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Question accordingly negatived.

8.30 pm

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Before we move on, I advise the right hon. Member for Bethnal Green and Stepney (Mr. Shore) that, when the time comes, I am prepared to allow a separate Division on new clause 12, if he so wishes.

Mr. Spearing: On a point of order, Mr. Lofthouse. You and the Chairman will have heard the many references to the Public Accounts Committee. Indeed, in his reply the Minister referred to the Government's willingness, if the House permits, to take some action in that regard. May I draw your attention to starred amendments Nos. 14 and 15, which may be relevant to any future selection when the stars are removed?

The First Deputy Chairman: For the moment, the Chairman has decided that those amendments are not selected.

New clause 3

Entry into force (protection of financial interests)

`This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to whether the United Kingdom Government should adopt a Council Regulation on the Protection of the Community's Financial Interests.'.-- [Ms Quin.]

Brought up, and read the First time.

Ms Joyce Quin (Gateshead, East): I beg to move, That the clause be read a Second time.

The First Deputy Chairman: With this, it will be convenient to discuss also the following: New clause 10-- Annual report on fraud and waste --

`Each year Her Majesty's Government shall make a report to Parliament on the proposals it has made and the progress achieved in combating fraud and waste in Community expenditure as documented in the relevant annual reports of the Court of Auditors.'.

New clause 13-- Fraud in the European communities: annual reports --

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`Her Majesty's Government shall make an annual report to Parliament on their efforts to eliminate fraud in the spending of the European Communities' General Budget.'.

Ms Quin: New clause 3 is important because it allows the important subject of fraud to be discussed in this debate.

The new clause states:

"This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to whether the United Kingdom Government should adopt a Council Regulation on the Protection of the Community's Financial Interests."

We know that such a regulation is being mooted, and I think that on this occasion the Government will claim to have been active in proposing it. I understand that the regulation was partly a British initiative and dates back to the early part of the year, when the British Government said that they wanted the rest of the European Union to consider the protection of the Community's financial interests, how money is spent and how best to crack down on fraud. I also understand that there have been discussions in the Council of Ministers as a result.

As is often and frustratingly the case, it is difficult for hon. Members to get any information about what is happening in this important area. I understand that protection of the financial interests of the European Union was on the agendas of the Justice and Home Affairs Council on 1 December and the Economic and Finance Council on 5 December.

Perhaps the Paymaster General can give us an update on the Council's consideration of that important matter when he replies to the debate. Any information that he can give us could greatly influence the attitude of hon. Members on both sides of the Committee towards that important issue and whether we feel that there is any real chance that fraud and financial mismanagement will be taken seriously.

The results of the discussions at the two Council meetings were unclear. What seems clear, however, is that the Council of Ministers has simply come out in favour of a resolution on the protection of the financial interests of the European Union. As we know, a resolution is a very weak instrument in the Union. Apparently, the Government are in favour of a regulation on the legal protection of the Community's financial interests, as I am certain that we would be. Perhaps the Paymaster General can give us an update on the progress that has been made towards such a regulation. I understand that the matter might be discussed at one of the meetings taking place as part of the Essen summit. We would be extremely interested to know what progress is being made on that important matter. From recent debates and the long-standing interest of many hon. Members on both sides of the House, it is clear that hon. Members take the question of fraud in the European Union very seriously. None the less, I repeat that it is often difficult to get adequate information about what has been taking place.

In an intervention on the Paymaster General, my hon. Friend the Member for Durham, North-West (Ms Armstrong) rightly mentioned the rather murky negotiations about fraud which took place as part of the Budget Council on 16 November, when Britain apparently agreed to a cut in the European Union's anti-fraud budget at the same time as the Government were trying to persuade suspicious Conservative Members that they were

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trying to deal with the problem of European fraud. The fact that that was revealed in the press was especially frustrating to Opposition Members, including myself. I had tabled a written question to the Treasury, asking the Government to make a statement on the outcome of the Council held on 16 November. In the written answer that I received from the Paymaster General, which went into a certain amount of detail, there was no mention of the discussion of fraud. There is therefore a lack of transparency in the information that the Government are prepared to give the House on that important issue. I want the Paymaster General to deal with that matter.

Press releases are issued at the end of each European Council meeting. The release issued after the Council on 16 November has just been made available to us. Again, there is absolutely no reference to the discussions on anti-fraud measures that we now hear took place, or to the fact that the Council failed to increase the funds available to combat fraud and, indeed, cut anti-fraud measures in the Union. We want an explanation of why Members of Parliament and the general public are refused information about the Council of Ministers. Many hon. Members on both sides of the House have rightly complained about undue secrecy in relation to Council of Ministers proceedings and this would seem to be a flagrant example of such secrecy when it is clear that members of the public as well as Members of Parliament want information on the fight against fraud and the measures that need to be taken.

From the documents before us today, it is clear that the European Court of Auditors feels frustrated at the difficulty that it faces in getting information from the Council of Ministers. That comes over in the opinion of the Court of Auditors on the proposals for a Council decision concerning budgetary discipline.

Mr. D. N. Campbell-Savours (Workington): I am sure that my hon. Friend knows John Tomlinson, who is a Member of the European Parliament. He issued a press release on 18 November 1993--12 months ago--which stated that, at a meeting which took place two weeks prior to that press release, the Council of Ministers failed to increase the budget to deal with fraud. One wonders whether that occurs every year, and whether the Council is now calling the same tune.

Ms Quin: My hon. Friend is right to detect an alarming trend, and the information that he gives to the Committee is correct. It is certainly true that, a year ago, the Council of Ministers was also prepared to cut anti-fraud measures in the European Union at a time when clear incidence of fraud was increasing at an alarming rate. The Court of Auditors report, which is produced annually, has made severe criticisms of fraud in the European Union for a number of years.

Rev. Ian Paisley (Antrim, North): Is the hon. Lady aware that in a recent debate in Strasbourg, criticism was voiced about the reticence of the Commission in dealing in an upright and forthright way with the quaestors?

Ms Quin: The hon. Gentleman pre-empts a comment that I was about to make. I had started to refer to the difficulty that the Court of Auditors has in receiving information from the Commission and from other parts of the European Union about the extent of fraud, and in having the figures in good time to make timely comments about the problems which are arising.

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The court's comments on the Council's decision concerning budgetary discipline say, in relation to article 2, that the proposal provides for the monitoring of expenditure to be tightened up and for statements of expenditure by chapter presented by member states to be sent to the European Parliament and the Council for information. The Court of Auditors understandably says that the paragraph in the proposed Council decision relating to the matter should be amended to include the Court of Auditors, so that it could receive data promptly.

When the Council decision was made on 31 October 1994, the request from the court for a change in the Council's decision was ignored. The court, even now, is in the frustrating position of not being able to get information in time to make criticisms at an earlier stage than it has been able to at present. In many ways, the court feels greatly frustrated by the fact that it has had to complain so long after the event. That makes its task in trying to get corrective measures adopted much more difficult.

8.45 pm

The Commission is castigated generally for its weakness in its approach to fraud, although it does have undoubted difficulties because so much fraud occurs within each member state. Lax controls within certain member states often give rise to many problems. In that respect, I can understand the comments made in relation to the earlier group of amendments on the role of the Public Accounts Committee. The way in which the Government reacted was disappointing, although I take the point made by the right hon. Member for Mid-Sussex (Mr. Renton) that the Public Accounts Committee could take certain initiatives without waiting to be cajoled by the Government. It is an area to which I am sure that the Public Accounts Committee will be paying close attention in the future.

My hon. Friend the Member for Workington (Mr. Campbell-Savours) has referred to the Government's record on fraud. The Government like to give the impression that they are the leading fraud-busters. In fact, as my hon. Friend pointed out, their record is not quite so glossy. It is certainly true that the Government have voted against anti-fraud measures in the Council of Ministers, and a great deal more could have been done by the Government to campaign for reform of the common agricultural policy, which causes so many of the problems of fraud in the European Union.

Although this may seem to be a minor point, the Government have failed in another respect--by conniving with other Governments to perpetuate the European Parliament's position of meeting in two different places. Many of us feel that a certain amount of useful money could be saved if the European Parliament was not forced into that expensive travelling circus. It is a great pity that the Edinburgh summit in 1992 confirmed the dual nature of the seat of the European Parliament. Of course, some elements of the Parliament still have their base in Luxembourg. The situation is absurd, and members of the public feel that it is quite crazy. Perhaps if there were more publicity about it, there would be more pressure to put an end to that waste of money in the European Union.

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The question of the common agricultural policy is crucial to any discussion on fraud in the European Union. The Court of Auditors report gave many examples which were fully quoted in the debate that we had a couple of weeks ago. None the less, they are staggering. For example, there was the money paid out for the destruction of trees which are in fact still standing. There was the tremendous scandal of the wine lake, and the amount of money claimed in export refunds for wine supposedly exported from Italy to the countries of central and eastern Europe, when eight times more money was claimed than could be backed up by the figures for exports to those countries. It seems a strange and unjust system whereby the Italians and other wine-producing countries in the European Union can export with subsidies to countries in central and eastern Europe which are trying to build their own economies and in many cases have potentially excellent wine industries of their own but find themselves being undercut by that type of activity in the European Union.

A similar situation exists with regard to the olive oil industry, where substantial fraud has been reported in the Court of Auditors report. Sub- standard olive oil was none the less claimed for as though it were of a high standard and high quality. It is a very sad situation when people notice how expensive olive oil is to buy at a time when there is a huge level of production in the European Union and a huge amount of money is being spent on subsidising that production.

Mr. Oliver Heald (Hertfordshire, North): If what the hon. Lady is saying is right, why have Labour MEPs voted to double the increase to the future European budget that is proposed in the Bill? They did not make any of the provisos for which she is asking in new clause 3.

Ms Quin: The provisos in new clause 3 have been pressed consistently by Labour MEPs since 1979. I can inform the hon. Gentleman of that fact, partly because I was a Member of the European Parliament from 1979 to 1989 and I took part in the debates, and partly because of the efforts of the Labour members of the budgetary control committee in the European Parliament: John Tomlinson has already been mentioned, and Terry Wynn is also active on that committee. I can assure the hon. Gentleman that what we are proposing here is fundamentally in line with what we have said on many other occasions, both here and in the European Parliament.

Mr. Stevenson: Is it not strange that Conservative Members should make the comments that they have, given that a Conservative Government have presided over and agreed to a £5 billion increase in common agricultural policy expenditure since 1992-93?

Ms Quin: It is indeed. The Conservatives--particularly in the European election campaign--claimed to have tackled, for example, the scandal of costly food mountains; yet, at the time when they made that claim there were about 200,000 tonnes of butter, 112,000 tonnes of cheese and 430,000 tonnes of beef in store. As my hon. Friend points out--he is in a good position to do so in view of his experience on the agriculture committee of the European Parliament--agricultural expenditure has

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increased greatly. In certain sectors, production has continued to rise, despite the measures that have been taken.

Rev. Ian Paisley: The hon. Lady will know that I, too, am a Member of the Strasbourg Parliament and I can confirm that Labour Members of the United Kingdom Parliament have continually opposed those developments on the Floor of the House.

Ms Quin: I welcome the hon. Gentleman's comments. I believe that he has been a Member of the European Parliament since 1979; he will therefore have participated in many debates of this kind and will know what was said on those numerous occasions.

I could give many more examples. For instance, there has also been a great deal of fraud in relation to tobacco. A large amount of money has apparently been spent on subsidising unusable tobacco; given the health problems that tobacco causes, subsidising usable tobacco may be slightly worse than subsidising unusable tobacco, but in any event it is scandalous that tobacco should be subsidised to that extent in the European Union.

It seems crazy that tobacco farmers--if that is the right word--can obtain export credits for tobacco that is sold nowhere because it is unusable, and can then simply dump the tobacco. It would be cheaper to provide them directly with a livelihood without their having to produce the substance at all--not that I am suggesting that that should be done in the European Union, but it seems crazy that adopting such an approach would save money for the EU budget. It is regrettable, to say the least, that the Court of Auditors' report on tobacco fraud and misuse was ignored by EU Agriculture Ministers. The common agricultural policy itself is, unfortunately, a fraud -friendly system. There has been a huge increase in CAP fraud. Even the legal operation of the policy is tantamount to fraud: an absurd circular system of subsidy can arise, so that a farmer may be paid a subsidy for not putting one field into production while being paid another subsidy for increasing the yield from another field. We also know of the policy's negative effect on the trading for third world agricultural products.

It is clear from the report that there are huge inefficiencies and irregularities in the use of European Union funds, that the administration of the European guarantee fund in agriculture is ineffective, that fraud is encouraged by weak internal systems and complex legislation, that there are no proper clear and fixed objectives for expenditure, that there are breaches of rules in contracts with third parties, that there is confusion between administrative and operational spending, and that the Commission's delegation of financial management to national Administrations and third parties has led to a serious loss of control. That reinforces the point made earlier about the Commission's culpability. It is vital for member states to improve their accounting, internal control and auditing of European Community operations. The whole saga adds up to gross weaknesses in what should be sound financial management, and very poor value for money. That explains why so many hon. Members on both sides of the House have expressed concern about the issue recently, and why the new clauses have been tabled.

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New clauses 10 and 13 call for annual reports on fraud to be presented to the House of Commons, which I think would be very sensible. I can foresee some of what the Paymaster General will say: he will say, for instance, that there are already many opportunities to raise such matters. There is, of course, a six-monthly report on events in the European Union, as well as the various procedures and documents that are considered in Committee--often, I may say, with inadequate media attention. Much of the work done in European Standing Committees is worthy of much more attention that it receives.

Given the interest that the House has expressed in the issue, it strikes me as sensible to hold an annual, focused debate on it alone. I believe that we should continue to hold such annual debates until the fraud problem ceases to exist in the European Union; we all look forward to that time, but it seems unlikely to arrive in the near future.

Earlier, my right hon. Friend the Member for Llanelli (Mr. Davies) forecast a certain meeting of minds between Euro-sceptics and those who are more positive about the European Union. I am not sure whether his forecast will be proved right, although I respect his experience: he has been in government, and has seen some of the matters that we are discussing from the viewpoint of the Council of Ministers. I know, however, that there is a great deal of cross-party agreement on this issue; I therefore hope that new clause 3 will receive the maximum support not only from Opposition Members, but from Conservative Members.

Mr. Dykes: I shall speak briefly. I welcome the interest and support expressed by hon. Members on both sides of the Chamber on endeavours to deal with the thorny problem of fraud in the European Community. I have no quarrel with anyone who suggests that that is necessary, although I remain sceptical about whether these or, indeed, any amendments to existing legislation are needed, or will deal with fraud in the best possible way.

I do not condone fraud either in member states--including this country--or in any of the Community transfer payments. Far from it. I am a member of the Select Committee on European Legislation--the Scrutiny Committee--and fraud is naturally one of our main concerns. It is a regular subject of discussion and deep examination, to the extent that we have the necessary information to hand. My quarrel, as emerged from the debate on Second Reading, is with putting it together with this legislation. That is why I would object to the proposed amendments, or any that were along similar lines. The Bill should not have been opposed by any hon. Member because it was a routine Bill, dealing with a very modest increase in own resources as agreed at the relevant summit meeting in Edinburgh. I shall not repeat the Second Reading debating arguments for that, but it remains a literal truth about the text, and the two clauses are entirely routine and should not even be gone over in that way. However, we know why that happened--for a totally different reason, and that is why fraud has been built into the argument as a wonderful way for anti-European Members of Parliament here, and the press especially, to have a tremendous field day. Interestingly, the press are not here tonight--that is a different point--but they certainly were here on Second Reading because they anticipated trouble and enjoyed the anticipation thereof.

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To hound the European Community and say that it is riddled with fraud is a good, populist thing to say, but it is totally untrue. No one would condone any fraud at the margin anywhere, including in member states, and substantial fraud takes place in the United Kingdom that has nothing to do with the European Community. That needs to be tackled energetically by the various relevant authorities as well, and I hope that that will happen.

For the hon. Member for Gateshead, East (Ms Quin) to be so optimistic as to say that fraud could be eliminated, either between member states of the European Union and the Commission handling all those payments in a complicated budget, or in the individual member states, is perhaps a little bit naive. I am afraid that there are some wicked people in the world. Unfortunately, our skill at financial techniques in this country, allied with agricultural payments, agricultural activity and other aspects, means that this country is full of people who practise those things, and that happens in the other member states.

9 pm

Mr. Austin Mitchell (Great Grimsby): Will the hon. Gentleman give way?

Mr. Dykes: At the moment, I do not intend to give way at all, because I want to be brief, to give other hon. Members a chance. I shall not give way at all unless I am deeply moved by an especially unusual and esoteric intervention. However, as, by definition, I shall not know that until I have given way and heard it, it is unlikely that I shall do that tonight. I want, therefore, to be brief, if the hon. Gentleman, with his extravagant obsessions about disliking the European Union, will forgive me on this occasion. That problem also applies in the other member states. I gleaned from my visits that each one is equally concerned with national domestic fraud that has nothing to do with the European Union and with the fraud that occurs in the European Community.

However, let us keep the matter in perspective. Let us get rid of the hysteria. Let us get away from the £6 billion figure that was bandied about in the press, with no evidence to that effect; that equalled, by the way, the amount of money that the previous Chancellor of the Exchequer wasted in trying to defend an exchange rate mechanism rate that was untenably high, because we should not have entered at such a high rate against the deutschmark. Perhaps £6 billion is a leitmotif figure for all those seeming political and financial scandals, and will be repeated in other areas as well. However, in our own report--

Mr. Campbell-Savours rose --

Mr. Dykes: I have already said that I shall not give way. In our Select Committee reports, and in the explanatory memorandum provided by the Treasury and signed, I think, by my hon. Friend the Paymaster General, it emerges repeatedly that fraud is a legitimate and serious preoccupation of all of us--but at the margin the size is grossly exaggerated by the anti- European propaganda--

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that the Commission has responded to the Court of Auditors' regular admonitions and references to those matters; and that the main problem is mishandling and mismanagement of financial payments, as was also discussed in the debate on the previous group of new clauses, rather than huge amounts of fraud in vast areas of the Community budget zones. That remains the literal truth. Therefore, it is a matter for the House of Commons to be extremely worried about, but let us keep it in perspective.

I quote from the latest report that the Select Committee had on the latest Court of Auditors' report. We referred in paragraph 56 of our report to the Commission's response:

"The Commission accepted a number of the Court's findings and" has

"taken steps to implement them. The Commission's response to the main features of the report are detailed below".

Then, in a specific example:

"The Commission comments that for Own Resources it is aware of the importance and value of post-import clearance checks and agrees with the Court that the effectiveness of the checks depends on the adoption of methods based on risk analysis. It is in contact with Member States to promote their use. The Commission does not accept that the overall GNP figures are not reliable but agrees that further efforts need to be made to ensure harmonisation of the national accounts."

In the "blue-top weekly Europe bulletins" that we receive from the various local Commission offices in the capital cities, the matter was also put in perspective with the leading paragraph in the edition of 24 November:

"Commission rejects fraud allegations. Commission

Secretary-General David Williamson has rejected media allegations that fraud was widespread in European budgetary spending. Commenting on the recent Court of Auditors report, he said that the document was not about fraud but about financial management"

or mismanagement.

"It mentioned fraud only once in its 484 pages"--

Mr. Duncan Smith: Will my hon. Friend give way? It is esoteric.

Mr. Dykes: I am not giving way.

"It mentioned fraud only once in its 484 pages, referring to just one transaction in Denmark. It was completely wrong to bandy about figures suggesting that fraud amounted to £6 billion or more, Williamson said. The Court of Auditors makes the point that more than 80 per cent. of EU funds",

as brought out in previous debates, on the Opposition Benches as well,

"are managed on behalf of the Union by the Member States". I do not think that anyone in the Committee would regard Secretary-General David Williamson as anything other than a man of great integrity. He is an honest public servant with much international experience--a serious senior figure in the European Commission. He is from this country and I believe that he was a permanent secretary at the Ministry of Agriculture, Fisheries and Food many years ago before he went to Europe. He is a credit to this country and to the European Community and not the sort of person to tell lies. He should not apologise--he is not the sort of person who says that he agrees with The Sun and the Daily Star , and the gutter filth and poisoned propaganda against the European Community that one regularly reads in those journals and, sadly, elsewhere. Let us keep the subject in perspective. When Ministers deal with such issues, they should not succumb to the temptation to stir up hysteria about fraud by saying that it is connected with the legislation. To be fair to them,

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Ministers have not done that, but the Opposition should not do so. The Opposition made a basic mistake--it is perfectly reasonable for, and open to, the Opposition to raise the subject of fraud in Europe or national fraud at any time without connecting it to the Bill. They have done a disservice to the cause of Europe in the House, where there is a natural, built-in majority for further developments after Maastricht among all parties. If there were free votes instead of the three -line Whip clamps put on by our nervous Whips--I understand why they do that nowadays--there would be large majorities in favour of all significant new developments in the Community. That is the important point on which to focus.

Keeping matters in perspective means being rational and pragmatic, not hysterical. I have a good example that is directly linked with domestic fraud. I believe that social security fraud--allowing for all systems, including income support and unemployment fraud--amounts to about £4 billion per annum. Would it be wise and right for payments to genuine and deserving applicants of whatever sort within the social security protection system to be denied financial assistance pending the resolution of the problem of fraud?

In the private sector, the Serious Fraud Office is, rightly or wrongly, under a great cloud of suspicion; it is suspected that it has adopted the wrong sort of investigative methods. Many people would be concerned if the SFO were too weak and had inadequate resources to do its job properly. Fraud also occurs when various spivs and crooks misuse public sector funds. There is fraud by way of tax evasion, not just avoidance--one can talk to any senior Inland Revenue officer about that. The sums involved amount to billions of pounds. Does that mean that ordinary, honest taxpayers should be penalised and brought into that category? No. Ministers should put the correct record on Europe in a balanced way. Newspaper propaganda and poison against Europe are moving from the merely alarming to the positively dangerous.

I do not think that I shall be out of order if I refer to some articles that refer, at least tangentially, to fraud. Two recent examples fill me with gloom and foreboding if they reflect future standards in the British press. The examples are not taken from The Sun , the Daily Star or the Daily Sport , but from serious journals. One example comes from The Spectator of 3 December--

Mr. Denis MacShane (Rotherham): A Tory comic.

Mr. Dykes: I agree with that, and I thank the hon. Gentleman, who described it as a Tory comic. It is perhaps a right-wing comic. I am not sure that many of those Tories are genuine Tories in the old sense that I still respect.

I love the story of the British mother whose children were taken to Germany by a recalcitrant and difficult father. The theme of the article is that the case is the direct responsibility of the European Union. The writer wonders how the wicked Germans and Europeans dare to take the

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wonderful children away from their mum in Britain. It is nothing to do with the European Union--that is poisoned propaganda--

The Second Deputy Chairman of Ways and Means (Dame Janet Fookes): Order. This does not have much to do with the new clause either.

Mr. Dykes: I agree, Dame Janet. Although I shall not detain the Committee at great length by reading from the article, in other passages it refers, tangentially, to fraud. Were other hon. Members alarmed by the futuristic article in the Daily Mail last Saturday? It certainly referred to fraud. [Interruption.] I am grateful for the advice from the Opposition, but such matters are important because the press are doing it more and more. What the press do--in concert with some of our hon. Friends, because they all work closely together--is to repeat poisoned propaganda against the European Union. It is a self-feeding process which would be easily reversed and dealt with if the Government had the necessary boldness and courage to deny such allegations, put the matter into perspective and restore the traditional enthusiasm for European Union developments on which the Government were partly elected, although the main policy areas must have been domestic, economic and social policy.

As you are looking at me rather severely, Dame Janet--and understandably so --I shall conclude. If the Government give a balanced lead, acknowledge that these issues are important, reject the amendments, which are unnecessary and would not be an useful change to existing legislation, and express their determination to deal with matters where justified but keep them in a balanced perspective, they will get more support from all parts of the Chamber.

Mr. Campbell-Savours: I want briefly to intervene to tell the hon. Member for Harrow, East (Mr. Dykes) that I simply cannot understand his attitude. Like me, he has spent most of his life advocating support for the Community. He must see the dangers of a referendum and he must accept that if there is a referendum by the end of the decade, the likelihood is that it will be fought on the issue of fraud and not on the ballot paper, if that is what it will be called. If it is fought on fraud, we shall lose and there will be a major crisis in terms of our membership of the European Community. The strongest advocates of the European Union have a special responsibility placed on their shoulders to deal with the issue before it destroys a principle that we have advocated for most of our lives.

I was not here when my right hon. Friend the Member for Llanelli (Mr. Davies) made his speech, but I understand that he saw some consensus developing between those of us who are concerned as supporters of Europe with those who have historically taken a position in opposition. I recognise that a consensus will develop because it is in all our interests to resolve the issues. The Lords European Communities Select Committee has now produced three reports of which I am aware: the 1989 report, "Fraud against the Community", the 1992 report, "The Fight Against Fraud" and the 1994 report, "Fraud and Mismanagement of Community Finance". The reports point to the problem within the Community. They are all set against a background of repeated attempts over the years by Labour and, if I am honest, I must admit, by Conservative Members of the European Parliament to deal with such issues. They recognised, particularly

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Conservative supporters of the Community, that the problem had to be dealt with before greater damage was done. Yet nothing has happened apart from measures being introduced as a result of the passing of the Maastricht treaty.

The problem is whether the will is there: some of us believe that it is not. Even if measures are introduced under the provisions of the Maastricht treaty, some countries within the European Community may set out to undermine whatever arrangements are made because their reasons for membership are selfish. As we heard in the previous debate, they are prepared to adapt their national statistics to ensure that they are beneficiaries.

I want to draw the Committee's attention to three particular pieces of information. The hon. Member for Harrow, East referred to a newspaper article. I shall refer to a Commissioner, Mr. Peter Schmidhuber, whom my hon. Friends will know. The EC Commissioner responsible for fraud prevention told MEPs in 1992 that the Commission was seeking to improve co- ordination between its own departments and member states. He told a public hearing of the European Parliament's budgetary control committee that

"Brussels is examining whether to pay rewards for information on fraud, or offer performance-related bonuses to investigators." I have asked the Minister to take note of my request as I shall be seeking a response from him. Those two propositions were considered by the Commission. What was the result of that consideration, and will the fraud measures that we understand are to be introduced include those two provisions, which will go some way towards dealing with the problem?

In 1992, Mr. Peter Schmidhuber went on to say:

"Demands for a further 35 fraud-busters have had to be shelved because of a general financial squeeze"--

I find that remarkable in the context of the EC budget--

"and the effective devaluation of the Ecu, in which the EC budget is calculated, against the Belgian franc, in which most staff salaries are paid."

9.15 pm

Are we to believe that the Community, which seems to spend its money lavishly in many areas, could not find the resources to pay 35 fraud- busters? That is a Commissioner responsible for fraud prevention speaking to the European Parliament budgetary control committee.

Mr. John Tomlinson, Member of the European Parliament, in a press release in 1993, said:

"`European Community Ministers are attacking funds for fighting fraud in the Community budget--at the insistence of the British Government', said John Tomlinson Labour MEP today in the European Parliament in Strasbourg. `This will be resisted most strongly and a row is certainly brewing between anti-fraud campaigners in the Parliament and the Council of Ministers. The first move was when the Ministers slashed 25 million ECU (about £20 million) from the anti-fraud funds in next year's European Community budget.'" Again, nothing happened.

On 10 March 1994, in a letter to the editor of The Independent , Terry Wynn said:

"Can I make one or two comments following Douglas Hurd's remarks about fraud in the European Community. In July last year at the Council of Ministers first reading of the 1994 EC Budget, the Council made sweeping cuts throughout the budget. However, when it came to agriculture, which accounts for half of the £56 billion

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