European Standing Committee B
Monday 29 January 2001
[Mr John McWilliam in the Chair]
European Parliament
[Relevant Documents: European Union documents Nos. 9712/00, relating to a statute for Members of the European Parliament, and 9560/00, relating to an audit of expenditure of European Parliament Political groups.]
4.30 pm
Minister of State, Foreign and Commonwealth (Mr. Keith Vaz): I welcome you to the Chair, Mr. McWilliam. I also welcome the opportunity to debate these important matters in Committee and to explain the Government's efforts to reform the financial management of the European Parliament and the way in which European political parties are funded. These are complex matters, but our policy is simple: we want reform.
I shall speak about the European Court of Auditors before turning to its report on the European Parliament's political groups. Successive British Governments have supported the strengthening of the ECA as a way of improving financial management of Community funds. The Maastricht treaty enhanced the ECA's status by making it a full institution of the Community. It also introduced a requirement to produce an annual statement of assurance. We sought and secured in the Amsterdam treaty further strengthening of its powers; we took that further at Nice with reforms to provide better ECA auditing of EC activity, including a new contract committee to promote ECA co-operation with national audit institutions.
The Government are serious about reforming EU institutions and their financial accountability, so I welcome the report of European Court of Auditors into the expenditure of the European Parliament's political groups. That expenditure comprises about 13 per cent. of the European Parliament's total budget. It is clear that the rules governing that expenditure were a mess and I share the Scrutiny Committee's concerns at the laxness of the financial regime described by the ECA.
There are lessons for all MEPs in the ECA's recommendations. I am glad that the European Parliament accepts that those lessons have to be learned and has agreed a series of reforms. New measures came into force on 1 January and include amalgamation of the administrative and information budgets, as recommended by the report, and the adoption of new rules to clarify correct use of expenditure; drawing up a list of external audit bodies to audit each political group; adoption of common rules for financial regulation of political groups; and supplying the European Parliament with a copy of any contract concluded between a group and a third party. Most importantly, the European Parliament agrees with the ECA recommendation for a statute to regulate properly the funding of European political parties. Such a statute would prevent the sort of siphoning off of money to political foundations or parties that the Scrutiny Committee, rightly, strongly criticised in its conclusions. Moreover, it would help to prevent the foreign funding of UK national parties, which we are pledged to end. This is why we strongly support such a statute, why the Nice European summit agreed a legal basis for it and why we sought and secured wording at Nice to stipulate that EC funding for European political parties may not be used to fund national parties either directly or indirectly.
The Commission is expected to bring forward a proposal soon and we shall have to consider the details. However, the UK strongly supports the principle of a statute in line with the recommendations in the report of the European Court of Auditors. Let me make it clear that we are not criticising Members of the European Parliament, who do an excellent job representing their constituents. However, it is important to consider ways in which to make the provision of funds more transparent, which will assist the whole process.
I turn to the recommendations by the Group of Eminent Persons on the MEPs statute. MEPs need clear and agreed arrangements for their expenses and remuneration. The absence of transparent rules for expenses undermines the credibility not only of the Parliament, but of the EU as a whole. All too often, the EP's appearances in the UK media are accompanied by ``gravy train'' headlines. The EP—and the British taxpayer—deserves better. That is why the Government strongly support a statute for MEPs, which would at last provide clear and tough guidelines on MEPs' terms and conditions and introduce proper arrangements to account for the funds that they receive.
The Council and the Parliament have been negotiating the statute for almost two years. I shall not pretend that those negotiations have been easy—they necessitate seeking agreement between 626 parliamentarians from 15 member states, many of whom want different things. We are clear about what we want: thorough reform that sticks.
The Group of Eminent Persons was appointed by the European Parliament to make recommendations. We do not endorse them all, but they are a useful contribution to the process. We are happy to support many of them, especially those that call for: transparency, accountability and comprehensibility in MEPs' expenses and costs; the ending of current practices on travel expenses; reimbursement based solely on actual expenditure; a clear element of control on MEPs' general allowances; greater transparency on MEPs' contracts with their assistants; and contribution by MEPs to their pension, health and accident insurance schemes. Those recommendations would go a long way towards achieving the reform that we want, and I am glad that the EP has moved towards accepting them.
I must register disagreement with the eminent persons on one major aspect of their recommendations—Community taxation for MEPs. To the Government and to UK MEPs it is a point of principle that UK MEPs should continue to pay the same tax as their constituents. We are not alone in holding that view—it is shared by many Opposition Members, including the hon. Member for Ruislip-Northwood (Mr. Wilkinson)—and we have made it clear to the European Parliament that such a provision will be a central element of any overall deal.
The negotiation of a common salary has been difficult. That is always to be expected when talking about people's salaries. There are huge discrepancies between the salaries of MEPs from different member states. UK MEPs are paid the same as Members of Parliament—a mere £48,000 per year—but a Spanish MEP is paid around £21,000 a year, and the lucky Italians receive around £75,000 a year. The eminent persons recommended a standard MEPs' salary based on the average of the national parliamentary salaries of the four largest member states. However, we believe that an average salary of all 15 member states is the most logical way to achieve a common salary. It would also, as astute members of the Committee will have calculated, produce a standard salary for an MEP that is very close to the pay of MPs here at Westminster—in fact, just below it.
I hope that progress will be made on the dossier under the Swedish presidency and that a deal will be struck in the near future. If not, it will not be owing to any lack of effort on our part. Naturally, I shall continue to keep Parliament informed of significant developments. I do not know how matters will be resolved in respect of the MEPs statute or the statute for European political parties, but I can state with certainty that the Government will continue their efforts to secure thorough and lasting reforms. That is in Europe's interests and in Britain's interests.
Mr. Richard Spring (West Suffolk): Does the Minister recognise that the effect of funding transnational political parties directly, which is one consequence of the report of the Court of Auditors, would be to disadvantage the United Kingdom Conservative party and the French RPR—Rassemblement pour la Republique—neither of which are members of such parties?
Mr. Vaz: I can assure the hon. Gentleman that there is no question of our picking on the Conservative party in respect of these provisions. However, appropriate accountability is important, and there is a growing public consensus that it would be wrong to ensure that national parties are funded in that way.
I do not know whether the hon. Gentleman saw the article on page 16 of The Times of 27 January 2000, under the headline, ``Perks protest MEPs face legal action.'' The article was about two members of the United Kingdom Independence party who have channelled their expenses and allowances from the European Parliament to fund Euro-sceptic causes. The article stated:
``They have openly used this money to support a British shopkeeper who refuses to use the metric system; a butcher who has defied the EU by selling beef on the bone; and commercial fishermen facing EU restrictions.''
Whatever one thinks of the cases, one will accept that that type of activity is a cause for concern and that it must be dealt with. However, there is no question of the current Government or any other picking on the parties that the hon. Gentleman mentioned by stopping their funding. The proposal has a much broader purpose than that.
Mr. Kelvin Hopkins (Luton, North): I welcome my hon. Friend's opening statement and his subsequent comments in response to the Opposition spokesman. Does he agree that there should be a deep distinction between remuneration, taxation and pensions of individual members of the European Parliament, and the funding of their political parties?
Mr. Vaz: I agree with my hon. Friend. The Government are not trying to prevent MEPs from getting their salaries or pensions. We—meaning Members of the UK Parliament—have a tight system. When we spend, we must produce receipts to be reimbursed, and there is no question of our certifying claims in advance to obtain money from the Fees Office; anyone who has tried it will know that it is impossible. We want to ensure that that system is also used in the European Parliament. The proposal that we are fighting for embodies an important principle and we shall continue to fight for it, but we do not want to interfere with pensions or salaries, which are separate from the other matters that have been mentioned.
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