European Union: Fraud (Hansard, 2 April 2003)

§ Lord McIntosh of Haringey
My Lords, since the publication of the reform White Paper in March 2000 there have been a series of major reforms of European Union governance and finance. The latest and most far reaching of these, the new financial regulation, came into force on 1st January this year. A major modernisation of the accounting framework and its supporting IT system is also being carried out. We expect that the bulk of these reforms, including a move to accruals accounting, will be implemented by 2005. This is an ambitious timetable and we strongly congratulate the EU Vice-President on the substantial reform programme that he has put in place.

§ Lord Pearson of Rannoch
My Lords, I thank the noble Lord for that reply and for doing his best to justify the unjustifiable. Does the noble Lord agree that it is now four years since the Commission resigned in disgrace and that at least five of the senior officials who blew the whistle have been silenced? Although the Minister said that the new accounting system is on the way, my understanding is that it will not be in place until 2006. In the mean time, no normal auditor would 1311 sign off any of these accounts. In these circumstances, is it not time that Her Majesty's Government stopped pouring so much of our money down such a hopelessly corrupt drain?

§ Lord McIntosh of Haringey
My Lords, the noble Lord, Lord Pearson, is right in his first and plainly historical point about the amount of time since the Santer Commission resigned. He is wrong about everything else. For example, if he is talking about Mrs Marta Andreasen, she herself has said that she was not a whistle blower and that she was not dismissed for criticising the reforms introduced by Neil Kinnock. The most recent accounts—those for 2000—were granted discharge by the European Parliament in April last year and the final stage of that is fast approaching. No accounts have failed to be given discharge by the European Parliament. As to the European Court of Auditors, it has rejected all of the last eight accounts. But it has done so on a basis which is generally recognised to be outdated—that is, a 5 per cent sample without any systems accounting procedures.

§ Lord Saatchi
My Lords, why did the EU pay out subsidies in Austria for 60 per cent more alpine pastures than exist? How did it manage to pay 2.5 billion euros to olive oil producers in Greece last year, despite the fact that there is no register of olive oil producers in that country?

§ Lord McIntosh of Haringey
My Lords, I am disappointed in the noble Lord, Lord Saatchi. He has forgotten about the import of bananas into southern Italy and tobacco subsidies in Greece. The newspapers are full of examples of fraud and irregularities. There is no doubt that there are both irregularities and fraud. Of course there are; there are in all systems. But the Question was about the reform programme—and the reform programme that Neil Kinnock is introducing is quite remarkable. The EU is moving over to accruals accounting, with a proper balance sheet, in a period of only four years. It took us seven years to do that and only three other European Union member states have succeeded in doing so.

§ Lord Wallace of Saltaire
My Lords, does the Minister agree that we need a strong and effective Commission and that Vice-President Kinnock's work to reform its working and accounting practices is extremely important? Can he assure the House that the British Government have given the fullest possible support to Vice-President Kinnock in his work?

§ Lord McIntosh of Haringey
My Lords, I hope that I said so in my Answer. I said that we congratulate the European Union Vice-President on the substantial reform programme that he has put into place. That continues to be our position. Incidentally, we are also supportive of the Budget Commissioner, Michaele Schreyer, because she has been responsible for many of the reforms involved.

§ Lord Stoddart of Swindon
My Lords, I can assure the Minister that I have not forgotten the subsidisation of tobacco. I cannot help drawing attention to the incongruity of banning tobacco advertising while subsidising awful tobacco in Greece and other countries of the European Union by some hundreds of millions of pounds. Is it not a fact that most of the fraud in the European Union—I almost said "the United States of Europe", but that comes later—is due to the operation of the common agricultural policy? Is it not time that our Government and other governments took real action to end this awful, corrupt regime?

§ Lord McIntosh of Haringey
My Lords, the noble Lord, Lord Stoddart, continues to fail to distinguish between those actions which are the responsibility of the European Commission and those which are the responsibility of member states. A very high proportion of the irregularities—which exist; the noble Lord is quite right about that—is the responsibility of member states and it is the responsibility of member states to eradicate them. The noble Lord's flight of fancy about the United States of Europe makes it very difficult to give serious answers to what ought to be serious questions.

§ Baroness Oppenheim-Barnes
My Lords, while on the subject of bolting the stable door after the horses have long escaped, does the noble Lord have any estimation of exactly how much taxpayers money—certainly of taxpayers in this country—has been lost since the inception of the European Community, and now the EU, in terms of fraud and definable waste?

§ Lord McIntosh of Haringey
My Lords, I was not on the subject of shutting the stable door after the horses have escaped. The noble Baroness, Lady Oppenheim-Barnes, is entitled to her own agenda. I do not carry with me figures going back 40 years. All of the reports of the European Court of Auditors are publicly available. There has never been any concealment of the criticisms, both internally and externally, of the European Union's financial systems.

§ Lord Renton of Mount Harry
My Lords, on the important point made by the noble Lord, Lord Stoddart, has the Minister made any calculations of how many British farmers would go bankrupt if the CAP were abolished and all CAP subsidies removed?

§ Lord McIntosh of Haringey
My Lords, this is a large, important and worthwhile subject, but it is not the subject of the Question on the Order Paper.