European Commission (Hansard, 16 March 1999)

§ The Prime Minister (Mr. Tony Blair)
I should like to make a statement today on the report of the Committee of Independent Experts, and the resignation last night of Jacques Santer and his 19 colleagues in the European Commission.
The Committee of Independent Experts, set up last January on a motion from the Labour Group of the European Parliament to investigate allegations of fraud and mismanagement, reported yesterday. It is a damning report. It catalogues in key areas a culture of complacency and lack of accountability, and in some cases nepotism, that is unacceptable. The report could not be more clear-cut. It has revealed systemic failings in the Commission which have been tolerated for far too long.
It was absolutely right that the Commission resigned en masse. The President of the Commission should leave as soon as reasonably and practically possible, and a new President should take his place. The Commission should stay only in a caretaker role until a new Commission is appointed.
There is no criticism of the two British Commissioners. Indeed, they played a key role in bringing this issue to a head, and I believe that they should carry on.
Above all, the appointment of a new President and Commission should be the opportunity to push through root-and-branch reform of the Commission, its mandate and its method of operation. I will, of course, discuss these issues fully with Chancellor Schröder, the present European Union President, when I see him later today.
The new President of the Commission must be a political heavyweight, capable of providing the Commission with leadership and authority.
Jacques Santer is by no means solely responsible for this situation. Indeed, to be fair to him, he has instituted many changes of a worthwhile nature. Many of the issues revealed by the report predate his appointment. But I will be blunt: we cannot have the next President decided in the same way as the last, debating the narrow interests of one country or another. The top jobs, not just in the Commission, but throughout the European institutions, should go to the top people. Merit, and merit alone, should decide. We need the best person for the job of President, and we Heads of Government should make it clear that the Commission President operates under a mandate for reform and is a thorough-going reformer.
I would like Heads of Government, in the manner that we proposed last year at the conclusion of our presidency, to give the new Commission—with due involvement on the part of the European Parliament—a specific statement of what we believe the aims and mission of the new Commission should be: a new contract between the Commission and the Council. It should set a clear new course for a Europe of reform and change.
The changes suggested by the committee of inquiry yesterday are just the first step. In the short term, reform must include at least the following: a complete overhaul of the approval and auditing procedures for financial control; a new system for financial management and spending programmes; an entirely new procedure for the awarding of contracts for the provision of services with a new management system to oversee it; reworking of the 888 whole disciplinary procedure so that staff in the Commission know exactly what is expected of them and what will happen if they fall short of those expectations; and a new system of accountability in the bureaucracy of the Commission so that each individual holding a position of responsibility is fully accountable for the budget and the measures that he or she manages.
In addition, we also need an entirely new framework for fighting fraud and financial irregularities. We have long been advocates of the appointment of an independent fraud investigation office which has full access to documents and officials, and the powers that it needs. That appointment should now be made.
The Committee of Independent Experts will report again soon with further recommendations on reform. We should implement them. In the longer term, we should put in place, as we argued at Amsterdam during our presidency and ever since, a new structure for the Commission, a better process of decision making, and a system of accountability that recognises the importance of connecting the people of Europe more closely to the decisions that affect them.
The inquiry's report has revealed a sad catalogue of negligence and mismanagement. There will, no doubt, be those who see this as just another chance to bash Europe. Intelligently seen, this is, in fact, an opportunity to make changes that many of us believe and have argued are long overdue. It is our responsibility now to use this crisis to ensure that the standards of management and public administration in the European institutions are as high as we expect them to be in national and regional governments in Europe. Let us seize that opportunity, therefore, and use it well.

§ Mr. William Hague (Richmond, Yorks)
Yesterday's report from the inquiry on fraud could not have been more devastating. It refers to the European Commission having lost control of the administration. It says that it is difficult to find anyone who has even the slightest sense of responsibility", and that no supervision was exercised and a state within a state was allowed to develop. It is welcome to hear the Prime Minister speak of root-and-branch reform—although we are learning, week by week, to judge him by his actions and not by his words—but does he accept that a more drastic overhaul of the Commission is now required than has ever before been envisaged; more important still, that the European Commission needs to do less rather than more; and that what it does it must do better?
Will the Prime Minister ensure that the national Governments now take an immediate grip of this situation, if necessary at an emergency summit within days, to restore public confidence in European institutions and to implement radical change? Will he consider adding to the list of proposals that he made a few moments ago: a binding code of conduct for the appointment of senior officials to prevent personal appointments by Commissioners and to stamp out nepotism in the Commission; an agreement that the European Parliament should be able to sack individual Commissioners who are guilty of misconduct; strengthened and publicly available 889 declarations of financial interest by Commissioners and by their senior staff; and the immediate introduction of a systematic career management system for senior Commission staff, so that they rotate between responsibilities, as would be normal in any other Administration?
Does the Prime Minister agree that Jacques Santer should be relieved of all responsibilities with immediate effect, leave his office today and not return to it? While supporting the idea of those Commissioners not directly implicated by the report serving out their terms as an interim measure, can I specifically ask the Prime Minister to agree that there should be a total clear-out of the existing Commission and an entirely new set of Commissioners appointed?
Is there not an even bigger issue and more important challenge now, which is that it is time to change the whole culture that leads the European Commission and the European Union to try to do too much and to interfere too often? The report makes it clear that the attempts of the Commission to implement a humanitarian aid budget, a policy on tourism and a highly expensive programme of aid to the Mediterranean led to massive fraud and irregularities that the Commission were unable or unwilling to deal with. Is that not what comes of trying to do too much? Is not the wrong answer to recruit more staff and the right answer to reduce the Commission's range of activities?
This is surely the heart of the matter. Does the Prime Minister recognise that a strong case already exists, further strengthened by this report, for cutting back on what the Commission does and letting national Governments do it instead? Will he accept that there is now considerable evidence that, in almost every case, bilateral aid provides better value for money than EU aid programmes? Is there not a strong case for the EU not to have an aid programme, but for those resources to be spent instead by member states?
Would it not be better, instead of the Commission trying to run a fisheries policy for every country, for local or national fishing industries to have control over the stock of their fisheries, while recognising the traditional rights of other countries?
Should not the Commission be doing less in those and in other ways, so that it might deal more effectively with the real priorities of enlargement of the European Union and completion of the single market? Is it not time not only for a new contract, but a new direction?
Will the Prime Minister now come clean and give straight answers to some specific questions on events of the past few months? Will he confirm that, only yesterday, at the Economic and Finance Council, the Chancellor signed up to creation of a fraud investigation office that, far from being independent of the Commission, would come under the control of the Commission, in directorate F?
Will the Prime Minister confirm that yesterday—on the very day the report was produced—the Chancellor thought it right, at ECOFIN, to sign off the 1997 European Union accounts, whereas the European Parliament itself has refused to do so?
Will the Prime Minister now give the House an answer about what instructions and advice he gave to Pauline Green, the Labour leader of the Socialists in the European 890 Parliament, before Labour Members of the European Parliament let the Commission off the hook two months ago, after the revelations?
Why was the leader of the Socialist group, Pauline Green, to be seen celebrating that event with Jacques Santer, with champagne, as recorded on German television, rather doing her job of holding the Commission to account?
When the Prime Minister talks about what he will do, will he undertake, this time, to deliver some action instead of some talk? His spokesman has said that the Commission is like Lambeth council in the '80s, and the analogy is not a bad one—fraud and mismanagement resulting from a group of politicians trying to do too much and interfere too much, while the Labour party lets them do it. Is it not time to ensure not only that they clean up their act, but that the Commission is doing less, and doing it better?

§ The Prime Minister
I should start by reminding the right hon. Gentleman who it was who appointed Mr. Santer. Which country, under which Government, blocked each one of the alternative 15 candidates, until only Mr. Santer was left? It was the Government under whom he was a Cabinet member. If he disputes that, I should read what the former Prime Minister said at the time. He said: What matters is how competently and efficiently the new President is going to run the Commission. I have worked with Jacques Santer for … a number of years. I know his virtues and his capacity to carry matters forward. The current Conservative finance spokesman—the right hon. Member for Wells (Mr. Heathcoat-Amory)—when he was a Treasury Minister, said: We are happy with Mr. Santer and we wish him well. He shows every sign, based on his record, of running an efficient and effective Commission. We have from the Conservative party itself this quote about Mr. Santer: He is the right man in the right place at the right time". So let us have no more of trying to blame this Government for any shortcomings in the Commission. The Conservative party has something of a habit of managing to appoint compromise candidates who seem like a good idea at the time, but do not quite work out in the longer term.
As for the irregularities that the right hon. Gentleman says that the Labour Government have let happen, if he reads the report, he will see that the vast majority of irregularities happened before we were even elected—they happened when the Conservative party was in government. The fact is that the current proposals have been made precisely because a committee of inquiry was established under a motion tabled by the Labour group in the European Parliament.
The right hon. Gentleman made some other extraordinary comments. He was wrong, for example, in his comment on the Chancellor, who made it quite clear that there should be an independent fraud investigation office. Today, the right hon. Gentleman has also suggested a very big change of United Kingdom policy—that we should effectively change all the Commission's powers—and has said that he would withdraw entirely from the common fisheries policy. Is that current Conservative party policy? [Interruption.] Really—to withdraw from it altogether? Do Conservative Members 891 think that an attempt unilaterally to impose our policy would be of benefit to the United Kingdom, when it would all have to be negotiated with the very self-same European partners?
There is one question, and one question only: do we use this event as an excuse to indulge the anti-Europeanism of the current Conservative party, which wants to take us out of Europe entirely, or do we regard it as an opportunity to drive through a reform agenda, from a position of strength and influence, in Britain's and in Europe's interests? The worst thing that we could do, when we have the chance of reform, is to return to the disastrous days of Tory diplomacy.

§ Mr. Menzies Campbell (North-East Fife)
Withdrawing from the common fisheries policy would be not only politically inept, but illegal under the treaties that we have signed. There is no denying the humiliation that the Commission has suffered over the past 24 hours or the significance of the victory achieved by the Parliament over fraud and mismanagement. Is it not clearly the case that relations between the Parliament and the Commission will never be quite the same again? Do not those events provide an opportunity for the reform of the European Union, the Commission and the Parliament, even to the extent of giving the Parliament the power to hold individual Commissioners to account, which the Labour Members of the European Parliament voted against earlier this year? Does the Prime Minister accept that we shall not achieve an open, accountable and transparent Europe merely by modifications or alterations, and that we need radical reform? Do we not need a set of clear political rules by which to manage the affairs of the European Union? Is not the case for a constitution for the European Union overwhelming?

§ The Prime Minister
It is important to get the reforms right. The reforms suggested by the Leader of the Opposition would be wholly detrimental to the interests of this country. We must be careful how we reform the European Commission and other European institutions. In the short term, measures connected with financial management and budgetary control are essential, and we can put them into effect quite quickly. We can also set up an independent fraud office almost immediately.
In the longer term, we must be careful about saying that the answer to everything is more power to the European Parliament. The right hon. and learned Gentleman suggested that, as did the Leader of the Opposition to an extent. One of the strongest connections that we can have is with the Council of Ministers, which represents the democratically elected Governments of the European Union. We need to get the longer-term reforms right and the shorter-term reforms in place. We can do that now.
I agree with the right hon. and learned Gentleman that we should use this situation as an opportunity for reform. We can do that. The initial indications from other countries in the European Union are that as a result of what has happened, the reformers are very much in the ascendant.

§ Mr. Bill Rammell (Harlow)
Does my right hon. Friend agree that one of the biggest institutional blocks on reform is the fact that individual Commissioners cannot be disciplined and removed from office without the wholesale resignation of the Commission? Will he 892 also ponder on the fact that we have a weak leader of the European Commission because he was foisted on us by the previous Conservative Government? They took their decision not in the national interest, but because of the divisions in the Conservative party at the time. Is it not also the case that when there was misconduct at the highest levels of Government under the previous Administration in this country, we used that not as an argument to remove and dismantle that Government, but to bring about fundamental and effective reform? That is what should happen with the Commission and the European Union.

§ The Prime Minister
It is important that the next President of the Commission is someone of strength and real authority in the European Union. It is also important to look carefully at the terms under which Commissioners and senior officials in the bureaucracy are appointed. Those changes can be taken forward with considerable backing from all countries of the European Union.

§ Mr. John Major (Huntingdon)
Will the Prime Minister accept that, no doubt inadvertently, he misled the House on the subject of Mr. Santer's appointment? Mr. Santer was proposed by all the other members of the European Union before I accepted his appointment on behalf of this country.
On the substantive point of his statement, does the Prime Minister agree that the report throws up an institutional problem that has long existed in the European Union? The structure of the Union is such that the Commission, in theory, is accountable to the Council of Ministers. However, in practice, the irregularity with which the Council meets means that detailed supervision over many of the activities of the Commission is not undertaken properly, either by the Council of Ministers or, in any other sense, by the European Parliament.
Is not one of the most important reforms—it is many years overdue, I happily concede—clear-cut financial accountability by the Commission, ideally to the member states of the European Union or, if that is too cumbersome, to a body that itself reports directly to the member states for them to judge how effectively the accounts are being managed? The Prime Minister and his fellow Heads of Government have a tremendous opportunity, in light of the report, to effect such a reform. Simply replacing the existing Commissioners will not do. If he takes that opportunity for structural reform, he will deserve the support of both sides of the House.

§ The Prime Minister
I will deal with the second part of the right hon. Gentleman's question and leave aside what will have to be disagreement on the first part. The institutional problems to which he drew attention have been there a long time, and there is a lot of merit in what he says, in two senses. There is a problem with detailed supervision because the Council, necessarily, meets irregularly. Secondly, we need a better system of financial accountability—that was one of the things that I set out in my statement. That better system of financial accountability—in the longer term—may well require some fundamental change to the way in which the present system works. The point that the right hon. Gentleman made is well worth looking at.
Reading back on much of what the right hon. Gentleman said at previous European Councils, one sees that it is true that this has been an issue for a long time, 893 and it would be misleading—on this point, although I do not accept that charge on the first point—if I were to say that this argument was not mounted by the previous Conservative Government. However, the big difference now is that I believe that a consensus for reform is beginning to form right across the European Union for some of the things for which the right hon. Gentleman argued but, at the time, was unable to get through. We can build the alliance for that now, but we can do so only if we see this as an opportunity, and not as an excuse to indulge in the Europhobia that some Conservative Members—although not the right hon. Gentleman—want.

§ Mr. Clive Soley (Ealing, Acton and Shepherd's Bush)
Is not what the right hon. Member for Huntingdon (Mr. Major) said an example of the importance of this country having a positive approach to Europe? If we have a negative and divided approach, the problems of which we have been aware for some time will inevitably continue. We need a strong and independent check on fraud, and a body dealing with standards and privileges for Commissioners. Perhaps at this stage we ought to record our thanks to Pauline Green and Alan Donnelly for the lead that they have taken on this matter.

§ The Prime Minister
The committee of inquiry would not have been set up but for the motion, which came not merely from the Labour group, but from British Labour members of that group. Secondly, the committee of inquiry will make a further report shortly. We should implement that as well.

§ Mr. William Cash (Stone)
The Prime Minister says that we must get the reforms right. Why can he not match the scale of this crisis with a statement dealing with the real problems facing this country? Is he prepared to go to the Berlin summit in a few days and make a proposal to the other Heads of Government to deal with the real questions, which relate to the loss of national democracy, accountability and the means of calling people to account? Is he prepared to table amendments at the intergovernmental conference that is due shortly to ensure that we get the balance right, and bring back to this House and to the other national Parliaments the democracy and accountability that the electors of Europe and this country truly deserve?

§ The Prime Minister
The hon. Gentleman will no doubt get a lot of support for that view from his own side. He believes that Britain should not be a member of the European Union at all. The idea that if I adopted his position on Europe I would go to Berlin with great influence is absurd: I would go there with no influence at all. If he had his way, I would not even be invited to Berlin and to the conference.

§ Mr. Cash
On a point of order, Madam Speaker.

§ Madam Speaker
I can take points of order only at the end of statements, and I have three statements to deal with today.

§ The Prime Minister
The hon. Gentleman caused quite enough difficulty for my predecessor without causing 894 difficulty for me as well. We have a fundamental disagreement about how to get the best for Britain out of Europe. He would do it by effectively taking Britain out of Europe; I believe that we should stay in Europe, fight for our interests as other countries do, and build consensus and alliances for the changes that we want.

§ Mr. Tam Dalyell (Linlithgow)
My right hon. Friend the Deputy Prime Minister will recollect that when he led the Labour delegation to Strasbourg, I was the Labour member on the Budget Committee and on the Budget Sub-Committee dealing with fraud. In the light of experience, especially of the Friuli earthquake compensation, does my right hon. Friend the Prime Minister accept that it is very difficult to get politicians to have anything to do with fraud investigations into their own country, not least if they are Italians? No Italian MEP would have anything to do with the Friuli investigation. Does he agree that if an investigation is to be effective, it will have to be on a European, rather than on a country-by-country basis, and that there will have to be a strong, independent investigative team?

§ The Prime Minister
I will not pray my hon. Friend's remarks in aid for my new strategy for the Italian alliance. My hon. Friend is right to say that there is a problem with countries investigating their own institutions to determine whether fraud has occurred, but that is surely precisely the reason why we need an independent investigative fraud office, which is what we proposed and what I now believe will be accepted.

§ Mr. David Davis (Haltemprice and Howden)
In June and July last year, before the furore that led to yesterday's events, the Public Accounts Committee published a report criticising the fraud and waste in Europe. I called for an independent anti-fraud office, with teeth, to be set up. The Commission dismissed that as unnecessary. Does the Prime Minister accept that an anti-fraud office that will do the most to stop the rot at the centre of Europe will be on the Danish, Dutch and British model: independent in funding, appointment and activities, with absolute access to the information in all the institutions in Europe, and reporting back to European taxpayers through the Council of Ministers?

§ The Prime Minister
I do indeed believe that the body should be fully independent and allowed to carry out its functions in a way that establishes its own credibility, quite apart from anything else. That is the best thing for Europe. The standing of the European Commission has been damaged, quite rightly, and the best way for us to respond is to act now. The right hon. Gentleman is right to say that the Public Accounts Committee made that proposal before, but the difference is that this time—I found this in the discussions in Petersberg a few weeks ago and, before that, in Vienna—it will find an echo right across Europe.

§ Mr. Robert Sheldon (Ashton-under-Lyne)
I support what the right hon. Member for Haltemprice and Howden (Mr. Davis), the current Chairman of the Public Accounts Committee, said. I want to refer to events as they unfolded late last night. Is not it clear that the responses of Jacques Santer and Mrs. Cresson were wholly inadequate? The report found fraud, nepotism and mismanagement, and the 895 minimum response from those singled out should be not only immediate resignation, but no possibility of reinstatement.

§ The Prime Minister
I agree that the response was wholly inadequate, which is why we have called for the measures that I outlined today.

§ Sir Brian Mawhinney (North-West Cambridgeshire)
Did the Prime Minister hear Sir Leon Brittan this morning, saying, without making any excuse, that one of the problems that the Commission had was that national Governments asked it to take on more than it was equipped to handle? Does he accept that if, in his new contract, he were to take the opportunity for reform by circumscribing the activities of the Commission and the pressure put on it by national Governments to do more, not as a cover for disengagement but as a genuine reform, he would carry the support of all parties in the House?

§ The Prime Minister
It is worth considering how we describe the functions of the Commission, although I suspect that even those who are most insistent that we remove some of its activities would want, in other circumstances, to start adding responsibilities. It is necessary to look root and branch at the activities we want the Commission to undertake and how it undertakes them. I hope that we can have a sensible debate across the House, because that would be in the interests of this country.

§ Mr. Tony Benn (Chesterfield)
Is my right hon. Friend the Prime Minister aware that although the two British Commissioners were apparently cleared completely of any charge against them, they were collectively responsible for the work of the Commission? Will he take the opportunity to make one significant reform—which is entirely in his hands—and give the House of Commons the opportunity to vote for and appoint the British Commissioners in Brussels? I wrote to him on that point today and legislative provision for it is contained in the Crown Prerogatives (Parliamentary Control) Bill, which has support on both sides of the House and would be a significant way to spread power from the few—indeed from the individual—to the many of the House of Commons.

§ The Prime Minister
I am afraid that I cannot offer my right hon. Friend any solace on that last point. In respect of his first point, I have looked at the report carefully and neither of the two British Commissioners was personally criticised or involved in any shape or form in the specific cases that were examined. Therefore, it would be wrong if we were to single out our Commissioners for blame in those circumstances.

§ Mr. David Curry (Skipton and Ripon)
Is it not curious that the one word that did not pass the Prime Minister's lips was Parliament? As a democratically elected leader, does he not believe that he should discuss with his fellow Heads of Government how the European Parliament and national Parliaments can co-operate rather than compete to represent the people's interests in Europe and achieve genuine accountability? The Prime Minister mentioned a new President. Is he suggesting bringing 896 forward the appointment of the whole of the new Commission or merely appointing a temporary stop-gap between now and next January?

§ The Prime Minister
I have said that I believe that the President of the Commission should stand down as soon as possible and that we should put the new Commission in place as soon as possible. I am here, being accountable to Parliament through the statement I am giving, but when I described longer-term reform, I had in mind the clutch of issues that we raised in Cardiff during our presidency, which included the need for better co-ordination between the European Parliament and national Parliaments. Because Europe has those powers, the more scrutiny to which it is subjected and the better the debate between the European Parliament and the national Parliaments and Governments, the better it is for democracy. However, I would stress, as I said to the right hon. and learned Member for North-East Fife (Mr. Campbell), that—I suppose probably all Prime Ministers say this—we must take account of the fact that the Council of Ministers is also a democratically accountable body, in the sense that each Prime Minister goes home and is accountable to his or her Parliament.

§ Mr. Denzil Davies (Llanelli)
My right hon. Friend rightly called for a root-and-branch reform of the Commission. Which institution of the European Union has the power to carry out such reform? If proposals are made for such reform, will they require a treaty to ratify them?

§ The Prime Minister
That depends on the nature of the reforms proposed, but we already have in the Amsterdam treaty some issues that were left over for the purpose of sorting out enlargement including, for example, the structure of the new Commission. In any event, we will consider some of those issues very carefully over the coming months. We should bind into that an opportunity to analyse some of the fundamental reforms that we can make. My right hon. Friend asks about the correct institution, but the correct beginning of the process of reform is with the Council of Ministers.

§ Sir Teddy Taylor (Rochford and Southend, East)
Does the Prime Minister agree that the basic problem is the fact that those 20 little emperors in Brussels have massive powers? They are not highly qualified, experienced civil servants, subject to disciplines and controls, but redundant politicians who are faced with daily temptations on the basis of the ever-increasing powers given to Brussels. While a minority take the view that Europe would be strengthened if the Commission were to close its doors tomorrow, does the Prime Minister agree that we could improve the administration of, and spending controls in, Europe if powers such as agricultural management and foreign aid were returned to member states?

§ The Prime Minister
I do not believe that it would be in our interests to renegotiate the entire terms of European Union membership or of the institutions of the EU. I must disagree with the hon. Gentleman, and our disagreement will simply remain. In respect of the hon. Gentleman's very 897 harsh words about the Commissioners, I must say that I dug out an interesting statement that he made when Mr. Jacques Santer was appointed. The hon. Gentleman said: He is a quiet, decent, responsible person and we can congratulate John Major for accepting him.

§ Mr. Dennis Skinner (Bolsover)
Is the Prime Minister aware that one reason why he has had to come here today to talk about the latest crisis in the common market is the contradiction in the common market? For as long as it is based on the idea that nation states must scratch one another's backs to get what they want—that is roughly how the common market operates—the net result will be a democratic deficit. If that democratic deficit resulted in a European Parliament that could properly scrutinise fraud and all the rest of it, we would have a united states of Europe. My right hon. Friend the Prime Minister does not want that, and nor do I.
Crises will therefore continue to confront the Prime Minister and everyone else in the common market. We must understand that no matter how well meaning the proposals are, the common market will continue to have one nation state scratching another's back to get what it wants. That is the problem that the whole common market must face.

§ The Prime Minister
If we consider the balance of our interest in being in or out of the European Union, we can see that it is fundamentally in our interest to be in it. It is in our interest in terms of jobs, trade, industry and influence in the world. Scratching each other's backs is one way of describing what happens, but there is a mutual self-interest in being part of the European Union. Whatever changes and reforms we make in the EU, I believe that Britain is better in than out.

§ Mr. John D. Taylor (Strangford)
I accept that Her Majesty's Government have a role in the appointment of the new President of the Commission and the nomination of two United Kingdom Commissioners. Have the Government any say, however, in the appointment of other Commissioners? In particular, have they any say in the reappointment of one retiring Commissioner who is the subject of a public inquiry into the disappearance of £50,000 in his own country?
Secondly, in so far as centre right politics in Europe is concerned, does the Prime Minister agree with new thinking in Europe that the Commission should be appointed by the European Parliament, not by national Governments?

§ The Prime Minister
If the right hon. Gentleman is saying that the European Commission should be appointed by the European Parliament, not national Governments, I do not agree. It is better that nation states appoint Commissioners.
In respect of the right hon. Gentleman's other point about the appointment of other Commissioners, of course we have a say. All Commission appointments are discussed at the Council of Ministers.

§ Mr. Austin Mitchell (Great Grimsby)
May I congratulate my right hon. Friend on his proposals, which 898 seem exactly the right way in which to deal with a long-running problem? Our own Select Committee on European Scrutiny said in January: This is the fourth successive year in which the Court has not been able to provide assurance about the legality and regularity of the accounts of the general budget. There remains the problem of the existing Commission and its collective responsibility. Without wishing to bash Europe in any way—there is no need; Europe is self-bashing these days—may I suggest that we should follow the practice of a president of a company that has failed because of incompetence, nepotism, selfishness and lack of leadership among its board? The board should go, and we should call in the administrator.

§ The Prime Minister
The board has effectively gone and it is right that the President of the Commission takes responsibility. My hon. Friend mentions that the European Scrutiny Committee has raised the issue of dealing with the problems of fraud; it is fair to say that this country and the various Committees of this House have been raising that issue for many years. My point is that we now have an opportunity in Europe to push that reform with the agreement of other countries. I do not know how it will be seen by our national media, but it is interesting that the media of other European countries see the whole issue as giving a fair wind to those who want to reform the system, once and for all.

§ Sir Michael Spicer (West Worcestershire)
If we are facing institutional corruption and fraud, to borrow Sir William Macpherson's phrase, what proposals does the Prime Minister have for institutional reform?

§ The Prime Minister
The proposals I made in the statement for changes in the whole system of financial accountability, disciplinary proceedings in respect of Commission staff and awarding of contracts are all institutional changes, as is the establishment of an independent fraud office. In the longer term, we should look at ways in which we can introduce a better system of accountability between member states and the European Union. Those are all changes that we can look at and do.

§ Mr. Harry Barnes (North-East Derbyshire)
Surely it is not only a matter of appointing a stronger President who has even greater authority—I think my right hon. Friend spoke about greater authority being established—but a matter of having democratic arrangements in place, so that whoever is there is controlled by those provisions. Should we not move to a system whereby the bodies that make decisions are the Parliaments—the European Parliament and the Parliaments of the nation states?

§ The Prime Minister
There is a case for looking at how to strengthen the link between national Parliaments and the European institutions, and that is what we proposed at Cardiff during our presidency. When I talk about the new President of the Commission having strengthened authority, I mean that we should appoint someone who is clearly a political heavyweight and who can make the European Commission into the sort of body that Europe needs. However, I am also suggesting, as we proposed at Cardiff at the conclusion of our presidency, 899 that the Commission operate under a specific mandate and statement of aims and mission from the Council of Ministers. That is the right place to start.

§ Sir Edward Heath (Old Bexley and Sidcup)
I agree with the Prime Minister's analysis of the situation and that his proposals are worth deep consideration. I would suggest only that when discussing those matters with the other countries, the right hon. Gentleman bear in mind the danger of being told that the British just want to run everything. That is a real danger, which he has encountered once before.
The good side of the situation is that, for the first time, the European Parliament has been prepared to act and to act decisively. Things will never be the same again, because, in future, the Parliament will always take an attitude and carry it through. That has to be taken into account. I suggest that that gives every one of us a powerful argument to use in the forthcoming European elections, which is to say to our own electorate that the time has now come when they should use their vote to get the representation in the European Parliament that we ought to have, rather than having the smallest of the lot.

§ The Prime Minister
I agree entirely that it is right that we try to get representation in the European Parliament that will stick up for Britain's interests in a sensible way. It is also true that we are not telling the rest of Europe that we in Britain know how to run everything and everyone has to take our instructions. However, with a Government who believe in a strong and influential position for Britain in Europe, we now have the chance to build the alliance necessary to get the right changes in Europe. I say with respect to my predecessor as Prime Minister that, at the beginning of his premiership and before his party put the manacles on him, he tried to achieve that and to construct a different set of relationships in Europe. It is possible for us to do that now, but we shall succeed only if we recognise and say, right up front, that Britain is a key partner in Europe. We shall play our role as a partner in Europe and, in doing that, fashion a Europe of which this country can be proud.

§ Ms Jenny Jones (Wolverhampton, South-West)
Does my right hon. Friend agree that, if we are to achieve the long-awaited reforms on fighting fraud and bringing greater financial accountability to the Commission, the work of the Court of Auditors should be given due recognition and that organisation should be given greater power? The Court of Auditors has for some time been pointing out what is wrong with the Commission in that respect.

§ The Prime Minister
There is certainly a case for ensuring that the Court of Auditors has all the powers it needs. However, I believe that the existence of the independent fraud investigation office will make the critical difference. If people can see that allegations are investigated by an independent body, it will give the whole system greater credibility. When the issues were first raised in the European Parliament, the European Labour group was absolutely right to call for an inquiry first and to make the necessary changes on the basis of 900 that inquiry. If we take this opportunity to put in place a wholly independent system, it will be far better and far more credible for the future.

§ Mr. Eric Forth (Bromley and Chislehurst)
Is the Prime Minister arguing for the immediate reappointment of the British Commissioners? If so, is that not rather odd because they must bear some of the collective responsibility for what has gone on and for the Commission's failure to act in spite of many warnings and reports? Would not the Prime Minister and his Government be better advised to stay their hand and consider carefully what is in the best interests of the Commission and of the European Union when appointing a new Commission, rather than joining other countries in rushing to reappoint discredited Commissioners?

§ The Prime Minister
It would be strange if Britain responded to this issue by sacking the two British Commissioners, who have been subject to no personal criticism or investigation regarding the original areas of complaint. It would be odd if we did not reappoint our Commissioners and other countries—whose Commissioners were also subject to no criticism—did the opposite. That would not be in this country's interests.

§ Mr. Rhodri Morgan (Cardiff, West)
Although it is quite understandable that the previous Prime Minister, the right hon. Member for Huntingdon (Mr. Major), should seek to play down his key role in appointing the President of the Commission—Jacques Santer has, from day one, suffered from delusions of adequacy—does the Prime Minister accept that it is important to remember the role that the whistleblower played in revealing the fraud that has taken place? Greater provision for freedom of information in the European Commission's work and in dealings between each member state and the Commission, and greater protection for whistleblowers in the EC, should be part of the reform package.

§ The Prime Minister
I support any moves that make the system more transparent because transparency will aid accountability.

§ Mr. Charles Wardle (Bexhill and Battle)
In several of his replies, the Prime Minister has asserted that the two United Kingdom Commissioners are free from blame—indeed, they were not mentioned in the report. Will the Prime Minister place in the Library the memorandums that show when the two British Commissioners first flagged up the mess that was under their noses—if they ever did so—before the balloon went up?

§ The Prime Minister
As I said in my statement, the two British Commissioners played a crucial part in bringing the issue to a head and in insisting that action was taken. Despite Conservative Members' comments, it would be very odd if we ultimately alighted upon the two British Commissioners—who were not subject to any personal criticism at all—as the ones who should pay the price.

§ Mr. Richard Shepherd (Aldridge-Brownhills)
The selection and appointment of Commissioners is clearly key to the reform of the institution and is a matter for 901 national Governments. What will happen if the French Government wish to reappoint, or assert their right regarding, Mrs. Cresson?

§ The Prime Minister
Let us wait and see whether that is the case. As I said earlier, any appointments or re-appointments are discussed in the Council of Ministers.