Olive Oil: EC Subsidies (Hansard, 15 March 1993)

§ The Earl of Strathmore and Kinghorne
My Lords, the Government are most concerned that the European Court of Auditors has for the second time reported on inadequacies in the systems for providing and controlling aid in the olive oil sector. We fully support the court's conclusion that the consumption aid scheme offers the requisites of a reliable control system, which the production aid system does not. We are therefore pressing the European Commission to come forward with proposals for reform of the regime along the lines recommended by the court.

Lord Campbell of Croy
My Lords, I am grateful to my noble friend for that reply. Are the Government 1218 satisfied that an effective system is in prospect following and in the light of events since my Questions last July about large quantities of phantom olives and about olive trees which move from place to place like Birnam Wood in "Macbeth"?

§ The Earl of Strathmore and Kinghorne
My Lords, the debate on 8th March on the report on The Fight against Fraud went into great detail as regards the developments to reduce fraud. Important steps have been taken over the past year. These include the following: first, the United Kingdom secured important provisions in the Maastricht Treaty, including making explicit that member states should treat fraud against the Community budget with the same vigour as fraud against national budgets; and, secondly, under the United Kingdom presidency, two meetings of the Economic and Finance Ministers considered ways of improving the Community's performance and agreed important extra steps in the fight against fraud. The Edinburgh Council emphasised the importance of sound financial management of the Community budget.
My noble friend made reference to Birnam Wood. There have been a number of press reports on mobile olive groves, but I gather that an aerial survey has been carried out which should help the situation.

Lord Bruce of Donington
My Lords, is the noble Earl aware that the amount of fraud and irregularity in this particular area is a public scandal which the whole world knows about? Is he also aware that despite the fact that the Court of Auditors spent many pages (nos. 94 to 106) in its recent report dealing with this question, the Commission itself completely ignored the issue in its response? Is the Minister aware that the Commission has no intention of tackling this matter and that the Council of Ministers, particularly after the Edinburgh conference, has no power whatever to tell the Commission what it should do?

§ The Earl of Strathmore and Kinghorne
My Lords, as usual the noble Lord, Lord Bruce of Donington, makes a vociferous point on this subject. The Government support the Court of Auditors' report in that the production aid scheme contains inherent flaws which could not be rectified quickly nor at reasonable cost. That is why we are pressing the Commission to accept the consumption aid scheme which can provide a more reliable system of controlling aid.

§ Lord Boyd-Carpenter
My Lords, can my noble friend tell us the total cost to the Commission's fund of this subsidy?

§ The Earl of Strathmore and Kinghorne
Yes, my Lords. In 1991 the total expenditure on the olive oil regime was £1,920 million of which £1,043 million was spent on production aid, £695 million on consumption aid and £110 million on export refunds. A surplus of £18 million was made on intervention measures. The Commission estimates the cost in 1993 to be in excess of £2 billion. That is the reason why the United Kingdom is calling for a cut in support.

§ Lord Carter
My Lords, is the Minister aware that British farmers are now having to fill in some 1219 immensely complicated forms correct to one-hundredth of a hectare to claim their arable aid payments and that a simple mistake can cost a farmer all his aid payments and his crops? Can the Minister assure the House that the olive oil producers in Italy, Greece, Portugal and Spain, who have defrauded the Community of £865 million—that is only the part that has been discovered—are also filling in their claim forms correct to one-hundredth of a hectare?

§ The Earl of Strathmore and Kinghorne
My Lords, the noble Lord, Lord Carter, asks a question which is slightly wide of the Question on the Order Paper. Suffice it to say, as I indicated in my original Answer, the Government treat fraud extremely seriously. That is why we are backing the Court of Auditors' report on the olive oil issue. Nevertheless, I agree with the noble Lord that the Italian, Greek and Spanish producers should play the game by the rules.