of major ” macro ” policies of the country and major infrastructure projects (Ministry of Infrastructure and Mobility, Ecological Transition and Economic Development). A considerable portion (more than one-third) is entrusted to other major ministries in charge of the main thematic policies of the country (Health, Education, Technological Innovation, Interior, University and Research). Ministries in charge of social areas and more related to the Third Sector (Labor and Social Policy, Culture, Justice, Tourism, Sports, Youth Policy, etc.) hold less than 10 percent of the funds but 20 percent of the interventions.
We have provided within the table, in the form of a link, the reference of the fund planning document for each titular administration (here all the planning documents ).
Notices published from the beginning until March 15, 2022
One last very interesting piece of information is about the calls published under the NRP from its inception until mid-March (see Tables 14 and 15, pages 114 and 115 of the report). Data are broken down by location (national and territorial) and by recipient category. They do not constitute a pattern of forecasting, but only of “fact” of what has been accomplished so far.
| Bandi per destinatario (n°, distrib. %) | Liv. nazionale | Liv. territoriale | Totale |
|---|---|---|---|
| Enti territoriali | 1,4% | 20,5% | 21,9% |
| Ambiti Soc. Terr. (Min. del Lavoro) | - | 4,1% | 4,1% |
| Enti pubblici economici | 0,7% | - | 0,7% |
| Autorità di Sistema Portuale | - | 0,7% | 0,7% |
| Istituzioni di ricerca | 0,7% | 4,1% | 4,8% |
| Vari Pubblico Privato | 2,7% | 2,1% | 4,8% |
| Farmacie rurali | 0,7% | - | 0,7% |
| Privati | 57,5% | 3,4% | 61,0% |
| Amministrazioni centrali | 1,4% | - | 1,4% |
| TOTALE | 65,2% | 34,9% | 100,1% |
| Bandi per destinatario (€, distrib. %) | Liv. nazionale | Liv. territoriale | Totale |
| Enti territoriali | 2,5% | 36,9% | 39,4% |
| Ambiti Soc. Terr. (Min. del Lavoro) | - | 4,0% | 4,0% |
| Enti pubblici economici | 1,4% | - | 1,4% |
| Autorità di Sistema Portuale | - | 0,7% | 0,7% |
| Istituzioni di ricerca | 0,0% | 15,1% | 15,2% |
| Vari Pubblico Privato | 0,9% | 2,4% | 3,3% |
| Farmacie rurali | 0,3% | - | 0,3% |
| Privati | 32,5% | 3,0% | 35,6% |
| Amministrazioni centrali | 0,1% | - | 0,1% |
| TOTALE | 37,8% | 62,2% | 100,0% |
The data show a highly polarized situation, with three categories of beneficiaries receiving about 90 percent of the calls and the respective amount in funds: Private (about 2/3 of the calls and 1/3 of the budget), Local and regional authorities (about 20 percent and 40 percent of calls and budgets) and Research institutions (about 5 percent of the calls and 15 percent of the budget). This distribution reflects the priorities of the current NRP start-up phase, focused on preparatory, material and infrastructure interventions.
Overview of the most representative interventions by mission
Mission 1 (Digitalization, innovation, competitiveness and culture)
In Mission 1 “Digitization, Innovation, Competitiveness and Culture,” there are at least two high-impact projects.
- The first concerns the so-called Transition 4.0 with the provision of capital goods tax credit measures. These are tax breaks aimed at promoting the digital transformation of production processes. Compared with the previous program (2017’s Industry 4.0), the new one differs in some new features: (i) replacement of hyper-depreciation with special tax credits of varying amounts depending on the amount of investment; (ii) credit recognition throughout the 2021-2022 biennium; (iii) the extension of eligible intangible investments and the increase of credit percentages and the maximum amount of incentivized investments. Three types of business tax credits are provided within this framework: the one for tangible 4.0 and intangible assets,the one for R&D&I activities and the one for training 4.0 activities.
- The second intervention responds to the goal of developing ultrafast networks (ultra-wideband and 5G) with the so-called 1 Gbps Italy Plan, which consists of ensuring, among other things, efficient connectivity to 8.5 million households and businesses.
Mission 2 (Green Revolution and Ecological Transition)
As for Mission 2 “Green Revolution and Ecological Transition,” the intervention related to Ecobonus and Sismabonus and the interventions aimed at land development and energy efficiency of municipalities stand out for their financial significance.
- On the first front, it is recalled that the measures are aimed at improving the efficiency and safety of the building stock, also with a view to contributing to the goal of full decarbonization of the civil sector envisaged by international protocols for 2050. The instrument chosen is, as is well known, a 110 percent super tax credit, a measure first introduced by the May 19, 2020, Decree Law No. 34 (so-called “Relaunch” decree).
- On the second front, there is a heterogeneous set of interventions to be carried out in urban areas that will cover land securing, building safety and upgrading, energy efficiency, and street lighting systems. In general, these are mainly measures to improve efficiency in water resource management and also includes a number of measures to simplify the design and implementation of projects related to water infrastructure and hydrological risk management and reduction.
Mission 3 (Infrastructure for sustainable mobility).
Under the Mission 3 “Infrastructure for sustainable mobility” of course, measures concerning investment in the rail network are of great importance, and in particular measures in the rail sector for high-speed rail (freight and passenger) in the North and South, for the development of the European rail transport management system, and for the strengthening of metropolitan rail nodes and key national links. It should be recalled that these are interventions that are already underway, which with the NRP benefit from an additional boost from the financial aspect even with regard to new projects that are intended to be implemented. No less important are the investments, albeit of lesser financial impact, planned for some rail links on the West/East diagonal of the peninsula and for the upgrading and electrification of southern railways.
Mission 4 (Education and Research)
As for Mission 4, “Education and Research,” interventions aimed at combating the risk of under-natality and supporting families through the implementation of a Nursery and Kindergarten Plan and early childhood education and care services, as well as the School Building Safety and Redevelopment Plan, are particularly emphasized.
- Along the first line are projects aimed at building, upgrading and securing kindergartens and preschools. The basic idea, which is increasingly emerging from a number of advanced empirical studies, is that educational provision should be strengthened from early childhood onwards to offer concrete help to families by countering at the same time the risk of educational poverty and the risk of Italy remaining in an area of low female labor market participation.
- On the second front, the aim is to increase the quality of school buildings, starting with improving their energy classes in addition to increasing the structural reliability of the buildings, including their earthquake-proofing.
Mission 5 (Inclusion and Cohesion)
As for Mission 5 “Inclusion and Cohesion,” those for the development of Active Labor Policies and those in the field of urban regeneration and social housing are certainly of importance, this time through reform interventions rather than investments in the strict sense.
- About the former, the country’s shortcomings in terms of active policy orientation and a certain propensity, even before the pandemic, to favor passive policies, as OECD data amply show, are well known. With the interventions allowed by the NRP, a significant step forward is planned along a path that had already seen growth in budget allocations in recent years. The hope and goal is also to address old and new problems, generated in the latter case by the pandemic, related to the sometimes rapid obsolescence of workers’ skills and the related difficulties of reemployment after major business crises. Strengthening active policies should help reduce the number of NEETs (young people who are not studying or working), among whom there is also a significant gender gap.
- With reference to the second front, an important role will be played by projects for strengthening “Social Infrastructure, Families, Communities and the Third Sector,” aimed at providing grants to municipalities.
Mission 6 (Health)
Regarding, finally, mission 6 “Health,” the interventions of greater financial relevance and representativeness of the effort aimed at creating a health care system more resilient to the risks manifested by the pandemic point, on the one hand, to the strengthening of territorial care, including through a relevant impulse to telemedicine, and, on the other, to the updating and technological strengthening of hospital facilities.
- Of the first front of measures, Community Homes, Community Hospitals, and the strengthening and modernization of home care represent building blocks. The goal is to fund projects that will enable remote physician interaction, diagnostics, and monitoring of the patient, as well as remote access to diagnostic reports.
- The second set of interventions aims to upgrade and structurally strengthen hospital facilities, but also to strengthen the related technological infrastructure. Through the adoption of innovative and technologically advanced solutions and the enhancement of the digital assets of public health facilities, the investment aims to improve the efficiency of care levels and bring facilities and organizational models up to the best international safety standards.
Other interventions
In addition to the measures quickly reviewed so far, and which stand out, as mentioned, also in terms of their financial scope, the Plan presents an important number of projects that are often more modest, quantitatively speaking, but highly significant in terms of the role they will be able to play in boosting business productivity and competitiveness, as well as a more sustained, lasting and inclusive growth of the Italian economy.
These are varied measures ranging from those supporting tourism and for the enhancement of cultural and environmental heritage, to those for the strengthening of digital skills,from those, in the agricultural sector, for the development of the sustainable agri-food supply chain, to those encouraging the production of renewable energy.
