HL Deb 02 March 1989 vol 504 cc1135-8

Lord Jay asked Her Majesty's Government:

What action they are taking to prevent large-scale fraud in the distribution of export subsidies by the Commission of the European Communities under the common agricultural policy.

The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, rigorous checks are made by Customs and Excise on exports of agricultural produce from the United Kingdom in order to detect and deter fraud. Cases of detected fraud are prosecuted whenever appropriate. The Government are also pressing other member states and the Commission to step up co-ordinated action against fraud across the Community. My right honourable friend the Minister of Agriculture has raised this matter several times in the Agriculture Council, most recently on 13th February.

Lord Jay

My Lords, as the Court of Auditors' reports reveal a scandalous level of fraud and waste, not merely in export subsidies but in storage and in many other cases, are the Government really satisfied that their action will be effective in stopping what is a gross misuse of British taxpayers' money? Can the noble Baroness now tell us what really happened in 1986 when the noble Lord, Lord Cockfield, claims that he put forward a splendid plan for stopping all this fraud which was then blocked by the British Government?

Baroness Trumpington

My Lords, my right honourable friend the Minister first alerted the Council to the problems of CAP fraud more than a year ago. He reinforced that message—not for the first time—last month. Largely because of the adverse publicity which reflects badly on the operation of the CAP, we believe that the Council now understands the importance of taking practical steps to reduce the scope for fraud.

With regard to the second part of the noble Lord's question, on 14th February my noble friend Lord Cockfield alleged that the United Kingdom had vetoed action by the Commission on fraud. This is not so. On the contrary, the United Kingdom has been the leading advocate of the anti-fraud unit set up by the Commission. The decision to which my noble friend referred, taken unanimously by the Council in March 1987, was to reject the Commission's proposal because it was not thought right to have a Commission-led investigative mission on Customs matters. We think it right that the Commission and member states should work together to tackle the problem of fraud.

Baroness Robson of Kiddington

My Lords, is the noble Baroness aware that the European Communities Committee of your Lordships' House is publishing on 10th March its report on fraud against Community funds? Is she also aware that we are hoping to have a debate shortly after Easter when no doubt we shall be able to go into these questions in depth?

Baroness Trumpington

My Lords, I am aware of that, but it would not be right for me to comment before the report is published.

Lord Cockfield

My Lords, is my noble friend aware that the proposal which I put forward on behalf of the Commission dealt with "Customs or agricultural matters"? I am reading from the actual document which also refers to "missions in co-operation with the competent authorities of the members states'', not by the Commission alone but in co-operation with the member states. How does that differ from what the Minister is now saying? Is she prepared to give the House an assurance that the Government will take effective measures in this field and that they will support the Commission in the efforts it is making, including giving it the necessary powers in co-operation with the member states?

Baroness Trumpington

My Lords, I can merely repeat that it was a unanimous decision not to follow my noble friend's project. That must speak for itself. The problem of fraud in the Community is clearly serious and must be tackled firmly. My right honourable friend the Paymaster General will be commenting in detail in another place later today on the Court of Auditors' report. We are pressing the Council to take early action on the report's recommendations. I understand that my right honourable friend the Prime Minister hopes to raise the subject in the next European Council to be held in Madrid in June.

Lord Gallacher

My Lords, can the noble Baroness say whether the Commission itself, when making proposals for reform of the common agricultural policy, considers the possibility of increased opportunities for fraud? Currently, there is a proposal whereby the Commission is hoping to increase the use of cereals in animal feedstuffs. Everyone who has looked at that proposal, in both last year's and this year's budget, is firmly of the opinion that the enhanced opportunities for fraud which this proposition would give are almost infinite. Is this not a case where the Commission might itself be somewhat more circumspect in what it is proposing?

Baroness Trumpington

My Lords, I have several answers and I am not quite sure which one to give the noble Lord. There have been some encouraging developments. The Commission's new anti-fraud unit is now fully operational. The Court of Auditors is doing a useful job in exposing slack controls in member states. As I said, we have pressed the Council to act urgently on the court's recommendations.

Lord Campbell of Croy

My Lords, can my noble friend comment on suggestions which have appeared in the press that some of the money obtained by such fraudulent means has found its way to the IRA?

Baroness Trumpington

My Lords, I have no evidence that CAP fraud is organised by the IRA or any other terrorist organisation.

Lord Taylor of Gryfe

My Lords, has the attention of the Minister been drawn to the statement made by Sir John Hoskyns this week that the Community is guilty of intellectual and financial corruption? Is she aware that an editorial in The Times today says that his speech has much in common with the British Government's thinking? Will the Minister confirm or deny that judgment?

Baroness Trumpington

My Lords, any malpractice anywhere is of concern. The United Kingdom has taken the lead in denouncing fraud. We believe, however, that press reports have been exaggerated.

Lord Carter

My Lords, is the Minister aware of a report in the French newspaper Liberation that in terms of convictions for fraud and irregularities, Italy is first, Britain second and France third?

Baroness Trumpington

My Lords, I wish to confine my remarks to the United Kingdom. In 1987 we reported to the Commission irregular payments totalling approximately £2.3 million; but not all of these involved fraud.

Lord Kennet

My Lords, the noble Baroness has told the House that it was in company with other governments that our Government rejected the Commission proposal to which the noble Lord, Lord Cockfield, has referred. Given that she has confirmed thereby this Government's dislike of Commission-led action, even in co-operation with national governments, can she say what is the Government's preference as a way to proceed in the matter in view of the fact that the joint Commission-national government option has been ruled out?

Baroness Trumpington

My Lords, I believe I answered that question in my original Answer.

Lord Stoddart of Swindon

My Lords, is there not a grave discrepancy between the £2.3 million that the noble Baroness has just mentioned, which the British Government believe is the extent of the fraud, and the £6 billion which has been mentioned not in a single press report only but in many? Can the Minister assure the House that not only the British Government but also the Commission itself take the matter very seriously, bearing in mind their defensive and illiberal attitude, and reply, to the speech delivered yesterday by Sir John Hoskyns?

Baroness Trumpington

My Lords, as the noble Lord said, very large figures have been quoted by newspapers; namely, £6 billion, or 20 per cent. of the Community budget. By its nature the exact amount of fraud cannot be known; but such figures are exaggerated. However, fraud is clearly a serious problem and certainly more serious than implied by the reported irregularities and must therefore be tackled seriously.

The Commission emphasises the need to tighten up Community provisions for combating fraud and we agree that rules can be made clearer so that member states carry out more uniform checks. We shall support any appropriate and cost-effective changes that the Commission proposes.

Lord Stoddart of Swindon

My Lords, I am sorry to come back on this point, but if the extent of the fraud is not known, how can the noble Baroness say that the £6 billion is an exaggerated figure?

Baroness Trumpington

My Lords, as I said, by the very nature of fraud it is difficult to come to any total conclusion; one can only go on those matters which are reported. Moreover, one realises that it may be that there is a great deal more which is not reported.

Noble Lords

Next Question!

Lord Jay

My Lords, whatever the noble Lord, Lord Cockfield, or even Sir John Hoskyns, may have said, would it not be better if more of these very well qualified persons in Brussels were to devote more time and energy to correcting such frauds than to devising all sorts of blueprints for imaginary futures?

Baroness Trumpington

My Lords, I think that the noble Lord asked whether it would not be better if more time were devoted to such matters. Is that correct?

Lord Jay


Baroness Trumpington

My Lords, that matter really comes under another heading. However, the Minister has reminded the Council of the importance of taking early decisions on the recommendations of the Commission's working group, taking full account of the Court of Auditors' findings. We also believe that each new proposal for Community expenditure must be examined so as to minimise the risk of fraud.