Queen’s Speech

Earl of Sandwich Excerpts

Wednesday 11th June 2014 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, in a defence debate it is a tradition to start with a tribute to those who have fallen in Afghanistan and elsewhere, and I open my remarks today with a tribute to aid workers, who have also died on active service, working on the front line in Africa, Syria, Afghanistan and many other areas of conflict. Aid workers in Africa and Asia are now targeted as if they were a fighting force. They will not, generally, be remembered, except of course by their families and colleagues.

I would like briefly to mention my concerns about Ukraine. The noble Lord, Lord Jopling, has already mentioned EU Sub-Committee C’s timely inquiry, and I know many Peers today share his concerns and those of the noble Lord, Lord King. My own suspicion, already much better expressed by my noble friend Lord Cromwell, is that the EU has overreached itself and has not taken sufficient account of the historical ties between Russia and some of its neighbours, notably Georgia and Ukraine.

Conflict seems to be on the increase, especially in Africa and the Middle East, partly because the media, notably Al-Jazeera, have brought conflict much closer to us. Victims of conflict are added to the high toll of poverty, which is the biggest killer of all. Countries such as Somalia and South Sudan have already low levels of literacy and health, which keep them on the lowest rungs of the ladder; civil war has almost thrown them off the ladder altogether. It seems to outsiders that whole swathes of Africa are now out of bounds to aid workers, yet the staff of the ICRC or United Nations agencies such as the UNHCR risk their lives in regions like Upper Nile and Darfur, and in many areas there is no authority except for local militias which often aggravate the conflict. But there are many areas where peaceful development is a real possibility. Even South Sudan has vast stretches of fertile land; minerals are another source of wealth. Investors and agencies have a common purpose in bringing prosperity to the poorest developing countries, but their frustration often stems from the lack of information, which means knowing the level and scale of poverty.

It is difficult to count the numbers in need. Because of the variations between and within countries, it is nearly impossible to set standards or calculate how many people live in extreme poverty. It is no wonder that the World Bank has had trouble with its poverty statistics. The $1 a day calculation was a handy way of describing the millennium development goals. It enabled the UN to proclaim that the number of extreme poor in the world, which had long remained at around 800 million, had been halved—and so it had, until the $1 a day was updated to $1.25, when the numbers accordingly went back up by 400 million. With the help of the Overseas Development Institute, I have been trying to learn how economists reach these calculations. They do it on the basis of household surveys that take account of purchasing power parity through something called the International Comparison Programme, which is carried out every six years. The latest survey showed that consumption in China and parts of Asia was growing much faster than previously thought. For some economists, this meant that poverty again fell dramatically, from 20% to about 9% of the world population. Meanwhile, the Brookings Institution did a different calculation, raising the poverty level to $1.55 and basing its results on the 15 poorest countries. Again it came up with an extreme poverty figure of 870 million. The end result is that the poor, in the biblical sense, remain with us just as before; and the UN says that a billion people could still be extremely poor by 2030.

The one thing that has been agreed is that we can no longer base our statistics crudely on GNP per capita, which has been so convenient in the past. We must now take account of social factors such as employment, access to education and so on, and these are extremely difficult to assess and compare. Can the Minister say what our Government’s policy is on data collection for the new millennium goals? Is this a priority for DfID? Can he confirm that the High-level Panel on the Post-2015 Development Agenda recommended that the new targets be tailored to different income and social groups? This will surely mean that a concerted effort must be made to assess the numbers in each group. This is a herculean task in about 40 of the poorest countries that still lack the necessary data and means of collecting the information. Nevertheless, the work has to be done if we are going to have confidence in achieving these goals in years to come.

EU: Fraud (EUC Report)

Earl of Sandwich Excerpts

Wednesday 11th December 2013 Grand Committee

[The Earl of Sandwich (CB)]

My Lords, I follow the noble Lord, Lord Davies, in much of what he said. As a former member of sub-committee E, I thank the noble Lord, Lord Stoneham, for his introduction of the report and our chairman, the noble Lord, Lord Bowness, for all that he did. I also thank our senior legal adviser Mike Thomas, ably supported by Messrs Ridout, Mitchell and others. Mr Thomas’s outstanding work on this made the evidence much more intelligible and our conclusions more fit for purpose. We wish him well in his retirement next year.

As the noble Lord, Lord Davies, said, the subject of fraud in the European Union is enough to get everyone excited, not only the Eurosceptics but also those who consider the UK to be free of blame and squeaky clean. The fact is that fraud exists everywhere: not just abroad but in this Palace, in the City and in businesses all over the country. Noble Lords will remember that one of the biggest frauds occurred in the al-Yamamah contract. After that was investigated by the SFO and discussed at length in Parliament, it was abruptly hushed up by the then Attorney-General in the public interest. Of course, that was all about a princely sum, even for a prince, and it was assumed by most people that it was the way things worked in Saudi Arabia. But no: the SFO calmly and correctly reminded us that there are two parties to every contract who shared responsibility equally. That is worth mentioning in this case.

This country is in no position to complain about the European Union or other EU states. In fact, if our consultants wish to teach anti-corruption measures to developing countries, as they do daily around the world, they may be qualified to do so but they cannot expect countries such as Kenya and Afghanistan to look up to us as angels of accountability. We may be higher in the transparency index but we are all in the mud together. The Commission protests that fraud in the EU is no worse than fraud in the member states and it is right that there always seems to be a presumption of member state innocence. The EU institutions usually get blamed for the failure to prosecute when in fact it is more likely to be the individual country concerned. As our report states, responsibility for avoiding fraud does not rest solely with the Commission. The treaties require both the EU institutions and the member states to counter fraud affecting the financial interests of the EU.

There are, of course, recent examples of general fraud in both the EU and national Parliaments, and the issue can lead to strong emotions. In some cases, it can come to blows; last June, an Italian MEP called Raffaele Baldassarre was caught red-handed on YouTube entering a lift in the European Parliament. He proceeded, on camera, to box the Dutch journalist who was accusing him of fraud. Astonishingly, in southern Europe, the public do not always notice when their representatives are accused of fraud. There was another case, which I shall not go into, of a Maltese MEP who faced criminal charges for alleged fraud over three years. This was uncovered by the anti-fraud office, OLAF.

That brings me to one of our main recommendations, that while OLAF itself needs to improve its act and protests that it is already doing so, member states must give more support to OLAF, including taking the decision to prosecute. We were told that, in principle, to investigate a case of fraud against the EU budget, OLAF is supposed to request information from the judiciary in the member state involved. As the noble Lord, Lord Davies, said, one of our key witnesses, Rosalind Wright QC, said that judiciaries in member states are,

“in some cases … reluctant to investigate their own nationals for a fraud on a subsidy that is being paid centrally from Brussels”.

We heard from Professor Spencer and others that, even after an investigation, OLAF has no powers to compel member states to act. Some call it toothless—but that is just the point. It was a conscious decision of the member states not to give it those powers. Because of this, at €404 million in 2011, the total amount of fraud is being wholly underestimated by the Commission.

The Government’s response throws doubt on the estimates of €5 billion, although they are derived from National Fraud Authority figures. As the noble Lord, Lord Stoneham, said, in explaining the difficulty of estimating the amount, the Government say that the Commission’s database is constantly being updated and that it makes no distinction between “suspected and established fraud”. Irregularities are sometimes included and sometimes not. Again, if we and other member states are reluctant to investigate, we are never going to find out how serious the problem is; we are just going round in circles.

Communications with OLAF have been inadequate, to say the least, and what we call a lack of enthusiasm all round for reporting fraud is, to me, the most serious issue. A related problem for OLAF is that there is no single point of contact in the UK Government and very likely not in other Governments either. The Commission’s response agrees with our analysis, saying that member states have a continuing duty to provide the information. The Commission refers to the recent tightening of the system through new investigative procedures, mentioning a new regulation establishing a clearer legal framework. Her Majesty’s Government’s comment is that “progress is being made”. We shall hear in a minute what that means.

The Commission invests rather a lot of hope in establishing an EPPO, which it conceives as a “decentralised structure” integrated into the national judiciaries. We all hope that that will never happen.

On the question of a UK focal point, the Commission says that there must be a national body designated to co-ordinate what it calls anti-fraud co-ordination services, which will strengthen the co-operation between OLAF and member states. Perhaps the Minister will update us on the likelihood of any such co-ordinated service in the UK, and on any further conversations between the Home Office, the City of London police and others involved.

The Government’s response merely says that there is room for improvement; it quite reasonably rejects the idea of a new department, mentioned by the noble Lord, Lord Bowness, but it seems to me and to him that we are putting off the more fundamental question of co-ordination—unless the Minister proves us wrong.