European Financial Interests

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Miss Melanie Johnson rose—

Mr. Ottaway: I have a funny feeling that the Minister is about to tell me that the Commissioner has changed.

Miss Johnson: The Commissioner is female.

Mr. Ottaway: I did not say whether the Commissioner was male or female.

Miss Johnson: The hon. Gentleman said, ``Mr.''

Mr. Ottaway: I am sorry; I was speaking generically.

Mr. Bosch, the vice-chairman of the European Parliament's budgetary control committee, said that OLAF was being used as a shunting yard for Commission officials and warned that the European Parliament would consider blocking funds unless the old practices were stamped out. Whichever way the Minister looks it, we must consider the proposals seriously.

I shall make a few suggestions on how the Minister could step up the pressure on the Commission. We want a genuinely independent anti-fraud office. She and I can at least agree on that. We want a body equivalent to the Public Accounts Committee; perhaps the European parliamentary budgetary control committee should be strengthened and allowed to call for witnesses and papers. The European Parliament should be given the power to dismiss Commissioners for maladministration. We want a register of interests for Commissioners, and we want to prevent them making personal appointments.

In conclusion, the situation is far from perfect. Much needs to be done. The Minister has invited us to take note of the document. I believe that it is too tame, but I shall leave it to the members of the Committee to decide how to react to that. The Minister also asked us to support the Government's continuing efforts to promote and support measures to improve financial management and fight EU fraud. Those are fine words and we cannot disagree with them, as far as they go. However, if the independent surveillance committee is to be taken seriously, it is clear that the measures in question are not up to scratch.

11.30 am

Sir Raymond Whitney: As someone who is keen on Britain's positive relationship with our European partners, and who believes that we must work hard to get the European Union to work better—and, above all, to be seen by our constituents to work better—I am conscious of the fact that, year by year, we have the same debate about the inadequacies of the control procedures in the Commission and throughout the European Union. There can be no doubt that we must go on fighting waste and extravagance wherever they are found. We all, day by day, come across examples of fraud or waste.

It is suggested in the newspaper today in a piece about Commissioner Kinnock that

    ``Commission secretaries claim a £1,100 annual typing allowance, although typewriters vanished a decade ago.''

That is not, of course, fraud, but it is a criminal waste of European taxpayers' money and, even more importantly, it does political damage to the concept of the European Union. There can be no division in the Committee or the House about the need to improve procedures.

However, it is important to keep matters in perspective. As the Minister said in her opening remarks, the European Union has many critics. Mr. Christopher Booker, for example, has a one-man campaign that is widely followed by those who want to find evidence of EU weakness or malpractice. The Committee owes it to itself and the House to keep the issue in careful perspective. That means that we should recognise that any large organisation, particularly an international one, will have faults and flaws that are difficult to remove entirely, because of the multifaceted international nature of the institution. That does not mean that we should rest and say that nothing can be done. We must keep striving for improvements. However, we must understand the difficulty of the job.

A few years ago, I was a member of a small group of Members of Parliament and Members of the European Parliament who were invited to see the fraud control procedures of the European Union. We were given a three or four-hour session with the then head of UCLAF, and we came away impressed with him and sympathetic to what he was doing. A major element in the task that confronted him was something that I raised with the Minister earlier: something like 80 per cent. of Government expenditure is under the control of member states and cannot be seriously investigated by the European institution concerned, by whatever name it might go in that month. That is a difficulty that the Committee and member states should consider.

The head of UCLAF of course found great differences in the accessibility of member states' mechanisms to investigation by UCLAF. Even within member states there were differences. We were all, I think, chagrined by what we were told about our own country, which we like to consider as a shining light showing how public finances should be conducted—as I believe it is. The head of UCLAF informed our little group that he found significant differences between certain Government Departments. We believed that that point should have been considered carefully.

The member states' inviolability from the investigation raises sensitive and crucial issues of sovereignty and independence. We are all aware of them, my party acutely so. We must be careful and measured in our attacks on the inefficacy of UCLAF or its successor in considering sovereignty. I hope that we can find mechanisms to shed more light and bring more transparency. We shall not find such a way forward unless we approach the issue in a positive and constructive spirit.

11.36 am

Mr. Wilkinson: I find the Minister's motion anodyne beyond measure. I have said before that righteous indignation has a role in politics. If we lose our sense of conscience, we betray our constituents and are not worthy of the role that we seek to fulfil. We all remember Bernard Connolly's book, ``The Rotten Heart of Europe''. Every year, we have a testimony to its subject in the Court of Auditors' report. In this country, such a catalogue of malfeasance would rightly not be tolerated, and we would not vote to allocate supplies in cases of established malpractice. In Europe, matters are different. As our country has virtually required the status of a subject satrapy, we are impotent to do anything about it.

The motion is bland and uncritical. It expresses hopes for the future, but we all know from our bitter experience of many years that they will not be realised. Our electors deserve better. Even if we voted to take no note of the motion, doing so would have no effect whatever.

Mr. Rammell: The thrust of the hon. Gentleman's argument is that the fraud and irregularity highlighted in the report is unique to the European Commission, as opposed to governmental activities in this country. Will he ponder on the fact that the level of fraud identified year on year by the Court of Auditors is broadly similar to that identified, for example, in the housing benefit budget in this country? I do not minimise the importance of the issue in terms of our Government's expenditure or European expenditure, but we need a sense of context that his comments have so far not had.

Mr. Wilkinson: The important difference is that our Public Accounts Committee has a role answerable to elected representatives who put pressure on Her Majesty's Government to try to rectify unsatisfactory situations. The Labour Government have been full of rhetoric about the need to eliminate housing benefit fraud and other abuses of the social security system. We always support them in such endeavours. Every now and again, the Secretary of State for Social Security gives evidence to the House of an improvement in the situation. Although we are not entirely happy, a degree of reassurance can be provided to Members; but no reassurance can be gained from the succession of Court of Auditors' reports, which we consider in a pantomime procedure that has no material effect.

The Minister was somewhat dismissive of the extent of fraud in the agricultural sector, but it is institutionalised. I have not heard of the Government having to hire remote sensing satellites to investigate the misappropriation of agricultural funding by British farmers, but that goes on on the continent. We know that unless such a practice is followed, claims will be made for non-existent vineyards, olive groves and the like. It is utterly unsatisfactory and grotesque, particularly so as our farmers are going to the wall and suffering so much at present.

As I said, we should reform our practices. We should at least withhold the British contribution to the extent of fraud for which we have evidence. We should also have the guts to stand up against evil. For example, the Minister referred to the European subsidy for tobacco growing. That subsidy, provided by British taxpayers at the behest of the European Union, promotes morbidity, early death, bereavement and suffering. It is morally appalling.

Mr. Rammell: I make the same point that I make whenever the hon. Gentleman raises that issue. Can he explain why Conservative Members of the European Parliament specifically voted against ending those tobacco subsidies?

Mr. Wilkinson: I cannot speak for Members of the European Parliament, be they members of my party or of any other party—any more than Members of the European Parliament can speak for the hon. Gentleman or for myself. They are answerable to their consciences. I would find it impossible to answer for my own conscience were I not to fight against that manifest abuse of European taxpayers' money.

The fault lies with the system and the automaticity of revenue gathering inherent in the European Union. The EU automatically receives a proportion of VAT receipts from member states and an own resources contribution based on their respective gross national products. No mechanism exists to allow elected representatives to vote a supply and then, if it is misused, to withhold it. That is what is needed. Until it happens, I doubt whether we shall see an improvement, because the EU fraudbusters are themselves under investigation for malpractice. That is a deeply worrying state of affairs.

To conclude, I revert to the original point that I made to the Minister. We are impotent in that field; we prove it year after year. At least the Members of the European Parliament purport to have a role in protecting the United Kingdom's interests. Can the Government say without equivocation that, if the European Parliament decides not to sign off the 1999 budget, they will support the European Parliament against the Commission? Unless they speak for the elected representatives, the electorate will have little confidence in the Government's true determination to eradicate fraud in the EU.

11.44 am

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Prepared 28 February 2001