HC Deb 17 December 2003 vol 415 cc1553-5
1. Sir Michael Spicer (West Worcestershire) (Con)

What measures his Department has proposed for tackling fraud in EU aid programmes. [144406]

The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas)

We take very seriously any accusations of fraud in EU aid programmes. My Department has therefore supported the reform of the EC's aid programmes and policies, in particular the establishment of the EuropeAid office, progress with de-concentration, reduction in the backlog of unspent Commission funds and the reform of the financial management of the Commission's external assistance. Those measures should continue to improve the transparency and accountability standards of the EC aid programme financial management through better scrutiny.

Sir Michael Spicer

Why give the money to the EU at all? Why not give it to the countries direct

Mr. Thomas

Many countries already have extensive bilateral development programmes. The advantage that the European Commission offers is that it is able to lever in development money that might otherwise not be spent by member states. The hon. Gentleman might want to consider that especially pertinent point while bearing in mind the huge cuts in development spending as a proportion of gross national income over which his party presided.

David Taylor (North-West Leicestershire) (Lab/Coop)

Among the countries and groups given aid by the EU is the Palestinian Authority. Only two weeks ago strong evidence showed that some of that aid is being fraudulently channelled to militant groups that are behind some of the suicide bombings in Palestine. Will the Minister comment on that and tell us what help his Department has given to root out such corruption and fraud?

Mr. Thomas

I hope that I can reassure the House that the European Commission's investigations have found no evidence to corroborate allegations that EC funds have been misused to finance terrorist activities or used for anything other than their original purpose. We are satisfied that the Commission, with the assistance of the International Monetary Fund, has ensured that all the terms of the conditionality on which it insists when giving aid to the Palestinian Authority have been met. Israeli concerns, which prompted some of the allegations, have receded in the light of further recent reforms in the Palestinian Ministry of Finance, and Israel has resumed the transfer of tax revenues due to the Palestinian Authority. I hope that that reassures my hon. Friend.

Mr. John Bercow (Buckingham) (Con)

Given that roughly one quarter of British aid spending supports European Union programmes and that fraud in the EU aid budget is currently running at approximately £14 million a year—for the ninth successive year, the European Court of Auditors has refused to give a clean bill of health to the European Union accounts—can the hon. Gentleman explain to the House why in the Department's 2003 annual report, neither the section on the European Community, nor the list of 2003 to 2006 public service agreement targets, makes any mention of the fight against fraud in EU aid?

Mr. Thomas

The 2002 European Court of Auditors report actually suggests that while there are some continuing concerns, about which we continue to press for serious improvements, over supervisory systems and controls and standards, a sample audit of the transactions undertaken by the Commission in development spending threw up only a number of relatively marginal errors. Clearly we need to continue to investigate those errors, but the programme of reform that the Commission has implemented in our development spending has produced fewer examples of irregularity and fewer accusations of fraud—far fewer than before 1999 when the current reform programme began. There is thus considerable evidence that the reform programme continues to work. Clearly more reforms may be necessary and we shall continue to support them.