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Mr. David Davis (Haltemprice and Howden) rose--

Mr. Cash rose--

Mr. Milburn: I will give way first to the right hon. Member for Haltemprice and Howden (Mr. Davis); then I will give way to the hon. Member for Stone (Mr. Cash).

Mr. Davis: Let me ask the Chief Secretary a simple practical question, which arose when my Committee went to Brussels. It seems to be being proposed that the head of the fraud prevention office should be up for reappointment after five years, for a potential two terms, which strikes me as a weakness in terms of the maintaining of his independence. Has the Chief Secretary considered that?

Mr. Milburn: As the right hon. Gentleman knows, I have the greatest respect for the Public Accounts Committee--not least because I used to have the pleasure of serving on it--and I listen carefully to what he has to say about this issue. I can tell him that the director can be appointed only after full and proper consultation with both the Council and the Parliament. This is not purely a Commission appointment. I hope that that will help to reassure the right hon. Gentleman and his fellow Committee members about the integrity and independence of the office.

Mr. Cash: Does the Chief Secretary agree with the assessment of the Economic Secretary, who has said:

of the kind that the Chief Secretary has described--

    "would have less understanding of how the Commission functions and would be likely to encounter barriers in obtaining information about possible fraud--it would not have access to 'inside information'".

Does the Chief Secretary not regard that as a bit thick?

Mr. Milburn: This is an important and interesting question. I think that there are advantages in the location of the director and the office. Let me draw an analogy, in order to reassure Opposition Members.

No hon. Member claims that the Comptroller and Auditor General is not independent, although he is responsible for auditing the procedures and accounts of the House, and although he is an official of the House.

Mr. Maude rose--

Mr. Milburn: No one claims that the CAG is not independent--unless the shadow Chancellor is about to produce a revelation.

Mr. Maude rose--

Mr. Milburn: I will give way to the shadow Chancellor in a moment. Let me finish my analogy first.

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In similar vein, the director and the office will be independent of the Commission, although they will be located within the body of the Commission, with all the safeguards that I have described.

Mr. Maude: The right hon. Gentleman is making precisely the wrong point in terms of his case. The Comptroller and Auditor General is accountable to the House of Commons--to Parliament--not to the Government. The Government's proposal, to which the right hon. Gentleman says ECOFIN is about to agree, is that the fraud prevention office will be based in the Commission, staffed by Commission officials. It will therefore not be independent. Indeed, the Economic Secretary's words, quoted by my hon. Friend the Member for Stone (Mr. Cash), suggest that the Government accept that it will not be independent in the way that we think it should be.

Mr. Milburn: The right hon. Gentleman continues to make those allegations. I have tried to set out in detail the various guarantees of independence that we have negotiated in proposing that new protection for taxpayers in Europe. I do not believe for a moment that I will satisfy the right hon. Gentleman because I suspect that, again, there is a triumph of ideology over the facts in the Conservative party.

Mr. Geraint Davies: Does my right hon. Friend accept that it would take a number of years to make the new fraud office institutionally independent owing to the requirement to change the treaty? The impact of that, alongside the impact of the office being outside the Commission, would be discontinuity of investigation and more fraud. The current proposal for the statutory independence of the director, along with the other changes that have been described, is the optimal course.

Mr. Milburn: I am grateful to my hon. Friend for those comments. He, too, is a member of the Public Accounts Committee.

Mr. Howard Flight (Arundel and South Downs) rose--

Mr. Charles Wardle (Bexhill and Battle) rose--

Mr. Milburn: I will give way in a moment or two. May I deal with one intervention at a time? Then I must make some progress.

I take precisely the points that my hon. Friend the Member for Croydon, Central (Mr. Davies) has made. I think that the position that we have reached, which I hope will be endorsed by ECOFIN, will get the balance right. Conservative Members are rightly agitated about the level of fraud in Europe. They want something done about it now, yet they rail against a measure that will allow us

19 May 1999 : Column 1090

to do precisely that while maintaining the integrity and independence of those who will be charged with investigating fraud.

Mr. Flight rose--

Mr. Wardle rose--

Mr. Milburn: I cannot remember which hon. Member was first, but I give way to the hon. Member for Arundel and South Downs (Mr. Flight). I will then make some progress.

Mr. Flight: Transparency of information is crucial in stopping fraud. Where within the proposal is the mechanism for asking searching questions, as happens under our constitution? It is all very well having an auditor--we have an auditor already--but if one cannot get to the truth from outside, there is scope for continuing corruption.

Mr. Milburn: The hon. Gentleman has either not been listening or is determined not to listen to what I have said on the issue. The director of the office of fraud prevention will have all the powers that he wants. He or she will have the powers to demand documents, to enter buildings, to summon witnesses and to report independently. He or she will be accountable more widely than just to the European Commission, which is what the hon. Gentleman is so concerned about. On all those tests, the criterion of independence that the hon. Gentleman rightly seeks is satisfied.

In my and the Government's view, the changes are radical and will make a real difference in tackling fraud.

Mr. Campbell-Savours: Will my right hon. Friend give way?

Mr. Milburn: As it is my hon. Friend.

Mr. Campbell-Savours: I am sorry to interrupt my right hon. Friend.

I have sitting been through these debates for 15 years and they are very interesting. I presume that the director of the new office will produce an annual report. Will that annual report be presented to the House of Commons? Will it be presented at the same time as the report of the European Court of Auditors? Will we have an opportunity to debate the contents of the director's report?

Mr. Milburn: That is a good question. [Hon. Members: "What is the answer?"] Amazingly, I do not know all the answers to all the questions, but I am happy to listen to what my hon. Friend has suggested. I am happy to listen to the Public Accounts Committee's views on the issue. I assure my hon. Friend that, when the director and fraud office undertake their work, they will report not just to the Commission but to the Council of Ministers and the European Parliament. The question that my hon. Friend asks about reporting to the Westminster Parliament is important. We shall explore it, if that is helpful.

Dr. Vincent Cable (Twickenham): Will the right hon. Gentleman give way?

Mr. Milburn: No. I will make some progress because many Members want to speak in the debate and it is right that they should have an opportunity to do so.

19 May 1999 : Column 1091

The publication of the report of the independent experts--and the subsequent resignation, rightly, of the Commission and the President--provides the opportunity for a more radical overhaul still of the style of Europe's institutions. The report of the committee of wise men was damning, revealing complacency, a lack of accountability and nepotism. It revealed, as the Prime Minister said, systemic failings in the Commission which had been tolerated for too long.

That brings me to an important issue. Before the Conservative party gets too high and mighty about the problem of fraud in Europe, it is worth remembering that it was in power and in government for 18 years. The Conservatives had the chance to act and failed to do so because, on Europe, they were weak, divided and isolated. All the tough words from the shadow Chancellor and in the motion count for precisely nothing because, in opposition as in government, the Conservatives remain weak, divided and isolated on the question of Europe.

Let us not forget that the man responsible for overseeing the chaos in the Commission, Jacques Santer, was the choice of the then Prime Minister, the right hon. Member for Huntingdon (Mr. Major). Indeed, Mr. Santer was the choice of the Conservative party. When he was a Treasury Minister, the shadow Chief Secretary, the right hon. Member for Wells (Mr. Heathcoat-Amory)--I note that he is not here today--said:

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