EU Financial Management

I beg to move,"That this House takes note of European Union Documents No. OJ C 301, the European Court of Auditors 2004 Annual Report; No. 11216/05, European Court of Auditors Special Report No. 1/2005 concerning the management of the European Anti-Fraud Office; No. 11452/05 and Addenda 1 and 2, Protection of the financial interests of the Communities: fight against fraud, Commission’s annual report 2004; No. 12493/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge Decisions–Council recommendations; No. 12494/05 and Addendum 1, Commission Report: follow-up to 2003 Discharge Decisions–European Parliament Resolutions; No. 12712/05, Commission Staff Working Document: follow-up to the 2003 European Court of Auditors Annual Report; and No. 13532/05, Member States’ replies to the Court of Auditors 2003 Annual Report; and supports the Government’s promotion of measures to improve the level of assurance given on the Community budget." I am pleased that we can have this debate on the report and other relevant documents that are before us for the first time in a long time. It is an indication of how importantly Parliament regards EU financial management and the protection of EU taxpayers’ financial interests. I heard a rumour that the hon. Member for Stone (Mr. Cash) is on his way to join us in the Chamber. I advise all Members that if we can make the debate snappy, we may have half a chance of an early night. However, the purpose of the debate is to secure transparency and scrutiny, even if we have to listen to the hon. Gentleman. It will be interesting to see whether he reflects the new Conservative party’s movement to the centre, certainly in terms of domestic policy, and in terms of the EU moving ever further to the right. It is an interesting development and one in which we shall see whether the debate reflects where the Conservative party is at the moment on the EU. I shall cover three areas in my opening remarks. First, I shall set out the main points that are presented in the various reports that are tabled for debate and the Government’s response to these various issues. Secondly, I shall highlight what has been done to address problems identified previously and debated in the House. Thirdly, I will set out what we see as the key next steps. There have been, and continue to be, improvements in our view in both the quality of financial management of the EU budget and in financial management information. However, we cannot be complacent or satisfied with the status quo. There is much more for us to do. What are the main issues and what are the Government’s views on them? The main issues are presented formally in the annual report that is presented by the European Court of Auditors, the ECA, on how the Commission has implemented the Community budget. The ECA has also been required, since 1994 under the treaty on European Union, to give a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions. The first part of that statement of assurance has always been positive. The ECA has observed every year that, despite some qualifications, the accounts faithfully reflect the revenue and expenditure for the communities for the year and their financial position at the year end. The qualifications relate to the recording of sundry debtors, assets and liabilities, which the Commission’s accounting system was not designed to handle adequately. The other half of the statement of assurance concerns the legality and regularity of the underlying transactions. Frankly, that is where the problems lie. But it is not all bad news: the ECA audits revenue, commitments and payments and has always given a positive statement of assurance for revenue and commitments. It is in payments where we find the most difficulties.