The Chairman: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant document to the Committee?

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): I welcome you to the chair, Mr. Bercow. I have served under your chairmanship in the past, and it is a welcome experience to do so again. I hope that I can help the Committee in explaining a little of the background behind the documents before us and why the European Scrutiny Committee recommended them for debate today.

Bulgaria receives financial and technical support from the European Union through the pre and post-accession funding. Following difficulties with implementation of the funding programme, the EU’s anti-fraud office, OLAF, investigated the management of the funds by the authorities and found that Bulgaria’s administrative capacity was insufficient to make good use of the funds made available to it. Serious allegations were also made of irregularities and suspicions of fraud and conflicts of interest in awarding contracts. As a result, the Commission decided to suspend certain funding until Bulgaria has enhanced its administrative capacity, curbed opportunities for high-level corruption and effectively fought organised crime.

When Romania and Bulgaria joined the EU on 1 January 2007, it was agreed that progress was needed in a number of justice and home affairs issues. A co-operation and verification mechanism was put in place to support and monitor their progress against certain benchmarks. The mechanism allows the Commission to invoke certain safeguards, such as the suspension of recognition of judgments issued by those countries’ courts, if they fail to meet the benchmarks. Romania has four benchmarks, Bulgaria six, all of which are interrelated and deal with concerns about effective judicial reform, independence, transparency, accountability, integrity and the effective tackling of Government corruption and organised crime.

The Commission monitors progress and writes reports every six months, with interim reports at the start of the year and main reports mid year. The ones before us are the second main reports on both countries. In the Committee’s view, the Commission’s report on the use of funds reinforces all too clearly the dispiriting picture painted by related reports on the co-operation and verification mechanism set out in the Committee’s report dated 10 September. In the introduction to both reports on co-operation and verification mechanisms, the Commission states that the

can be put into practice only if the problems identified are tackled at source.

The Committee’s view is that: first, the problems were fully known before Romanian and Bulgarian accession; secondly, that the lack of progress since demonstrates that the best way of ensuring the integrity of EU enlargement policy is to ensure that candidate countries are fully able to take on responsibilities of EU membership and fulfil the values that underpin the EU before accession and, finally, that that lesson should be learned with regard to planned future accessions.

Looking ahead, the Commission’s communication on its enlargement strategy and main challenges in 2008-09 sets out progress made and the key challenges faced by countries engaged in the enlargement process. The communication reveals that even in the case of Croatia, which has been given a tentative date of the end of 2009 for the conclusion of its accession negotiation, major reform efforts continue to be needed in the all-too-familiar areas of the judiciary, public administration and the fight against corruption and organised crime. In the Committee’s mind, what links all the documents is the Union’s commitment to conditionality, which has been brought into question by the handling of the first Balkan accessions. The question in the Committee’s mind is whether the lesson of that will be learned.

The Committee has also referred the communication for debate in the new year, and in the meantime hopes that discussions of the implications for “conditionality” identified in the reports will inform that debate and the future accession process.

The Chairman: I call the Minister to make an opening statement.

The Minister of State, Foreign and Commonwealth Office (Bill Rammell): It is a genuine pleasure, Mr. Bercow, to serve under the chairmanship of a Member who is so well informed on foreign affairs. I look forward to a constructive debate.

The Government welcome the opportunity to discuss the progress made by both Romania and Bulgaria towards meeting key justice and home affairs commitments since they joined the European Union on 1 January 2007. Those commitments are essential norms for all European partners, including the UK. They protect and promote the rights and responsibilities of individual citizens and families throughout the EU, so that they can live in security and prosperity under the rule of law and accountable democratic systems.

As Members will know, when Romania and Bulgaria acceded to the EU in 2007, both countries undertook to deliver essential reforms to meet agreed values and standards in an enlarged EU, with the active advice and support of the Commission and partner countries including ourselves. Those reforms are set out clearly in the pre-accession and post-accession co-operation and verification mechanisms.

In the case of Romania, the four agreed benchmark areas are reform of the judicial process, the establishment of a National Integrity Agency, the investigation of high-level corruption and the tackling of low-level corruption, particularly in local government. In the case of Bulgaria, there are six benchmarks: the independence and accountability of the judicial system; the transparency and efficiency of the judicial process; reform of the judiciary; the tackling of high-level corruption; the tackling of corruption at borders and in local government; and the tackling of organised crime.

On behalf of the Government I welcome the latest comprehensive reports, issued by the European Commission this summer. We are grateful to the Commission for continuing to pursue a rigorous, transparent and objective monitoring and evaluation process. I am glad to note that the reports detail some important progress since the first reports in 2007. Since accession, both countries have made legislative changes relating to the judicial system and the fight against corruption. In Romania, for instance, there has been progress on the drafting of new criminal and civil procedure codes. The UK has taken a close interest in supporting the National Integrity Agency, and it was good to see that it completed its first investigation this September. It resulted in the case against a former Member of Parliament being sent to court.

However, the key point is that the latest reports also make it clear that significant work remains to be done. They show that in both countries there has been a very disappointing lack of progress on tackling high-level corruption. In Romania, the Commission notes that although the fundamental elements of the judicial system have been put in place to tackle corruption, the foundation is fragile and decisions on corruption are highly politicised. The UK has worked with the Romanian Prime Minister’s Government to provide practical advice and support on both judicial reform and the fight against corruption, including with the help of British judges. We have enjoyed close collaboration with the Interior and Justice Ministries on specific projects such as the creation of an agency to tackle police corruption, which has already shown good results.

Following the recent parliamentary elections in Romania, once a new Government are appointed we shall continue to take every opportunity to encourage them to give the highest possible priority to meeting the benchmarks. We will continue to offer our support to help Romania tackle the remaining challenges.

In Bulgaria, the Commission notes that the Government have begun necessary and long-overdue processes of reforming the judiciary and law enforcement structures. However, the report states that there has been a growing sense of frustration among Bulgaria’s partners about the lack of transparency and about poor results. We share with our partners serious concerns arising from the separate Commission report on the use, or rather the misuse, of EU funds. The Government support the action taken by the Commission’s anti-fraud office to investigate Bulgaria’s management of EU funds provided to support reform programmes. In the light of the serious allegations of irregularities, fraud and apparent conflicts of interest, it was fundamentally right for the Commission to suspend the affected funding streams.

Given the seriousness of the situation, hon. Members will not be surprised to learn that on her official visit to Bulgaria last month, my right hon. Friend the Minister for Europe raised the issue with Bulgarian Ministers and senior officials. The Bulgarians acknowledged that they need to implement essential changes as soon as possible to avoid negative knock-on effects to the wider reform programmes. The Commission has provided advice and support to ensure that progress is sustained.

Given the seriousness of the outstanding reforms in both countries, we agree with the Commission that the co-operation and verification mechanism should remain in place. We urge both countries to tackle the outstanding issues noted in the latest reports and endorse the Commission’s emphasis on the importance of delivering tangible and lasting results. We will continue to lend our support and advice, which will benefit the people of Bulgaria, Romania and all partner EU states.

The Chairman: We now have until half-past five for questions to the Minister. I remind hon. Members that those should be brief. Subject to my discretion, it is open to Members to ask related supplementary questions.

Mr. Mark Francois (Rayleigh) (Con): It is a pleasure to serve under your chairmanship this afternoon, Mr. Bercow, not least because you are a man who has shown considerable interest in the European issue in the past. Bulgaria has been allocated€11 billion from the EU structural fund for the period 2007 to 2013. Given the scale of those payments and the problems experienced so far, which are spelled out in the documents before us, are there any plans to increase the supervision of the payments from the cohesion fund as well?

Bill Rammell: Yes. The amount of money committed thus far—this is a back-loaded process—is about 2.5 per cent. of the global total, but the Commission is sending a mission to Bulgaria early in the new year to examine oversight, including, crucially, oversight of the distribution and apportionment of those funds. Given our experience thus far, it is critical that that task should be undertaken.

Jo Swinson (East Dunbartonshire) (LD): It is lovely to serve once again under your chairmanship, Mr. Bercow. I welcome the Minister’s comments and the fact that the Commission has taken the step of freezing some of the funds. It would make a mockery of the system if no effective sanctions existed. However, it seems that the sanctions have not done the job thus far to ensure reform in Bulgaria. What further steps can be taken to encourage that reform? Are there further funds that could be frozen, or are other options available to the Commission to get the necessary results from Bulgaria?

Bill Rammell: The jury is still out on that issue. It is noteworthy that since the reports came to light, the Bulgarian authorities have charged the Deputy Prime Minister with overseeing the disbursement and distribution of European Union funds. Specific legal changes have been introduced, such as a whistleblower’s charter and conflict of interest legislation. We now need to test whether those changes are having an effect. I believe that at the moment, we are right to support the Commission’s approach of supporting the process of change rather than imposing sanctions. There is still an immense amount to be done, and it is right that we should support it.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab): I have been aware of the difficulties in Bulgaria since I worked for a short period during the 1990s for the International Miners’ Organisation and became aware of the enormous economic difficulties faced by that country.

The Minister referred to certain matters as outstanding. I am informed by the Bulgarian embassy that some progress has been made. Is he aware of that, particularly with regard to procurement? Changes are being made as of this October. I also understand that changes have been made to the judicial system, and that they will be reported at the meeting in February next year. Is he aware of those changes? If so, will he say a little about them and their possible impact on how member countries view Bulgaria?