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Mr. William Cash (Stone) (Con): Important as this debate is, it also demonstrates the cultural inadequacy of the way in which the European Union conducts itself. On the issue of how taxpayers' money is spent, we can look back with some pride on the fact that the Public Accounts Committee was set up under Gladstone. Nor does anyone have any serious doubt that the National Audit Office and the Public Accounts Committee do a thorough job in identifying inadequacies and, where necessary, maladministration or fraud in the UK.
However, the report by the Court of Auditors on OLAF makes the following comments:
"The Office's investigations policy is still uncertain . . . With regard to preliminary work . . . analyses are still rudimentary . . . Supervision of investigations by the Office's management has generally proved inadequate . . . The duration of investigations has not been brought under control . . . There is no system in place to measure investigators' actual workload or the time they spend on investigations . . . The obligation to report investigations that are more than nine months old to the Supervisory Committee has had no notable effect . . . It is still difficult to determine the actual results of investigations. In the area of internal investigations, little progress has been achieved since 1988 with regard to sanctions imposed."
As I mentioned in an earlier intervention, the report also stated:
That is an average catalogue of condemnation of the so-called efficiency of a body that was, as the hon. Member for Stroud (Mr. Drew) said, set up some seven years ago. That is what the Court of Auditors is still saying about it.
The importance of that criticism is that OLAF is at the hard end of the so-called investigations of malfeasance in respect of taxpayers' money. We have heard reference before to the question of irregularities, and I gave some figures earlier, which I shall briefly rehearse again. In 2004, for the European Agricultural Guidance and Guarantee Fund there were irregularities of €82,064,000. On the structural measures, irregularities for that year totalled €531,744,438. The sum to be recovered was €357 million. The amount declared irrecoverable, pending a formal decision, was €15 million. Those are facts, and I take them from the official documents.
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Mr. Cash: I shall certainly give way to my hon. Friend, whether he comes from Venus, Jupiter or Uranus.
Mr. Taylor: Will my hon. Friend also note, however, that the president of the Court of Auditors said that the court concluded that the 2004 consolidated statement faithfully reflected revenue and expenditure for the year and the financial situation of the Communities at the year end, save in respect of sundry debtors? The court went on to say that it had inadequate confidence in the way that member states were administering the budget for the common agricultural policy and structural funds. One needs to put in context what is causing the problem and what is not.
Mr. Cash: I hear what my hon. Friend says, but I must mention again what I have said on a number of occasions. Indeed, I made a specific point in respect of the European Communities (Finance) Act 1995, when six of my colleagues lost the Whip, not over Maastricht but over European finance. I tabled an amendment to deal with the relationship between member states and the EU's financial management. In summary, I worked things out, spoke to the Comptroller and Auditor General and came to the conclusion that it was possible for the Public Accounts Committee and the National Audit Office to have much more direct control of the money administered in the United Kingdom as a member state.
Mr. Siôn Simon (Birmingham, Erdington) (Lab): Will the hon. Gentleman give way?
Mr. Cash: I will not give way for the moment, if the hon. Gentleman does not mind.
In other words, the accountancy principles applied in the UK by the PAC and NAO would then have been applied to EU finances in the member states. That seemed to me a rather good idea. I will not go into all the detail, but I had 45 Members, or thereabouts, ready to vote with me on that question, and it can be fairly said that I was given assurances that those matters would be fully considered. However, to this day, some 10 years and more later, I am still waiting to hear either from the Government or from Conservative Front Benchers that we will adopt those principles to get proper control over the money that is spent in member states.
The Economic Secretary rightly said that such questions went to the heart of the EU's problems. My hon. Friend the Member for Rayleigh (Mr. Francois) rightly said that the whole question also related directly to the rebate, because the rebate is connected to financial management, and with the manner in which such operations are conducted. Furthermore—to refer to other contributions—it relates to the European aid budget for Africa, in which I have an interest, as the chairman of the all-party Uganda group and the vice-chairman of the all-party Kenya and Tanzania groups. I am deeply worried about corruption in Africa and the relationship between that and the manner in which the EU is failing to provide the kind of effective control and delivery in relation to financial management and the budget that we ought to expect.
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Such things are not simply technical questions, and this large stepping stone of papers that I have in my hands—I can assure hon. Members that it is pretty heavy—contains an enormous problem that goes to the heart of the way in which the EU operates. It does not work. It is ineffective. It is not operating even according to the terms that the Court of Auditors, or, indeed, the Government, present to us.
The Minister referred to the question of nation states, and said that some rogue states might in future fail to carry themselves properly on these important questions. We already have the example of the stability and growth pact, whose rules it is perfectly obvious that people did not comply with. My hon. Friend the Member for Esher and Walton (Mr. Taylor) rightly pointed out that it is essential in matters of this kind that the rule of law be complied with. It is equally clear that there is no intention to do that, and several hon. Members have made the point that we have every reason to doubt whether there is any real desire or intent to carry through on compliance with the rules of the European Union.
That calls into question the whole fabric, the whole system, the whole framework of the current European Union, which has led me to believe that the best way to act would be to have a form of associate status. I do not need to enlarge on that, having spoken about it on a number of occasions. At least, however, it would get us away from what I regard as a largely fraudulent approach to the European Union, which is to say that we want things to improve, while seeing almost no serious change taking place in spite of the fact that reforms are proposed in documents such as those before us that clearly have not been carried through. There are also the reforms of the Lisbon agenda, which again have been proposed but not carried through.
We need to be quite transparent and decisive. We need to be honest with the British people about the deficiencies in the way in which the system functions. We must not roll out yet another fudge, year after year after year. We must tackle the problem. I challenge the Government—and, indeed, my own Front Bench—to be less reticent in their arguments. I do not mean this to refer for one moment to my hon. Friend the Member for Rayleigh, but there is a tendency for an eerie silence to descend on the European issue.
Mr. Drew: Is not the problem the way in which we debate these issues in the House? It is not acceptable that these documents are merely to be noted.
Mr. Cash: I agree—on which note, I shall sit down.
7.22
Angus Robertson (Moray) (SNP):
While I speak on behalf of the Scottish National party and Plaid Cymru, I want to make a number of points not yet raised from the perspective of the European Scrutiny Committee, on which I sit. Notwithstanding the sensible point made by the Minister about much of the problem that we have discussed being the fault of the member states, and notwithstanding the excellent point made by the hon. Member for Esher and Walton (Mr. Taylor) about the
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scale of fraud being less than that of benefit fraud in the United Kingdom, we agree across the House that some serious issues need to be dealt with when we consider the situation, warts and all.
The context of the fraud should not be overlooked. A series of senior officials involved in audit and financial management have suffered personally—a point I made to the Minister earlier in an intervention. Those are people who brought maladministration and financial mismanagement to light, and they cannot all be publicity seeking cranks. There are serious questions about the governance of OLAF, which was, as hon. Members will recall, instrumental in bringing about the arrest and detention of one Mr. Hans-Martin Tillack, a Stern journalist who had published articles critical of financial management in the Commission. According to evidence given to our sister Committee in the Lords in 2004 by the chairman of the OLAF supervisory committee, that raid was triggered by hearsay evidence from one informant in the public relations office of the Commission, and a witness thought that any normal person would have to say that OLAF was
That is not an isolated case, because similar events have occurred in a series of cases. The fraud issue is serious and improvements need to be made.
The financial changes outlined by the Minister are supposed to be integral to the Commission's reform programme. That matter was discussed in the European Scrutiny Committee only last week, when the Government's reaction was described as "supine and unquestioning", which is a serious comment. The hon. Member for Leicester, East (Keith Vaz) has said that he is content with the standard of benchmarking, but the Committee does not think that the Commission's benchmarking proposals on the reform programme are adequate. In particular, the Committee has noted
"the almost complete absence of any quantification of the results said to have been achieved, and even of any kind of external independent evaluation."
The Government need to raise that serious shortcoming in the Council of Ministers.
On the budget being qualified for 11 consecutive years, it is ludicrous that the Commission aspires to becoming "a leader" in the field of public sector financial management, because it has a long way to go. The situation is unacceptable and it must be addressed.
In the previous Parliament, the European Scrutiny Committee pointed out the weaknesses in protection in the revised EC staff regulations for officials bringing maladministration and wrongdoing to the attention of EU institutions and the public. The Minister would be right to say that the situation in the EU institutions compares unfavourably with the rule in the civil service in the UK, where a protected disclosure could be made by any Minister of the Crown. The UK Government can and should do something in the Council of Ministers, and they should not respond to such documents in a way that Committee members from both sides of the political divide have described as "supine and unquestioning".
I am not Eurosceptic—I believe passionately in the European Union, I am in favour of the reform of the European Union and my position on the common fisheries policy is well known in this House. However,
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unless we examine the challenges, describe them for what they are and do something about them, we will have the same debate for another 11 years, in which case trust in the EU institutions, which are worthy, will continue to plummet.
7.28 pm
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