House of Commons Hansard Debates for 13 Mar 1991

Mr. Maude : My hon. Friend makes an important point, but I suspect that it may not be possible to truncate the period to any extent. The court cannot audit the accounts until they have been drawn up at the end of the year. The process of detailed scrutiny by those examining the Court of Auditor's report cannot begin until a little time after the end of the financial year. However, the sooner that scrutiny can be undertaken, the better it will be.

I repeat that we shall debate those matters at ECOFIN on Monday. I look forward to hearing the views of right hon. and hon. Members on this important report.

10.29 pm

Mr. Chris Smith (Islington, South and Finsbury) : Sadly, I must begin with an uncharacteristic note of congratulation to the Financial Secretary. The memorandum before the House is a considerable improvement on those submitted in earlier debates concerning the Court of Auditors and related matters. The memorandum is clear, and it sets out in greater detail than was the case last year the content of the court's report.

It is a pity that the documents for consideration tonight--some of which are lengthy--were available from the Vote Office only on Monday, two days before the debate. I hope that matters can be arranged rather better in future years, so that we may study at greater leisure and length the important and detailed points that the Court of Auditors makes.

The court has performed a useful and important role in identifying the probity and efficiency--or the lack of it--that attaches to the application of European Community funds, and I hope that its observations will be noted not just by the European Parliament but by the Council of Ministers and the Commission.

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During the Financial Secretary's speech, there was an interesting exchange about who is responsible for acting as an overseer. The answer is both the Commission and the Council of Ministers, and it is not good enough for the Financial Secretary to say, "The Council of Ministers sets the framework and guidelines, and put the policies in motion, but the Commission administers them," because the Council oversees the Commission's work as part of its administrative responsibilities.

When difficulties and problems such as those identified by the Court of Auditors exist, it behoves not just the Commission but the Council of Ministers--of which the British Government form a part--to act on the court's recommendations.

Many of the court's specific points should be addressed, and I will highlight just five of them. First, it pointed to the absence of any sector -by-sector aggregate budget summary, which meant that it had to add up the individual figures to reach its conclusions. That must be remedied, if at all possible. Secondly, the court drew attention to the continuing overproduction of butter in the Community by a staggering 25 per cent., and highlighted the consequential complexity of the subsidy regulation.

Thirdly, the Court of Auditors noted the lack of consistent information about the use of the social fund in relation to supporting the long-term unemployed.

Fourthly, the court questioned the direction and efficiency of aid to Bangladesh and especially to the poorest people and areas of that country. Finally, it questioned the lack of management controls in relation to some aspects of aid to central and eastern Europe. Those points sprang out at me when I read the Court of Auditors' report as items that must cause concern.

It is worth noting that the Commission's response to those points has been helpful in some respects, but too hesitant in others. There seems to be a problem ensuring that the findings of the Court of Auditors and its recommendations do not fall into a black hole of inactivity and inaction, but instead are implemented. There must be a continuing drive in the Community to get the best value for money and the best efficiency from the considerable funds that are deployed. As well as the specific items that the court identified, some larger questions arise ; I refer to two that deserve special consideration. The first involves the court's analysis of the development of the regional fund. The regional fund is becoming increasingly important within the Community's overall budget. It is, within a four-year period, doubling in size, and it is therefore very important that it is used wisely and sensibly.

The Court of Auditors' report refers to the benefits of diversification in the use of the regional fund--a process started in 1974 which was consolidated by the budgetary changes and guidelines instituted in 1989. The report also points to the increasing co-operation between national and Commission levels in administering the regional funds. However, it also identifies a remaining weakness in the assessment and monitoring of particular projects and programmes. Given the increasing importance of regional funds in the overall development of the Community and the desire to address imbalances between regions, it is important that that weakness is addressed.

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The other specific question arising from the court's report to which I wish to draw attention is the analysis of the budgetary control over the agricultural guidance and guarantee fund. The report states rightly and sensibly that although the fund's overall expenditure may not have exceeded its budgetary guideline figure, that was achieved only by switching between different chapter headings within the overall expenditure level. Several of those chapter headings were exceeded.

If such virement in subsequent years is not possible between chapter headings, there is an obvious danger that the overall guideline figure for agricultural guarantee support might be exceeded. Given the enormous proportion that that section represents of the Community budget at the moment and the over-preponderance given to it within the balance of the overall budget, it is important that we ensure that it is kept within the guidelines. Those two specific points need careful consideration.

Several specific points that need a United Kingdom Government response arise from the report. They may be small, but nonetheless they are important. I point the Government's attention to just four of them.

Under paragraph 1.68, dealing with special agreements with third countries, the report notes that,

"every month in the case of the amounts deducted by the UK", there is

"no indication of the reference periods and no way of identifying the amounts concerned".

It would be useful to know whether the Government have proposals for rectifying that problem.

Under paragraph 2.25, the court notes that in the United Kingdom the certificates of origin information manual is available only at the Central Customs Office and not more widely available. Have the Government any proposals for ensuring that it is more widely available? Under paragraph 4.3.43, where the report deals with aid for small producers of cereals, it notes :

"In the United Kingdom the non-retention of invoices also posed difficulties for audit purposes."

Have the Government any proposals for rectifying that problem? Under item 4.4.25, dealing with set-aside, which has already been mentioned, the report notes :

"As at March 1990 neither Italy, the FR of Germany nor the United Kingdom had submitted the reports"

on the findings arising from inspections which were due by 1 July 1989. Have the Government submitted that report? Are they intent on ensuring that their performance is somewhat better in future? Those may be small points, but they identify matters in which some improvement on the part of the Government as well as on the part of the Commission and the Council of Ministers might be required. When we debated this matter last year, I asked the then Paymaster General, who has since risen in the ranks of the Conservative party, what the Government intended to do to improve the resources of the Court of Auditors in fighting fraud in the European Community. The court's report for 1988 identified several serious instances of fraud, and the House was united in feeling that that should be tackled seriously.

At that stage, the Paymaster General told us that the resources available to the anti-fraud section of the Court of Auditors amounted to 30 members of staff. I asked then whether that was regarded as sufficient, and I repeat the question. If it is not sufficient, surely it is one matter in

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which the bureaucracy in Brussels can act in the interests of the sensible running of the European Community, rather than against it. We must ensure that the Community operates the substantial funds available to it with probity and efficiency. Of course, the Community has a long way to go

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in achieving that objective, as do our Government, but the Court of Auditors is a valuable instrument in ensuring that progress is made. We should welcome the report and demand that all bodies responsible, including our Government and their representatives in the Council of Ministers, take action on the findings.

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Court of Auditors

10.44 pm

Mr. Jonathan Aitken (Thanet, South) : I beg to move, as an amendment to the motion, at the end to add :

"congratulates the Court for once again producing a detailed and comprehensive account of the appalling waste, mismanagement and incompetence of the institutions of the European Community ; and much regrets that there is no effective vehicle within the European Community to ensure that appropriate action is taken on the issues raised in the Report."

You may have noticed, Mr. Deputy Speaker, that the wording of the amendment is somewhat sharper than the congratulatory tone of parts of the speech of my hon. Friend the Minister. It is not difficult, therefore, to raise the temperature a little, because the prose style of the Court of Auditors' report must rank as among the most boring in the world, and my hon. Friend the Financial Secretary delivered his comments upon it in a most appropriately soporific style--perhaps in the hope that none of us would notice some of the irregularities that he was talking about.

I was troubled by my hon. Friend's lack of indignation about what the amendment calls

"the appalling waste, mismanagement and incompetence of the institutions of the European Community".

I try to imagine myself for a moment not in the House of Commons talking about the European Community and its Court of Auditors' report, but at an annual general meeting of a public company in this country, discussing with the shareholders an auditors' report couched in such terms. In any half- decent company which had an auditors' report highlighting such failures and weaknesses, there would immediately be demands for the resignation of the chief executive and changes in the board, while the institutional shareholders would be up in arms. Even in public finance, the Public Accounts Committee would make a serious song and dance.

After reading the extraordinary catalogue of irregularities, creative accountancy, unlawful switchings of accounts, monitoring failures and plain vanilla frauds which all seem to be part of the staple diet of Euro-folk, I thought that the European Commission needed a new signature tune. I would suggest the old nursery rhyme, "Fre re Jacques"--"Are you sleeping? Are you sleeping?" It is apparent that brother Jacques Delors and his merry men in Brussels have been disgracefully and incompetently asleep at the switch when it comes to running the proper financial management of the Commission. Instead of running a tight ship, I suppose that they have been dreaming of political unity.

We need to focus on some of the things in the report and address seriously whether we should not merely criticise in sharp terms--much sharper than those used by my hon. Friend the Minister--but also try to do something about it--

Mr. Hugh Dykes (Harrow, East) : I very much agree with what my hon. Friend has said. Does he agree that it is interesting that, each year, when the Court of Auditors' report laments that it needs more staff and more resources for its investigations, it always confirms, above all, that all these misdemeanours occur in all member states equally?

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Mr. Aitken : It also confirms, year after year, that the frauds go on and on and get worse and worse. My hon. Friend's comment seems to prove what is happening year after year. We need to do something about it.

When one goes through the report's small print, one does not know whether to laugh or cry. In certain places one can do both. I shall have a stab at stimulating both emotions in the House. Let us, for example, tackle the subject of redundancies in Europe, which seem a different form of redundancy from any that I can discover. Some of us have long known that the Brussels Commission is the Valhalla of jobs for the boys, but what is new in the report is that it also turns out to be the El Dorado of golden handshakes for the Euro-researchers. I found the comments of my hon. Friend the Minister amazingly complacent and self-satisfied about what he thought had gone on in the research department. He seemed to think that there were "continuing problems", or something like that. However, chapter 9 of the report discloses a jolly little tale--an expensive tale--of 150 temps in the Commission's joint research centre who were made redundant. They knew that they were temporary staff, because they had a contract stating that they were temporary staff and that the contract was terminable on either side at three months' notice. However, when the temps were made redundant, they received not the three months' money that they might have expected, but 70 per cent., of their salaries for each year of their working lives until the age of 65.

In the last three years, that has worked out at £30,000 per researcher. That exercise cost £4.5 million in 1988, 1989 and 1990. Presumably it will be a continuing cost to the Commission until those temps celebrate their considerably enriched 65th birthdays. It adds a new meaning to laughing all the way to the bank.

The European Commission puts it rather differently and in rather more moderate language. It simply says :

"Why it was necessary to give such terms to staff engaged on temporary contracts terminable at three months' notice is not clear."

Obviously, a lot more is not clear in the wonderful world of Euro- retirements and redundancies.

The Father Christmas munificence towards those who get the sack in Brussels becomes even more incredible when we reach the European Parliament. Chapter 15.4 of the auditors' report criticises the incredible payment of £2.2 million to three redundant persons. It is not clear whether the fortunate trio were Members of the European Parliament, MEPs' staff or European Parliament cleaning ladies, but at £730,000 per head of redundancy money for getting the sack, they too will have laughed all the way to the bank as a result of being dismissed by the Commission. The auditors say that the payments were made because of a "considerable system defect". The data on which the payments were made

"had not been checked either by the administrators responsible or by the Financial Controller".

It is very different from the world of our own dear Fees Office here in the House of Commons.

Such everyday stories of European Commission money folk in the Court of Auditors report are always expensive. Sometimes they are funny, sometimes they are sad. To me, the saddest parts of the report are those which deal with European Community aid, far too much of which is wasted by sheer incompetence.

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In the House we hear a great deal from my right hon. Friend the Minister for Overseas Development about how glad she is that most of Britain's overseas aid is channelled through the European Commission, but one might take a different view after reading through the passages of the report on aid to west Africa and Bangladesh. The auditors say that, of last year's £25 million of food aid to Bangladesh, only 38 per cent. was actually distributed. The remaining 62 per cent. was either eaten by senior civil servants--I suppose that is food for the boys- -or sold by them for a profit. The poorest Bangladeshis simply did not receive the aid that they were supposed to receive.

In west Africa, the story is much worse. Let me focus the attention of the House on the story of EC aid to Benin, a country that I happen to know quite well, and which is one of the poorest countries in the whole of Africa. This sad story is to be found on pages 206 to 216. Here is what was wasted. There was a £3 million EC aid project for village water wells. All the wells had to be abandoned because they did not work properly and had not been properly surveyed. There was £40 million EC aid for a cattle-rearing project. It failed because of delays and inadequate financial management and, again, a failure to do proper surveys. The same fate befell a Benin fish farming project, to which EC aid of £1.5 million had been given. That failed because its self-sufficiency was doubtful, if not non-existent. A Benin wildlife park failed to open its gates for many of the same reasons. But perhaps the most shocking story of aid to Benin that went wrong involves a European Community aid transfer of £5 million in cash, called a STABEX transfer. The money was tranferred from Brussels to a joint EC-Benin bank account in July 1988. It was supposed to be under the control of the joint signatories of a Benin official and an EC official. The EC official forgot his duties, and the Benin official moved the entire sum to another bank account without proper authorisation by the EC official, who did not notice for another seven months that the money had been moved. Then the bank to which the £5 million in cash had been moved went bankrupt, and the whole amount of aid had to be written off.

Five million pounds is a lot of money in aid when children are starving and aid is desperately needed in a poor part of Africa. It is not amusing but desperately sad that such incompetent mismanagement of the EC aid programmes should occur.

Mr. Rowe : Does not my hon. Friend agree that this is the same story, writ large, as is sadly so often the case with national aid programmes, where we encounter exactly the same difficulties despite our best efforts? Does it not suggest to my hon. Friend that we should reconsider the policy under which aid is given? It might be better to allow organisations and companies with an established track record of delivering good work in a country to be given additional assistance, rather than, as at present, the frequent setting up, de novo, of schemes by people with no proven track record?

Mr. Aitken : My hon. Friend's intervention had several themes, but I do not think that I agree with any of them. Perhaps one with which I do agree is that anybody other than the EC would be better doing the job. If my hon. Friend has up his sleeve some organisations with a track record, let us send them the money. I do not agree that the national performance of our Government or civil servants

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has been nearly as bad as that of the EC. I have not heard any horror stories about a British Government official who allows £7 million in cash to be transferred to the wrong account and does not notice the transfer for seven months, so that the full amount is written off and wasted. That is a disgraceful story. I cannot accept that there is any comparison between such mismanagement and anything that I have heard of within the British Government.

Mr. Cash : Does not my hon. Friend agree that, in light of the tremendous activities of charities seeking to raise money to help those who are starving in the third world, it is incredible that figures such as he has mentioned should be squandered? That is a total disgrace and must be sorted out.

Mr. Aitken : I am glad that I seem to have raised the temperature in the House, because that is what I intended to do. Some of the wastage is heart-breaking, but it does not seem to matter to those in Brussels. If the message goes out from this House that people care about the scale of incompetence, which can be heart-breaking for those involved in the world of aid, it will be a good thing. Agriculture is the biggest item in the EC budget and features extensively in the criticisms in the auditors' report. It is perfectly clear that the European Commission's financial accounting methods for agriculture are roughly those of Polly Peck or Bernie Cornfeld's Investors Overseas Services. One can find examples after example of that. Page 55 of the report criticises the Commission for treating food aid gifts to third-world countries as sales at intervention prices, so making fraudulent profits and improving the agricultural budget. On another page, the report states that agricultural expenditure is kept within its guidelines only by the dubious accountancy practice of transferring from those sectors with underspends to those with overspends.

Page 83 contains a pretty clear hint that the co-responsibility levy is continuously evaded by continental farmers, who pretend to consume large quantities of the cereals on their farms in order to qualify for benefit. I noted the Court of Auditors' comment that none of the member states visited, except the United Kingdom, took steps to check the reliability of global figures and check farms on a test basis. Only Britain operates on a level playing field.

European agricultural spending today faces a new budget crisis, largely because of the cost of buying in east German corn, which has risen to a cost of more than £1 billion this year. That will mean cuts in European Commission agricultural spending. As we have the Court of Auditors' report in our hands, it is a good moment to ask what Mr. Delors is going to do about it. We know the answer from some interesting recent press reports. Mr. Delors has decided to cheat and continue the sort of fraudulent, creative accountancy cycle that we find in the auditors' report.

Why do I say that? I shall quote from a fascinating article, written by Mr. Boris Johnson, the Brussels correspondent of The Daily Telegraph, which appears in this week's Spectator. Mr. Johnson states that the EC must make some cuts. The article states : "Just to keep within budget, this means moderately painful price cuts for farmers in the whole of Europe. Resistance is being led by the French, and amazingly, Delors himself.

Last week he startled officials by allowing himself to be outvoted by his 16 commission colleagues after a flagrant attempt to protect French farmers. While his colleagues

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agreed with the Irish farm commissioner, Mr. Ray MacSharry, that there was no choice but to make the cuts, Delors said it would be better to admit defeat and break the EEC budget. Voted down, he fumed : I will not defend this in public.' MacSharry : Do you mean to say you will not defend a collegiate decision?' Delors : I will not take moral lessons from you, MacSharry!'

That is the sort of conversation that sets a Brussels cocktail party a- twitter, and raises questions about marbles."

The report is important, because it raises the curtain on a whole series of totally unacceptable financial management practices. At times, they are fraudulent, deceitful and dishonest. I shall not press the matter to a vote, but I take issue with the tone of my hon. Friend the Minister, who misjudged the mood of the House by not saying as clearly as I hope he will if he speaks again at the end of the debate, how shocked the House and, I hope, the Government are at some of the revelations in the report.

Year after year, we turn up for these late night debates and simply accept that somehow there is a continuing financial shambles in the Commission. It is not good enough. The amendment asks that we take action

"to ensure that appropriate action is taken on the issues raised in the Report."

I hope that the debate will encourage the Government to take some truly effective and thorough action.

11.1 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber) : As hon. Members have said, we are debating a detailed two-volume report. The first volume has 133 pages and the second has 85. There are also many tables. As the hon. Member for Bexhill and Battle (Mr. Wardle) said, it is now March 1991 and the report is for 1989, and we have an hour and a half in which to debate it. That is not a very effective way in which to proceed. Despite what the hon. Member for Thanet, South (Mr. Aitken) said, the Minister did not misjudge the mood of the House. He caught it just right, because the mood is somnolent and the Minister was reflectively somnolent.

One can only pick out some matters. Even the critical hon. Member for Thanet, South could pick only the odd bit of the report, and in dealing with any organisation one can always find awful things that have gone wrong. I shall pick three matters in the report, and the first of them is not a criticism. It is to note, and it is worth noting, the size of the bureaucracy. The report tells us specifically that the total staff for all European Community institutions is 24, 266. That includes everybody--the cleaners, the electricians, the doormen, the lot--and the Commission takes 17,257 of those. For a Community of 338 million, and bearing in mind the policy areas that are covered and allowing for error, sometimes gross error as we have heard, that represents good value for money.

Mr. Bob Cryer (Bradford, South) : Will the hon. Gentleman give way?

Sir Russell Johnston : How could I refuse?

Mr. Cryer : The hon. Gentleman advances an argument used by many pro -marketeers, that the EEC has a small bureaucracy. Does he take into account the fact that a large part of the EEC bureaucracy is administered by individual member states? For example, our Ministry of Agriculture, Fisheries and Food employs 3,500 civil servants solely on EEC matters and that is repeated in

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almost every Department. The idea that there is a relatively small and efficient group of people administering the EEC is not true.

Sir Russell Johnston : It is true, but I shall not argue at length with the hon. Gentleman. It is not true that other Departments employ the 3,000-plus that the Ministry of Agriculture, Fisheries and Food, and presumably the Scottish Office Agriculture and Fisheries Department, employ. The Ministry is in a special position. The hon. Gentleman has made his point.

My second point concerns fraud and irregularity, on which the hon. Member for Thanet, South properly laid great emphasis. The United Kingdom has a good record in putting European legislation into effect. However, no country is perfect, and the hon. Member for Islington, South and Finsbury (Mr. Smith) gave examples of where we have not gone along with what we have been required to do. The Court of Auditors makes a major and admirable effort to cover the field, but it is not clear that there are effective measures to deal with defaulters. Financial sanctions were supported by a recent vote in the European Parliament, and I wish to know whether there has been any progress on this. At the administrative level, for example, one notices in paragraph 1.73 that the court says :

"There is no systematic linkage of information concerning frauds to the entering of own resources in the accounts. Such information could, however, have an effect on the recording of the entitlements established. In particular, the Commission does not make out any recovery orders, even in the case of amounts that have been properly identified."

That is not satisfactory. The response from the Commission, on page 226, is long and complicated. I simply ask the Minister whether we are getting on top of this. If the hon. Member for Islington, South and Finsbury is correct, 30 fraud detectors for 300 million people does not seem a good ratio.

My third point concerns a matter which has, for a long time, caused all those interested in an effective European Community regional fund, based on agreed criteria, deep dissatisfaction with the attitude of this Government and of the Labour Government before them, after the establishment of the regional fund. As hon. Members will recall, that was made the responsibility of the then George Thomson, now Lord Thomson of Monifieth. I am talking about additionality.

The Court of Auditors' report expresses the problem succinctly and clearly at paragraph 7.106, where it says :

"The principle of complementarity"--

these are awful words--

"aims at ensuring that Community action is in addition to national action to assist the regions and is not used as a substitute. The implementation of this concept requires the drawing-up of adequate procedures to ensure that Community contributions to regional development are not in practice diverted from their purpose" We do not do it that way. In the past, regional funds, which were usually based on a negotiation of a fixed proportion, have been treated by the Treasury as a clawback of what the former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), used to call "our own money". I do not accept that concept, and I should like to hear the Goverment's opinion of the clear statement by the Court of Auditors of what is proper--a statement of which we are in breach, and to which no reference is made in the commentary by the Treasury or the Scrutiny Committee.

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My last point is about the unpredictabilities of politics. When he was briefly Foreign Secretary, the Prime Minister had to write the interim White Paper on European Community developments between June 1989 and January 1990. He said :

"For the first time in years Community spending, including on agriculture, is under proper control."

The reason for that was increased resources. Until then, resources had lagged behind policy decisions, and that was the reason for the Delors package, which had been reluctantly accepted by the right hon. Member for Finchley. The report gives a generally good picture of the Community picking up momentum.

However, by the end of the year, the Berlin wall was down, the effect of agricultural imports from central and eastern Europe were being felt, and the drought in the United States was sending up world prices. On all those things, my views are contrary to those of the hon. Member for Thanet, South. Those uncertainties in the world argue for closer and closer integration in the Community.

I conclude as I began, by remarking on the ineffectiveness of the whole procedure. In my experience, it is often made worse by a tendency among Ministers simply to ignore questions that are asked of them. In a short contribution, I have asked only two or two and a half questions. I very much hope that they will be answered. 11.9 pm

Mr. Christopher Gill (Ludlow) : Thank you, Mr. Deputy Speaker, for calling me so early in this important debate.

I have spoken regularly in debates on the reports of the Court of Auditors. What is significant about this evening's debate is that there is a much greater attendance, which is most encouraging because many of us have been concerned about the lack of interest that the House has shown in these important matters.

The other feature of the debate which I welcome very much is the invitation of my hon. Friend the Minister to make suggestions about how affairs in the Community can be better controlled and organised. I want to make suggestions on three subjects--the unsatisfactory nature of the division of responsibilities within the European Community, the unsatisfactory systems that are represented by some of the European policies, and the sheer unintelligibility of much Euro-jargon.

On the division of responsibility, I quote from the Court of Auditors' report :

"Management of numerous important areas of the Community finances is shared between the administrations of the member states and the Commission."

I suggest to my hon. Friend that in that division of responsibility there is the classic recipe for confusion, disaster and total lack of control. There is too much opportunity always to leave it to the other chap to do what needs to be done.

The report is valuable, important and excellent. As my hon. Friend the Member for Thanet, South (Mr. Aitken) has pointed out, it contrasts very much with the auditors' report that we in commerce would expect to see. One only has to flick through the pages of the report to find criticism after criticism about the way in which the finances of the Community are organised. The report is littered with phrases like :

"The system of budgetary and financial management in force needs to be improved" ;

"the accounting and internal control shortcomings" ;

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and "More rigorous financial management by the Commission would provide better information".

There is much criticism in the report. One looks hard to find any reference to things that the Commission is doing efficiently and with probity.

With regard to systems, I am sure that many hon. Members will understand that the systems defy reasonable control. I have on previous occasions in the House talked about fraud in agricultural products. No number of accountants and no army of inspectors could control the abuse and fraud involved in commodities because they cannot recognise what they are looking at. That is a matter of simple practicality, but it goes well beyond that.

I was interested to read the supplementary explanatory memorandum on the management and control of export refunds by the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, in which he states :

"the level of subsidy has been determined with insufficient regard to the need for economy ; the Commission's arrangement of export subsidies has not satisfied the requirements of public accountability ; and national controls provide an insufficient safeguard against fraud."

On the implications of this, he says :

"The Government is concerned that the objectives of the refund system should be achieved as economically as possible and regards fraud against the Community budget as a serious problem which needs to be tackled quickly and effectively."

He welcomes the court's report,

"which underlines the need for improved management of EC expenditure and greater effort to minimise fraud."

Those are all very welcome expressions of sentiment. So often in these debates we hear expressions of sentiment as to how we would like to see matters improved, and we utter platitudes along those lines ; but so much of the fraud and the abuse can never be resolved unless we tackle the system that allows them to take place. In a Committee Room in this House we have been considering the transport of live animals within the European Community. Part of the evidence submitted to us in Committee is that 31 bulls were exported from a market in the midlands for meat in Sicily. As a practical man involved in that trade, I cannot think of any legitimate reason why beef animals should be exported from the middle of this country to the island of Sicily to provide Sicilians with freshly butchered meat. I suggest that the only possible reason for the extremely long journey of those animals was to satisfy the fraudulent intent of, perhaps, the mafia.

Perhaps my hon. Friend the Financial Secretary to the Treasury would see whether something could be done to help all of us in the House to assist him and the European Community to get a better grip of the Community's finances. There is an important role for the House in scrutinising the many regulations and directives which come from Brussels. I am sure that other national Parliaments look to see what we are doing at Westminster to scrutinise such matters as are before us tonight. I am also sure that many hon. Members are deterred from looking closely at many things to do with the European Community simply because of the complexity of the legislation and of the detail put in front of us, the sheer incomprehensibility of much of it and the frustration that builds up as we feel that it is impossible to get to grips with this huge and monolithic bureaucracy.

In looking at the whole question of the European Community, we must not allow our idealism to blind us to realities ; nor must we allow our innate common sense to be

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