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Madam Deputy Speaker: Order. I remind all hon. Members that we are debating EU finances.
Mr. Ian Taylor (Esher and Walton) (Con): I am grateful for that guidance, Madam Deputy Speaker. However, I endorse the Economic Secretary's most recent comment. It would be absurd for this country not to be in the EU, and that is why we take such an interest in improving it. To avoid a sense of sharing sanctimonious pleasure, will he confirm that the UK Government distribute approximately £2 billion in benefit fraud per annum, which far exceeds fraud in the whole EU? That puts the matter in context, not least because the National Audit Office has qualified the accounts of the Department for Work and Pensions on more than one occasion.
Mr. Lewis:
I do not know whether the hon. Gentleman is in the mainstream of his party on the
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issues that we are considering. The Tory party is undergoing change, and I am therefore unsure whether he is in the mainstream. Of course he is right to say that such issues must always be put in context—unless one is deliberately setting out to prove an argument that portrays the EU as a negative and corrupt institution. Some people want to present the EU in that light because they believe that the country should leave the EU. That is a legitimate point of view, but it would be wrong to portray the budgetary position out of context, in a way that misleads public opinion in an unfortunate direction.
Angus Robertson: I agree with the point that the Economic Secretary is making, but does he accept that it is incumbent on those of us who support the idea of the EU working properly to point out its shortcomings? The most recent Commission report on its reform claims that adopting accrual accounting based on International Federation of Accountants standards could help it to become a leader in the field. That is not credible.
Mr. Lewis: It is important that organisations should not be in denial. It is vital that we tackle the fundamental problems, are honest about them and do not run away from them. This is reminiscent of those who are rightly passionate about the EU but continually want to go down ever more federalist paths, when the people of Europe do not want that sort of EU. However, that position is not the status quo in the EU.
It is important to make the case for the EU, and the best way to do that is to show people how it adds value, makes a difference to their everyday lives and responds to some of the genuine challenges that face us in a global economy. The EU adds considerable value in the best interests—indeed, the national interest—of this country and its citizens. Those who claim otherwise are disingenuous about the sort of world in which we now live.
Mr. Cash: The answer to the question of whether the money belongs to the EU is clear. It is stated as categorical fact that the moneys that devolve into the EU's budget are those of the EU. Is it not disingenuous—to use the Economic Secretary's expression—to say to member states that fraud happens in the nation states but all the money belongs to the EU? It cannot do the job properly. Why cannot our Public Accounts Committee and National Audit Office audit the moneys that go into the EU's coffers? After all, we are talking about our taxpayers' money.
Mr. Lewis:
On the subject of the auditors' inability to give a statement of assurance, they and independent reports by respected European parliamentarians have identified one of the problems at the heart of the matter as individual nation states' inability or unwillingness to account for money that they end up spending. There is no point in denying that. The Court of Auditors has identified it as a major reason why the qualification of accounts is to continue. There has to be co-operation between the nation states and the Commission if we are going to crack this nut and eventually arrive at a point at which the accounts do not have the qualification attached to them. That is simply plain fact. If we do not
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get the nation states signed up to working in partnership with the Commission on these issues, we are always going to struggle.
Mr. Lewis: I shall give way once more, then I must make some progress. I have been incredibly generous in giving way.
Lorely Burt: I am grateful to the Minister for giving way. He talks about the individual nation states taking their share of the responsibility. Does he agree that the EU should perhaps not allocate subsequent funding to nation states that do not fulfil that responsibility? Would not that bring them into line very quickly?
Mr. Lewis: We are trying to achieve co-operation and consensus on this matter. Of course, at some stage in the process the concept of using a stick might well come into play. If it were absolutely clear that certain rogue states were unwilling to be held to account for their use of these resources, sanctions would of course be an option that ought to be considered. However, at the moment, that is not part of our strategy for reaching a point at which the accounts do not have the qualification attached by 2009. That might be part of the solution in future, but I hope that it will not be necessary. Sanctions are not part of the plan, but they might become part of the solution.
Mr. David Drew (Stroud) (Lab/Co-op) rose—
Mr. Lewis: As my hon. Friend has not yet contributed to the debate, I shall give way. Then I must make some progress.
Mr. Drew: I thank my hon. Friend for giving way. I want to be constructive and helpful to him. That marvellous organisation called OLAF, which deals with anti-corruption measures, was set up with a great fanfare as an improvement on the previous arrangements. I have been reading the documents, and surely one of the problems is that it has not had much impact at all. What are we going to do with these cases of fraud? Clearly they just get kicked into the long grass, and everyone gets more cynical. That is no good to anyone, is it?
Mr. Lewis: I think that my hon. Friend is being a little unfair. OLAF has made a difference. We are debating the year 2004, and obviously, quite a bit has happened since then. The overall judgment on OLAF is that it has been a good thing. It has begun to address some of the cultural issues, and to get them taken more seriously. Has it been the solution in itself? Until now, certainly not—but I do not think that that was ever the intention. However, to say that it has not made a difference is unfair, given some of the improvements that are now under way. I do not know whether my hon. Friend would agree with that, but perhaps we can discuss the matter on another occasion. OLAF is a pretty new organisation, and there is evidence that improvements and progress have been made.
I shall now return to my speech. The relevant figures were 13 per cent. of the total agriculture irregularities and 17 per cent. of the structural funds irregularities, or
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about €11 million in agriculture and €118 million in the structural funds. These figures are a far cry from the allegations typically made in the media claiming fraud and waste of €5 billion. There is hard evidence to back up OLAF's figures. Of course, that is nothing to be complacent about; it is not acceptable. But I support and commend OLAF's efforts to put the figures on the table, so that we are better informed about the extent and nature of the fraud.
The "Fight against Fraud" report also contains an analysis of the amount of irregularity—as opposed to fraud—reported by member states. In 2004, 9,463 cases were reported, involving a total amount of €982 million. That is an increase over 2003 levels, although the increase was mainly in the structural funds sector. Indeed, irregularities in own resources and agriculture decreased. The overall increase is, of course, bad news, but, as I have said throughout, it must be seen in proportion. On the expenditure side, reported irregularities accounted for 0.19 per cent. of the agriculture budget and 2 per cent. of the structural funds budget. To be responsible, we must put the figures in context, particularly if we are to have a meaningful dialogue with the public.
Mr. Davidson: Will the Minister give way?
Mr. Lewis: I will give way one last time.
Mr. Davidson: The Minister is being very generous. The fact that we can have a dialogue of this kind shows the benefits of our system. Does the Minister agree, however, that it is misleading to say that those very small figures represent the limits of waste, in particular? The number of value-for-money studies that the European Commission undertakes is minimal, unlike the number undertaken by the National Audit Office here. We have no comparable examination of waste in the European Union; all that we have is an examination relating to theft and misappropriation. The questions of waste and efficiency of spending are not adequately measured and never have been, and that is not proposed even under the Barroso plan.
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