EU: Financial Management and Fraud (EUC Report)

My Lords, I did not see that letter in the FT, but Mr Dixon’s views on Europe are well known. The noble Lord, Lord Radice, reminded us of the famous example in Britain of the Department for Work and Pensions, a single department whose funds exceed the funds that we are talking about tonight. The noble Lord, Lord Williamson, rightly reminded the House that the Court of Auditors has in recent years praised the Commission’s results on control. The report was replete with Mrs Andreasen’s oral evidence; there was plenty of it. I did not find it at all convincing. I agree with the noble Lord, Lord Giddens, that it is difficult to measure fraud precisely. Although it was wholly a national problem for us, we can think of the vast amounts of money involved in the recent carousel fraud scandal related to UK VAT. The Treasury says that that has now been solved, but I doubt that it has been completely solved. I should think that there is still a considerable amount of it going on. The idea that there is one source of fraudulent activity called the EU Commission in Brussels and that fraud does not go on anywhere else, or in the private sector at all, is complete rubbish, as the two UKIP Peers must admit. The international firms of accountants whom we all love and admire often exaggerate their own activities. I well recall that Enron was certified and supported as giving accurate accounts by two famous international firms. Look what happened to it. There are many such examples. It is ridiculous to say that there is magical veracity and accuracy in the private sector and a problem in the European Commission because it is in the public sector. This is a well balanced and fair report. I think that it will be much used in other member states by the experts to follow through with their preferences for a more efficient and persuasive methodology in future. That is not, of course, the same as saying that no other country does this—the usual kind of haughtiness we hear in the press here and from the anti-Europeans. After all, many other member states, especially the large ones, have highly sophisticated systems which are as good as ours. The Dutch system has been given as an example. That is the great beauty of the Union: we can all learn from each other and pool the best from all in methods and practice. Accruals-based accounting has made a big difference, as the Government acknowledge. When talking to people outside, I find that the IFAC rules inspire greater confidence everywhere. The committee reminded us that administrative mistakes are just as important as the often-overstated cases of actual naked fraud. However, we must admit that both give the Community a bad name. Even if that is somewhat unfair, it has to be tackled and improved in future. I welcome greatly the committee’s conclusion in paragraph 172 that the EU Council of Budget Ministers should be, "““at least as concerned with the Union’s accounts as it is with drawing up the Budget””." I notice the noble Lord, Lord Tomlinson, nodding in agreement with that proposition. If we can get to that position as a routine matter of regular, repeated behaviour, then great strides will be made. Although that would virtuously go beyond what national budget Ministers are prepared to do normally in their own national context in most member states, it would help toinspire confidence in a system where putting together 27 different national accounting and verification procedures is a nightmare at any time. But it must be achieved.