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2 Dec 2002 : Column 710—continued

Ms Stuart: Fundamentally I agree with the hon. Gentleman's argument on an exit clause. However,

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what is his opinion of the proposal by the European People's party, part of his political family, to have an exit clause but only if it is agreed unanimously by all member states?

Mr. Tyrie: That is a trite remark. I am trying to make a serious political point about whether the EU should have an exit clause. I am not making a trivial debating point about what may be going on in the European Parliament.

I am not a sudden convert to the idea of an exit clause. I have pressed the case for such a clause for at least 15 years. I started thinking about it when the Delors report was first debated. There are good arguments for and against currency unions, and reasonable men can disagree about them, but one of the most ludicrous arguments is that the loss of monetary control involved in a currency union is inevitably a one-way ticket and involves the surrender of our nationhood. Currency unions have come and gone over the centuries, and they will do so again. It has always struck me as much better to have the ground rules for withdrawal from a currency union laid out at the start. That could have been done without destabilising the markets and it was a profound mistake that we did not put such a rule into the Maastricht treaty.

I have discussed an exit clause with a good number of people on the convention over the past few months. Initially, I faced strong opposition, including from some senior people. I am pleased that Guiliano Amato, whom I spoke to, and Giscard, whom I did not, appear to be coming around to the idea. I just hope that they fully grasp and articulate the importance of such a clause for entrenching the primacy of the nation state because only if they do that will they get full political value from it. The EU is not—it would be foolhardy to try to make it—anything more than a highly sophisticated set of reciprocal obligations between member states. Perpetuating the illusion that it is anything more, and many try to do that, particularly in continental politics, will at best waste a great deal of bureaucratic and political time; at worst, it will mix a dangerous nationalist cocktail. We are already seeing some evidence of that lethal mix in the domestic politics of France, Austria, the Netherlands and possibly Germany.

My deeper worry about the work of the convention is the lack of appreciation of the scale of the problems that the EU is accumulating, and I say that as somebody who is not a paid-up Europhobe. Those problems are not only the failure of so many policies. Is there anyone in the House who could honestly say that there is any major area of EU spending with which they could agree? There are no takers—not even the Minister, who is frowning. That is the scale of our problem in explaining these issues to the electorate. The convention has not fully grasped the scale of the problems that we are trying to deal with.

There are two straightforward commitments that the Government could make tonight—they have edged towards one of them—which would indicate an appreciation of the scale of the problems. First, it would be helpful if the Government said unequivocally that they fully support an exit clause, not only that they do not see a problem with it. The second, equally important point is that they should put any constitutional arrangement to the electorate in a referendum.

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10.1 pm

Mr. Richard Bacon (South Norfolk): It is a pleasure to follow my hon. Friend the Member for Chichester (Mr. Tyrie). I have enjoyed listening to the debate, and I want to focus on an area that has received little attention this evening or in the Standing Committee on the Convention. The hon. Member for Glasgow, Pollok (Mr. Davidson), with whom I serve on the Public Accounts Committee, referred briefly to the matter, which is of huge importance to the future of Europe. I refer to financial accountability and the control of fraud in the European Union.

I first took an interest in the issue when I read the House of Lords report, XFinancial Control and Fraud in the Community", in July 1994. I shall quote at length from page 1 of that report because it predicates what follows. It says:

That report made me realise, back in 1994, that this was something that one should keep an eye on, and I decided that I would do that. The 1995 accounts were qualified by the Court of Auditors, which says that the statement of assurance provides

The same thing happened for the third year in a row when the 1996 accounts were qualified, saying that

and it was estimated that about £3.1 billion went missing through fraud. It appears that there had been no change by 1998, for which the report says:

When we reach the reports for 2000, we find the National Audit Office commenting that

Page 1 of that report says:

In May this year, NAO reported on the accounts for last year, and once again the accounts were qualified. The report said:

A number of points in that report caught my eye. First,

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In relation to the accounting system, it was noted that

Last Thursday 28 November, the Court of Auditors report, which will not be reported on by the NAO until next year, was published. Once again, the accounts were qualified. The report stated:

In other words, after eight consecutive years of qualified accounts, the Commission has not yet come up with a detailed action plan. Consider for a moment what would happen if the accounts of Marks and Spencer or Boots plc were qualified—the directors would be hauled over the coals straight away, in year one.

Angus Robertson (Moray): Will the hon. Gentleman give way?

Mr. Bacon: No—I am sorry, but many hon. Members still want to speak.

Earlier this year, at the beginning of January, the Commission appointed Marta Andreasen to two jobs—budget execution director and accounting officer for the European Union. She quickly pointed out serious and glaring shortcomings: there were no accounting books and no double-entry bookkeeping; staff of the Commission could enter the budget computer system and change entries without leaving a fingerprint or an audit trail. She raised her concerns and was rebuffed. She then tried to raise her concerns with the Court of Auditors and the European Parliament's Budgetary Control Committee, for which she was disciplined.

Compare that with what would happen in this country. In this country, if accounting officers for Departments, who are legally responsible for the way in which money is spent, do not like what a Minister is telling them to do, they are obliged to seek a direction from the Minister. That automatically triggers a process whereby the NAO is informed of what is going on. Having acted in that way, if the accounting officer subsequently comes before the Public Accounts Committee, he or she will be exonerated. In Europe, the

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exact opposite happened to the accounting officer for the whole of the EU. She tried to act honourably and to draw her superiors' attention to her concerns about the serious irregularities that were occurring, but she was rebuffed. What does that say about the EU's seriousness about getting control of those matters?

We are discussing the powers of the EU and its institutions and whether those powers should be extended—whether the European Parliament or the Council of Ministers should have more power, and whether there should be an elected president. What does that track record tell us about the competence of the EU to have any powers at all? What does it say about the competence of the European Union to have any money at all if it cannot look after the money it already has? The solution was eloquently stated in an article in The Times by Rosemary Righter, who said:

Taxation is a cardinal matter. It is hard to think of anything other than the acts of making war or imprisoning people that more closely defines what it is to be a state—what it is to have the powers of Government. My constituents work extremely hard to earn the money that they then pay in tax. It is not easy for them to earn enough money to clothe their children and pay the supermarket bills and still have enough left over to go on holiday. If the EU institutions cannot safeguard the moneys entrusted to them by the taxpayers of this country, it is at least open to question whether they should have them at all.

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