European Public Prosecutor’s Office (EUC Report)

Lord Bates Excerpts

Thursday 19th March 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)]

My Lords, I join others in paying tribute to the work of the wider EU committees under the chairmanship of the noble Lord, Lord Boswell, and, specifically in this context, to the work of the Sub-Committee on Justice, Institutions and Consumer Protection under the chairmanship of the noble Baroness, Lady Corston.

The report is very thorough and comprehensive, and the body of evidence that it drew upon in arriving at its conclusions was substantial. Anyone who has had anything to do with EU institutions will recognise the high regard that is held throughout the European Union member states for the work of this House in carrying out scrutiny of proposals. It is therefore doubly disappointing that the concerns, which were clearly expressed in the reasoned opinion, were not taken more seriously. The yellow card system could perhaps have worked a little better in that regard. However, the Government have very much welcomed the report. The Home Secretary gave evidence to it, and we have responded to the committee and to its specific recommendations. I now want to cover some of the principal points raised during the debate.

The Government have consistently made it clear that we will not participate in an EPPO, and we have assurances from the Commission and all member states that our non-participation will be respected. We continue to take an active role in negotiations to ensure that it is, and those negotiations are ongoing. I was amazed to see that the idea of an EPPO had its genesis back in 2000 or 2001, so it has been going on for some 14 years. I do not understand why, in the words of the noble and learned Lord, Lord Hope, people are not looking at the existing structure and making what we have work better rather than seeking to develop something that is new, untried and untested. That logic escapes the Government, as it has escaped the committee.

The negotiations are contentious and extremely fluid. The focus to date has been on Chapters I to V of the proposal. Participating member states regard these as internal business matters that concern only them. In their view, it is too early to have discussions about impacts on non-participating member states. The Latvian presidency is aiming to reach a partial general approach at the June Justice and Home Affairs Council, which it hopes will firm up the basic structure of the EPPO. Yet member states still have divergent positions on many of these issues.

There are other factors in play, many of which have been mentioned today. Under negotiation are separate EU measures, such as the directive in the fight against fraud to the Union’s financial interests by means of criminal law, known as the PIF directive, as well as the Eurojust regulation. The PIF directive in particular will affect how an EPPO would deal with cases on a day-to-day basis. It is therefore extremely difficult for us to know what effect an EPPO will have on existing EU co-operation mechanisms and systems. It is also still too early for the presidency and other member states to consider how an EPPO will impact on the UK. We totally accept that, as stated by the noble Baroness, Lady O’Loan, there will be very serious implications for the UK, including Scotland, and these will need to be addressed and assessed. However, there will be a continuing need to engage closely in the negotiations, and where we deem that so-called internal issues directly affect the UK we will continue to strongly raise our concerns. We also continue to make it clear that we want to strengthen the existing—

[Lord Spicer (Con)]

The Minister says that there could be serious effects on the UK. Is one of those effects that we could have to go across to a different form of law?

[Lord Bates]

I do not think that is the particular effect that I was thinking about in this context. Clearly we have a system that works to a degree at the moment with Eurojust and OLAF as the two bodies that then refer back, in our case, to the Serious Fraud Office and the newly established National Crime Agency, which is doing very good work in tackling fraud of this nature. They are then prosecuted through a court in the UK. It is more that operational level which the Government are thinking about at this time.

[Lord Hope of Craighead]

I am grateful to the Minister for allowing me to intervene. The point that really gives rise to concerns for the Lord Advocate is confusion about competence and jurisdiction. At the moment we have complete clarity as to which body is entitled to prosecute in our courts. They have a complete understanding, rights of audience, and so on. Introducing this outside body would give rise to differentials and demarcations. That in itself would give rise to disputes and we would have a sort of preliminary session as to whether one body or the other should prosecute, which gives rise to delay. So it is not really a matter of resources so much as a matter of confusion, which is why the call for further detail is really so important and why I still support the line that the Government are taking.

[Lord Bates]

That very clearly makes the point that we are talking about, and perhaps explains why it has been impossible to find a way forward so far. I would also mention some of the challenges, which may be insurmountable, in trying to progress down this model. The Government are absolutely committed carefully to watching the negotiations and ensuring that our interests are defended.

The noble and learned Lord also asked about shared competence. Ideally member states would retain competence. It is the only way in which they could contain the elements of the Commission’s proposal that they favour. An independent prosecutor would investigate cases inside member states free of bribery and corruption. We believe that that would be the only way in which the EPPO would add any value to the fight against EU fraud. The UK would prefer the EPPO to have as little competence as possible.

In response to a number of questions raised particularly by the noble Baroness, Lady Corston, in her introduction, it is worth putting on the record and restating the fact that the UK Government are absolutely committed to the fight against fraud. We certainly cannot envisage any circumstances in which it would be tolerated that the UK could become a safe haven for fraud. We are expressing confidence in our own legal systems and existing cross-border co-operation to ensure that that does not become the case.

[Lord Pearson of Rannoch]

While he is on that subject, can the Minister give noble Lords any estimate of the annual amount of EU fraud across the European Union? Do we have a modern figure for that?

[Lord Bates]

A figure has been mentioned. I am trying to put my hand on it. I wonder whether the noble Lord would accept the Commission’s estimate of the level of fraud. Those of us who are participating in this debate are still trying to recover and see whether we are on the right track when praised by the noble Lord, Lord Pearson, on European matters. It slightly shook our confidence, but we are recovering from that, and I think we are all on the same page here.

The Commission’s estimate of the level of fraud in July 2013 in the impact assessment put EU fraud at not detectable, and therefore unknown, at around £2.55 billion a year. I am reading out this figure and am aware that it is slightly contradictory to say, “not detectable, and therefore unknown”, when the estimate is around £2.55 billion a year. But that is the Commission’s estimate.

[Baroness Corston]

Can I point out to the Minister that evidence given to the EU Justice, Institutions and Consumer Protection Sub-Committee before this inquiry was that the dimension of fraud against the European Union budget was probably about €5 billion a year?

[Lord Bates]

Yes. They are extraordinarily large and very worrying sums of money, and this Government remain absolutely committed to tackling that. We continue to support efforts by the EU anti-fraud office to tackle EU fraud, we value the role of OLAF and Eurojust, and we want to minimise disruption to current and future anti-fraud cases if an EPPO is created.

We understand that the EPPO-to-Eurojust relationship and the EPPO’s impact on OLAF will not be discussed until later in the negotiations. We also have no further information from the Commission on any plan for reform of OLAF. I appreciate that this lack of clarity makes assessment of the impact of an EPPO difficult at this stage. The Luxembourg presidency may be in a position in the latter half of this year to begin constructive discussions on EPPO interactions with other EU bodies, third countries and non-participating member states, but that is highly likely to depend on where things stand in June. As soon as there are significant developments, we will update noble Lords in the normal way.

[Lord Spicer]

We always used to be told that European criminal law would not incurse itself into our law, which is a different form of law. This is surely an example of the reverse; this is the incursion of European criminal law into our common law-based system. It is very serious from the point of view of this country, surely.

[Lord Bates]

These are important constitutional matters. I am looking across to the Benches where we have a distinguished constitutional academic and a distinguished former member of the Supreme Court, who may offer opinion, but I think I will slightly side-step the question.

Help is at hand.

[Baroness O'Loan]

My Lords, the proposal is that prosecutions will occur in British courts under British law. This is not a proposal that European law will be exercised in British courts, so the reservations of the noble Lord are not warranted.

[Lord Bates]

I could not have put that better myself.

[Lord Pearson of Rannoch]

I am not quite sure whether the Minister was attempting to answer the question that I put to him, but just to be sure I will repeat it. What happens if the Commission decides to plough on with this proposal? Are we capable of stopping it or must we just live with the muddle, the increase in fraud and the damage that will ensue, thanks to the Commission’s activities?

[Lord Bates]

If the Commission continues down that line, there will have to be treaty changes. Negotiations will have to take place on the implications for non-member states and third-party countries as well as for member states. However, the proposal is in such flux at the moment that trying to judge what it is is nigh on impossible at present, let alone what a future Government’s position would be in responding to it. The fact is that we would have a position, there would be a negotiation and there would have to be agreement as to how it would operate in this country. The report, which has been presented so ably today, has highlighted the many complex issues that will need to be addressed by a future Government.