| Previous Section | Home Page |
The First Deputy Chairman : As far as I can ascertain, it has nothing whatever to do with the amendment.
Mr. Cash : I am grateful to you, Mr. Lofthouse, for dispatching that irrelevant intervention.
I wish to move on now, as I would have done but for the enthusiasm of hon. Members who, unlike my hon. Friend the Member for Wirral, South (Mr. Porter), wish to participate in the debate because they appreciate the impact that all this is having on their constituents. What I cannot understand is why my hon. Friend the Member for Wirral, South, who generally sympathises with us in this
Column 276
matter, is not prepared to take the kind of interest in the debate which his views, as expressed to me in the past, would suggest. That is a matter for him, but it is not a matter for him to come along to the House and start moaning and groaning--The First Deputy Chairman : Order. It is a matter for the hon. Member to address himself to the amendment and not to his hon. Friend.
Mr. Cash : I am delighted to be able to ignore my hon. Friend on this occasion.
Mr. Cryer : The hon. Gentleman made a point about fraud and its effect on the British taxpayer. Will he give an estimate of the amount of money that has disappeared in fraud from the £14 billion that was paid by the British taxpayer between 1980 and 1990 to the Common Market? These grants are paraded about as though the European Community were giving us something, whereas all it is doing is giving us some of our own money back. It goes to Brussels, is laundered and comes back in a much smaller proportion, and yet it is paraded as though something is being conceded to us.
Of the £2.5 billion a year that we now contribute, will the hon. Member hazard a guess at how much disappears in fraud? My constituents, who are very hard pressed to meet the demands on them for local tax, income tax and VAT, which now dominates tax revenue, would certainly be interested to know. If that figure were widely disseminated, there is no doubt that the widespread hostility to Maastricht would be greatly reinforced.
Mr. Cash : The hon. Gentleman makes a good point. He is talking about the kind of financial carousel that we see with the cattle in Northern Ireland. As the money goes round and round the system, no doubt people are taking their slice of it all the way round, and that makes a substantial contribution to the fraudulent activities that we are discussing.
The Chancellor of the Exchequer is a governor of the European investment bank, and we contribute 19 per cent. of its capital. It is a matter for concern that, irrespective of the amount that we contribute, we are financing huge tranches of Italian industry. We get back out of the bank far less in loans than do the Italians, who I understand receive 40 per cent. of all the loans made. If I am wrong--my hon. Friend the Member for Harrow, East appears to have the vapours again. Every time such a matter is mentioned he says that what is being said is nonsense. I should be delighted if he would intervene if he can explain to me where I am wrong. Clearly he does not dare to speak, because he knows that he does not have the facts ; he shows that he disagrees with me, but he does not come up with any evidence.
Mr. Wells : Will my hon. Friend give way?
Mr. Wells : I am grateful to my hon. Friend for at last giving way to someone who is informed on such matters. He has previously failed to do me the honour of giving way to me on other such matters, which has distressed me. Does he agree that the European investment bank is financed basically by Government guarantee--that the money is raised on the money markets of Europe and of the rest of the international community, and then re-lent? Perhaps the interest rates and charges of the European
Column 277
investment bank are unattractive to British investors and more attractive to Italian investors. It is wrong for my hon. Friend to mislead the Committee by suggesting that we are giving money from our Treasury and our taxpayers to that bank. I should be grateful if he would make that clear.Mr. Cash : I should be more than happy to confirm what I have just said : that the European investment bank has a system and that part of that system concerns the making of loans. On the figures that I have--I am always open to correction and always delighted to be corrected whenever necessary ; I would never want to mislead the Committee in any way--40 per cent. of the loans made are made to Italy.
Another matter that should be the subject of close audit and scrutiny is the fact that France appears to get about 25 per cent. of the European investment bank grants in aid to small businesses, whereas the United Kingdom receives only 2 or 3 per cent. The auditors should examine that imbalance closely. As with coal subsidies, we get the wrong end of the stick. If there were a level playing field in the European Community, as we are making a substantial contribution of 19 per cent. of the capital of the investment bank there would seem to be good reason for us to expect an equitable sum by way of return. I do not know what the reasons are.
The Paymaster General (Sir John Cope) : If my hon. Friend wants to know anything about the borrowing from or the lending by the European investment bank, he can look in the annual report which is available to him. All the figures are shown and divided clearly there. I do not have the figures with me tonight, because they have nothing to do with the amendment.
The First Deputy Chairman : Order. The hon. Member for Stafford (Mr. Cash) has been given some latitude tonight. He has strained my patience from time to time. In our previous encounter, although he identified the movement of finance, he identified no fraud. We must get back to the amendment. The debate has been going on for a long time. It is becoming very tedious and repetitious in many aspects. I hope that the hon. Gentleman will bear that in mind.
Mr. Bill Walker : On a point of order, Mr. Lofthouse. You will have heard the Paymaster General say that this debate has nothing to do with the European investment bank. If the guarantee given by the United Kingdom on behalf of United Kingdom taxpayers was called upon to be taken up, that would surely be a matter of interest in the internal finance of the European Community.
The First Deputy Chairman : That point is hypothetical at the moment. The Chair is not responsible for what the Paymaster General says.
Mr. Cash : The report by the Court of Auditors deals at some length with the European investment bank and its functions. I will leave it at that.
The First Deputy Chairman : Order. But does the report deal with fraud?
Column 278
Mr. Cash : It does deal in part with questions that relate to fraudulent activities. I will now move on to fisheries matters, which are of great importance to this country at the moment. I will describe some of the problems that have arisen in relation to internal financing, as exemplified by the report by the Court of Auditors.
I cite the example of a Portuguese sardine fishery. It is regrettable that a system was set up in relation to a Portuguese sardine fishery. I see that the Minister of Agriculture, Fisheries and Food, that great Euro- enthusiast, has now come into the Chamber. This is a matter which falls directly within his responsibilities. Perhaps he can throw some light on the problem.
The producer organisation in question had established a withdrawal period of fewer than 115 days for all vessels. As the Commission had accepted the approach prescribed for that producer organisation, compensation was paid for days on which no fishing would be carried out anyway. That added about 40 per cent. to the European taxpayers' contribution. It is incredible that such a thing can be allowed to go on. It is not just a question whether the Court of Auditors has identified that problem after the event. The question is how the arrangements are set up in the first place and how they go on with nothing being done. That is an especially bad case.
Another example concerns Spain, which is dealt with on page 111 of the Court of Auditors' report of 15 December 1992. It states that, after some investigation,
"Finally, an on-the-spot inspection revealed that one fishing vessel that was in dry dock for repairs had not submitted its rol de despacho' and, that therefore, this period may be considered a period of fishing activity."
Those examples have caused the Court of Auditors considerable concern and they ought to cause us concern, especially given the great difficulties that fishing problems have caused us recently. 12 midnight
Sir Nicholas Fairbairn : As one sardine to another, may I say that if any fraud is being committed, it is by the hon. Member boring us to death all night unnecessarily ?
Mr. Cash : I am glad that my hon. and learned Friend was able to get up and to sit down as quickly as he did. I would not want to refer to his state of mind, but the Committee shuddered as he collapsed in a heap after that brilliant intervention.
Many matters need to be brought out in this debate and no doubt many other hon. Members would like to speak. I should be only too delighted to ensure that the issue can be given the thorough investigation that it deserves, as I have only scratched the surface of the subject.
Sir John Cope : My invervention might be helpful to the Committee at this point, particulary if I deal with the amendment. I appreciate that it has many ramifications and my hon. Friend the Member for Stafford (Mr. Cash) has gone through many of those lying a long way behind it. In doing so he has made out a good case against amendment No.230, which he tabled.
My hon. Friend the Member for Stafford may want more elaborate controls. At one time he seemed to suggest total integration of the Community and a federal state with a strong central authority as the only solution to fraud in the Community. That does not appeal to me, and
Column 279
I am sure that it does not appeal to him either. Nevertheless, he seemed to suggest that it was the only way to deal with those problems.I realise that my hon. Friend would want to go much further to control Community expenditure and the way in which it is dispensed, but in my view that is not an argument for passing the amendment. On the contrary,. if the amendment were passed it would delete some of the very provisions in the treaty which strengthen the fight against fraud--and I hope that I am second to none in wishing the fight against fraud to carry on.
Many criticisms of expenditure have been made and all sorts of examples of fraud within the Community have been produced, mostly from the reports of the Court of Auditors. My hon. Friend the Member for Stafford referred to the report on the 1991 budget, which the House debated on 10 March.
Mr. Leighton : Does the Minister agree that the best way to end fraud would be to do away with the awful common agricultural policy, in which fraud is endemic? Should we not exercise some sort of subsidiarity and let each country run its own agriculture?
Sir John Cope : I do not agree, but I will return to the CAP a little later.
Amendment No. 230 seeks to remove that section of the treaty which replaces the existing article 206b with a new article 206. The new article repeats many of the words in the existing article, but adds in paragraph 1-- significantly--that special reports by the Court of Auditors are to be examined, where relevant, by the Council and the European Parliament.
The real addition, however, occurs in paragraphs 2, 3 and the fourth paragraph, which strengthen the fight against fraud in the Community, and we are all agreed that it is desirable to do that. It would be a mistake not to include in the treaty those paragraphs or the other sections which strengthen the fight against fraud and which were negotiated at Maastricht. It would, therefore, be a mistake to pass amendment No. 230.
A number of other issues have been raised, to which I should respond at least briefly, although some of them were less than central to the argument about amendment No. 230. My hon. Friend the Member for Billericay (Mrs. Gorman) was concerned that the imposition of value added tax on fuel would swell European Community funds, and an Opposition Member raised a similar point. As I believe my hon. Friend the Member for Stafford acknowledged, it is a mistake to imagine that the calculation of the VAT resource is done on a standardised basis. That issue relates to amendment No. 57, which appears in a later group of amendments.
I reject the charge made by my hon. Friend the Member for Stafford and others that Ministers have not taken up the fight against fraud in the Community. We have done so in a series of ways during our presidency, and also in the negotiation of the Maastricht treaty, particularly in article 206, which amendment No. 230 seeks to delete.
Mr. Nicholas Winterton : My right hon. Friend has just skipped over an important issue by saying that the Government did their best over that section of the Maastricht treaty dealing with fraud. What was done to reduce fraud? It would be helpful to know that. We have had about two hours of debate on fraud, but we are still
Column 280
unconvinced that we are able to do what should be done about the high level of fraud and corruption in the Community.Sir John Cope : We have, on a number of occasions, stated some of the steps that were taken in the Maastricht treaty. Article 206, to which the amendment relates, plays an important part in that process. It gives enhanced powers to examine the Commission's implementation of the budget. The Court of Auditors is required to give a statement of assurance on the reliability of the Community's accounts. The European Parliament has additional powers to obtain the necessary information in the course of examining the Commission on the basis of the annual report. Under article 206 of the Maastricht treaty, that power also covers any relevant special reports made by the Court of Auditors.
In the past few months we have had some other successes in the fight against fraud, some of which will be discussed in the House on other occasions not connected with the Maastricht treaty. Amendments to the financial regulations mean that the Commission's spending proposals must in future be accompanied by a justification of each programme on grounds of cost-effectiveness. I attach considerable importance to that. It will help the Council of Ministers to make proper decisions about the implementation of the various programmes leading to expenditure.
Mr. Nicholas Winterton : My right hon. Friend is being very helpful.
Let us suppose that, as a Conservative Back Bencher, I receive evidence of what I consider to be misuse of public structural funds given to, for instance, Portugal. Should I raise the matter with my right hon. Friend, or should I go direct to the Court of Auditors? How does a Back Bencher who is concerned about what he sees as the misuse of public funds--or fraud, or corruption--raise such matters?
Sir John Cope : My hon. Friend can take whichever course he chooses. Certainly I would encourage him to come to me, if he wished to do so, with information about any fraud that was being perpetrated in connection with Community funds or, for that matter, in connection with United Kingdom Government funds. I would encourage him to approach me, or whoever is doing my job. Of course, if he wished, he could approach the Court of Auditors directly.
Mr. Bill Walker : I have more confidence in our Treasury team than some other hon. Members may have expressed, so I am delighted to hear that we should approach my right hon. Friend or other members of that team.
Every day we see evidence of such practices. For example, Air Portugal has just been given a subsidy which puts it in a uniquely competitive position ; the same has happened with Iberia, Air France, Sabina and others. That puts all the United Kingdom airlines at a disadvantage. To whom should I address my comments if any discipline is to be introduced into those unfair aviation arrangements?
Sir John Cope : I am not sure whether my hon. Friend is suggesting that fraud is involved, or whether he simply dislikes decisions which have been properly arrived at. It could be either. If he is referring to fraud, I encourage him to come to me in so far as British Ministers are concerned ;
Column 281
is concerned about the policy which leads to decisions that he does not like, he can by all means approach my right hon. Friend the Secretary of State for Transport. Mr. Beggs : The right hon. Gentleman will be aware of the rumour throughout Northern Ireland that large sums are being paid to terrorist organisations by business men for protection. He will know that our Government permit those moneys to be set aside against taxation. Does he know whether comparable practices take place in other European countries? Does he know to what extent payments may be made to the Mafia and other organisations in the Community which can be set against taxation?
Sir John Cope : I am not sure how that question relates to what we are discussing. As the hon. Gentleman knows, however, I have had some responsibility for related matters in the past and the matter that he raises would probably come before the House as part of the Finance Bill debates. I can give him no information off the cuff about other countries' taxation provision in relation to such payments, but in any case the payments that he has mentioned will not come out of Community funds. They are payments made by individuals or companies from their own funds ; the question is how they are treated in the context of national taxation, which is not a matter related to these amendments or to the treaty.
Mr. William Ross (Londonderry, East) : My hon. Friend the Member for Antrim, East (Mr. Beggs) referred to the Mafia. I do not think that any hon. Member believes that the Mafia comes by any of its income in what one would describe as a legal manner. The Mafia derives its income mainly by means of extortion and fraud. From what has been printed in the press and other reports, it seems that the Mafia creams off a great deal of money from the Common Market--from funds provided by this House through payments to Europe. In those circumstances, what assuance can the right hon. Gentleman give me that the Mafia declares its income for tax purposes, never mind other individuals trying to get money that they can then give to the Mafia as protection money?
12.15 am
Sir John Cope : When I was in the Northern Ireland Office I visited Italy to look into the fight against the Mafia, so I have some knowledge of the matters to which the hon. Gentleman refers, but not enough to answer his question authoritatively off the cuff. Italy's national taxation arrangements are a matter for that country. It does not arise out of the amendment. What does arise out of the amendment and what was also referred to in the debate was the extent to which the Mafia might be taking European money to which it is not entitled. That is exactly the sort of matter that the Court of Auditors is there to investigate, uncover and report upon. It is therefore important for the role of the Court of Auditors to be strengthened. Under the Maastricht treaty it becomes a full institution. That is not a matter towards which the amendments are directed, but it is relevant to the discussion so far. Italy is a net contributor to the budget, so the point about British funds is an arguable one. All Community money should be properly spent. The Court of Auditors exists to see that that is done, and the
Column 282
treaty assists the Court of Auditors to do so. It is important for the Committee to bear that point in mind at this stage in the debate.To judge from the interventions, one of the matters of concern to my hon. Friend the Member for Stafford and some of his hon. Friends is the increase in the structural funds and the cohesion fund that is taking place now. That increase was agreed when Lady Thatcher was Prime Minister. It followed through in all the Budgets, including the 1993 Budget. We have already discussed the conclusions arrived at in Edinburgh, and there will be other opportunities for debate. We shall need to debate the new own resources decision when it is made, but that matter is not before the Committee now. The matter before the Committee is the question of increasing the powers of the Court of Auditors and the European Parliament to pursue fraud-- something which is entirely desirable.
Mr. Leighton : The right hon. Gentleman relies on the Court of Auditors. What powers of investigation, policing and control does it have?
Sir John Cope : The powers are set out in the treaty. If the hon. Member refers to articles 188b and 188c, he will see them set out there. That is not, however, the article to which the amendment is directed. Those powers are strengthened in many respects by the Maastricht treaty. They are incorporated in the first part of the treaty. Under the treaty, the Court of Auditors is transformed into a full institution.
Mention was made of practices contrary to the financial regulations having been discovered by the Court of Auditors. In future, of course, when the Maastrict treaty is ratified by all states and comes into force, the powers of the Court of Auditors to pursue matters of that kind will be increased. It will, for instance, be able to go to the European Court of Justice if it wishes.
The hon. Member for Newham, North-East (Mr. Leighton) expressed concern in an intervention that there was a problem as to whether member states policed strongly enough within their countries. The remedy for that is to strengthen the Court of Auditors as this treaty does, to strengthen its ability to go to the member states, to co-operate with the auditing authorities, which is what it is required to do, as appropriate, and to pursue fraud wherever it occurs.
It would be a great mistake for the Committee to pass amendment No. 230, or for that matter the other amendments in this group, as this would have the effect of weakening the fight against fraud, which we all wish to strengthen, as has been shown by everyone who has spoken in the debate.
I said that I would mention the common agricultural policy, which comes partly under this amendment because the amendment strengthens the Court of Auditors and the Parliament's powers in respect of that as well as of other items of expenditure. The reform of the common agricultural policy agreed in Brussels last year involves significant changes in the way in which subsidy payments are made. In particular, there is an anti-fraud measure known as the integrated administration and control system across all member states. It is relevant to mention this, particularly in the presence of my right hon. Friend the Minister of Agriculture, Fisheries and Food, as we shall all no doubt be getting complaints from farmers
Column 283
before long about the detail of the checks being put in place by the Community to control expenditure on the CAP.If we get such complaints, it will ill behove us to complain too much about them because, as the Court of Auditors' reports have made clear, there has been fraud by United Kingdom farmers as well as by overseas farmers. In addition, by applying this across all 12 member states, we shall improve financial control and the fight against fraud in the CAP.
Mr. Bill Walker : The comments that my right hon. Friend is making are very important. I am sure that he will understand that those of us with large farming constituencies get evidence from our own farmers that nation states are not pursuing the necessary documentation and all the things that our farmers are complaining about. Who should I come to with these complaints?
Sir John Cope : My hon. Friend can come to me if he wishes, but I would suggest that he went straight to our right hon. Friend the Minister of Agriculture, Fisheries and Food. My information from him is that they are all implementing the system that I have just described.
Amendment No. 230 would weaken the fight against fraud when we all wish to strengthen it. I therefore suggest that the Committee reject the amendment.
Mr. Andrew Smith (Oxford, East) : On the last point, I imagine that it is not coincidental that we have all had a letter from the Minister of Agriculture today setting out provisions for the integrated administration and control system. I notice that he is offering to undertake meetings after Easter. Perhaps he had better go and meet the farmers in the constituency of his hon. Friend the Member for Tayside, North (Mr. Walker).
Our concerns on the questions dealt with in this group of amendments are : first, that the Community budget--it is really a matter of common sense as well as propriety--should be deployed effectively to achieve the objectives of agreed policies ; secondly, that financial transactions should be properly accounted for and subject to proper audit ; and thirdly, that there is efficiency and fairness in both the raising and the spending of funds.
We are, after all, talking about a very large budget--over £54 billion for the current year--to which the United Kingdom, as we have heard, is one of the largest net contributors. How it is raised and how it is spent is clearly of enormous importance. It is important both in terms of propriety of spending and value for money. It is also important politically, and is an extremely sensitive issue. Nothing diminishes more quickly public confidence in the Community and its institutions than the knowledge, or even the suspicion, that public money is being misapplied or wasted.
When the House considered the report of tch was evident on a disturbing scale in a number of the Community's financial affairs. The hon. Member for Stafford (Mr. Cash), who is not here at the moment, regaled us at length with examples earlier this evening. The extent to which the hon. Gentleman, in a long speech, relied precisely on the report of the Court of Auditors to which he now wishes to deny extra powers, appears to be a deep contradiction in his argument.
Column 284
Some of that waste, irregularity and fraud is the responsibility of member states ; some is the result of legislation that is unclear or inconsistent between member states, and some is the result of inadequate supervision by the Commission. Whatever the cause, it is wholly indefensible, and much more urgent and resolute action needs to be taken if it is to be rooted out. It is crucial to ensure that public money is not squandered or misappropriated, and to restore public confidence in the value of Community action and expenditure. No one should underestimate the damage inflicted by irregularities, waste and fraud such as that identified in the Court of Auditors report. Despite the quality of the work of the Court of Auditors, if we recognise some of the limitations that the court identified on its own ability to investigate, we are left with the suspicion that only part of the problem has been uncovered in its report.The real question before us tonight is how far the changes brought about by the Maastricht treaty assist the control and scrutiny of Community finances or whether they weaken it. Of course, they strengthen scrutiny and control and are to be welcomed.
The treaty provides in article 78c, which the amendment tabled by the hon. Member for Stafford would delete, for the Commission to have
"regard to the principles of sound financial management." That is straightforward common sense, but none the less it is important that it is enshrined in the treaty.
The treaty also states in article 160c :
"The Court of Auditors shall examine the accounts of all revenue and expenditure of the Community"
and
"shall provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions."
That is an important provision, which should usefully enhance the role and powers of the Court of Auditors.
It is particularly important, bearing in mind the fact that sources at the Court of Auditors were quoted in The Guardian of 27 November 1992 as saying :
"If we had to certify these accounts, we would not do so." They were referring to the 1991 accounts on which the hon. Member for Stafford dwelt at such length.
Clearly, with the treaty in place, the auditors would have much more powerful leverage, first, to require accurate accounting information and, secondly, to insist that irregularities are ended and abuse stamped out. That requires action particularly by member states as well as by the Commission. That requirement, too, is strengthened in the treaty by the provisions of article 183a, which says :
"Member States shall take the same measures to counter fraud affecting the financial interests of the Community as they take to counter fraud affecting their own financial interests."
12.30 am
That can be taken to answer some of the concern that was expressed by my hon. Friend the Member for Newham North-East (Mr. Leighton) about how far member states did not have an incentive to ensure financial probity when the only possible beneficiary was the Community. I do not draw such a sharp distinction between the interests of the member states and those of the Community. There is a commonality of interest here, and that is what the whole treaty and the process of integration is about. In this respect as well, the treaty takes steps to improve on the present unsatisfactory situation.
Column 285
The powers of the European Parliament are also increased in the treaty in these matters. Article 180b, which the amendment in the name of the hon. Member for Stafford would delete, requires the European Parliament to examine the financial statement and the annual report by the Court of Auditors and empowers it to call the Commission to account over its expenditure and financial control. The Commission is obliged by the article to submit all necessary information to the European Parliament at its request, to act on its observations, and to report on its observations, which reports will also go to the Court of Auditors. So, again, we see a tighter loop of financial control and democratic accountability being established.Mr. Nicholas Winterton : The hon. Member is presenting a very favourable picture of the Maastricht treaty and the Court of Auditors, and about the extension of its powers. Will he comment on this quotation from a distinguished business man, a past director of N. M. Rothschild and Sons, a director of Jardine Matheson, Trafalgar House, Kwik Save and other companies, and a trustee of the Post Office pension fund--I quote precisely from his article :
"To travel round Europe is to realise that people everywhere have lost faith in their governments and the unaccountable bureaucracies which, dispensing 50 per cent. of each country's wealth, foster corruption, influence-peddling and inefficiency."
That is from a very respected business man with a considerable banking background, who has that view of the European Community. I particularly draw the hon. Gentleman's attention to his phrase in the article "fostering corruption".
The Second Deputy Chairman of Ways and Means (Dame Janet Fookes) : Order. That was a very long intervention.
Mr. Smith : I have already condemned the corruption in the Community, just as we all would. The thrust of my speech is to show how the provisions in the treaty strengthen the fight against such corruption, but the quotation the hon. Gentleman mentioned referred to more than 50 per cent. of expenditure, he said. Therefore, that could not have been referring to the Community budget, which is a mere 1 or 2 per cent. of the Community gross domestic product.
Mr. Winterton : I thank the hon. Gentleman for allowing me to clarify precisely what Mr. Leach said. He talked about the Governments of the various countries that comprise the Community spending more than 50 per cent. of the product of their countries. That situation, fostering corruption, and with the bureaucracies of Europe, would further foster corruption, inefficiency and influence-peddling, to use the phrases that Mr. Leach used.
Mr. Smith : It seems to me that Mr. Leach was referring to an entirely different situation. He was questioning the share of GDP which goes on public expenditure. That is another matter which we could debate here at considerable length. It clearly was not referring to the scale of the Community budget, which nowhere near approaches the sort of figures that the hon. Member was referring to. In any event, to the extent that corruption is a problem, and to the extent that it is inadequately addressed within the Maastricht treaty--I would not claim that the treaty is perfect in this respect--the answer is to go further in
| Next Section
| Home Page |