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Lord Cockfield: If I may be so bold as to say so, the only difference which exists between myself and the four previous speakers is that they are so extraordinarily good at talking about the subject: I simply want to do something about it. My speech yesterday was directed to that end. If one is going to do something about it, one has to start by identifying where the fraud occurs and who is responsible for it. If one looks at every single case quoted by my noble friend Lord Onslow, in each case the money was expended by the government of a member state or their agencies.

I have with me, because I referred to it yesterday, an admirable booklet produced by the Intervention Board in Reading. This is a document of enormous clarity. It sets out very clearly indeed who pays the money and the progress. I suggest that one of the reasons why fraud, mismanagement, maladministration and all the other emotive terms which the noble Lord, Lord Bruce of Donington, can think of, is so much lower in the United Kingdom is because the situation is explained with great clarity by people like the Intervention Board in the United Kingdom. If one reads that document one can see exactly where the responsibility lies. It goes so far as saying that the responsibility for auditing the books rests not with the Commission in Brussels, but with the National Audit Office in London.

That is the position throughout. If the noble Lord, Lord Bruce of Donington, would care to update himself a little and move from 1993 to November 1994—I told this story yesterday—he would know that the president of the Court of the Auditors said that 80 per cent. of the money was disbursed by the member states. If 80 per cent. of the expenditure incurred properly or improperly is incurred in the member states by their governments and under their authority and with whatever controls or lack of them which exist in those member states, that is where the responsibility primarily lies.

You see it again if you read the conclusions of the Essen Summit—the meeting of the heads of government. They deal with fraud under pillar 3 of the Maastricht Treaty, and pillar 3 is inter-governmental co-operation between the member states. The Commission is marginalised under pillar 3. Unless you start by finding out where the responsibility lies, you will never solve the problem. As I said some time ago in your Lordships' House, it is no good shooting the wrong man. You have to start by finding the right person and then proceed to shoot him. That is what I have been trying to do.

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I am sorry that my noble friend Lord Beloff is so scornful of the forces of the market-place. I know that he is not an economist and regards economists as being somewhat lowly down the intellectual pecking order. But I am saying that what motivates people's behaviour at the end of the day is who foots the bill. If they have to foot the bill themselves for the fraud, the irregularities and the maladministration which occur in their own member state, that is the best possible incentive you can give them to do something about it.

I am far more anxious than any noble Lord who has spoken so far that this problem should be dealt with and solved. I am anxious that it should be dealt with and solved because it is a blot on the face of the Community, and I support the Community, while so many of the people who talk about fraud do so from the perspective of knocking the Community. I am not referring to any particular person so I hope that there will not be any protest about that. There is not the slightest doubt that a great deal of the attention that is directed to the subject is in the context of criticising the Community. If you proceed down the road of ensuring that the member states have to bear the greater part of the burden—I suggest that they should pay 51 per cent. of the total amount that they claim—they will undoubtedly take a much stronger line on good administration in their own country. This is a problem that has to be dealt with, and any effective way of dealing with it I should be only too glad to support.

Lord Hamilton of Dalzell: I could suggest an even better solution than that presented by my noble friend Lord Cockfield, and that is that the individual countries should pay 100 per cent. The problem with all these matters is that once there are enormous sums of other people's money floating about people are bound to get at it. I know that my noble friend Lord Cockfield would say that the whole of the agricultural policy is designed by the Community to produce various results—more or less production and specific objectives. But I am a farmer, and when the booklet so admirably produced by MAFF comes through I read it carefully. There are a great many experts reading it all over the country. They say that that is where the money is. Therefore one does not farm with a view to producing anything in particular; there is a new crop in farming. It is called the European paper crop. We pay a great deal of attention to reaping vast amounts of money from it.

I see from the figures in the Bill that agricultural expenditure is calculated to rise by 8 per cent., 9 per cent. or whatever it is. How can one possibly tell what it will rise by? It will depend entirely upon how people play the game; what happens to the weather; and everything else. For the moment we are being paid increased subsidies when the price of grain, for instance, is way above its support levels. We cannot intercept the free market and adjust that matter. We will spend our time endlessly wasting money until we return the

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payment of subsidy to national interest, and then if governments get it wrong the electorate will vote them out and try a different government.

6.45 p.m.

Lord Stewartby: Perhaps I may offer one or two brief comments based on the torrid experience of having represented the UK in the Budget Council for a number of years in the 1980s. My strong impression at that time was that many Ministers representing those member states which were net beneficiaries of the Community budget were careless of how expenditure was to be applied so long as the appropriate portion of the total came the way of their country.

I endorse what the noble Lord, Lord Monson, said about will power in this whole area. Of course it is necessary, as my noble friend Lord Cockfield said, to pursue the issue through the member states where fraud and irregularities occur. But I doubt seriously whether the sanctions on those member states within the processes of the Community, and particularly with regard to the Community budget, are effective. One has only to look at the consequences of sanctions in any area to see whether they are effective, and clearly in this area they are not.

If restitution has to be paid, it is to be paid only if the irregularity or the fraud is discovered. All moneys which are applied wrongly in member states, but where the fraudulent or irregular application of those moneys never properly comes to light or cannot properly be substantiated, are in terms of transfers of resources still effectively to the advantage of those countries. Although their governments may in general terms be committed to the orderly conduct of their affairs, it is inevitable—it is only human nature—that if there are financial advantages for those countries to turn something of a blind eye or to be less than 100 per cent. enthusiastic in pursuing the areas of misappropriation, then that is likely to happen.

I suspect that the difference in attitude between member states, based on whether they are net beneficiaries or net contributors to the Community budget, probably lies at the heart of this great problem. So I hope that the Government can, through their representatives, particularly in the Budget Council, try to establish a specific axis with other member states which are net contributors—for all practical purposes in the past that has meant Germany, although I understand that if the amendments to the budget process go through other member states are likely to become net contributors—and that by concerted action by those who represent taxpayers who are parting with their money in favour of the citizens of other countries putting their case strongly, persistently and with determination we can achieve a different attitude among the recipients.

I well recall a number of Budget Councils where the UK was isolated, with the exception of Germany, in calling for restraint on expenditure. The obvious reason for that was that Germany and the UK were the two countries which had to pay most of the bills for the extra budget expenditure for which the other 10 member states were calling.

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The member states which are continuous net beneficiaries from the Community budget underestimate the resentment that can be caused in countries such as ours, where for so many years we have had to look at the issue the other way around. I hope and believe that a tougher attitude is developing in Germany. For a long time, it seemed willing to provide substantial resources because of the importance which, for strategic and other reasons, it attaches to the coherence of the Community. Perhaps, since the collapse of the Warsaw pact and the reunification of Germany, its emphasis has changed. If so, that is in Europe's interest. We, like Germany, are in the position of having to come to Parliament year after year and ask for expenditure to be sanctioned. We know that inevitably part of that will go to other member states, and that part of it will not properly be applied.

I hope that those who represent this country in the councils will be able to make common cause with others who are, or will be, the net contributors to that budget and will try to follow the purpose through as strongly as they can.

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