Court of Auditors

HC Deb 10 March 1993 vol 220 cc1036-57 10.49 pm

The Paymaster General (Sir John Cope)

I beg to move, That this House takes note of the Court of Auditors' Report concerning the financial year 1991 together with the institutions' replies (OJ No. C330, Volume 35) and the unnumbered Explanatory Memorandum submitted by HM Treasury on 25th February 1993 relating to the draft Council Recommendation to the European Parliament on the discharge of the General Budget of the European Communities for the financial year 1991.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

I must inform the House that Madam Speaker has selected no amendments.

Sir John Cope

The motion takes note of the report of the Community Court of Auditors on the 1991 expenditure of the Community. It is a long report, just short of 500 pages, with a long commentary from the Commission, and it is also the subject of a long explanatory memorandum from the Treasury, which I hope that the House has found helpful.

As the House knows, the court's duty is to report whether the Community's revenue has been properly received and the expenditure properly incurred and on whether the financial management of the funds has been sound. The report is an important, independent check in itself, but it is also a valuable tool for the Council of Ministers, the European Parliament and others, including the national parliaments—but especially for the Council of Ministers and the European Parliament—which are the two arms of the budgetary authority of the Community, to examine how well the Commission and the member states have managed the Community's resources.

The court's report is forwarded to the Council of Ministers and, from there, to the European Parliament. The Council and the Parliament examine the report along with the accounts and financial statement submitted by the Commission. The Council will then usually recommend, and the European Parliament will decide to give, what is called a discharge to the Commission over its implementation of that year's Community budget.

The intention is that the Council's recommendation should be discussed and, I expect, adopted at the Economic and Finance Council next Monday.

Dr. Norman A. Godman (Greenock and Port Glasgow)

The court was critical of the aid provided for the temporary laying up of fishing vessels. The report states that access to that aid was, to say the least, unequal. What means are available to our fishermen, who have suffered, to redress the grievance? Have they the right to compensation—sometimes for having been denied fair and reasonable treatment because of the regulation—under the treaty of Rome, or do they have to wait until the treaty of Maastricht is ratified?

Sir John Cope

I cannot answer the hon. Gentleman satisfactorily off the cuff, but I shall answer later in the debate if I am able. Perhaps I may proceed with general remarks about the report and the treatment likely to be accorded to it after our discussion.

The draft Council recommendation, which the Economic and Finance Council of Ministers is expected to consider on Monday, is also available to the House and is, of course, the subject of another explanatory memorandum. However, the main explanatory memorandum, which was submitted on 5 February, gives a comprehensive summary of the report itself. The report is, by itself, an extensive survey of the Community budget; it also contains some important remarks by the court.

The report rightly emphasises the Court of Auditors' continuing concern about financial management, and control in the Community and identifies two main reasons for the deficiencies: inadequately drafted legislation, and poor arrangements for management and monitoring. These are deficiencies which go to the heart of financial control and of value for money. The Government consider that they raise issues that the Community must continue to address. Of course, those concerns are not new. Indeed, in highlighting the deficiencies of financial management, the report picks up criticisms that were central to the court's previous report, on the 1990 budget.

The Government's concern to secure value for taxpayers' money from Community spending was the reason why the Chancellor of the Exchequer raised the issue with the Commission, with his ministerial colleagues and with the European Parliament, at about this time last year. A copy of my right hon. Friend's letter to the Commission was sent to the Scrutiny Committee and placed in the Library. As the House would expect, our concerns were taken seriously. Considerable advances have been made since then, although the situation is still not satisfactory.

Even before that, in 1990, an important amendment was made to the financial regulation which sets out the detailed rules for implementing the Community budget. The United Kingdom had long been concerned that the rules did not emphasise that, in spending the revenues provided by Community taxpayers, the Community did not take sufficient account of value for money. The financial regulation was amended in 1990 to include a specific reference to the need for economy and cost-effectiveness in Community spending.

In consequence, proposals for spending must now be justified by reference to value-for-money criteria. The court's most recent report picked up that requirement as a yardstick for considering the Community's performance, and drew attention to important inadequacies in that performance—notably the need for the Community to appraise proposals for spending against clear objectives before spending any money; to monitor the effectiveness of the spending at the time; and to evaluate the outcome and then adjust future programmes as necessary.

Mr. Nigel Spearing (Newham, South)

The Paymaster General mentioned the letter written by the Chancellor of the Exchequer to the then chairman of the Finance Council—Dr. Macedo of Portugal—of which copies were sent to Commissioner Schmidhuber and the chairman of the parliamentary budgetary council of the European Parliament. The letter raised some important issues, which the right hon. Gentleman has already mentioned. As he said, the letter is in the Library for us all to see. Was there a specific response to it, or was that subsumed in the process that he has just described, which may have started a little before the letter was sent?

Sir John Cope

Yes, the process that I have described took place in 1990, as I believe I explained. There was a response to last year's letter, too. It was discussed further and has been taken up since, as I shall tell the House in a moment. It was followed through—most importantly in the negotiations on future financing which took place in Edinburgh but also, meanwhile, in various discussions in the Economic and Finance Council.

The points raised by the Chancellor of the Exchequer at that time have been an important aspect in the consideration of the Community's finances ever since.

Sir Teddy Taylor (Southend, East)

I appreciate the Minister's sincerity, but does he accept that what was agreed at Edinburgh was a budget of £31,000 million for the EC to spend on agriculture this year? Does he accept that the cereal mountain is the highest it has ever been in recorded history, and that we have an horrendously large set-aside system which is costing us dear? Does he accept that, so long as there is a crazy policy, no matter how good Ministers are or how hard the Commission tries, nothing can be done to resolve the problem?

Sir John Cope

My hon. Friend is not quite right; his approach to the matter is over-pessimistic. As I said, I do not think that the position is satisfactory, but I think that it improved a bit as a result of the Edinburgh considerations. The position has improved further since then.

Among the conclusions at Edinburgh, there was an unambiguous requirement that the Community's resources should not be committed without a thorough prior appraisal which demonstrated that there would be economic benefits in keeping with the resources deployed.

More specifically with reference to the structural funds, of which the Court of Auditors has been critical, the Heads of Government concluded that financial control should be strengthened, and that greater emphasis should be given to appraisal in advance, to monitoring and to evaluation afterwards. They also concluded that assistance should be allocated where appraisal showed that medium-term economic and social benefits commensurate with the resources were involved and that operations should be adjusted in accordance with the results of monitoring and evaluation.

I point out to my hon. Friend the Member for Southend, East (Sir T. Taylor) that the additional funds to which he drew attention, which were decided on at Edinburgh, are part of the conclusions reached at Edinburgh. The different parts of those conclusions—to spend the money and to have the criteria to which I have referred—depend on one another; they are part of the same resolution.

Since the Edinburgh conference, the criteria have been applied more rigorously, although not so rigorously, no doubt, as my hon. Friend the Member for Southend, East would like or as I would like. In the agreement in the Foreign Affairs Council last Monday, there was a regulation for the interim cohesion fund, about which my hon. Friend, like me, will be interested. The matter was agreed in principle at Edinburgh.

The regulation agreed last Monday in the Council explicitly requires the prior appraisal of projects; it explicitly requires that, before approving a project, 1;he Commission must assess the appraisal against value for money criteria; it explicitly requires that beneficiaries have the management and audit systems to ensure that the projects are effectively implemented; and it further explicity requires that the Commission is responsible for ensuring the adequacy of those systems. The operations are to be reviewed to ensure that the original objectives have been achieved. Those are specific requirements for which the Court of Auditors, the Council and the European Parliament, through the Budgetary Control Committee, can look out. The Commission is under an obligation to put those requirements into practice.

My hon. Friend the Member for Southend, East will realise that matters cannot become magically perfect in a short time, but I believe that real improvements have been taken on board by the Council of Ministers, by the Commission and by the European Parliament.

The steps that I have described concern value for money—avoiding wasted expenditure. The Community has also addressed the important issue of fraud, which is also a matter of concern. During the United Kingdom presidency, constructive steps were taken under that head. The matter was discussed at the Economic and Finance Council more than once, and we set up a high-level group of officials under United Kingdom chairmanship to agree some practical steps to improve the prevention of fraud.

Those practical steps included an improved programme of action for the Community's fight against fraud—the 45-point programme—and ways in which to improve co-operation, including the Commission agreeing to take a more positive co-ordinating role and work to continue on simplifying legislation. That is one of the weaknesses in the system, and a special group is considering it with the anti-fraud issue in mind. Vague or poorly defined legislation is one area highlighted by the Court of Auditors in the report before us. The quality of administration and financial control depends very much on the quality of the legislation on which it is based. All those are important points on fraud. The steps that I have outlined are not the whole answer to improving financial management in the Community, but they take us down the right road.

In the explanatory memorandum on the draft Council recommendation, we set out the key features, which include value for money and the importance which the Council attaches to that. Attention is also drawn to problems of management which might permit fraud or other irregularities—not fraudulent—and the Council's commitment to continuing action as agreed by ECOFIN last autumn is restated. It is also important to draw attention, as we do in the explanatory memorandum, to the Commission's commitment to review periodically the justification for on-going actions and to call on the Commission to report on the steps that it has taken to improve its internal procedures.

These are important conclusions which the Government welcome, just as we welcome the report of the Court of Auditors and its valuable comments on the financial management, value for money, evaluation of Community funds and the need for member states to assume their responsibilities more fully, because much of the Community expenditure goes from the Commission through the mechanisms in the member states themselves.

It is an important report. The explanatory memoranda on the report have given the Government an opportunity to express their views. I think it is in the interests of the House that I should not go into more detail now, but should leave time for hon. Members to contribute and then do my best, by leave of the House, to respond to the points they raise.

We have to remember all the time that, although the legal term for Community revenue is "own resources", none of the money belongs to the Community institutions—it is taxpayers' money which has to be raised by the member states. It must therefore be used with the utmost care and attention to value for money and to the avoidance of fraud. The report of the Court of Auditors helps the Community to do just that.

Mr. Tim Smith (Beaconsfield)

Can my right hon. Friend say what changes there are in the Maastricht treaty which would improve the quality of financial management in the Community institutions and enhance the accountability of the Commission?

Sir John Cope

There are some changes. The amendment to the financial regulation to which I referred was an initial step. At Maastricht, the members of the European Council built on that. Among the improvements to the treaty which were agreed, and which I believe will be ratified before long, it is made explicit that the Commission, in implementing the Community budget, is responsible for the sound financial management of the Community's finances. Responsibility for that is placed firmly on the Commission.

In addition, the Court of Auditors will be strengthened and made a full-blooded Community institution. The European Parliament's powers of scrutiny will also be strengthened. There is an explicit requirement that member states should pursue fraud against the Community's budget with the same vigour as they pursue fraud against their own national budgets.

Those changes in the treaty represent an important move forward in strengthening the framework necessary to improve the management of the Community's finances. We shall have many opportunities to debate those matters on another occasion. In the meantime, I commend the Court of Auditors' report to the House.

11.9 pm

Mr. Andrew Smith (Oxford, East)

It would seem that the Court of Auditors' report does not have quite the same entertainment value in terms of pulling an audience as the proceedings on the previous votes. Anyone who thought that the report might be dull should read it, because the absurdities in it are equal to anything we saw in the procedural farce earlier in the House.

As the Minister said, the report is important. It covers 55,327 million ecu, or £46 billion, of expenditure, to which the United Kingdom contributed revenue of a gross £5.6 billion. The report leaves no doubt that there are errors, irregularities, fraud and waste on a disturbing scale in a number of areas of the Community's financial affairs. Some of that is the responsibility of the member states themselves, some is the result of legislation which is unclear or inconsistent, and some is the result of inadequate supervision by the Commission. Whatever its cause, it is unacceptable and more resolute action needs to be taken as a matter of urgency if it is to be rooted out.

Resolute action is crucial to ensure that public money is not wasted or misappropriated, and thereby to build public confidence in the efficacy of Community action and expenditure. No one should under-estimate the damage which is inflicted on the whole Community and on its future by the shortcomings identified in the court's report. Given the difficulties to which the auditors referred in monitoring all the expenditure and revenues involved, it would surprise no one if, despite the quality of the auditors' work, what they uncovered was only part of the whole iceberg.

The Minister talked about the changes which the Maastricht treaty would bring about. One of those changes is that the auditors will be required to certify that the accounts are a true record of the Community's finances. It disturbs me greatly—I hope that it disturbs the Minister—that an article in The Guardian on 27 November quotes sources at the Court of Auditors as saying: If we had to certify these accounts, we would not do so." That shows how much progress must be made if the irregularities and fraud are to be controlled in the way in which people would expect, and if we are to have confidence in the way in which the Community's finances are being maintained.

Mr. Roy Beggs (Antrim, East)

Does the hon. Gentleman agree that those member states which as yet cannot properly manage their own income tax and VAT do not give us much confidence that they will properly manage EC funds?

Mr. Smith

I take the hon. Gentleman's point. It shall refer to the different numbers and sorts of discrepancies which have been discovered in different member states. On the whole, the United Kingdom's performance in terms of the regularity with which the operations are supervised that our authorities have responsibility for supervising is a good record. Sadly, that record is not equalled in some of the other member states.

The explanatory memorandum to which the Minister referred is a useful summary of the auditors' report and a helpful guide to its 496 pages. The report's dead-pan language does not fully do justice to the scale and seriousness of the problems which the Court of Auditors' report identified.

If I were to go through all the irregularities, this would be a long speech. Instead, I shall pull out some examples. In the collection of so-called traditional resources, the member states' six-monthly reports of frauds and irregularities are an important element of what is, after all, largely a delegated system of control. On that subject, the auditors say: Useful information is rarely provided, and cannot in every case be used to justify their effectiveness"— that is, the effectiveness of the reports. Perhaps that accounts for the fact that in 1991 the United Kingdom reported 223 such cases—nearly a third of the Community total—whereas, to take a topical example, Italy reported only 25. That may have a bearing on the point raised by the hon. Member for Antrim, East (Mr. Beggs).

It is disturbing that there were instances of identified own resources not being made available to the Community. The largest such example was one of no less than 1–4 million ecu, which one customs district in the Netherlands failed to pay over. That was rectified by the Dutch authorities when the Court pointed it out. I hope that the Government will use their voice strongly in the Council to support the Court's recommendation that the Commission monitors more closely the implementation of the relevant legislation in member states.

Also of concern is the amount of interest due to the Community on late payments of customs duties, which amounts to 25.7 million ecu—l6.9 million of it in Germany. The report states that the court has brought that matter to the attention of the Commission and the member states involved. I should be grateful if the Paymaster General would say whether that money has now been paid.

There were many issues of concern relating to the operation of the European agricultural guidance and guarantee fund. The court's report stated that about half of the expenditure of that fund involved measures that can reasonably be regarded as the inescapable consequences of surplus agricultural production: in particular, aids for the export or destruction of products—34 per cent.—and intervention—18 per cent.

In addition, the Court found that some production aid schemes, which are intended to support rural communities, are actually obstacles to rational development. High rates of subsidy are paid in order to render viable small farms which would otherwise be uneconomic. There are premiums which encourage farms to remain small or which encourage the breaking up of farm holdings in order to qualify as small farmers. Those premiums include higher rates of aid for small olive producers, which the Court of Auditor's report states is not an effective way of supporting rural communities, since producers can continue to benefit from aid after they have moved to the towns and the cities". That is plainly not a measure that supports rural communities.

The report notes that budget expenditure on the special premium for beef and veal producers has increased from 52.5 million ecu in 1987 to almost 305 million ecu in 1991. The scheme was meant to compensate for the cut in the previously excessively generous buying-in price in order to save money, but the report states: Despite the situation of surplus production, the criteria for granting the special premium do nothing to curb As intrinsic incentive effect. The premium is not selective since there are no conditions laid down as to the type of holding that is eligible or as to the quality of the products, and worse still within the annual limit of 90 animals per holding, there is no provision for preventing increases in the number of male cattle in respect of which the premium is paid. The Court also notes that the Commission authorised an exemption from that limit in France without any legal basis. The Commission has said that it will re-examine that issue. I should be grateful if the Paymaster General would give us more information on that subject, as it seems to be a clear instance of favourable treatment to one member state not being enjoyed by others.

In paragraph 7.56, the Commission states that many of the concerns, including those about the beef and veal premium, have been met by reform of the common agricultural policy adopted by the Council in 1992. I question whether anyone can rest easy on any of the issues. We must underline the importance of constant review arid changes in the means by which we work towards achieving the objectives of article 39 of the European Community treaty, which stated that, while we should aim to achieve a fair standard of living for the agricultural community", we must be aware of the very real need to increase agricultural productivity by promoting technical progress and by ensuring rational development of agricultural production and the optimum utilisation of factors of production. There must be a much more radical reform of the common agricultural policy. Nothing less will do.

There are other examples of irregularities and curiosities in the report. The court questioned the legitimacy in the United Kingdom of the administration of the sheep annual premium scheme, and provided an extraordinary example. Six shepherds with no more than eight sheep each formed a group with a limited company to claim for 6,024 sheep, and were awarded full payment for them. I have heard of people counting sheep, but that is ridiculous. I welcome the court's work in bringing that to light, thereby ensuring that the rules have been tightened to prevent such practices.

The report contains more worrying examples of vested interests conspiring to misuse EC taxpayers' money. It states that work on the olive cultivation register is bogged down in Greece, blocked by a lack of funds in Portugal, and behind schedule in Spain. It also says that spot checks are limited. Such a lack of information causes severe problems. In Corfu, flat rate aid was paid on three times the amount of olive oil that was produced.

Wine-growing measures financed by the agricultural guidance fund also attracted criticism. The report says that the simultaneous use of two opposing methods—premiums for replanting and for the final grubbing up of vines to achieve market equalibrium—was illogical. It states that wine growers using land of identical quality may choose between one Community aid to replant their vines and another for their final grubbing up. One wonders where the guidance element in the work of the EC agricultural guidance and guarantee fund is to be found.

The report says that there is some inconsistency in promoting measures which increase production capacity in a market that is in constant imbalance because of plentiful supply and constantly falling demand, while maintaining the possibility of distilling surplus quantities.

My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) spoke about the court's comments on common fisheries and the seas. It questioned the operation of withdrawal premiums to compensate for monetary abstention from profitable fishing, supposedly to encourage conservation of fish stocks. The report says that compensation has been paid in Portugal for days when no fishing would be carried out anyway thus adding about 40 per cent. to the European taxpayers' contribution. The report also says: the amount of the temporary withdrawal premiums is not attractive enough to dissuade fishermen from carrying out fishing activities at times when it is possible to fish for the most profitable species—which are the ones that are threatened by overfishing. According to the Court, 40 per cent. of expenditure on temporary withdrawal premiums subsidises traditionally low periods of fishing activity.

Dr. Godman

I should like to ask my hon. Friend about what I call the Portugese fiddle. Is he confident that the Maastricht treaty, if it is ever resuscitated by the Danish people, will lead to a diminution of such frauds? Does he agree that it is more likely that the Maastricht treaty will increase fraud?

Mr. Smith

The provisions in Maastricht for enhancing the status and powers of the Court of Auditors and putting stronger injunctions on member states and the Community to secure value for money in the Community's programme should help. However, as I said earlier, more determined action is required. The British Government, through the Council of Ministers, should be calling for the schemes which are most open to abuse to be threatened with closure unless the abuses are ended. Some of those programmes required radical reform.

Sir Teddy Taylor

May I point out that the British Government have no power to do anything except ask?

Mr. Smith

The British Government have the power to raise the issue in the Council of Ministers. The Minister said that these matters were pursued during the British presidency. I share the scepticism of hon. Members who believe that member Governments wanting those abuses stamped out must take a firm stand.

Dr. Godman

There is a discrepancy in the Maastricht treaty in the way in which the two courts—the European Court of Justice and the Court of Auditors—have been treated. The European Court of Justice will have formidable powers, particularly in imposing sanctions against recalcitrant member states, but no such equivalent powers have been given to the Court of Auditors.

Mr. Smith

As I said earlier, the powers of the Court of Auditors would certainly be strengthened by Maastricht. It would be required to provide a statement of assurance on the reliability of the Community's accounts and there would be an explicit responsibility on member states to tackle fraud. As we have said on other occasions, the treaty is a framework. What policies are initiated and pursued through that framework is a matter of political will.

We are in favour of tougher action to stamp out abuses, including the 5 million ecu of movable property which was unaccounted for in the European Parliament. Our colleagues there will need to look into that before effectively discharging themselves from the censure of the auditors' report.

The final, and perhaps most disturbing, items on the list of abuses as they involve taking food out of the mouths of starving children, are the failings in the food aid programmes to the former Soviet Union, Bulgaria and Romania. As well as identifying appalling instances of mismanagement, the court questioned the practice of charging that to the agricultural budget.

There are a number of disturbing examples of how things went badly wrong. For example, the Soviet authorities gave the Commission a list of beneficiaries. The Commission did not specify exact destinations when making the individual transportation contracts. The report states that, as a consequence, the German Red Cross discovered that some organisations they chose to deliver to had already received deliveries from the French Red Cross and could not store any more items. The Commission accepted alternative destinations …and met the consequential increase in transport costs from 262 ecu per tonne to 392.39 ecu per tonne. In February 1992, of the 79,500 tonnes for which the Commission had to organise transport, only 44,000 tonnes had been taken over by the transporters. The remainder was costing the Community taxpayers storage charges, because dates of final delivery had not been properly specified in the contracts with the transporters.

It is also appalling to read about 740 tonnes of skimmed milk powder delivered to Bulgaria and subsequently sold for foreign currency on the Egyptian market, using a Greek middle man. So blatant was the fraud that they did not even bother changing the packaging before it went on sale.

The House should commend the work of the Court of Auditors in bringing all that to light. While it would be wrong to blame the Commission for all the irregularities uncovered, some of which are clearly the result of member states and agencies not getting their act together, it would be equally wrong to accept the Commission's grudging response to some of those very serious matters. It is not good enough for it to say, as it does on page 322: The Commission agrees that some difficulties arose in the implementation of these schemes of emergency aid to Eastern Europe"— an understatement if ever there was one. It then went on: The Commission does not agree with the Court's accusations of a lack of transparency and insufficient controls on the operations. It is plain that there were not sufficient controls on the operations.

Still less is it acceptable for the Commission to accuse the court, as it was reported as doing in The Guardian on 27 November, of making observations and a recommendation relating directly to the policy goals and content of Community action. It is the job of a proper audit not merely to check that the accounts add up—and it is clear from what I have said and from what the auditors were quoted in that article as saying that in many of those programmes the figures did not add up—but to assess whether the programmes and procedures pursued were actually geared, and geared consistently, to the objectives set by Community laws, regulations and policies.

I therefore support what the Government say in the explanatory memorandum about the importance of a rolling action programme to tackle fraud, improvements to financial control, and better co-ordination by the Commission and between member states. However, I believe that more needs to be done. After all, for the past 14 years, the Government have been sitting on the Council of Ministers. They have seen a succession of reports, a number of which have raised irregularities and frauds as blatant as those in the report before us. As well as handing out their share of criticism, the Government should take their share of responsibility, in that the Council is responsible for overseeing the Commission and for setting the direction of Community policy.

Does the Paymaster General undertake that, both on the instances cited in the report that relate to the United Kingdom and on the broader criticism of the various programmes in the report, he will report back to the House on the progress, or otherwise, being made with actions to eliminate abuse? There has been insufficient follow-up and tough action on many of the abuses and irregularities that the Court of Auditors has identified. The House and the people should have the right to know exactly what action is being taken by the British Government to stamp out such grotesque abuses of the Community budget.

Will the right hon. Gentleman comment on additionality, which the auditors say in paragraph 599 is still riot sufficiently verifiable? Can he assure the House that the Government will be able to satisfy the Commission on additionality so that the up to £1 billion in European Community regional aid grant which has been put at risk by delays in matching funding for projects for Britain's most depressed regions, can go ahead?

Can the right hon. Gentleman also tell us the position on the accumulated devaluation effect on Britain's allocation from the European social fund, amounting over the period of 1990 to 1992 to some £82 million? Will that extra money be spent as it should be for the benefit of the long-term unemployed and our depressed regions, or will it be a repeat of the British presidency, when the Government forced out of the Edinburgh summit the proposal for £160 million expenditure on training for those who had lost their jobs or whose jobs were at risk, despite support for the project by the other 11 member states?

When Community resources appear to have been misappropriated elsewhere, it would be an indefensible irony if resources to which Britain's depressed regions and unemployed people were legitimately fully entitled were to be denied them—not, on this occasion, by fraud in the rest of the EC but by the Government's dogma and reluctance to act.

11.35 pm

Mr. Tim Smith (Beaconsfield)

It has taken us about 500 years to develop a satisfactory system of audit of public expenditure in the United Kingdom, and our present system goes back 130 years. Against that background, it is not altogether surprising that the European Community institutions are still effectively in their infancy when it comes to dealing with audit. I agree with the hon. Member for Oxford, East (Mr. Smith) that the report and its predecessors leave much to be desired.

We know from our experience of audit in the United Kingdom that there is financial and regularity audit and, secondly, value for money audit. On both counts, it is clear that the EC institutions, and the Commission especially, fail completely to meet the standards that we as taxpayers are entitled to expect. First, on financial and regularity audit, it is clear that there is widespread fraud throughout the Community. There are not the standards that one would expect. Secondly, on value for money audit, it is clear that there are not the systems in place for assessing value for money. Criteria are not set out before projects are developed. Systems are not in place for assessing projects after projects have been executed. There are fundamental concerns which have been raised year after year.

There are two basic reasons for the concerns. First, there is no great incentive for individual member states to make significant improvements. If a state tackles its own back yard, so to speak, the result will be a reduced amount of money from the Community. In other words, there is a disincentive to tackle the issues. Secondly, there is still a less than satisfactory system of accountability. If we compare the system of accountability of the Commission to the Council of Ministers and the European Parliament with the system which prevails in the United Kingdom —we have a National Audit Office which reports to the Public Accounts Committee, which then submits to tough questioning the accounting officers responsible for public expenditure—we see that the system in the Community leaves much to be desired. We must improve the systems of accountability, and I do not suppose that that will be easy.

It is not a coincidence, for example, that the number of cases of reported fraud was higher from the United Kingdom than from any other member state. That merely shows that we have a reasonably effective system. Unfortunately, the systems in other member states leaves much to be desired. It is almost certain that the prevalence of fraud in other member states is much greater, which shows that they are not very good at, or not especially interested in, trying to detect it.

I think that it is down to the European Parliament to take a greater interest in these matters. It is impossible for us, in a 90-minute debate, to give proper consideration to these problems. The report before us goes into great detail on all the different areas of Community expenditure. The report should be considered paragraph by paragraph by the Budget Commitees of the European Parliament. The Committees should call before them the Commissioners responsible for the various heads of expenditure and keep them there until they give satisfactory replies to questions about who was responsible and how matters will be put right in future. That seems to be the right forum.

I have given some thought, as have other members of the Public Accounts Committee in the past, to whether we could carry out the function in the United Kingdom, but I have come to the conclusion that that is not possible. The European Parliament, to which the Commission is accountable, should take a greater interest in these matters. That is why I ask my right hon. Friend the Minister what changes have been made in the Maastricht treaty to try to improve the system of financial management and accountability.

I am glad to hear that the constitutional position of the Court of Auditors will be reinforced and that the European Parliament is to be given an enhanced role. But when the treaty is ratified we shall have to see how that works out in practice. That requires not just a statement of good intent but the necessary political will on the part of those involved. I am not yet persuaded that Members of the European Parliament take all this sufficiently seriously. British taxpayers have a right to expect that money spent on their behalf by the European Commission is spent in an honest straightforward manner in accordance with the purposes for which it was voted.

The hon. Member for Oxford, East mentioned additionally. That is a difficult issue. It is difficult to demonstrate additionality when it comes to expenditure in the regions. Usually, if there is investment in a particular region, it simply means that investment in another area has been displaced. One is simply moving investment around the country or around the Community. The Department of Trade and Industry at least has some objective criteria for determining what additionality means and tries to assess projects on that basis before approving them, but it is clear from the report that there are no similar arrangements in the EC.

Mr. Alan Meale (Mansfield)

Surely the hon. Gentleman is not saying that EC funds coming into Britain should be distributed in the way that the Government have attempted. For example, RECHAR or RETEX funding should be going not to the south of England but to areas which have lost an amazing number of jobs in coal, steel and textiles. It is illogical for the Government to come forward with such a suggestion.

Mr. Smith

I was not suggesting that such money should come to the south of England, although the rate of unemployment in some areas there is now higher than in some of the regions. I was simply pointing out that when in the past the Public Accounts Committee has considered regional expenditure—I recall a recent report on expenditure in Wales—we have naturally cross-examined the accounting officer, the permanent secretary from the Welsh Office, on the important question of additionality.

It should be possible to show that new jobs have been created and that jobs are not simply being lost elsewhere in the United Kingdom. That is what additionality means, and it is important in a United Kingdom context, and in the context of European regional expenditure. That is why the Court of Auditors has drawn attention to it.

Mr. Meale

I was trying to say that RECHAR provided money from Europe for areas which had lost jobs in coal mining. RETEX, similarly, provided money for areas in Britain which had lost textile jobs. The Department of Trade and Industry has redirected that money to different areas for different jobs in different circumstances where there had been no coal mining or textile jobs in the past. That cannot be logical or correct.

Mr. Smith

I understand that, but I do not wish to be diverted down that road because it is not relevant to the report that we are discussing. The hon. Gentleman may well be right. 1 know nothing of that.

The point that I was discussing was the question of additionality in the context of the report. It is a good example of the way in which the Commission needs to tighten up on value for money and fraud. The way to achieve that is to try to enhance accountability by persuading the European Parliament to take a greater interest in these issues.

11.43 pm

Mr. Nigel Spearing (Newham, South)

The hon. Member for Beaconsfield (Mr. Smith) has mentioned two important institutions, domestic and European, in this scene—the Public Accounts Committee and the European Parliament and, in particular, its Committee concerned with this topic. I shall mention both of those in the course of my remarks.

I want first to put on record a sense of dissatisfaction that it was Her Majesty's Government's intention that, however events proceeded this evening—and they have been somewhat unusual—there would be only an hour and a half for this debate. That was clearly the Government's intention in the business motion on last Friday's Order Paper. By chance, it was frustrated—but still only one and a half hours is available for this debate. That would have remained the case if the Government had been successful and the debate had started at around 7 pm. I regard that as unhealthy. As my hon. Friend the Member for Oxford, East (Mr. Smith) clearly showed, the report contains many items which require ventilation and some expression of dissatisfaction.

That is even more important than some hon. Members described. The question of taxation and the authorisation of its expenditure—without any question of its value for money—is a central feature of any Government. It is the responsibility of any Parliament to ensure that it is done correctly. It is also at the centre of any democracy. The European Community claims that it prides itself on being a democracy. Unfortunately, we do not have much control over the passage of money from the United Kingdom to the European Community, which the Court of Auditors oversees by way of its own resources. By virtue of the European Communities Act 1972, the Treasury hands over so much per year from the three main resources that the Community has at its disposal.

That is decided from time to time by the Economic and Finance Council, and the framework is changed roughly every five years. That expenditure does not come before the House and is not part of the Budget, although it is part of the public expenditure Estimates that we see from time to time. The House is cut out of that process.

The House is also cut out of determining how that money is spent, other than by our representatives in the respective Council. The money is spent in a number of controversial ways, but I particularly want to draw the attention of the House to the way in which that money is spent irregularly and the consequential effects, which may be political.

We know from our history that the way in which public money is distributed and those who are to benefit from it are highly political matters. In a democracy, only when Parliament and the elected representatives of those who provide the money have complete control of it can proper democracy and accountability exist. We rely for that on the Public Accounts Committee. In the 18th century and early 19th century, the constitutional position was that those in power got hold of money through patronage, and distributed it in various ways. The Gladstonian reforms made us all respectable.

The Public Accounts Committee tries to ensure that public money is spent on the authorised purpose for which it was raised, appropriated and allocated by the House. The PAC has in its hands at least some sanction. The prospect of being summoned before the PAC or being investigated by the Comptroller and Auditor General—now an Officer of the House—has some effect, although we still have problems and read about them from time to time.

Any person—a Minister, official, or anyone else in receipt of public funds—knows of the existence of the long arm of the Comptroller and Auditor General, with the backup of the Public Accounts Committee and the threat of exposure. What is the equivalent in the Community, which has vast sums at its disposal and complex accounting because of the ecu and having to deal with different Governments and agencies in different languages? Year after year, the Court of Auditors produces a report of which we always say in our debates that if only one tenth of it applied to any one organisation, it would be given a qualification by any auditor in this country. That has been going on for years. We debate the report, and say the same things, year after year.

What happens to the report? The Commission comments on it, and then it goes to the Council. I must express some dissatisfaction. The Council acts as referee: after the national Governments have taken on board all the contents of the report, the Council then examines the Commission's responses. That is fair enough. Auditors often ask for explanations in the course of their work; they are entitled to ask questions, and many of the replies may be satisfactory—as, indeed, some of the Commission's replies may be. But what happens next?

I understand that the various member Governments and their respective Treasuries then reach some consensus on how far the Commission has given satisfaction in answering the questions raised by the Court of Auditors. When they think that the Court of Auditors is right, they should say so; when they think that the Commission has answered its questions satisfactorily, they are not drawn to the Council's attention in its discharge meeting.

As I understand it, the rights of the Public Accounts Committee within ECOFIN—the Council of Finance Ministers, which is surely the equivalent of the PAC—are concentrated in one person, the Paymaster General. He is the PAC's equivalent, but only collectively within the Council, which will meet on 15 March and reach a final conclusion—equivalent, perhaps, to a report that we might receive from the PAC.

Sir John Cope

The hon. Gentleman is right: I expect to represent the Government at a meeting of ECOFIN on Monday. I think, however, that the nearest equivalent to the PAC is the European Parliament's Budgetary Control Committee.

Mr. Spearing

In a sense, the Paymaster General may be correct: that is where the buck stops. The Budgetary Control Committee receives a recommendation, which will be drawn up by ECOFIN on 15 March—we have a draft, or the indication of a draft, before us—and will then decide what to do. I assume that the Committee has powers to summon witnesses, to make reports and to reach some sort of conclusion. Perhaps it should issue the final judgment on the 1992 accounts.

I am rather disappointed with what is before us as I had hoped that we would be able to discuss some sort of draft recommendation. We have the explanatory memorandum, dated 25 February, which the Paymaster General has signed. In paragraph 3, he says: In its Recommendation the Council has, in particular"— followed by eight paragraphs. I shall not take up the House's time by reading them out, but they are a poor set of paragraphs and a shadow of what we read in the report of the Court of Auditors. I shall not embarrass the Paymaster General—or shall I?—by reading out the formulations. I hope that they were not drafted in our own Treasury, although I have no doubt that Sir Humphrey would be very proud of some of the sentences.

I will give a few samples. For instance, the Council emphasised the importance it attaches to funds being administered in accordance with Article 2 of the Financial Regulation and reiterated its attachment to monitoring and ex-post and ex-ante assessment". Of course. That is part of the job, is it not? There is nothing new about that. The Council also stressed the importance it attaches to the Court of Auditors report as a tool to improve the implementation of the Community budget. That is what is going on in the so-called discharge. I see nothing in this draft for that European Parliament Committee to get its teeth into. I know that it can look at the report of the Court of Auditors, but it ought to take its cue from the Council of Ministers' so-called discharge, because I do not believe that it is a discharge—frankly, it is a disgrace.

Hon. Members may ask me what it is upon which I base that assertion. Let us look at some of the better reports to be found in the other document that the Paymaster General signed. He has therefore done something for us. I refer to the preceding memorandum dated 5 February. Under the heading "Introduction", we read: The Court identifies two main reasons for deficiencies in financial management and control. First, they may be due to inadequately drafted legislation. That is just it. Many of the regulations that come before us are incapable of providing the hooks, knobs and indicators which allow auditors to get to work. It is no use having an auditor unless he has something to look at.

The memorandum says: some of the practices used by the Commission to collect revenue arc, in the Court's view, contrary to the Financial Regulation". That does not appear in the Council's conclusions, does it? It goes on to say: there are deficiencies in the supporting documentation submitted by member states in respect of agricultural guarantee expenditure. The Court of Auditors found that, because records for VAT and GNP own resources are incomplete, transactions cannot easily be traced in the accounts. It sounds like a qualified report all the way through, does it not?

In paragraph 21 we read: The Court noted that a substantial proportion of the aid for the temporary laying up of fishing capacity had been granted for periods which are unfavourable for fishing". That paragraph has already been quoted by my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman). I shall therefore leave it to one side.

In paragraph 45 we see: The Court noted that in the absence of a principal authorising or accounting officer a number of disbursements under the Fourth Lomé Convention had been made illegally …(ii) bank guarantees covering advances paid to contractors do not appear in the financial statements; …(v) because of the transfer to the new computerised accounting system, it is not possible to reconcile 20 per cent. of the records for the fifth and sixth EDFs with end-year balances.

Dr. Godman

It has been said several times that the Maastricht treaty enhances the status of the Court of Auditors. If that is so, would that enhanced status meet some of my hon. Friend's criticisms?

Mr. Spearing

I am afraid that my hon. Friend has caught me there, rather like the Paymaster General. I should have looked at that famous treaty just to see the extent to which the effective power of the Court of Auditors is increased, other than by being brought formally into the institutional family, of which it was formerly perhaps an associate member. If I looked at those articles, I suspect that I should need the help of persons who have been members of the Court of Auditors to understand them. British representatives have been very active in the Court of Auditors. Only they would be able to make the proper evaluation for which my hon. Friend correctly asks. That is perhaps beyond the powers of any hon. Member, but Treasury officials might be able to make such an evaluation.

I intend to refer to two sums of money which are of particular interest. One relates to the European Parliament. In the third volume of the draft general budget for 1993, we see, under title 3, a sum of about £13 million for what is called, under article item 3706, political activities and, under article item 3708, information about the role and work of the political groups inside the European Parliament. This country is debating whether public funds should be used to support political parties. It is less well known in this country that that already applies to the European Parliament. I am wondering to what extent the European Court of Auditors can have a look at that.

I conclude by mentioning a subject which has not been raised so far. It involves an entry by the Court of Auditors in respect of some moneys granted in support of other organisations. I refer to page 465 of the voluminous report consisting of the Commission's replies, which mentions a grant for the European Year of Tourism 1990. I cannot remember very much about it, but I should have thought that there was already plenty of tourism within Europe without the Community having to stimulate it further. However, we had a European year of tourism, which went badly wrong.

The European Parliament asked the Court of Auditors to examine the organisation. The journal states that, for the objectives of the EYT to be met, there had to be some co-ordinated activity between the Community, the Member States and private organisations …Three types of activity were planned". However, they did not happen.

Even more important, the resources allocated to the EYT turned out to be "7.7 Mio ECU", which I take to be 7.7 million ecu. If that is not the case, we shall no doubt hear from the Paymaster General. That sum was allocated in Parts A and B of the 1989 and 1990 budgets …whereas Council Decision 89/46/EEC had estimated the cost at 5 Mio ECU. Presumably, 5 million ecu, which I suppose is about £3 million or £4 million, was allocated to that particular effort, which went 50 per cent. over budget.

However, it gets worse. Subcontractors were involved, and all sorts of things went wrong. I shall not detail them all, but I quote paragraph 19.68 which states: The Commission itself merely participated in events organized by third parties and took no initiative of its own regarding the EYT. As a result it failed to organise any sort of objective survey to evaluate the impact of the EYT, both on public opinion and on professionals in the tourist industry." I do not know what the impact was meant to be. The hon. Member for Beaconsfield (Mr. Smith) mentioned value for money. The project does not seem to have done very well, as 7 million ecu, or at least £5 million, was spent on it. I suggest to the Paymaster General that that fact could be added to the observations and recommendations if the Council wishes to discharge the accounts of which this matter is part.

12.2 am

Sir Teddy Taylor (Southend, East)

1 hope that the Government will accept that it is an insult to the taxpayer and to the Court of Auditors that a handful of hon. Members are discussing this enormous report at 12.2 am, when no one will notice, hear or care.

It is also frightful to realise that the report contains a multitude of frauds, overspending and illegal spending. With reference to illegality, page 91 states: The Court noted that in the case of France the Commission has authorized, without any legal basis, an exemption from the limit of 90 eligible animals per year", which is one of the key new agricultural issues. It cost a fortune. The Commission's response was that it would re-examine the issue.

Member states are acting illegally. Page 111 reveals that, in the case of a Portuguese sardine fishery, regulations were interpreted in such a way as to add 40 per cent. to the European taxpayers' contribution.

All the estimates by the Commission about the great savings that would be made seem to fade away. Page 54 outlines a case in which it was anticipated that "227 Mio ECU" was to be saved because of a remarkable change in policy, but it faded away.

There are further examples of crazy spending, of which the tobacco industry is a perfect one. Every year the expenditure increases on growing high tar tobacco and dumping it in the third world and in eastern Europe. Page 79 of the report says: over half of the maximum guaranteed quantity of the tobacco market receives a premium which is equivalent to 75 per cent. or more of the intervention price: 15 per cent. of this quantity receives a premium equivalent to 94 per cent. or more. The tragedy is that the scandals grow greater every year. Ministers know that—and we certainly have a most patient Paymaster General. The CAP is totally out of control, with the mountains breaking all the records and expenditure at an all-time high, so that the poor families in all constituencies are paying massive extra sums for their food.

The plain fact is that there is nothing that anyone can or will do about that. It is sad to see one of the most able and useful Treasury Ministers sitting on the Front Bench and hearing us talking about all those crazy injustices. They are nothing to laugh at. The poor people and the local authorities of Britain are being deprived of cash for things that are needed while money is being wasted and poured down the drain.

Mr. Meale

Does the hon. Gentleman not find it peculiar that senior officials of the legal profession should be found trying to account for a document that shows an enormous amount of illegal activity and wrong auditing?

Sir Teddy Taylor

There is massive illegal activity arid illegal spending, waste and fraud—and there is nothing that anyone can do about it. It is a tragedy that here we have an able Treasury Minister who will tell us that things are being examined—my hon. Friend the Member for Beaconsfield (Mr. Smith) even made the remarkable suggestion that the European Parliament could examine those activities. But so long as we have mad crazy policies based on artificial prices, nothing can effectively be done. If we found a way of blocking out graft and corruption in our country, another means would be found.

I could mention many cases, but I want to finish my speech quickly because of the pressure of time. I simply hope that Ministers will accept that there is nothing that we can do—that, sadly, the work of the Court of Auditors is wasted, apart from annoying people who read about the graft, corruption, fraud and waste. Nothing whatever can happen. The waste will increase, the fraud will increase and the mountains will increase—unless there is some way in which policy can be changed.

Briefly, in the one minute left to me, I simply add that there is nothing that we can do to change policy. I wish that the Government would accept that. There is no way in which the CAP, for example, can be reformed. We have talked about it year after year. New plans are brought forward all the time. But the same thing always happens. Remember Lady Thatcher's wonderful attempt to spend all the money to wipe out the food mountains and insist on strict budgetary controls? Although the strict controls were there, in the first year of operation the Commission —with the help of ECOFIN and even of a British representative—got round them by declaring a metric year of 10 months to ensure that it kept within the strict budgetary controls.

The tragedy is that Ministers and Members of Parliament are kidding themselves into thinking that there is some bright solution; some new committee or some new fraud department that we could set up. I wish that they would accept the plain fact that nothing can be done. Unfortunately, the organisation of the EC is such that problems tend not to be solved. The CAP is the perfect example.

I hope that, if the hard work of the Court of Auditors and its splendid reports prove anything to anyone, they will prove that we are wasting our time year after year when we say, "We hear that more exciting things are happening in the Commission and in the Council. There are more reports, more checks, and more frauds will be detected." Nothing can be done. Things will get worse, and more costly—and the poor people and the unemployed will suffer. Everyone is suffering. The CAP is one of the greatest scandals and protection rackets in the world. We are doing massive damage to the third world by dumping all the surpluses at artificial prices.

I simply wish that honest, decent Ministers—of which the Paymaster General is certainly one—would stand up and say, "I am sad about this; I think that it is a tragedy and a waste—but the Government and other hon. Members must work out how we can find a way of disengaging from those mad policies and stopping the waste." The only way in which we can stop the scandals and abuses is somehow to pull out from policies that can neve be, and will never be, resolved.

12.9 am

Sir John Cope

I realise that my hon. Friend the Member for Southend, East (Sir T. Taylor) thinks that there is no cure for any of the problems discussed this evening or for many other problems except for us to withdraw from the Community as it is now organised. I do not take that view. The problem of agriculture in the third world, to which my hon. Friend referred, would not be improved if we opted out of the EC. Nor am I prepared to agree with his judgment—to which he is entitled—that Ministers or the House should give up and say that the problem is insoluble.

I am not prepared to agree that nothing should be done. I accept that there are difficulties that we need to address and that we need to push our colleagues in the Council of Ministers. I accept that we need to ensure that the machinery of the Community is improved to deal with the problems that we have discussed and to which the report draws attention.

Dr. Godman

Will the Minister give way?

Sir John Cope

No. Many detailed points were raised and I shall try to deal with as many as I can. I shall write to hon. Members about detailed matters raised if necessary. I shall also forward a copy of the Hansard report of this evening's debate to Commissioner Schmidhuber, who is responsible for budgetary matters, to draw his attention to the strength of feeling among hon. Members of all parties about aspects of the budget and of its control.

There have been references to the control of finance in this country by the House. The mechanism in which hon. Members have much confidence, as I do, includes the Public Accounts Committee, with which we are all familiar. As hon. Members have rightly said, that mechanism has taken a long time to build up. The history of the Paymaster General's office reveals that some of my predecessors made enormous profits out of the post. From the point of view of my pockets, I am sorry that the traditions of the office have lapsed. For the past 150 years, from before Victorian times, such profits have not been possible for Paymasters General or for other Government officials. Gladstone improved the control mechanisms a good deal, but he did not start the process of tidying up the mess.

I intervened in the speech by the hon. Member for Newham, South (Mr. Spearing) to explain that the procedure is that the Council, as he rightly described, considers matters initially in detail through the Budget Committee of the Council, which is made up of Treasury or equivalent officials and which makes recommendations to Ministers—that is approximately the state at which we are now in respect of the 1990 report—after which the Council's recommendation is debated by Ministers. When duly passed, it goes on to the European Parliament.

The hon. Member for Newham, South read some extracts from the explanatory memorandum about the Council recommendations. The full Council recommendations run to 59 pages and can also be made available to the House. I know that the hon. Gentleman is extremely assiduous about looking at original documents. The explanatory memorandum is a brief summary, and I am sorry if it did not please him. The recommendations are far longer.

When the recommendations reach the European Parliament, the Court of Auditors' report goes to the Budgetary Control Committee—a different Committee from the Budget Committee—which is the nearest equivalent to the Public Accounts Committee. It starts with the Council's recommendation. In addition, obviously it considers the report of the Court of Auditors —nearly 500 pages—and the Commission's response. The relevant Commissioners give evidence to the Committee about the programmes in which they are interested. It has to decide whether or not to give a discharge, as it is called, to the budget for the year. So there are quite a number of democratic checks inserted in the process.

During the British presidency in the second half of last year, I had the benefit of appearing before the Budgetary Control Committee, something I had not done before. As a representative of the Council and not just of the United Kingdom, I attended meetings to try to explain some matters. Appearing before that Committee was not all that different from appearing before a Select Committee of the House.

The work of the Comptroller and Auditor General and the National Audit Office is substantially the same as that of the Court of Auditors. The Court has representatives of each member state, including the United Kingdom, obviously. Its job is to go through the detail and to produce a report. It produces not just the annual report but special reports when it considers them necessary.

Additionality and RECHAR were mentioned in the debate. Receipts have always enabled programmes to be higher than they would otherwise have been. There have been changes in the United Kingdom's presentation of receipts of the European regional development fund in the public expenditure figures. They were agreed last year and they will produce greater transparency so that there cannot be accusations such as there have been in the past, and we hope that they will encourage a wider range of applications, helping to increase value for money. The Commission accepts that full provision has been made for RECHAR receipts—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 ( Exempted business).

The House proceeded to a Division—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

I have decided to ask for an investigation of the delay in the No Lobby.

The House divided: Ayes 95, Noes 19.

Division No. 192]	[12.17 am
AYES
Ainsworth, Peter (East Surrey)	Arnold, Jacques (Gravesham)
Alexander, Richard	Atkinson, Peter (Hexham)
Alton, David	Baker, Nicholas (Dorset North)
Amess, David	Bates, Michael
Arbuthnot, James	Blackburn, Dr John G.

Bowis, John	Lord, Michael
Brandreth, Gyles	Luff, Peter
Brazier, Julian	Lyell, Rt Hon Sir Nicholas
Bright, Graham	MacKay, Andrew
Browning, Mrs. Angela	Maclean, David
Burt, Alistair	Malone, Gerald
Carrington, Matthew	Merchant, Piers
Cash, William	Mitchell, Andrew (Gedling)
Chapman, Sydney	Neubert, Sir Michael
Clappison, James	Nicholls, Patrick
Clifton-Brown, Geoffrey	Page, Richard
Coombs, Simon (Swindon)	Patnick, Irvine
Cope, Rt Hon Sir John	Redwood, John
Currie, Mrs Edwina (S D'by'ire)	Richards, Rod
Davis, David (Boothferry)	Robertson, Raymond (Ab'd'n S)
Devlin, Tim	Robinson, Mark (Somerton)
Dover, Den	Ryder, Rt Hon Richard
Duncan, Alan	Shaw, David (Dover)
Duncan-Smith, Iain	Smith, Tim (Beaconsfield)
Dykes, Hugh	Spencer, Sir Derek
Elletson, Harold	Spink, Dr Robert
Evans, Jonathan (Brecon)	Sproat, Iain
Fabricant, Michael	Steel, Rt Hon Sir David
Fenner, Dame Peggy	Steen, Anthony
Fishburn, Dudley	Stephen, Michael
Forsyth, Michael (Stirling)	Streeter, Gary
Freeman, Roger	Sykes, John
Gallie, Phil	Taylor, Ian (Esher)
Hague, William	Thomason, Roy
Harris, David	Thurnham, Peter
Haselhurst, Alan	Trend, Michael
Heald, Oliver	Twinn, Dr Ian
Heathcoat-Amory, David	Tyler, Paul
Hunt, Sir John (Ravensbourne)	Waterson, Nigel
Jack, Michael	Wheeler, Rt Hon Sir John
Jones, Robert B. (W Hertfdshr)	Whittingdale, John
Kilfedder, Sir James	Widdecombe, Ann
Kirkwood, Archy	Willetts, David
Knight, Greg (Derby N)	Winterton, Nicholas (Macc'f'ld)
Kynoch, George (Kincardine)	Wood, Timothy
Lait, Mrs Jacqui
Legg, Barry	Tellers for the Ayes:
Lennox-Boyd, Mark	Mr. Timothy Kirkhope and
Lidington, David	Mr. Robert C. Hughes.
Lightbown, David
NOES
Barnes, Harry	Kilfoyle, Peter
Beggs, Roy	Martin, Michael J. (Springburn)
Campbell-Savours, D. N.	Meale, Alan
Cann, Jamie	Ross, William (E Londonderry)
Connarty, Michael	Skinner, Dennis
Cunliffe, Lawrence	Spearing, Nigel
Davidson, Ian	Wise, Audrey
Dixon, Don
Godman, Dr Norman A.	Tellers for the Noes:
Graham, Thomas	Mr. Bob Cryer and
Howarth, George (Knowsley N)	Mr. Jimmy Hood.

Question accordingly agreed to.

Resolved, That this House takes note of the Court of Auditors' Report concerning the financial year 1991 together with the institutions' replies (OJ No. C330, Volume 35) and the unnumbered Explanatory Memorandum submitted by HM Treasury on 25th February 1993 relating to the draft Council Recommendation to the European Parliament on the discharge of the General Budget of the European Communities for the financial year 1991.