(13 years, 11 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Campbell of Alloway
To ask Her Majesty’s Government what steps they will take to ensure that the expenditure on accounts for the budget signed off by the European Court of Auditors shall be excluded from the contribution imposed on member states.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the UK cannot withhold its contributions to the annual European Union budget as it is required to make those contributions under obligations imposed by the treaties. The European Communities Act 1972, particularly Section 2, gives effect within the UK to Community law.
Lord Campbell of Alloway
I ask the noble Lord in response: since the findings of the Council are subservient to the approval of the Parliament, will the Government now seek change to the Lisbon treaty to enable the European Court of Auditors to oppose expenditure on a reasoned assumption that has the support of the Council of Europe, and so then to sign off the accounts? In other words, will the Government take some step, if not that step?
Lord Sassoon
My Lords, I am grateful to my noble friend for drawing attention to a clearly unsatisfactory situation. Year after year, the European accounts cannot get a clean audit opinion. However, it is the Government’s view that the way forward is not to press for treaty changes but to try to make sure that the whole system of accounting is made simpler and clarified. It should concentrate on what is important, and the capabilities of both the European Commission and other agencies—whether at the European level or, particularly, within member states—to manage the money should be enhanced so that we get out of an appalling situation that we do not want to see continue. However, treaty change is not the appropriate vehicle.
Lord Pearson of Rannoch
My Lords, can the Minister think of a better word than “grotesque” to describe the situation whereby the overall supervision of our priceless financial services has been passed to an organisation that, as he has mentioned, has been incapable of getting its own accounts signed off by its internal auditors for 16 years?
Lord Sassoon
My Lords, I said that the situation in which we find ourselves, with the European accounts not getting a clean audit opinion, is completely unacceptable. The connection between that and the regulation of financial services in Europe is somewhat tenuous. We should focus on ways of improving the budget situation. My right honourable friend the Prime Minister has already taken steps, both on this year’s budget and by talking about what we expect from the financial framework for the next seven years of the budget. Those are the ways in which we have to move forward determinedly.
Earl Cathcart
My Lords, my noble friend says that we have a treaty obligation to pay our contribution to Brussels. Quite so, but surely there is also a treaty obligation to ensure that all EU money is properly spent. Secondly, if Brussels blames the nation states for these financial irregularities, why do we not put pressure on the Commission to name and shame, and then block future payments to, those countries responsible for the fraud and mismanagement?
Lord Sassoon
My Lords, there are indeed things that we can do and will consider doing. The Council considers the budget issue in the early months of each year. It is rare—certainly it has not been done in recent years by a UK Government—to vote in Council against waving through the budget without a clean audit opinion. However, as my honourable friend the Economic Secretary has made clear in another place, the Government are ready to use our vote if we see accounts that fail to meet the standards that we think they should. She said in another place:
“If we see accounts that contain points made by the European auditors that we believe the Parliament is not taking on board, we will be ready to use our vote in future to challenge the Commission in a way that the last Government never were”.—[Official Report, Commons, 13/10/10; col. 456.]
Lord Sassoon
My Lords, I cannot tell the House that but I am very happy to write with the information. I think that it involves different auditing standards and a different structure but I shall be very happy to confirm that.
Lord Mawhinney
My Lords, those of us who have been privileged to serve at either end of this Building for the past 15 years have listened to Answers remarkably similar to the one which my noble friend has just given. Will he assure your Lordships’ House that progress is being made to the end which he desires, or are we going to listen to similar Answers for another 15 years?
Lord Sassoon
My Lords, I sincerely hope that we will not; anyway, I am sure that I will not be here giving those Answers for 15 years. We are making progress: the number of areas of qualification of the budget is going down and the level of fraud has been significantly reduced and is at a very low level, so there are certainly improvements in the detailed audits coming forward. However, that is occurring within a total picture which, I repeat, is not acceptable. We must work towards achieving more progress.
Lord Hunt of Chesterton
My Lords, does the Minister agree that many important projects and finances come through our involvement with the European Union which are valuable in areas ranging from agriculture to manufacturing? He should be well aware that, if there is excessive interest in detailed financing and control, it will be very difficult for these projects to operate.
Lord Hunt of Chesterton
You just have to listen to all the important manufacturers who find involvement in Europe extremely valuable. I hope the Government will ensure that this support is effective as well as valuable.
Lord Sassoon
My Lords, we are taking steps—for example, I think that we are one of only three or four countries which voluntarily publish audited statements on the way that co-managed funds are used in the UK. As a country we are doing everything to make the UK accounts as transparent and thoroughly audited as any, and the European Commission has noted that with approval. It is depressing that in agriculture, the largest area of spend, the error rate found by the auditors is going up.