Anti-Fraud Strategy
The Committee consisted of the following Members:
† Chishti, Rehman (Gillingham and Rainham) (Con)
† Clappison, Mr James (Hertsmere) (Con)
Davies, Geraint (Swansea West) (Lab/Co-op)
† Garnier, Mark (Wyre Forest) (Con)
† Hands, Greg (Chelsea and Fulham) (Con)
† Hemming, John (Birmingham, Yardley) (LD)
† Hoban, Mr Mark (Financial Secretary to the Treasury)
† Hopkins, Kelvin (Luton North) (Lab)
† Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/Co-op)
Love, Mr Andrew (Edmonton) (Lab/Co-op)
† Uppal, Paul (Wolverhampton South West) (Con)
Wilson, Sammy (East Antrim) (DUP)
Sarah Thatcher, Committee Clerk
† attended the Committee
European Committee B
Tuesday 25 October 2011
[Mr Charles Walker in the Chair]
Anti-Fraud Strategy
[Relevant Documents: 35th Report of Session 2010-12, HC 428-xxxi, Chapter 1 and 41st Report of Session 2010-12, HC 428-xxxvi, Chapter 2.]
4.30 pm
The Chair: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement lasting no more than five minutes about the decision to refer the documents to this Committee?
Mr James Clappison (Hertsmere) (Con): That pleasure has fallen to me but, before I enjoy and discharge that duty, I must say that it is also a great pleasure to serve under your chairmanship this afternoon, Mr Walker. Equally, I welcome my hon. Friend the Financial Secretary to the Treasury to the Front Bench and the hon. Member for Kilmarnock and Loudoun to the Opposition Front Bench.
In the words of the European Scrutiny Committee’s notes on the matter, the Commission and the other EU institutions, through their internal arrangements and the European Court of Auditors, have primary responsibility for the proper management and avoidance of misuse, including fraud and criminal activity, of the European Union’s financial resources. However, the lead in investigating possible criminal activity against the financial interests of the EU is shared between the European Anti-Fraud Office, known as OLAF—which, although part of the Commission, has a governance structure intended to guarantee its independence—and investigative agencies of member states.
The first communication sets out the Commission’s ideas on how to protect the EU’s financial resources against all forms of criminal conduct, including fraud. It outlines a work programme to deliver an integrated policy to protect the EU’s financial interests by criminal law and administrative investigations that it says would be consistent, credible and effective—those are the words of the European Scrutiny Committee. Having set out what it sees as the problems, the Commission makes recommendations for new tools to protect the EU’s financial interests, claiming a strengthened competence in the field of judicial co-operation in criminal matters under the Lisbon treaty. The communication is accompanied by a Commission staff working paper, which provides detailed information intended to substantiate the analysis of shortcomings identified in the communication. It includes case studies from the operational practice of OLAF and Eurojust, statistical analysis of judicial activity and a comparison of national criminal law concepts.
The second communication presents the anti-fraud strategy that the Commission has adopted to reinforce and modernise the way fraud against the EU budget is tackled within the Commission services. The Commission proposes a set of measures to ensure that its services manage or supervise EU funds with the right tools to
prevent and detect fraud against the EU budget. The strategy covers the revenue and expenditure of the EU budget, including funds partly managed by member states, and includes the whole anti-fraud cycle, from the prevention and detection of fraud at an early stage to investigations, sanctioning and recovery of misused funds. In discussing the strategy, the Commission notes that evolving fraudulent methods necessitate continuous adjustment of EU anti-fraud policies, as a means of protecting the EU’s financial interests, and sets out guiding principles for policy in that area. The communication is accompanied by a staff working paper that outlines an action plan to fight cigarette and alcohol smuggling along the EU’s eastern border.While the European Scrutiny Committee recognises that the UK has a significant interest in preventing criminal activity against the EU’s financial resources and that the first document does not present specific legislative proposals, we share the Government’s concern about the thrust of the Commission’s ideas about the use of the criminal system in relation to crime against EU funds and the role of EU institutions in that regard. We also endorse the Government’s view that if a legislative proposal were to follow the communication, it should be supported by clear evidence of necessity. Therefore, we recommended that the document be debated in order to reinforce the Government’s stance against the inappropriate and unacceptable use of the criminal system in relation to the EU’s finances. Furthermore, given the relevance of the second communication to the appropriateness of criminal law activity in the broader context of anti-fraud measures, we recommended that it, too, should be considered in the debate.
4.34 pm
The Financial Secretary to the Treasury (Mr Mark Hoban): It is a pleasure to serve under your chairmanship this afternoon, Mr Walker. I fear that my remarks will not be as brief as your speech last night, but I shall make my speech as short as possible. I also welcome the hon. Member for Kilmarnock and Loudoun to her place this afternoon for, I am sure, the first of many debates on European financial matters.
I am grateful for the opportunity to discuss the Commission’s strategy for protecting EU financial interests, including against fraud. As the Committee is aware, the Government’s approach to the EU budget is focused on achieving real budgetary restraint, reflecting ongoing efforts in the UK and across Europe to consolidate public finances.
At a time when public resources are scarce, EU spending must be strictly prioritised on programmes that offer the greatest EU added value. Such programmes must be implemented as effectively as possible using available funds; clearly, the criminal misuse of EU funds thwarts efforts to do so. By misdirecting EU funds from their intended purpose, fraud against the EU budget costs all EU taxpayers. As a major net contributor to the EU budget, UK taxpayers are particularly vulnerable.
Crucially, the credibility of EU spending depends on the orderly accounting of EU expenditure. It is disappointing that the European Court of Auditors has not granted a positive opinion on the EU’s accounts for 16 consecutive years. Irregularities in EU spending,
which in some cases are proved to be fraudulent, contribute to that regrettable situation. As a criminal offence, fraud against the EU budget is completely unacceptable. For those reasons, the Government take the management of EU funds seriously and strongly support efforts to reduce fraud against the EU budget. Ultimately, protecting the financial interests of the EU will protect the interests of UK taxpayers.I will provide a brief overview of the main documents under consideration before remarking on the Government’s overarching approach. The Commission communications cover the whole anti-fraud cycle, from prevention and detection at an early stage to investigations and sanctioning, and, finally, to recovering misused funds. The Commission’s plans are primarily motivated by concern at the increasingly effective fraudulent methods used against EU funds, the variation among prosecutions and penalties in fraud cases and the obstacles to the effective handling of cross-border cases of suspected fraud.
To some extent, the Government agree with the Commission that there is cause for concern. According to this year’s OLAF report on fighting fraud, the overall financial impact of irregularities increased to €1.8 billion in 2010 from €1.4 billion in 2009. In our view, the best way to tackle fraud in the EU is to focus on prevention and deterrence. That means ensuring that rules on EU spending are as simple and transparent as possible, making it easier to monitor and more difficult to defraud. Activity from the Commission in that area is broadly welcome. The Government support, for example, the Commission’s plans to improve its internal controls and to report the implementation of anti-fraud measures in its services annual activity reports.
To combat the level of irregularities in EU spending, the UK is using the discharge procedure and the ongoing triennial review of financial regulation to promote simplification and transparency. Prevention and deterrence of fraud also require an effective, independent and visible anti-fraud institution at EU level. The UK fully supports the work of OLAF, the Commission’s independent anti-fraud office, and is engaged in reforms to improve OLAF’s operational performance and efficiency.
Judicial processes for the investigation and penalisation of fraud are a different situation. We must be careful to identify the most appropriate level for new initiatives. To date, policy on criminal investigations and penalties for fraud has largely been at the discretion of member states, notwithstanding the convention on the protection of the EU’s financial interests and its protocols. The treaty recognises the validity of different legal traditions and the importance of respecting different criminal justice systems.
The Commission’s anti-fraud strategy should not result in the accrual of powers by the Commission or other EU institutions without warrant. Variation in performance across member states does not automatically justify imposing minimum standards via EU legislation, which is why we seek not to increase European powers, but to strengthen voluntary co-operation between member states. That is why we actively participate in the European judicial network.
The UK is seen as the international leader in asset recovery and confiscation, and law enforcement and prosecution agencies in the UK continue to use the powers in the Proceeds of Crime Act 2002 to tackle serious and organised crime, including fraud. The UK
fully assists OLAF with investigations in the UK, which have led to a number of convictions. That shows that we take our responsibility seriously, and we encourage other member states to do the same.I stress that the Government do not intend to foreclose debate on future anti-fraud proposals, either in the House or in Europe. Although many proposals remain vague, such foreclosure would be premature. Tackling fraud against the EU budget is an important task that the Government support in principle, and future proposals will be considered on their merits.
The Chair: We have until 5.30 for questions to the Minister. I remind Members that such questions should be brief. It is open to a Member, subject to my discretion, to ask related supplementary questions.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Walker. This is my first opportunity to attend the Committee, which I thank for its work scrutinising this important issue and bringing it forward for debate.
I have a few opening questions for the Minister. We all accept that any means to combat fraud are important. Can the Minister outline examples of the type of cases brought to his attention that have not been successfully dealt with by existing means? Will he also outline the work that the Government have done to simplify rules? Which rules have they asked to be simplified in order to create greater transparency? What has been the outcome of discussions on the matter?
Mr Hoban: We have sought to work with other member states that have a shared view on the importance of tackling fraud and also budgetary constraint. For example, we are working with the Netherlands and Sweden, which share some of our views and have submitted a joint declaration to the Commission setting out the importance of increased transparency and simplification. For example, we are keen to ensure that member states take responsibility for the way money is spent and publish an account of that—we want other member states to do that too. The public reports that we publish are audited by the National Audit Office. That is an example of the work we are doing with other member states. We are taking a lead because, as the hon. Lady recognises, this is a big challenge that needs to be tackled across Europe.
Cathy Jamieson: Can the Minister say a bit more about the Government’s view on the outline in the documents, where it states that existing prosecution arrangements are inadequate in some types of cases? Is the Minister aware of any situations where the UK Government have taken a view that the prosecution arrangements have been inadequate? Does he have any further proposals to make co-operation better, particularly in relation to the European Judicial Network?
Mr Hoban: The hon. Lady raises an important point. In the UK we are never satisfied with the powers we have in place to tackle fraud. One of the drivers behind the Commission’s approach is that those powers and the penalties vary from one member state to another. The Commission would use that to argue for increased
powers at European level. Our argument is that member states should put their own houses in order. We should not be seeing a greater European dimension in that process.Cathy Jamieson: Will the Minister say something about the Government’s view on the replacement of mutual administrative assistance with legislation, from a principled point of view?
Mr Hoban: We ought to ensure that arrangements are in place to allow co-operation between member states. Clearly a big element of EU fraud and irregularities happens on a cross-border basis. We seek to work with our counterparts in other member states to secure that co-operation. There are some challenges that we need to think about. For example, the feedback from police forces seeking information from other member states has been that the process has not worked as quickly or as well as it should. Steps are being taken to try to improve that. We seek to improve the functioning of intergovernmental co-operation in the pursuit of fraud, rather than agree to the Commission having more powers.
Kelvin Hopkins (Luton North) (Lab): Can the Minister say what Britain’s record is in detecting, preventing and deterring fraud in EU matters? How do we compare with other member states?
Mr Hoban: There is a helpful table—if I cannot lay my hands on it, I will send it to the hon. Gentleman, although he might have a copy with him—that sets out the results of member states in terms of the number of references. [ Interruption. ] Here it is—isn’t it remarkable how these things suddenly appear in one’s hand? The table details how actions that were transferred to member states have been dealt with. The document before me is the 11th operational report from OLAF, covering the calendar year to 31 December 2010. The figure for convictions was about 46%, with the rate varying from about 20% in some cases to up to 100% for one accession country, Bulgaria, although I note that a relatively low number of cases were referred to it.
The rates vary; the challenge is to get them in the right place and ensure that consistent standards are applied. Greater transparency and disclosure of member states’ results in investigating and prosecuting fraud are an important way of doing that, which is why tables such as the one in the OLAF report help to stimulate such debate. The hon. Gentleman is a doughty defender of the UK’s interest and would not want to see the proposal being used to transfer powers to Brussels.
Kelvin Hopkins: Would it not be more sensible for the European Union to focus attention on where the fraud problem is greatest, rather than trying to impose more general approaches?
Mr Hoban: The hon. Gentleman hits the nail on the head. This is one of our areas of concern, which was shared by the former Economic Secretary to the Treasury, my right hon. Friend the Member for Putney (Justine Greening). Like me, she had a career in auditing before
coming to the House. She worked for Price Waterhouse, while I worked for Coopers & Lybrand, where we had a risk-based audit approach. That involves identifying where the problems are, and we can tell where they are from the previous year’s accounts and investigations. We should focus our effort where there is risk, rather than do what we currently, which simply involves following a euro through the system on a slightly random basis. I agree with the hon. Gentleman that a risk-based approach is the right way to do that.Kelvin Hopkins: The addendum to the documents that were circulated to us before the meeting records the concerns of the European Scrutiny Committee, of which I am a member. The conclusion states:
“There is a worrying tone to the Communication, which is this: divergent national legal systems are the reason why fraud on EU funds is not better combated: a uniform supranational legal system the answer.”
The concern is that the European Union is toying with the idea of a supranational, uniform system that would attempt to weld together divergent legal systems. We find that worrying.
Mr Hoban: The hon. Gentleman and I share similar concerns. The best way to tackle the problem is to ensure that we have good preventive measures and that member states take responsibility for how funds are disbursed in their countries. By focusing on penalties and investigations we are shutting the stable door after the horse has bolted. We should be preventing irregularities and fraud in the first place, rather than seeking greater European powers over investigation and penalties.
The Chair: Are there any more questions from colleagues? Are colleagues being shy, or have they had enough?
Motion made, and Question proposed,
That the Committee takes note of European Union Documents No. 11055/11 Addendum, relating to the Communication from the Commission on the Protection of the Financial Interests of the European Union by Criminal Law and by Administrative Investigations: An Integrated Policy to Safeguard Taxpayers’ Money; and No. 12141/11 and Addendum, relating to a Communication from the Commission on its Anti-Fraud Strategy; recognises that the UK has a strong interest in preventing criminal activity against EU funds; recalls the Government’s constructive participation in ongoing negotiations to improve the operational efficiency of the European Anti-Fraud Office, OLAF, and to strengthen its effectiveness; notes that both documents set out initial orientations and that any more detailed, future proposals should be considered on their merits with clear evidence of necessity; emphasises the importance of fully respecting different criminal justice systems within the EU, while pursuing effective cooperation to combat fraudulent use of EU funds; and supports the Government’s ongoing efforts to ensure the effective protection of the EU’s financial interests.—(Mr Hoban.)
4.49 pm
Cathy Jamieson: I will try to keep my contribution relatively brief, because I sense that there is more co-operation on this issue than perhaps there will be on future questions. We all welcome any measures to work more closely together to combat fraud and misuse of what are, after all, public funds, as the Minister has recognised. We also recognise that the public have concerns about the lack of transparency in some issues and in some funding streams arising from the EU. However,
I note that the various documents circulated to us state that quite often circumstances arise due to errors, rather than people being fraudulent in intent.I did not have a career in auditing, but I can refer to my former career as Scotland’s Justice Minister. Some of my remarks about the justice system may have been shaped and framed by my determination—indeed, the determination of the UK in the past—to protect the integrity of the different legal systems in the UK. It is important to put that on the record. I am pleased that the Government recognise the various different legal systems not just in the UK, but in other member states.
We have to guard against the tone of the communication in parts, as has been mentioned. Some countries in the EU desire more harmonisation of legal systems rather than a focus on co-operation, and I welcome the raising of concerns about that. I also welcome the Government’s intention to try to ensure appropriate and possibly speedier criminal investigations in the UK, about which there will be ongoing dialogue. We would have great concerns about any move away from co-operation and better implementation of the rules and protocols and back to simply making a wholesale change in the operation of the criminal law across the UK. We would also be concerned about any suggestion of a move towards a European prosecution service. The previous Government did not support that, and I am sure that this Government do not either.
The communication describes “new tools”. We would all be interested to know which ones might be used for prevention or in the work that the Minister suggested. The communication essentially refers to “new tools” as legislation, including for matters such as asset recovery and the proposed replacement of mutual administrative assistance with legislation action. That causes us concern, as do the way the definitions of “core offence” and approximations of “rules on jurisdiction” would impact on the devolved Administrations. [ Interruption. ] I am getting the suggestion from the Chair that I should perhaps draw my remarks to a close.
The Chair: Absolutely not: I was paying you a compliment by telling the Clerk that you are a very tight speaker. I apologise, as I am enjoying your speech.
Cathy Jamieson: I thought that I was overstepping my time for speaking.
On recognising the devolved states, it is also important to note that Scotland’s system is based on common law. Therefore, the notion that “core offences” might be defined by European systems would create difficulty. I am sure that the Scottish Government would make that point, if they have not already done so.
Closer co-operation is always helpful, as I have said, and there are good arguments for closer understanding between the different states. I tend to agree with the Government that the answer is not changes to the European judicial training network, although it is always good for people to co-operate more closely and work on improving systems.
I recognise the Minister’s desire to continue the discussion, but I hope that any future proposals will take account of the different criminal justice systems in the UK, as set out in the treaty on the functioning of the European Union. It is not clear how that is best served by the plan
for a European prosecutor, as outlined in the report. Similarly, judicial training should remain the responsibility of the UK and the devolved Administrations. We should protect the independence of the judiciary; what is set out at the European level should not impact on its ability to treat everything case by case. I am not entirely clear which types of cases are not adequately covered by existing legislation.If there is a belief that mutual legal assistance is not followed up quickly enough, we would perhaps accept more changes to the European judicial network. I am sure that mechanisms are available—for example, via the European investigation order and closer co-operation between member states—rather than simply adding another layer of legislation. I am not clear what added value there is from the proposed changes to asset recovery and confiscation, given that a fairly robust system already exists in the UK. I note that there are no detailed proposals on strengthening substantive criminal law, although that is referred to in the documents.
In conclusion, I agree with the concerns that have been raised about the tone of some of the comments in the documents. I want to restate our point that everyone wants fraud in EU funds to be dealt with. There is no doubt about that. That should come, hopefully, from better monitoring, earlier action and greater transparency, rather than a proposal for legislation, which would impact on the criminal justice system right across the UK, including on the devolved Administrations.
4.55 pm
Mr Clappison: Speaking individually, let me say that it is a pleasure to follow the hon. Lady, and I will echo some of her concluding remarks. I warmly welcome the Government’s approach to this matter, as well as the words of the Minister. He has got the tone exactly right.
The problems of the European budget have been much commented on over a long period. People talk about the problems of the European budget so much that they have almost passed into common folklore, but I will not expand on them today. The documents are instructive because, in seeking to tackle the problem of fraud in its budget, the instinct of the European Commission is to bring forward documents that include proposals that would greatly enlarge the powers and institutions of the European Union in respect of criminal law and the other matters contained in these documents.
Following on from what the hon. Lady and the Minister said, let me be absolutely clear that what the European Commission is proposing—in draft preliminary form: this is only a communication—is an extension of the European Union’s authority and legal power across general criminal law as a whole, including the
“definitions of core offences…approximations of rules on jurisdiction and time limitation…the systematic rules on various technical legal terms…and rules on criminal liability of appointed and elected office holders and of legal persons.”
That is not just in relation to the European budget, but across the general criminal law, because these measures would extend to any type of offence, not just those involving the European budget.
The documents are proposing an extension of judicial training. It is not specified, but it seems to be judicial training for all judges across the board. They also propose an extension of criminal law and the creation
of a new institution: a European public prosecutor’s office, which, if memory serves, has been the subject of a great deal of interest in the past. I think—I might be wrong—that it was specifically referred to in the coalition agreement, where it is specifically precluded. I welcome that.Let it be said that, once again, that would be a European public prosecutor’s office to cover all offences, not just those concerned with the European budget. Members of the public might find it instructive, if not rather surprising, that the first instinct of the European Commission, when dealing with its own fraud problem, is to seek a massive extension of power for itself. That tells us a lot about its character and how it approaches these matters.
I support the approach that my hon. Friend has taken. If I can paint with a broad brush, he is saying that these measures are unnecessary, although he put it in polite terms—he said that we need further evidence. I welcome that suggestion. The problem is that this is the starting point of the European legislative process. This is a communication in which the Commission is putting forward its ideas. In due course, it will be open to the Commission to produce proposals for law and for a directive. If it does that, that will be the subject of negotiation between the member states, the Council of Ministers and the European Parliament.
It may be that some law will come about at the end of that through the usual process of horse-trading, which is how European law evolves and over which our constituents have little say, other than through the Council of Ministers, where we have one Minister sitting among a council of 27 Ministers. There is an uncertain process of horse-trading. One never knows what bargains will be struck behind the scenes and exactly what will come out of it at the end.
I am heartened by the fact that all the measures, I think, fall within the European area of freedom, justice and security. I look to my hon. Friend for confirmation, because I may be wrong, but I guess that that is right. If so, this country must decide whether to opt into the measures; we are not bound by that horse-trading, because we are out of it from the outset. We must decide whether to opt in voluntarily and subject ourselves to it. As I have said, the course that my hon. Friend has set out is quite right: we should not foreclose discussions on such measures, but should question whether they are necessary.
In conclusion, if the Government have to decide whether to opt into a measure resulting from discussions on judicial training, harmonisation of the criminal law and the creation of a European public prosecutor’s office, we hope that these matters will in due course be debated in the House and voted on and that what we said at the outset about such measures being unnecessary will be taken into account.
5.1 pm
Kelvin Hopkins: It is a pleasure to serve under you chairmanship this afternoon, Mr Walker. It is a particular pleasure to serve in support of my hon. Friend the Member for Kilmarnock and Loudoun. Her evident competence suggests that she has a great future
on the Opposition Front Bench. I look forward to seeing her perform more in the Commons as well as in Committee.I agree entirely with the hon. Member for Hertsmere. I almost called him my hon. Friend—he is a friend, of course, and we know each other well, but he is on the Government side. He spoke well, as we would expect from a highly competent lawyer, and I defer to his skills in those matters. It seems that we all agree with each other, which is a happy circumstance. I support the Government’s approach.
I have always had concerns about fraud. The papers draw attention to the particular problem of tobacco and alcohol smuggling, especially across the eastern borders of the European Union. It is difficult to deal with such smuggling when goods get into the EU because of their unrestricted movement. There is a border of some kind between the rest of the EU and Britain, but travelling across borders with alcohol and cigarettes is not difficult in most of the EU. Perhaps that is a mistake.
We have been uneasy about the free movement of alcohol and cigarettes into Britain. Bulk amounts have rightly been taken at the ports. The white van brigade has been in operation and we have tried to deal with that. It is not strictly part of what we are discussing today, but I hope we will address the problem of alcohol and tobacco smuggling again. The vast sums of money lost, particularly from tobacco smuggling, are sufficient to pay for some of our public services—cigarette smuggling causes losses of many billions of pounds. Although attempts are made at borders to stop that, a lot of tobacco gets through, and a significant proportion of tobacco consumed in Britain is smuggled. It has been suggested, for example, that ice-cream salesmen on estates in our constituencies are selling under-the-counter smuggled tobacco, which is not good. Given the dangers of tobacco consumption, I want us to do something about that.
We used to have indicative limits on the amounts of alcohol we could bring into the country. A return to such limits would be very sensible for Britain. Amounts for personal consumption might be limited to 100 litres of beer, 50 litres of wine or 10 litres of spirits. Limits might offend the EU and its rules about the free movement of goods, but I am not worried about offending it in such matters, especially when they relate to the health of the people of our country and to Treasury revenues, which are very important at present. So I hope we will at least pay some attention to the alcohol and tobacco smuggling problem. Indeed, I would go further and suggest that in time, some kind of internal border constraint across the European Union as a whole would be a sensible approach.
At a meeting a few days ago we talked about people trafficking and the failure to stop that, largely because the internal borders are not policed. I suggested that if European citizens were free to travel without restriction, but others were not, we might be more able to deal with people smuggling. We might be more able to deal with alcohol and tobacco smuggling if we had internal borders again. At some point in the long-term future I would like to see such borders reintroduced, and I put that down as a marker. I do not expect it to happen soon; on the other hand, it would be a sensible way forward and would help both the Treasury and the health of our fellow citizens.
With those few words, I can say that I entirely support the Government’s approach to this issue and will continue to do so.
5.6 pm
Mr Hoban: This has been a rare treat. This is the first time as a Minister that I have been before a European Committee where there has been such an outbreak of consensus, not just between parties but within parties. I am rather tempted to draw stumps and bask in the glory, but I want to say a couple of things. Let me start with the points about alcohol and tobacco raised by the hon. Member for Luton North. The Treasury takes a close interest in smuggling, not just for health reasons but for revenue protection reasons. The previous Government renewed their strategy for tackling alcohol smuggling in 2009-10, and this Government launched a new strategy on tobacco this April in conjunction with the UK Border Agency, looking at areas such as cutting off the supply of tobacco products, taking tough action against offenders to deter and punish those taking part in fraud, and working with international partners.
As the hon. Gentleman said, a lot of cross-border smuggling is taking place, and much of that comes across our borders from eastern Europe. We are working very closely with the Eastern Partnership to tackle those issues and to try to cut smuggling off at source. We have had some significant successes in seizing quantities of Marlboro Lights and cigarettes I had not heard of before called Imperial Blue. So, we are having success there. On the hon. Gentleman’s point about imposing limits, we have introduced a possible indicator that someone is bringing stuff in that is not for personal use, particularly tobacco. From 1 October we will apply EU minimum levels of 800 cigarettes and a kilogram of tobacco. That is broadly consistent with other EU member states. We are seeing action being taken on that, which is important.
Returning to the main thrust of the issues in front of us today, my hon. Friend the Member for Hertsmere was spot on in highlighting that the vast majority of measures fall under justice and home affairs—OLAF,
however, comes under economic and financial matters—and obviously, a decision must then be taken about opting in. There is a challenge here, because we want to see tough action taken across all member states in the area of investigation and prosecution. We believe that such matters are the responsibility of national Government, and we need to work through the process, but we need to find ways to make the system work better on a voluntary basis, or through co-operation. The European investigation order, which my hon. Friend has concerns about, is going through a scrutiny process. Some steps in the order concerning formal request, deadlines for response and the standardised format for requests for information will actually facilitate co-operation between member states and ensure that measures that need to be taken at a member state level can happen without that transfer of sovereignty to the European Union. However, we need to work through such things carefully and ensure that we get the balance right, because we want proper prosecution of fraud.As I said earlier, we also want to deal with the prevention side through simplification and transparency. A measure of how important the Government see the pursuit of such matters is that we abstained from the discharge process for the European Union accounts. It has been 16 years since the accounts were signed off. For 16 years, Governments have been supporting that position. We actually abstained this year, which is a clear signal of how seriously we take the whole issue of irregularity and fraud. We want taxpayers’ money to be spent carefully, wisely and legally. Abstaining on that measure sends a clear signal to our European partners and to the Commission that the issue is a particular priority for the Government. My right hon. Friend the Member for Putney led on that, and I will seek to carry on her work as we try to ensure that we get best value from the money we spend in the EU, which is particularly important in a time of austerity.