EU Anti-Fraud Measures: UK Position (Hansard, 6 June 1996)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, on 3rd June, ECOFIN considered a draft regulation providing additional powers for the Commission to carry out on-the-spot checks against fraud in member states. My right honourable friend the Chancellor indicated support in principle for this measure. However, he made it clear that, in line with the policy outlined by the Prime Minister in another place on 21st May, the United Kingdom would be unable to agree to the draft regulation until there was an 1357 agreement to lift the export ban on beef derivatives and until there was agreement on a clear framework leading to a lifting of the wider ban.

§ Lord Thomson of Monifieth
My Lords, the Government have taken a leading role in the fight against fraud in the Community, encouraged by your Lordships' Select Committee. Therefore, is not this policy to block and veto proposals to take action against fraud the most absurd, self-defeating policy that we have so far supported? Has the Minister seen the article by the chairman of the CBI European Committee, Mr. Niall FitzGerald, who speaks about a "European nightmare" if the Government pursue such a policy? Would it not be wiser to take advantage of the good will of the Italian Presidency and of the modest concession that the Government made yesterday in connection with recognising Slovenia, in order to retreat from this cul-de-sac which they have got themselves into instead of announcing in the press today that they will be proposing another nine vetoes on Monday?

§ Lord Mackay of Ardbrecknish
My Lords. if I understand the noble Lord correctly, he is suggesting that one should block only those measures with which one does not agree. That is no different from what happens anyway. To make the point to our European partners, we have to block even those measures with which we do agree, including the regulation on fraud. The result is that we now have a decision from the Commission to lift the ban on beef derivatives. We recognise that that was not an easy decision and we are grateful to the Commission and to the Italian Presidency. Because of the interest of the Italian Presidency in Slovenia, we have indicated that, as we are prepared to review all such cases on a one-to-one basis, we shall not block that case when it comes up.

§ Lord Healey
My Lords—

§ Lord Barnett
My Lords—

§ Lord Taverne
My Lords—

Noble Lords
Healey!

§ Lord Healey
My Lords, I thank you. I congratulate the Minister on the noble example of self-sacrifice which the Government have set by vetoing measures with which they agree in order to achieve what they wish. However, does not the Minister find it a little odd that a government who oppose the power of the bureaucrats and the possibility of qualified majority voting should rely entirely on bureaucrats and qualified majority voting to get rid of the ban on beef derivatives?

§ Lord Mackay of Ardbrecknish
My Lords, I am sure that the noble Lord understands full well that we are grateful to the Commission for the sensible view that it has taken of the ban on beef derivatives. We are equally grateful to those member states, including the Presidency, which have supported us so far. However, the fact remains that other member states are determined to prevent any progress being made on the difficult 1358 question of beef. We believe that it is important that we stand up for the UK's interests and the interests of our important farming industry.

§ Lord Clark of Kempston
My Lords, does my noble friend agree that the British Government's stance is to protect the beef industry in this country plus our abattoirs and food processors? Does my noble friend further agree that it is extraordinary that HMG should be criticised for adopting a policy which has been adopted by France and Italy when the European Union has never criticised those two countries for it?

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend is correct to point out that in the past other member states have taken even more drastic measures than that which we have felt obliged to take on behalf of the UK's farming industry and the many people whose jobs have been put at risk in industries which are downstream of the beef industry. My noble friend is right. We believe that it is as a result of our policy that we are beginning to see progress. The decision to lift the ban on beef derivatives is one step in what we firmly believe to be the right direction.

§ Lord Barnett
My Lords—

§ Lord Taverne
My Lords—

Lord Bruce of Donington
My Lords—

The Lord Privy Seal (Viscount Cranborne)
My Lords, I am aware that this issue arouses great interest. Perhaps we can proceed expeditiously and in an orderly fashion, and begin with the noble Lord, Lord Barnett; I am sure that we can then fit everybody in.

§ Lord Barnett
My Lords, is the Minister aware that I pay tribute to the Government for what they have done to attempt to reduce fraud in Europe? However, given that the beef ban could well last for years not months, is it not now a question of the Government doing what they have done in relation to Slovenia and conceding that at least in this area they should agree with the rest of the European Community?

§ Lord Mackay of Ardbrecknish
My Lords, I think that the real point came in the second part of the last sentence of my Answer when I referred to, agreement on a clear framework leading to a lifting of the wider ban". That makes it clear that it is not just a question of waiting for the wider ban to be lifted, but of waiting for agreement on the methods and the steps that will be taken along the road to the lifting of that wider ban. No such framework is yet in place. We firmly believe that it is important for our industry that such a framework is put in place. That is why I am afraid that we shall have to continue our blocking policy—except, as I said earlier, in the case of Slovenia—until all our European partners see some sense.

§ Lord Taverne
My Lords, will the Minister now confirm or deny that the Government might apply the same convoluted logic to all the other 60 non-European 1359 nations which have imposed a ban on our beef? Are we to seek to disrupt our relations with those countries also in order to have the ban lifted?

§ Lord Mackay of Ardbrecknish
My Lords, I am sorry to have to point out to the noble Lord that if another country bans imports of our beef, that is something that we shall have to negotiate with that country. The current ban is a ban on this country being able to export its beef and beef products anywhere in the world. I should have thought that there was a significant difference which even the most Euro-phile of noble Lords would be able to see.

§ Lord Renton
My Lords, may we get away from the beef ban for a moment and return to fraud? To what extent is fraud in the Community considered to be due to abuse of the common agricultural policy?

§ Lord Mackay of Ardbrecknish
My Lords, the common agricultural policy is a fairly rich source of fraud in various parts of the Community, and measures are already in place for dealing with that part of the European budget. The current regulation relates to a broader area than merely the question of the common agricultural policy. It would allow the Commission to go into member states to help them to detect fraud by on-the-spot checks.

Lord Bruce of Donington
My Lords, I have with me a copy of the proposal to which the Question refers, together with the Government's explanatory memorandum. Are we to take it from the Minister's Answer that the Government have abandoned the queries that they raised in paragraph 30 of their memorandum which states that before the Government can agree the proposal, they require further explanation and reassurances? Have the Government had those reassurances? If so, they must have received them within a remarkably short time since the memo is dated 9th May.
Is the Minister aware that in any event the regulation gives quite undesirable powers to the European Commission in connection with powers of inspection, but that it ignores the specific question of the possibility of irregularities occurring within the Commission itself or the rights of the Belgian police to be able to gain access to the documents that they require?

§ Lord Mackay of Ardbrecknish
My Lords, the position with regard to the draft regulation is that although, of course, we are never entirely satisfied, our reservations were both positive and negative. We had considerable reservations that other member states might attempt to water down the regulation. That has not happened. That is why I said that in principle my right honourable friend the Chancellor had indicated his agreement at ECOFIN.
Turning to the noble Lord's other points, if he is to widen the issue, we shall need a lot longer than the time available to us this afternoon. However, it is true that such regulations would give the Commission and its officials the power, along with member states, to carry 1360 out on-the-spot investigations. Given that the noble Lord is so keen on attacking fraud in the European Community, I should have thought that he would welcome that step.

§ Lord Wright of Richmond
My Lords, can the Minister confirm that the Government have taken note not only of Mr. Niall FitzGerald's remarks about a "nightmare", which were quoted by the noble Lord, Lord Thomson of Monifieth, but also of his remarks about the very real damage to British interests and British business which is being caused by the apparent diminution of the Government's commitment to the European Union?

§ Lord Mackay of Ardbrecknish
My Lords, it is in no way a diminution of our commitment to the European Union. We are continuing to work in the European Union, but we have made it clear that because of the very great damage that the policy of the ban on exports is causing to many fragile rural areas of our country, we have some responsibility to put our fellow countrymen first. That is what we are doing. The matter can be easily resolved. We will remove this policy immediately if our friends in the European Union start to build the framework which I mentioned in my earlier answers.

§ Lord Eatwell
My Lords, does the noble Lord agree that any responsible government before embarking on an adventure of this nature would give some consideration to the likely cost both to the Exchequer and the British taxpayer? On Tuesday we heard that the Government were prepared to give comfort to organised crime by vetoing anti-smuggling measures. We now hear that the Government are prepared to give comfort to fraudsters. The CBI tells us that damage is being done to British industry. Can the Treasury tell us its responsible forecast of the overall cost to Britain of this policy?

§ Lord Mackay of Ardbrecknish
My Lords, I say to the noble Lord, Lord Eatwell, that a few weeks' delay on these issues will not make any difference to a matter upon which we are agreed in principle and will be unblocked the moment that British interests are satisfied. I understand, as I did two days ago, that the noble Lord, Lord Eatwell, does not particularly want a British Government to stand up for British interests. I oppose that absolutely, as do the Government. I tell the noble Lord that the farming industry in this country is with the Government in a resolute stand on this issue and not with the noble Lord and his party.

§ Lord Eatwell
My Lords, am I to understand from the Minister's answer that if the framework is not in place within a few weeks the policy will have failed?

§ Lord Mackay of Ardbrecknish
My Lords, the policy will succeed, as it has begun to do, in that the beef derivatives ban has now been lifted. Would it not have been lovely if we had heard one word of welcome for the lifting of the beef derivatives ban from the noble Lord who speaks for the party opposite? This Government will continue to defend British interests.
1361 The blockage can be removed immediately our partners come forward with a framework which we believe will eventually lead to the ban being lifted.

Viscount Cranborne
My Lords, we have one more Question. I believe that your Lordships will agree that we have had a long and enjoyable run on the present Question.

Noble Lords
Hear, hear!