EU: Financial Management and Fraud (EUC Report)

Well, my Lords, we should take joy in those occasions when we have a united position on the other side of the Chamber and I am able to respond in one sentence to more than one individual Member of the Opposition. My noble friend Lord Giddens made some constructive comments, rightly identifying that fraud, even if it is at a more marginal level than has been contested by some contributors in this House, is not acceptable. We need to crack down on it. If it is0.3 per cent of the budget it is still too high—and it is important that we recognise that initiatives should be taken to deal with it. He supported the extent to which the UK was making progress on that matter. What we do identify clearly as fraud in the European Community does not look much greater than that which obtains within its nation states. The noble Lord, Lord Willoughby de Broke, mentioned Eurostat prosecutions. I am afraid that OLAF does not prosecute; that is not its role. The Eurostat case has been passed to member states and national prosecutions are under way in France, Luxembourg and Portugal. Once fraud has been detected, that is the only way in which it can be properly prosecuted. Predictably, the noble Lord, Lord Stoddart, also emphasised fraud. We attach great importance to that issue. He said that we should keep up pressure on the EU to put its house in order. I agree with that. That is why, both under our presidency of the EU in 2005 and subsequently, we put EU financial management high on our list of priorities. We are demanding improvement in that regard. My noble friend Lord Tomlinson gave a vigorous riposte to those who argued strongly against the EU. I was grateful for the way he introduced balance into the debate. One of his constructive comments was that the Court of Auditors should be reformed. We agree with that but my noble friend will recognise that that requires treaty change so it is not an easy thing to achieve. That takes us into a debate on the European constitution. I for one shall not engage in that dimension this evening, particularly given the length of time I have spoken at the Dispatch Box. I was grateful to the noble Lord, Lord Dykes, for reminding us of the need to compare standards in Europe in this regard with those in private industry. That is a salutary indication of the fact that fraud can exist in other organisations, some of which may look as if they are subject to the full range of audit inspection which some noble Lords advocated so strongly. However, that does not mean to say that fraudsters cannot operate successfully on occasion. I have already said that the noble Lord, Lord Howard of Rising, made several important points on fraud in the European Community and the necessity to validate expenditure. He said that 90 per cent of the budget was qualified. That is not quite so. Administrative expenditure was cleared, as was a majority of pre-accession spending and around 65 per cent of CAP expenditure. This means that about35 per cent of the total EC budget was cleared in both 2004 and 2005. That is an improvement over previous years. It is far from being good enough; his strictures are taken on board. That is why we are taking action to get reform. This has been a stimulating debate. I would have a great deal more to say about these issues if it were not for the fact that noble Lords expressed themselves with such vigour. As the report recognised, some progress has been made. It is not enough in the Government’s view. We are already taking initiatives to improve things in Europe. The report has helped to contribute towards a strategy of improvement to the European budget and its procedures, which are very necessary.