European Affairs

It is always a pleasure to follow the right hon. Member for Leicester, East (Keith Vaz), who served for a time—perhaps it was too short a time—with distinction as Minister for Europe and is now serving with distinction as Chair of the Select Committee on Home Affairs. His kind comments about my hon. Friend the Member for Totnes (Mr. Steen) are welcome and on the record. The right hon. Gentleman's speaking about human trafficking in the way he did underlined yet again that when Europe and its nations need to come together to address a key problem, they fail. Human trafficking is just another example of where we need to be more pragmatic in our approach, in sharing the issues and in dealing with them in a unified way. I share the disappointment of my Front-Bench team that the European Court of Auditors has refused to sign off on the EU's budget for the 15th time in a row, owing to fraud and mismanagement in the budget. It is very unfortunate that the EU, with the enormous powers that it yields and a gargantuan budget to match, continually faces such serious allegations from its own auditors. I wish to take this opportunity to highlight some of the nonsenses that have been recorded regarding projects funded by the EU in recent years. My first example took place under the umbrella of the common agricultural policy, when €173,000 was given to the luxury golf resort called the Monte de Quinta Club in the Algarve in Portugal. According to the resort's website, guests can choose between""the comfort of a villa with garden and private pool, or be dazzled by deluxe suites."" It would be interesting to know whether that appropriation has been challenged and the money reclaimed. My second example is that of a Swedish farmer who received a subsidy, albeit small, of €200 through the EU's single farm payment scheme for land on which he grew cannabis—we are told that he had filled in all the required forms correctly. Last, but certainly not least, is the example of the €4 million subsidy given in 2002 to seven Italian orange farmers who failed to grow a single orange between them. It is not just the EU's agricultural policy that is not fit for purpose; another key area of waste is the EU's structural and cohesion funds—its second largest spending area, representing almost a third of the budget. The European Court of Auditors concluded in its report on the 2008 budget that the structural and cohesion funds remain problematic and are""the area most affected by errors"." Worryingly, the Court estimated that at least 11 per cent. of the total amount paid out in grants from those funds should not have been paid out in the first place. The structural and cohesion funds are intended to narrow the economic disparities among member states, and key recipients included Ireland, Spain, Portugal and Greece after they joined the EU in the 1970s and 1980s. Following the eastern enlargement in 2004 and 2007, most of the recipients of the funds are now central and eastern European states. Despite the €45 billion poured into the funds from member states every year, the OECD has not found any conclusive evidence that the funds have had a positive impact on the economies of the states receiving them. In fact, an OECD report from September 2007 stated that""regional disparities are not falling, or at best declining very slowly"." It calculated that at the current rate of convergence it would take 170 years just to halve the economic disparities between different regions in the EU. A major reason for the extraordinary levels of waste and mismanagement is the sheer size and complexity of the budget. As the EU's auditors pointed out in their recent report, in many situations the errors are a consequence of too complex rules and regulations. There are several ways in which the budget can be improved. At the moment, EU rules state that allocated funds must be paid out within two years or the money will be cancelled. That, of course, encourages member states to spend the money as quickly as possible without due scrutiny or responsibility. Bringing the structural and cohesion funds under national control would, in our opinion, simplify the EU budget and inject national accountability, greater transparency and more involvement by national Parliaments. It would, we believe, reduce waste and mismanagement and establish a better link between performance and receipt of subsidies.