EU: Financial Management and Fraud (EUC Report)

My Lords, I thank the committee for its report and the noble Lord, Lord Radice, for the manner in which he presented it to the House. However, in spite of finding no evidence of a culture of corruption in the EU, I am afraid that the report will not dispel the deep-rooted conviction that fraud is endemic in the EU and costs about £2 billion a year. This evening, two noble Lords stated that the idea that fraud does not exist is not acceptable. Indeed, the report is altogether too kind to the Commission and gives little or no credit to people who have sought to bring its failings to public attention. That especially applies, as we have heard, to Marta Andreasen, whose Sovietesque treatment by the Commission is to be deplored. In my view, the committee accepts too easily the notion that the problems are ones of irregularity rather than fraud. It also gives too much credence to the repeated assertion by the Commission that it is all the fault of the nation states rather than itself. As we have heard, the responsibility to order the accounts—and supervise expenditure for which it is responsible—lies not with the nation states but with the Commission. That cop-out really cannot be accepted, particularly by the United Kingdom because it is, and will remain, the second largest contributor to the EU budget in both gross and net terms. For us, fraud and lax administration is a serious matter—but for the net beneficiaries it is probably looked at in a completely different light. As far as they are concerned the ““easy come, easy go”” syndrome might well operate, as the noble Lord, Lord Giddens, said. So, for the United Kingdom, which is and has been the milch cow of Europe ever since we joined, it is therefore essential that the Commission stringently controls the EU finances. I come back to that, because it needs emphasising time and time again. To emphasise that point further, I remind your Lordships that in 2005 the United Kingdom made a gross annual payment to the EU of £15 billion, and a net contribution of £6.1 billion. The new seven-year financial settlement will further increase those figures; indeed, if Britain’s rebate is removed in 2009, our contribution will rocket to around £10 billion net per annum. That is very serious money, and our taxpayers have the right to expect that it will be properly spent. In addition, there are funds like overseas development, 33 per cent of which are administered—badly, I might say—by the European Union. So, we are really thinking about huge sums of money being paid not by the British Government but by British taxpayers: it is their money and, as we have heard from the newspapers today, some people are paying 50 per cent of their salaries in tax. They do not want to see it wasted and are therefore entitled to an assurance that all of their money is being properly used, and that none of it is being fraudulently converted by persons or organisations within or outside the EU. There appear to be no sanctions available against the Commission for neglect or mishandling of the finances, or anything else for that matter. Yet British taxpayers are being fined by the Commission for Defra’s mistakes and faulty administration in the single farm payment scheme. Apparently, that fine will amount to £305 million—that is £5 for every man, woman and child in the country, or £10 for every worker. They have a right to be resentful that we should be fined in this way. It is outrageous that British taxpayers should be made to pay fines in respect of the failure of government departments over which they have no control by a gaggle of appointed commissars who are immune from such sanctions. Why on earth the House of Commons, which has to raise that money, accepts such an imposition with hardly a word of protest is completely beyond my comprehension. If I were still there, I would be rattling Early Day Motions around the place, and I am sure that a lot of people would be very happy to sign them. The report makes a number of useful recommendations, including the one dealing with the need to establish double-entry bookkeeping in the EU’s accounting systems. It seems incredible that the accounting system has been in operation for 50 years without double-entry bookkeeping, yet we are forever being told that the EU is a very efficient and progressive operation. There are other useful suggestions with which I agree very much, including the signing-off of accounts by officials, value-for-money audits and the necessity for the Council and national parliaments to adopt a more structured system of considering and debating the accounts of the European Union. I sincerely hope that they will be implemented, but how far those recommendations will be accepted and implemented by the Commission, we simply do not know. Pressure on the Commission to put its financial house in order should be maintained, so that taxpayers in this country and throughout the EU can be assured that no part of their imposts are fraudulently converted or not well managed. It may very well be the case that, as was suggested by the noble Lord, Lord Pearson, the Commission should employ an international firm of accountants, either to examine its accounts or even to run its financial affairs.