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subordinated to theory. Earlier today in the House we saw how an ideal or principle had gone awry simply because the practical difficulties were not fully recognised and were underestimated. In our efforts to be so communautaire, to demonstrate that Britain will play a leading role in the councils of the European continent, passing many directives and regulations and participating in the intergovernmental conferences and other meetings, we must keep our feet on the ground.Many of the complaints that are itemised in so much detail in the auditors' report arise because the system is so fundamentally flawed. Agricultural support spending is out of control. Fraud is endemic. What assurances can my hon. Friend the Minister give the House? Can he promise the House that the programmes in which fraud is endemic will be abandoned? Will the Court of Auditors' recommendations be implemented? Platitudes and promises will not do. In the final analysis, if there is no improvement, the House must be prepared to withhold funds.
11.20 pm
Rev. Ian Paisley (Antrim, North) : I am not holding a flag for the Commission, but does not the Council of Ministers have responsibility to oversee the administration as carried out by the Commission? Is that not part of its powers under the treaty? I should like the Minister to elaborate on that.
It is no use hon. Members simply attacking the Commission. The Commission has fallen short and it is open to justifiable criticism, but the Council of Ministers has a responsibility. The Minister cannot answer for the Commission, but he can answer for the Council of Ministers, because he is part of that Council. Knowing the way in which the Common Market operates, we cannot expect the Minister to stand at the Dispatch Box and defend the Commission because he is not responsible for its workings. But, as a member of the Council, he is responsible for overseeing the administration carried out by the Commission, so he should be able to answer on that.
I should have thought that pro-marketeers, such as the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), would be glad to have done with the evils and shortcomings of the Common Market, instead of trying to gloss over them. If the hon. Gentleman reads the document that the Minister has produced for us--on which I congratulate the Minister--he will see that it is a fair, perhaps even a biased, summary in favour of the market. Yet that document alone is a terrible overall indictment of the administration.
I agree with the hon. Member for Thanet, South (Mr. Aitken) that, if the books of any company were in the state that the books of the Common Market are in today, the directors would all be fired and the fraud squad would be called in. It is no joke that £5 million that should have gone to the needy has gone astray and that that has been glossed over. I have heard Commissioners boasting about what they are doing for the third-world countries. What could that £5 million have done to help people in their dire need? The House has a right to highlight that and to pay attention to what is really happening.
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Mr. Cash : Does the hon. Gentleman agree that that was only one of the examples that my hon. Friend the Member for Thanet, South (Mr. Aitken) produced? The £5 million is only the tip of the iceberg. If that sum is quantified in terms of the fraud taking place in the Community as a whole, the total sum is enormous. The situation has gone beyond the pale, and action must be taken.
Rev. Ian Paisley : I agree with the hon. Gentleman. It would be impossible to highlight every example during this short debate. Surely it is amazing that the Court of Auditors has continually to say to the Commission that the presentation of its accounts and of its administration has many shortcomings. Surely the Common Market should have its act together by now. It should be able to present an overall summary to the Court of Auditors. The summary that has been produced fails to differentiate between compulsory and non-compulsory expenditure. Accordingly, the auditors are in difficulties when they come to examine the books. They have to do considerable research in trying to carry out their duties. The Court of Auditors is to be commended.
Many of the members of the Court of Auditors are strong pro-marketeers. Some of them were members of the European Parliament and were committed to the Common Market, but the court is not biased. Although some of its members have the background that I have outlined, they are alarmed by what is happening. When the court draws attention to irregular carry-overs, the Commissions merely states that it is applying the rules. It adds that some flexibility is still required. Under the smokescreen of flexibility, the Commission excuses what it is doing.
Money should be returning into the coffers of the Common Market, but we find that the interest on arrears of payments of our own resources is not even being collected. The Commission is not collecting the money that should be coming back to the Community. Surely the House should be concerned about that. The document that the Minister has produced shows that we are getting into a sorry pass.
I have always been worried about the inadequate customs control of certificates. It is something that we know about in Northern Ireland. It seems that it is possible to obtain certificates to make repeated crossings of the border. It must be remembered that every crossing takes money out of the EEC's pocket. I am sure that the hon. Member for Inverness, Nairn and Lochaber is as concerned about that as I am, he being a Scotsman. I am a Ballymena man, an area which is known as the Aberdeen of the north. We are told that there is no proper documentation and that the Court of Auditors cannot undertake proper scrutiny. That is alarming.
The court refers to serious weaknesses in the implementation of the levy system. Any Member who has farmers in his constituency will be worried about that. I am worried about slow payments. The court has highlighted the delays in processing requests for payments. Surely those who deserve to benefit from the subsidies should be paid on time. We should be trying to ensure sound financial management, so that they get their moneys when they are due.
I am alarmed by the offhand way in which the Commission seems to dismiss the matters to which the
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Court of Auditors has drawn attention. It does not say, "The Commission is prepared to face these matters and to take steps to ensure that the deficiencies do not continue."The time has come for the Council of Ministers to take the Commission to task, and to say, "It is in the interests of us all to get honesty and integrity into the way that the funds are expended." That would remove a great deal of current criticism, which would be in all our interests. I am not a Common Marketeer ; I have always been anti-Common Market. However, it must face up to its responsibilities. It cannot continue to be dishonest ; it must now start to be honest.
11.30 pm
Mr. Charles Wardle (Bexhill and Battle) : The hour is late. It is that time of day when the Whip fixes one with a baleful stare and asks whether one really wishes to make some comments. I shall be brief, and restrict my comments to three observations about the 1989 annual report and the functions of the Court of Auditors. First, I wish to emphasise that the accounts are produced very late indeed. I expressed that concern when my hon. Friend the Financial Secretary allowed me to intervene in his speech. If the accounts are produced in December of the year following the year end, they are too late for the Council of Ministers and the European Parliament to enable that information to have any bearing on spending plans and decisions for the year that follows, even in a normal year. In a year when there has been some structural change in the Community--such as following German reunification, when five additional German Lander became part of the Community--the need for information from the previous year is most important. That is lacking. Although my hon. Friend said that the report was the principal means of scrutinising how money is spent on the Community's behalf, unless that information is delivered sooner, so that it can apply to the following year's budget process, the system can be of little use.
Secondly, the Court of Auditors has no teeth. Much political importance is attributed to its work, and it is certainly active. It produces many papers --for example, 13 in 1989 and 14 in 1990. However, there are no powers to demand remedial action and to enforce changes. That means that for all the virtuous pronouncements in its reports, there is no power in reserve to hasten the pace of change and to enforce budgetary control. With the volume and complexities of CAP spending and the voluminous growth of regional fund expenditure, that becomes doubly important.
My third point concerns the anti-fraud efforts, upon which hon. Members have already commented. A few weeks ago, on a Treasury and Civil Service Select Committee visit to Brussels, I had the opportunity to meet the Commissioner in charge of the budget, Mr. Schmidhuber. He made the fundamental point that, no matter what effort is made by the budgetary team and by the Court of Auditors, it depends very much on the efforts of the member countries if fraud is ever to be tackled. Even with an expert team of 30 staff, all their efforts will come to naught unless the Council of Ministers debates the matter in earnest and ensures that each member country makes a determined effort.
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The report is a mine of information, and I cannot resist detaining the House for a few seconds to read from paragraph 118 of section 1 :"The Commission regrets that it has no internal documentation on the general accounts at the moment. Over the last few years, priority has been given to the modernisation of computer applications This effort entails a heavy workload, not only for computing depts but even more so for accounting depts Since the same officials would also be responsible for compiling a manual of accounting procedures, it was therefore impossible to begin work before March 1990." As hon. Members have already said, if that were to happen in the corporate world, there would rightly be fireworks.
Unless there is an effort to produce the accounts more swiftly, unless the Commission is given teeth, unless the Council of Ministers ensures that greater efforts are made, and unless fraud is combated at member state level, the production of the accounts will prove to be largely academic.
11.34 pm
Mr. William Cash (Stafford) : Much has been made of the importance of budgetary discipline in the Community. The introduction to the annual report of the Court of Auditors states :
"the Court observes that, of the measures adopted to impose discipline on agricultural expenditure"--
which is by far the greatest proportion of the total--
"those it examined have not, as yet, attained the desired level of effectiveness."
It continues--this is highly important--
"The apparent control of agricultural expenditure is above all the result of a favourable situation on world markets."
In other words, budgetary discipline hinged more upon favourable world markets than on the intrinsic methods employed to achieve it. That is not a very good start.
Furthermore, there is a reference in the introduction to the famous Delors report, that deserves a little explanation in the context of the intergovernmental conferences and the references to budgetary deficits and so forth in relation to economic and monetary union. Paragraph 1.52 states :
"The Court considers that the first cases of implementation of the new rules on budgetary discipline are still a long way from management with due and proper care' and from the spirit of rigour' described when the Delors package was introduced in document COM(87)100 final of 15 February 1987".
In shorthand, that means that the application of the rules which have been given such an enthusiastic welcome within the Community--the Delors package --are clearly not working, or were not for the financial year ending December 1989.
In view of the enthusiasm with which some member states and the Commission have received the Delors report, we are entitled to insist that the Minister tells us whether he and the Government are satisfied with the way in which the Delors package is working, given the importance that we have attached to budgetary discipline. As regards the European agricultural guidance and guarantee fund guidance measures and the general conclusions drawn from them, the court states :
"Three years on"--
after the system was first put into effect--
"the same shortcomings are evident : undefined objectives, vague expressions, dispersal of measures, lack of operational guidelines and lack of effective coordination of the various aspects of the common agricultural policy. At best, the measures financed under the structural policy result in fragmented, generalised financing of investment relating to agricultural or forestry activities."
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In regard to the most critical questions facing the report--agriculture and budgetary discipline--at best it can be said that it gets two out of ten. That is not a criticism of the Court of Auditors--I am grateful that it has done such a good job in identifying these matters--but, we must go beyond the question whether the Court of Auditors has done a good job and consider whether the objectives of the budgetary arrangements are being implemented. If they are not--this report deals with the entire expenditure of the European Community--we are entitled to ask some serious questions about the viability of the system as a whole.It is not good enough for my hon. Friend the Financial Secretary to explain in accountancy terms, and in a sombre, melancholy, downbeat manner, what he thinks has occurred. We need vigorous criticism of the system from our own Government, to ensure that the aspect on which we lay so much emphasis-- budgetary discipline--is delivered. As the Court of Auditors itself is so critical of the lack of budgetary discipline, we might have expected some comment from my hon. Friend the Financial Secretary along the same lines.
The report is full of examples of fiddling, fraud, waste, and extravagance- -you name it, Mr. Deputy Speaker, and it is there. It is about time that we put our foot down. When my hon. Friend attends the Council to discuss the Community's budgetary arrangements as a whole, I hope that he will speak his mind and get them sorted out once and for all.
11.42 pm
Mr. Maude : With the leave of the House, may I say that we are, sadly, drawing to the end of the debate, and I have been rebuked by hon. Members in all parts of the House for the way in which I approached it. I have been accused of being soporific, sombre, melancholy, and, inaccurately, by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), somnolent--I plead not guilty to that charge.
If I have been sombre and melancholy, it is because we are dealing with a sombre and melancholy subject. I am glad that no one accused me of not taking it seriously. It is a serious matter, and I am pleased that the House treated it as seriously as it did. If I have any criticism of the debate, it is that those hon. Members who are enthusiastic about the idea of the European Community have a tendency to approach such reports in a spirit almost of apology. They suggest that, if a fault exists, it is that member states have denied the Commission the resources that it desperately needs to avoid waste and inefficiency. Later, I will refer briefly to resources dedicated to guarding against fraud.
With respect to the hon. Member for Inverness, Nairn and Lochaber, the approach that I described is not the correct one to take. Of course we must ensure that member states, but the Commission as well, can monitor the situation properly, exact full value from the funds, and ensure that they are spent properly.
On the other side of the argument, some seek ammunition with which to lambast the Community, for which they have little sympathy. One is bound to admit that the report provides a rich arsenal of such ammunition.
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However, an auditor's report tends, by its very nature, to highlight things that have gone wrong. Its purpose is to shine a spotlight on problems, and to point to remedies.The faults that have been identified fall into two categories, in the way they have been addressed tonight. Into the first fall those that arise from a system that some of my hon. Friends argue is incapable of delivering a satisfactory outcome. Into the second fall the perhaps more remediable problems that arise because, although the system is satisfactory, its execution leaves much to be desired. As an optimist, I do not believe that the systems concerned are incapable of improvement. If they have proper objectives, are properly managed and operated, and are rigorously scrutinised, I am confident that they are capable of producing satisfactory results. However, it must be said that the report draws attention to some lamentable lapses. Some of them, as my hon. Friend the Member for Thanet, South (Mr. Aitken) said, are humorous, while others are deplorable. Important sums of money which have been voted and deployed for the relief of poverty in some of the poorest parts of the world have not made it to their destination. That is lamentable. I assure the House that, when we debate the issue in the Finance Ministers Council on Monday, I shal, as British Ministers always do, make clear our views on the subject. If I can offer my colleagues a word of comfort, may I say that, as I attend Finance Ministers' meetings, I find increasingly that our view about the need for rigour is being echoed by our partners as--
It being one and a half hours after the commencement of proceedings on the motion --
Mr. Deputy Speaker (Mr. Harold Walker) : In the light of the earlier comments of the hon. Member for Thanet, South (Mr. Aitken)--
Mr. Aitken : I beg to ask leave to withdraw the amendment.
Question put, That the amendment be made :--
The House divided : Ayes 16, Noes 72.
Division No. 97] [11.45 pm
AYES
Abbott, Ms Diane
Aitken, Jonathan
Barnes, Harry (Derbyshire NE)
Body, Sir Richard
Cash, William
Gill, Christopher
Gordon, Mildred
Mitchell, Austin (G't Grimsby)
Molyneaux, Rt Hon James
Nellist, Dave
Paisley, Rev Ian
Skinner, Dennis
Spearing, Nigel
Spicer, Michael (S Worcs)
Taylor, Rt Hon J. D. (S'ford)
Taylor, Teddy (S'end E)
Tellers for the Ayes :
Mr. William Ross and
Mr. Bob Cryer.
NOES
Alison, Rt Hon Michael
Amess, David
Arbuthnot, James
Arnold, Jacques (Gravesham)
Arnold, Sir Thomas
Baker, Rt Hon K. (Mole Valley)
Bennett, Nicholas (Pembroke)
Boscawen, Hon Robert
Boswell, Tim
Bottomley, Peter
Bowis, John
Brazier, Julian
Bright, Graham
Brown, Michael (Brigg & Cl't's)
Campbell, Menzies (Fife NE)
Carrington, Matthew
Chapman, Sydney
Chope, Christopher
Clark, Dr Michael (Rochford)
Coombs, Simon (Swindon)
Fishburn, John Dudley
Forsyth, Michael (Stirling)
Franks, Cecil
Freeman, Roger
Goodlad, Alastair
Greenway, John (Ryedale)
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