HL Deb 09 March 1992 vol 536 cc1163-6

2.45 p.m.

Lord Bruce of Donington asked Her Majesty's Government:

Whether, before preparing their response to the European Court of Auditors' reports on the accounts submitted to them by the institutions of the European Community, they will consult the Comptroller and Auditor General and incorporate his observations thereon.

Lord Brabazon of Tara

My Lords, the European Court of Auditors' reports comment on the Community institutions' management of their budgets. The Comptroller and Auditor General has no formal locus in the preparation or response to those reports. However, the Government benefit from Parliament's views on matters such as Court of Auditors' reports.

Lord Bruce of Donington

My Lords, is the Minister aware that the Comptroller and Auditor General and his office enjoy the utmost respect in this country—and justifiably so—and that, even though they are ostensibly and actually under parliamentary control, the Government have had control over Parliament for the past 13 years? Therefore, it only needs a Motion by one Back-Bencher to be endorsed by the Government to ensure that the accounts are in fact examined by the Comptroller and Auditor General.

Will the Minister bear in mind the fact that over the past 10 years, at least, each Court of Auditors' report has contained observations which, if applied to a public limited liability in this country, would have resulted in the directors being held on a charge of misfeasance? Is he also aware that there is little or no financial control in the European Community as we in the United Kingdom understand it? What action is he prepared to take?

Lord Brabazon of Tara

My Lords, the noble Lord has just asked me a number of different questions. He asked, first, whether we respect the role of the Comptroller and Auditor General. The answer is, yes. Secondly, I should say that the Comptroller and Auditor General is a servant of Parliament; he is completely independent of government. If he were to be involved in support of the executive branch of government, as implied by the noble Lord's question, that could prejudice his independence. In the case of the Public Accounts Committee, it is possible for Parliament to ask the Comptroller and Auditor General to examine any proposals from the Court of Auditors in respect of the Community or expenditure so far as it affects this country. That is a perfectly proper role for him to play. However, I do not think that it would be right for the Government to ask the Comptroller and Auditor General to look at such matters on his own.

Lord Cockfield

My Lords, is not the position that from time to time governments disagree with the observations of the Comptroller and Auditor General? Further, as the responsibility for responding to the Court of Auditors rests with the government, would it not be wrong in principle for government to convey to the Court of Auditors observations of the Comptroller and Auditor General with which they disagree?

Lord Brabazon of Tara

My Lords, my noble friend is quite right. As I said, it is perfectly possible for the Public Accounts Committee to ask the Comptroller and Auditor General to look at any matters which the committee feels might affect it. But it would not be right for the government to do so.

Lord Peston

My Lords, as I understand it, the Minister's point is that the Comptroller and Auditor General does not have a locus standi in this respect. But, equally, the point made by my noble friend Lord Bruce of Donington is that the CAG has at least the right kind of expertise. Whether we are discussing fraud, on the one hand, or the efficient use of Community resources, on the other, if the office of the Comptroller and Auditor General is not the right place to go can the Minister say where is the right place to go within government to ensure, from our point of view, that the Community's finances are being used both correctly and efficiently? For example, is it the Minister's view that the Treasury has all the relevant expertise? Is that what he is trying to tell the House?

Lord Brabazon of Tara

My Lords, I was not trying to say that. The European Court of Auditors looks at the way in which the Commission is spending its money and whether that is correct, as the noble Lord suggested. It then reports to the Council of Ministers, which looks at the matter again. The European Parliament then also looks into these matters. The Government make their input as a result of advice from the Treasury, but mainly from the Court of Auditors. It is not unknown for the Court of Auditors to be critical.

Lord Peston

My Lords, I understand the Minister's answer, but want to press him on one point. I am not saying that I am entirely committed to it, but there is a view in this country that some aspects of the Community's use of funds is less than satisfactory. Although the Minister is reassuring when he tells us that the Court of Auditors looks at all this, there is at least a view that there is a British Government interest which we could perhaps pursue a little more strongly. I am not suggesting that the Minister is mistaken, but I put this one question to him: is there any possibility that we could pursue this matter rather more strongly from our side?

Lord Brabazon of Tara

My Lords, I do not believe that any government within the European Community pursues this matter more strongly than we do. We have pursued it constantly at Council meetings. Obviously, we are influenced by the report of the Court of Auditors, but also by the advice that we receive from a variety of different sources. I believe we achieved a better way forward at Maastricht in that the Court of Auditors' role has been enhanced. Eventually, that should result in a better way of doing things.

Lord Bruce of Donington

My Lords, will not the Minister—or rather the Chancellor of the Exchequer in ECOFIN—presently be required to give a discharge to the European Community budget for the year 1990 to which the report of the Court of Auditors relates? What would provoke the Government to object to giving a discharge to the European Commission in respect of its budget, bearing in mind that for the past 10 years increasingly satisfactory Court of Auditors' reports have given prominence to widespread fraud within the European Community and to the expenditure of the funds of, among others, British taxpayers? When will the Government take a stand on that and insist on proper auditing standards and on the Commission complying with its own financial regulations?

Lord Brabazon of Tara

My Lords, that is very much a role for the Court of Auditors, which I believe the noble Lord regards as a useful institution. The European Council and Parliament carefully consider the Court's findings and the Commission's response. In granting its discharge to the budget, acting on a recommendation from the Council, the European Parliament indicates what further action it believes to be necessary. That further action has included the new Community 45-point action programme on fraud within the budget, which covers a number of areas, particularly agriculture, which have been identified in various reports by the court. I think that that is the best way forward.