European Union Committee: 2012-13 (EUC Report)

Baroness Corston Excerpts

Tuesday 30th July 2013 Lords Chamber

[Baroness Corston]

My Lords, I am very grateful for the opportunity to speak in this debate and to follow the noble Lord, Lord Boswell of Aynho, who chairs the main European Union Select Committee of your Lordships’ House with the utmost diligence and courtesy. I want also to place on record that for the majority of the 2012-13 Session Sub-Committee E—the committee on justice, institutions and consumer protection—was chaired by the noble Lord, Lord Bowness. He certainly handed on to me a very well-oiled machine.

It reminds me somewhat of an exchange with the then clerk of the Joint Committee on Human Rights, when I was its founding chair more than 12 years ago. He told me that he had previously been clerk of the Defence Committee, which he described as like Inspector Morse’s Jaguar. It was a classic, needed a little light touch on the tiller and the accelerator, had regular servicing and caused very little trouble, whereas, he said, the Joint Committee on Human Rights was a kit car with the instructions in Hungarian. The committee handed on by the noble Lord, Lord Bowness, was much more like Inspector Morse’s Jaguar and I am very grateful for that.

In the previous Session there was more than enough work for Sub-Committee E. In addition to very substantial scrutiny work, the sub-committee carried out one full inquiry, a joint inquiry together with Sub-Committee F, and a follow-up inquiry. I shall briefly describe each. We conducted an inquiry on combating fraud against the European Union’s finances. It was launched in July 2012. It was timed, in part, to coincide with the publication by the Commission of its proposed directive designed to protect the EU’s financial interests via the criminal law. Evidence was taken from a range of parties, including academics, the United Kingdom police, government agencies, the relevant European Union Commissioner and, after some reluctance, the Exchequer Secretary, Mr David Gauke. I will say at this point how surprised we were that the Government refused permission for us to take evidence from Her Majesty’s Revenue and Customs and it took quite a lot of prodding for the Minister to appear before us at all. In addition, members of the committee travelled to Brussels to take evidence from, among others, MEPs, Eurojust, and OLAF, the European Union’s anti-fraud body. In total, the sub-committee held 13 evidence sessions with more than 30 individual witnesses.

Our subsequent report identified a number of weaknesses in the EU’s current anti-fraud system, including a lack of enthusiasm among the member states in taking their responsibilities to combat EU fraud seriously, weaknesses in the ability of OLAF to fulfil its remit to protect the EU’s financial interests, and a considerable mismatch between the known levels of fraud perpetrated against the EU’s finances. The Commission’s figure of €404 million for 2011 and the committee’s own estimate in the region of €5 billion are at variance to say the least. In their response to the report the Government stated that,

“no amount of fraud should or will be tolerated”.

While they recognise that in some areas the EU’s anti-fraud system needs improvement, overall, however, the Government believe that the system is “on the right track”.

In the course of the inquiry, we were unable to ascertain whether any government department or agency in the UK takes overall responsibility for fraud against the EU’s finances. No one was able to tell us with any confidence how much known EU fraud is perpetrated from within these shores, despite the fact that the individual member states are required to tell the relevant EU authorities when they uncover these offences. In our report, we called for a single government department or agency to take responsibility for fraud against the EU’s finances. However, the Government rejected this recommendation on the grounds that any move designed to place responsibility for the matter on to what they called a “single UK department or agency” would create duplication and slow the process down.

On the sub-committee’s estimate that the level of fraud against the EU’s finances is more likely to be €5 billion as opposed to the €404 million that the Commission estimates, the Government say merely that they are “concerned” by this figure, but that it,

“is not a figure that is recognised”.

They do not say who it is not recognised by, and the response may be somewhat perfunctory.

Finally, in relation to the upcoming proposals for the creation of a European public prosecutor’s office—the EPPO—the Government state that the creation of another EU body is not the answer to the problem of EU fraud. The Government recognise that the current system is “not perfect” but suggest that it works and continues to improve, and that, as far as the UK is concerned, the anti-EU fraud position is “strong”. The Government have stated that the best way of ensuring that the decision to prosecute remains a national matter is not to participate in any EPPO. They also point out that the treaty envisages a system whereby the EPPO will be empowered to,

“investigate, prosecute and bring to judgement”,

those responsible for committing EU fraud, which is a role that conflicts with the UK system where the investigation and prosecution functions are kept entirely separate. The proposals to create the EPPO were published last week and the sub-committee intends to launch an inquiry into these proposals in the autumn.

I now turn to the workload of the Court of Justice of the European Union. The sub-committee carried out a follow-up inquiry into this matter in the later part of the Session. We sent a call for evidence to all those who provided evidence during the original inquiry and also took oral evidence from the Minister for Europe. In our report, we expressed concern that the number of cases pending before the Court of Justice continues to rise year on year and we called for the right balance to be struck between the length of time it takes for the court to dispense with a case and the quality of its judgments in order to preserve its credibility. We also found that although the latest statistics from the general court indicate a reduction in the number of pending cases, the number of new cases has more than doubled between 2000 and 2010. Those cases are of great interest, principally to business in this country. We therefore reiterated that there is still a very strong case for increasing the number of judges in the general court and urged member states without delay to find a system for appointing additional judges to safeguard the stability of the court and the quality of the judiciary.

In their response, the Government agree with most of the report’s conclusions. They appear to have shifted their position a little in that they are being more positive about appointing additional judges to the general court as a means to deal with the court’s backlog of cases. Also, the Government now appear to favour a merit-based selection process to appoint additional judges to the general court instead of a rotating system of appointment. The sub-committee hopes that progress will be made soon on resolving the general court’s excessive workload and it will follow developments in this area with interest.

I now turn to the 2014 opt-out decision on Protocol 36 to the Lisbon treaty. I do not intend to go into any of the detail on this inquiry. I will leave that to the noble Lord, Lord Hannay of Chiswick, when he addresses the House. Suffice it to say that on 9 July this year the Home Secretary made a Statement that provided more information about the Government’s approach to the opt-out decision. At the same time, the Government published Command Paper 8671—not the easiest of documents to digest—which sets out a list of 35 measures that the UK will seek to rejoin if the opt-out is exercised and includes Explanatory Memoranda that cover the 130 measures falling within the scope of the opt-out decision. The first debate was held in the House on 23 July and a vote took place on the opt-out decision. The House supported the Government’s decision to opt-out and endorsed the list of 35 measures they would seek to rejoin. A second vote on the final package of measures will take place in due course, following the conclusion of the negotiations with the Commission and the Council.

Sub-Committees E and F have agreed to reopen their inquiry and report to the House on the 35 measures that the Government wish to rejoin. The call for evidence for the reopening of the inquiry was published on 18 July and the deadline for submitting evidence is 11 September. Oral evidence will be taken from Ministers on 9 October. The sub-committee is looking forward to continuing working on this issue, together with the Home Affairs Sub-Committee.

As to the reform of Eurojust, last week the Commission published proposals for a regulation on the European Union Agency for Criminal Justice Co-operation—known as Eurojust. The UK opt-in applies to these proposals and the sub-committee will consider them in September.

I turn to our enhanced scrutiny work. At the beginning of the previous Session, the sub-committee took over responsibility for consumer protection and culture from the now defunct Sub-Committee G. In this regard, we scrutinised the European Consumer Agenda and proposals for a common sales law. The sub-committee held an informal briefing with the consumer rights campaigning organisation Which? in October and heard oral evidence from Jo Swinson MP, Minister for Employment Relations, Consumer and Postal Affairs, on the alternative dispute resolution for consumer disputes. More recently, the sub-committee held a private briefing from Ofcom on the Commission’s Green Paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values. The sub-committee may continue work in this area in the autumn.

The sub-committee is also conducting enhanced scrutiny on the Commission’s package of proposals on trade mark reform. To this end, the sub-committee has sought comments from the Institute of Trade Mark Attorneys on the proposals, and further activities may continue in the autumn. The sub-committee has been interested for some time in the work of the Fundamental Rights Agency and the possible overlap with the work undertaken by the Council of Europe. Accordingly, the sub-committee will invite the Fundamental Rights Agency to give evidence on its role and the work it carries out. That is expected to take place in late October.

Finally, those noble Lords who were involved in the European Union Select Committee acknowledge that this committee represents and does some of the most important work done in your Lordships’ House. To scrutinise all European Union legislation is an extraordinarily important function. I am proud that this House does it so well and I am grateful for the opportunity to take part.