EU: Fraud (EUC Report)

Lord Bowness Excerpts

Wednesday 11th December 2013 Grand Committee

[Lord Bowness (Con)]

My Lords, I thank my noble friend Lord Stoneham of Droxford for his comprehensive introduction of this report and for his support—together with that of the noble Lords, Lord Rowlands and Lord Anderson of Swansea, the noble Earl, Lord Sandwich, and my noble friend Lord Eccles—during the conduct of this inquiry under my chairmanship of the sub-committee. I am sure that we all want to send the noble Baroness, Lady Corston, good wishes for recovery from her illness.

I am delighted that the House, albeit eight months after publication, now has the opportunity to debate this report. I will emphasise a few points, although they have been covered very adequately by my noble friend. I particularly regret the rejection by Her Majesty’s Government of the suggestion that one department have overall responsibility for ensuring that the fight against fraud is kept to the forefront of everyone’s attention. I note from the response that the Government believe that individual departments are best placed to detect, prevent and rectify fraud or irregularities and that reducing this to a single department would lead to duplication and slow down the process. Of course, the report did not advocate that but rather that one department should have responsibility for co-ordinating the efforts of each. While we understand a lack of knowledge of the amount of undetected fraud, it is less understandable why, in evidence, the Government were unable to give us a total figure for detected fraud.

We also advocated one point of contact between OLAF and the United Kingdom. The Government highlighted the difficulties of different jurisdictions within the United Kingdom. However, that should not create a problem. This is still one country with a national Government. There could well be a single point of contact. What happens thereafter would and should remain a matter for the relevant devolved Administrations.

We are also well aware of the Government’s position on the European Public Prosecutor’s Office. Indeed, the Committee and the House made their position on that clear. I do not know whether the present proposal will go ahead under enhanced co-operation but the recommendation in the report urged the Government to make clear what proposals they would bring forward to tackle this problem. Like my noble friend Lord Stoneham, I ask the Minister to explain further.

We were singularly disappointed by the apparent lack of engagement by the Government and HMRC in the course of this inquiry and report. That appeared to stem from the belief—a proper one—that matters of taxation are the exclusive prerogative of the member states. However, protecting one’s turf should not exclude recognition of a problem or the search for a solution. That I felt particularly true of the problem of VAT fraud and its international elements, coupled with the complicated and some may say tenuous connection between VAT gathered and money due to the European Union. It seemed and still seems to be an area of legitimate inquiry for the committee. That view was confirmed when the Minister told us, “Oh, it was only a very small proportion of the money that went to the European Union compared with VAT totals as a whole”. That small sum was £2 billion.

The committee went to Brussels and saw OLAF. We were singularly concerned about the apparent discord between the director and the supervisory committee, which evidenced itself in the morning that we were there. I do not know what the outcome is. Perhaps the Minister, having seen our report and the response, will be able to bring us up to date on the present position.

We also talked to a number of MEPs and the relevant committees. They showed considerable concern and awareness of the problem—a view shared, I believe, by my colleagues on the committee—but perhaps do not have the power necessary to make a real difference. I will be interested to hear from the noble Baroness, Lady Morgan of Ely, who is winding up for the Opposition for the first time in a European debate in which I have taken part, how, in the light of her considerable experience in the European Parliament and of matters of this kind, she sees the problem being dealt with.

Having been got up at a somewhat ungodly hour to be interviewed about this report by a radio presenter, he missed the whole point of the report and raised with me the question of the European Union’s accounts not having been signed off by the auditors. I suggested to him that it was not really relevant to the point. However, perhaps we should remember that it is not an easy matter to deal with. The stringency of the rules and the fact that the money is dealt with by member states leads to a difficult situation in the Union’s accounts. To put that in context, I read in the Times this morning that the Auditor-General has declined to sign off the accounts of the Department for Work and Pensions and that depending on whether you believe the Telegraph or the Daily Mail this is the 24th or 25th consecutive year in which that has occurred.