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7.59 pm

Mr. David Heathcoat-Amory (Wells): This is the first time that the right hon. Member for Darlington (Mr. Milburn) has appeared at the Dispatch Box in his new job. I congratulate him on attaining that position, which carries great responsibility. I hope that he lasts a bit longer than his two predecessors and I look forward to many exchanges with him about these and other issues.

The background to this debate is not simply the launch of the euro, although the Chief Secretary's speech concentrated on that. In the European Parliament, events of great importance are unfolding, with the possibility of a censure motion against the entire European Commission. That tells us something about the European

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Union and how the drive towards the big projects of political integration and the launch of a single European currency have sidelined other matters of equal importance, such as whether taxpayers' money is being properly applied. That should have engaged his attention; it was mentioned by the hon. Member for Gordon (Mr. Bruce).

Fraud should worry the Treasury; not only is the general European taxpayer at risk, but the British taxpayer is disproportionately affected because of our very large annual contributions. They fluctuate from year to year for technical reasons but, averaged out, our gross contribution is nearly £18 million a day. We get some back--not necessarily for projects that we would choose to spend the money on--but our net contribution still runs at nearly £7 million every day. It was therefore doubly surprising that the Chief Secretary managed an entire speech on our relationship with the European Union, and our economic relationship in particular, without mentioning fraud and mismanagement.

The issue is not new. I am afraid that fraud and mismanagement are endemic in the European Union at all levels, and in the European Commission in particular. The European Court of Auditors produces a report every year itemising the scandalous waste and mismanagement of the European Union budget. I raise the matter now because of the debate that is taking place in the European Parliament and tomorrow's vote. I note that the problem is not new but the present revelations are interesting because they have come not from the European Commission, the Court of Auditors or member states, but from a Dutch official who blew the whistle and was promptly disciplined by his employer, the European Commission.

My point is relevant to the debate because, last year, the British presidency had an opportunity to do something about fraud and mismanagement. Indeed, at its start exactly a year ago, the Prime Minister and the Treasury announced that that was a British priority. Yet again, a huge gap has opened between what the Government said and what they did, between the rhetoric and the reality. For instance, spending on anti-fraud measures fell last year. One of the first things that the then Economic Secretary did, both last year and directly after the general election, was to tell European Standing Committee B that there would be a sharp reduction in the amount spent on anti-fraud measures. For greater accuracy, I have the figures.

In the internal market, industry and trans-European network, which is a huge item of expenditure, the sum allocated to anti-fraud measures--a tiny proportion of the overall sum--fell from 19.9 million ecu to 4.4 million ecu. At the same time, the Treasury and the Government were telling us how important they thought the drive against fraud and mismanagement was.

Exactly the same will happen next year. Expenditure on all the other programmes will go up but expenditure on anti-fraud measures will go down. That has now been spotted by the Select Committee on European Legislation, which reported to the House last July that the total budgetary provision for anti-fraud measures will drop next year by a further 20 million euros--a drop of nearly a third--on top of the drop the year before. When the Treasury was challenged about it, all that Ministers could

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say was that it did not matter because the rest of the Commission's budget would be directed to anti-fraud measures.

That is not the experience of Mr. Buitenen, the Dutch official faced with dismissal for blowing the whistle on the fraud and mismanagement at the heart of the Commission. The matter is very serious because he reports that, far from the Commission using its budget and making efforts to control fraud, it is part of the problem. It was not surprising that the Select Committee on European Legislation concluded its review of what the British Government were doing on fraud by saying that it was not convinced or impressed by the Minister's argument that a reduction of 20 million euros in the budgetary allocation did not imply a reduction in the effectiveness of the anti-fraud effort. I hope that Minister will tell us her attitude to the fraud and mismanagement in the budget, and what she is doing about it, because it is our taxpayers' money, which was voted by this House, that is being stolen and mismanaged.

I concede that it is not simply a question of spending money on anti-fraud efforts, but of political will. We therefore turned with some interest to the document "A New European Way", which was published last October by the socialist and social democratic Ministers of Finance in the European Union. It was reported that the Labour party had a prominent input. It is full of the usual waffle about a people's Europe. There are descriptions of all the wonderful things that can be done with the European budget--more trans-European networks and all the rest of it. There is not a single line, word or mention of fraud or mismanagement. All that stuff during the European presidency about how it was a priority--for the Treasury, I think that it was the priority--did not get translated into action during the British presidency, or in the document published by the left-of-centre Finance Ministers last October. That is eloquent testimony to what the Labour Government really think about fraud in the European Union and its institutions.

The reason for all this is that the Government are so anxious to fit into the European Union scene that they do not want to be accused of doing anything that might discredit the EU. We are well past that. The days when it could all be covered up so as not to startle the public are long past. The public know perfectly well what is going on and want something done about it. The European Parliament socialist group is manoeuvring to keep individual Commissioners from being singled out and asked to resign.

Mr. Lock: Do the right hon. Gentleman's views about the public knowing what is going on extend to his former colleague Mr. Phillip Oppenheim's description of the shadow Cabinet as consisting of donkeys, too many old faces, too many debts from the leadership election; in short, too many sad reminders of unhappy times past. Is that what the public are well aware of?

Mr. Heathcoat-Amory: Is that really the best that Labour can come up with? I advise the hon. Gentleman to have another go. This is a debate about the European Union. It is telling, and will have been noted by my hon. Friends, that Labour has nothing to say about the

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European Union and no defence to what I was saying about slashing anti-fraud measures or about the attitude of his colleagues in the European Parliament socialist group. They are clearly more interested in protecting individual socialist commissioners than in protecting the European taxpayer.

It has been left to the right of centre group, the European People's party, and, in particular, Conservative Members of the European Parliament, who have been doing what they can to strengthen the procedures against fraud in the EU, to get something done and, in particular, to stop the Commission and its employees hiding behind diplomatic immunity.

Mr. David Heath (Somerton and Frome): I hope very much that British Conservative Members of the European Parliament will support the motion of censure tabled by my colleague, Pat Cox, in the European Parliament tomorrow. However, I hear that the Christian Democrat group is doing a deal with the socialist group in order to back Jacques Santer. Is that correct?

Mr. Heathcoat-Amory: If the hon. Gentleman wants to look at the voting record, he will have to wait until tomorrow evening. But in the few short weeks after these revelations first became clear, the Conservative group in the European Parliament has done more to strip away the diplomatic immunity than the European Parliament socialist group, with all its waffle and posturing. Therefore, I can assure the hon. Gentleman that we and our colleagues in the European Parliament do not just talk about this, we do something about it.

I, too, wish to congratulate all those in Britain who worked over the new year on the launch of the new currency in order to make it stable and successful. I was rather surprised by the tone of the exchanges was between the hon. Member for Gordon and the Chief Secretary. They were hardly in the spirit of the new alliance about which we keep reading, or at least pressed so strongly by the leaders of their respective parties. It is early in the new year, but all the festive spirit appears to have worn off. That is particularly so in that they have been squabbling about essentially constitutional matters.

The joint Cabinet Committee on those matters is not new. Throughout last year, the Liberal Democrats sat on a Government Sub-Committee discussing constitutional matters. One would have thought that, by now, they would have come to some kind of agreement, or at least a meeting of minds. Very sharp differences have again been exposed today.

We know--I think it is beyond dispute--that joining the euro will mean a massive and irreversible transfer of decision making from people who are elected and can be removed at home, to people who are not elected and cannot be removed in the institutions of the EU. That is practically a definition of a constitutional issue.

The Liberal Democrats welcome that. They cannot wait to give away those powers. For them, the creation of a European economic and political state is desirable, and they cannot get to it soon enough. The Labour party position seems to be simply to deny that that is ever likely to happen. That is again demonstrated by the amendment. The only tests that it raises for consideration of British entry are the five economic tests. There is not a word here about any constitutional implications.

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