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.

European Union Committee: Multiannual Financial Framework

Lord Bowness Excerpts

Tuesday 19th June 2012 Grand Committee

[Lord Bowness]

My Lords, I thank the noble Lord, Lord Boswell of Aynho, for his comprehensive introduction of these two reports. It is an opportunity for those of us who are members of the European Union Committee to wish him well, in a public forum, as the new chairman of the committee. No doubt he will lead the committee as successfully as did his distinguished predecessor, the noble Lord, Lord Roper, who steered the committee through the production of these reports. As chairman of the then Justice and Institutions Sub-Committee, I will make four short points which it made as part of its contribution to these reports, and which despite the changing circumstances remain relevant.

First, we agree that in this area spending for the period 2014 to 2020 should be broadly consistent with the levels of expenditure planned for the end of the current multiannual financial framework. That is constant in real terms. Citizenship, freedom and security make up less than 2% of the total, but for a five-year period it is difficult to judge what the right levels are. The current five-year programme for the area of freedom, security and justice concludes in 2014 and some agencies such as Eurojust and the Fundamental Rights Agency are being given additional responsibilities.

Secondly, because of the importance of this area of activity, savings should be sought elsewhere in the budget if the ceiling on justice and citizenship is to be raised beyond that of 2013.

Thirdly, if there is a choice between justice and citizenship headings, justice should have the priority.

Fourthly, what gives the sub-committee the greatest concern, to which my noble friend Lord Maclennan has already referred, are the resources available to the Court of Justice of the European Union, comprising the European Court of Justice, the General Court—formerly the Court of First Instance—and the European Union Civil Service Tribunal. As the Select Committee’s report into the workings of the Court noted, the workload is increasing and additional resources are required if delays are not to build up. We cannot countenance a situation similar to that which prevails in the European Court of Human Rights, where the backlog runs to over 100,000 cases. The cost of the Court comes from the administration budget. It is less than a quarter of 1% of the EU’s budget and less than 5% of expenditure on all the institutions of the Union. I am normally cautious about suggesting that budgetary problems can be solved by administrative savings, but in this instance the amounts are so modest even I believe that it may be possible.

The sub-committee’s report called for an increase in the number of judges in the General Court, something which may be achieved without treaty change. Latterly, we have supported the suggested use of recently retired judges to assist the civil service tribunal as a cost-effective way of dealing with what may be a temporary need. The court is seeking approval for changes to its working practices, which we support, but which will not in the light of our inquiry of itself solve the problem.

In this area of justice, if we are to have a full and free single market with all that means in terms of inter-member state trade, freedom of movement and European Union citizens living, working and moving in a variety of member states, we must ensure that there are certain common standards and procedures. This is not to threaten our legal system, but to ensure that British citizens enjoy elsewhere in the Union the protection and freedoms to which they are accustomed here. In many ways it is easier in the area of criminal justice, where the Commission has taken a series of incremental steps. It is more difficult in the area of civil justice, where proposals such as those on wills and succession, and matrimonial, property and contract law, create real difficulties for the countries with common-law traditions. To those who may be tempted to say that we should have nothing to do with any of it, I recall that my right honourable friend the Lord Chancellor expressed the view to the sub-committee:

“Assuming that the general objective of the proposal is one with which we are perfectly comfortable, I would prefer to opt in because I think that it gives a greater role and influence at an early stage of the subsequent negotiations and you have a vote in the course of any decisions on drafting, so you can be in a better position to remedy any queries you have about it”.

In conclusion, I hope that Her Majesty’s Government support those elements in the multiannual financial framework which support European added value, and that this is not governed by a sometimes apparent hostility to all expenditure in the European Union and a current desire to distance ourselves from our partners and the problems in Greece.

My noble friend Lord Maclennan referred to the current uncertainty. In these uncertain days we cannot know what expenditure not yet envisaged may arise. That is highlighted in an article by Bronwen Maddox in today’s Times, which gives succinct and graphic examples of some of the political dangers of which we should all be aware and which I hope Her Majesty’s Government will take into account.

In conclusion, I wish to quote briefly from the article in the Times by Bronwen Maddox. It states:

“As the EU struggles to work out how much it is prepared to pay to keep Greece in the currency bloc, or even the Union, it should take into account how Iran (and Russia) are scanning Europe’s troubled southeast in search of new allies. It is easy in Britain, where diplomacy is infused with a sense of unambiguous borders, to forget how allegiances across Europe’s eastern corner have always been twisted from many strands”.

She concluded:

“The EU’s expansion eastwards and southwards has been one of the transforming gestures of recent history, embracing countries that appeared to want to define themselves by western ideals of liberal democracy. Clearly, the creation of a single currency among very different economies was folly; Greece played to that generous romance of enlargement, extracting all the capital imaginable from its claim to be the ‘birthplace of democracy’.

All that said, the expansion of the EU carried huge symbolic value. It said to those countries, and the world: ‘They are on our side, they share the same values’. If Greece falls out of the euro, and if its links with the EU are strained—or break—it would be careless to overlook the possible consequences. A country that straddles the old fault lines of Europe might find reason to look east—and leaders in Tehran, for a start, would try to give it every cause to do so”.