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3. Legal basis for the establishment and the powers of the actors in the budget system

3.1. The executive and the legislature

3.1.1. Overview

The 1958 Constitution establishes a two-house Parliament composed of a directly elected National Assembly and an indirectly elected Senate. The functioning of both houses is governed by an organic law. Since a 1962 referendum, the head of State, the President of the Republic, has been elected by universal suffrage. The President nominates the Prime Minister as well as other ministers (on the recommendation of the Prime Minister), chairs meetings of the Council of Ministers, and promulgates laws adopted by Parliament (or asks Parliament to reconsider laws). The government is headed by the Prime Minister, who may delegate certain powers to individual ministers (Constitution, Art. 22) who cannot retain their seats in Parliament if they are elected parliamentarians (Art. 23). The government determines the nation’s policies and is collectively responsible before Parliament (Art. 20) – namely the National Assembly (Art. 49 and 50).

France is a unitary State and the central government has traditionally been very strong. Certain central government functions and powers are progressively being transferred to local governments. The top tier of local government – a region – was created by law in 1982. In contrast, departments (départements) and municipalities (communes) are long-standing forms of local government.

3.1.2. Roles and responsibilities of the Council of Ministers and individual ministers

There are no constitutional constraints on the number of ministers. As a consequence, the number of ministers has varied greatly over the past 50 years. The Prime Minister directs the work programme and action of the government. After consultation with the Council of Ministers, he/she is responsible for defending the government’s programme before Parliament.

The Minister of Finance is not mentioned in the Constitution. His/her roles are specified by a presidential decree, signed also by the Prime Minister. In 2004, the Minister headed a “super-ministry” covering economy, public finance and industry.15 The Minister’s attributions include preparing and executing the budget, pensions, public accounting, and tax/customs policies. Several of these responsibilities have been delegated to the Secretary of State for the Budget and Budgetary Reform. Based on Decree No. 2002-952, the Secretary of State for the Budget and Budgetary Reform is specifically charged with implementing the 2001 LOLF.

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3.1.3. Establishment of ministries and executive branch agencies

Spending ministries do not need a law for their establishment. Government decisions create, merge, or abolish ministries. The number of ministries has varied enormously, as different Councils of Ministers have attempted to reform government administration via ministerial fragmentation or consolidation.16 Their internal organisation – particularly the number of internal departments (directions générales) – is established by Prime Ministerial decrees, after draft decrees are examined by the Council of State (Conseil d’État – see section 3.1.6).

The Constitution specifies that categories of public establishments are to be established by law. However, no overall framework law has been adopted, even though public establishments play a very important role in implementing the annual budget. In broad terms, there are two main categories of public establishment (see Box 2). In 2003, there were about 1000 EPAs (excluding thousands of schools and hospitals) and about 100 EPICs at national level.17 Within the “administrative” public establishments (EPAs), there are several subcategories, the most important of which are the social security organisations. Individual public establishments are created either by law or by decree. Apart from the social security public establishments, there is no common framework for essential matters such as governance structures or the preparation and submission of mission statements to supervising ministries. Although regular reporting to Parliament of the activities of public establishments is not required by law (except for the social security EPAs), a dedicated unit in the MINEFI closely monitors State-owned companies and reports to Parliament annually.18

Box 2. France: Characteristics and types

of public establishments (établissements publics)

●Public establishments are legal entities, separate from the State, with financial management flexibility of varying degrees.

●Public establishments are distinguished by function – notably those that perform commercial functions (EPICs), administrative functions (EPAs), or scientific, cultural, or educational functions (specialized public establishments). The major social security funds are national EPAs.

●EPICs are public enterprises, usually governed by corporate law; EPAs are governed by public law.1 Personnel of EPAs are treated as civil servants and all accounting is performed by public accountants under the MINEFI.

1.In the absence of clear distinguishing features of EPICs and EPAs, the distinction between them is being deprived of meaning (Rochet, 2003, p. 152). Some non-commercial EPAs have the status of an EPIC, mainly so that they can escape certain public law requirements.

Source: Rochet, 2002.

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Public establishments generally have a management board (conseil d’administration). The State generally has a representative from the responsible ministry, as well as a representative of MINEFI, on the management board. In many cases, the board’s president is nominated by government decree. For some public establishments, a director, selected by the government, coexists with a board president. Local governments, users, and other interested parties are also represented on the board, depending on the functions of the public establishment. For the social security funds (for which governance structures are clearly laid out in the Social Security Code), employer and employee representatives dominate boards.

3.1.4. Responsibilities of senior civil servants

Under the Constitution, the Council of Ministers appoints senior civil servants – directors of central administrations (Art. 13). In practice, the President of the Republic, the Prime Minister and the minister concerned jointly sign off on high-level appointments. All civil servants’ general responsibilities and rights are specified in Law No. 83-634 of 1983 (itself a revision of a law passed in the 1940s). Civil servants’ roles are further elaborated in law (dispositions statutaires), notably Law No. 84-16 of 1984, or by decree (dispositions réglementaires), with advice provided by the Council of State (Conseil d’État – see section 3.1.6). These laws concern recruitment, career structure, discipline, etc. However, the laws do not lay out principles for any special relationships between senior civil servants and higher authorities. Implementing decrees accord privileges to particular categories of civil servants. Overall, the legal framework induces rigidity in employment structures, which may inhibit the decentralised management responsibilities required for implementing the LOLF. It is recognised that written performance agreements may be required to clarify the responsibilities of budget programme managers, staff in ministerial private offices (including political appointees), ministry heads and ministers. However, the nature of contractual arrangements has not been made explicit in law (Arthuis, 2003, p. 83).

3.1.5. Establishment and roles of parliamentary committees

The Constitution limits the number of permanent parliamentary committees in each house to six (Art. 43). Special parliamentary committees may be created for examining specific laws. The detailed internal regulations of each house (which have the status of law) fix the composition and appointment methods of each permanent or special committee. The law that governs the functioning of parliamentary assemblies empowers these committees to summon to hearing any person judged necessary (1958 Ordonnance No. 58-1100, Art. 5bis). The same ordonnance allows the creation of parliamentary temporary commissions of enquiry. Three parliamentary evaluation offices that serve