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Financial Management

I will leave the last part of the hon. Gentleman's assessment to the auditors and the fraud office, but all I can plead in my own defence is that I have been Chair of the ESC for only two years and things have improved vastly in that time. I do not claim any correlation between those two facts, however. One of the great difficulties in defending the EU is that people often look at it with a deliberate eye to seeing where they can transact dubious movements of money. There have been scandalous situations in some countries, where individuals have somehow trousered lots of money—£36 million for a single individual in one case—and Bulgaria has clearly not brought itself up to a satisfactory level of financial control and sufficiently reduced corruption to justify its spending the money to which I have referred. I must add that our Committee can put its hands up and say that we said Romania and Bulgaria should not have been allowed into the EU in 2007; nor should we have made them the offer that if they did not come up to scratch in 2007 and even if they did nothing, they would get in in 2008. As someone said to me privately, that meant that the politicians thought that they did not have to listen to Europe any more, and that if they just waited and did not change anything, their countries would get in. There have been more than 100 contract killings in Bulgaria since it joined the EU; that is a frightening statistic. The excuse we got when we met its Foreign Secretary was, ““Well, they hire Russians, and they just go back to Russia after the killings, so we can't find them.”” Things are going on in the world that we would all like to change, but I shall now return to the budget. Mr. Bostock states in paragraph 11 of his letter:"““In the other areas of expenditure—agriculture and natural resources; cohesion (the Structural Funds and Cohesion Fund); research, energy and transport; external aid, development and enlargement; and education and citizenship—however, the Court concludes that payments are affected by material levels of error””." The letter continues with the observation"““that supervisory…systems are only partially effective in ensuring that payments are properly made.””" Therefore, there are major identified faults. Paragraph 12 states:"““As for 2007, the Structural and Cohesion Funds are the area of spending most affected by error…'The Court estimates that at least 11 per cent. of the total amount reimbursed should not have been reimbursed'.””" Given that that is known, we think that the next thing to do would be to find out who the people involved were, get the money back and prevent that from happening in the future. The letter continues:"““Rural development accounts for a disproportionately large part of the overall error rate estimated in agriculture and natural resources.””" It is not agriculture and natural resources, but so-called rural development that is the main error area, therefore. Many other things are worth commenting on, but I shall draw the House's attention to a point that David Bostock drew to the attention of the Committee. He wrote:"““The latter part of Chapter 1 (from 1.42 onwards) discusses the problems of ensuring that EU spending takes place properly. It leads to the conclusion (in 1.52 to 1.54)””—" of the report before us today, which I find an incredible conclusion—"““that there are political choices to be made about the control of spending and what risk of mis-spending is tolerable.””" No level of mis-spending is tolerable for any political reason. That should be the rule by which the anti-fraud office and the EU run. The letter states:"““Chapter 2 reports some improvements in the Commission's supervisory and control systems, notably a greater realism than in previous years in the reports by Commission Directors General about the legality and regularity of the expenditure for which they are responsible.””" That would appear to imply that the directors general previously had greater laxity in terms of what they considered to be realistically acceptable in expenditure. The letter continues that"““the Court's conclusion is...that the Commission is not able to demonstrate that its actions to improve supervisory and control systems have been effective in mitigating the risk of error in large areas of the budget.””" It is an honest and clear appraisal, and it is in the documents contained with the report before us today. It would merit everyone studying it in detail. I wish to discuss what is said about the UK in the annual report, because we are never completely free of blame. For example, we regularly get reports that more cases have been brought against the UK over the illegal taking of fish in the EU than against most other countries—[Interruption.] Not in the past couple of years, but certainly in the past. Paragraph 17 of David Bostock's letter states:"““There are references to the United Kingdom in chapters 5 (the CAP) and 6 (cohesion) of the annual report.””" Paragraph 18 states:"““In chapter 5 criticisms are made of the establishment of the management of the CAP Single Payment Scheme. See in particular paragraphs 5.22, 5.26, 5.30 and Annex 5.1.2.””" Paragraph 19 states:"““In annex 6.1 to chapter 6 the Court reports on its assessment of supervisory and control systems in 16 Structural funds programmes.””" He was talking about programmes involving the UK, and he continued:"““One of these is jointly managed by the UK and Ireland.””" No country, not even this country, is free from questions about the way in which people carry out their transactions. That does not mean that they are fraudulent; it just means that the accounting systems and the way people are reading the spending rules for European Union funds call the transactions into question. It does not mean that when clarified, they will end up being seen as fraudulent or improper reimbursements. I wish to finish with an anecdote about one of my local farmers who was having problems with his sheep premium returns. When I went to help him out, he pulled out a bundle of things that were the equivalent of backs of fag packets—a number of bits of paper and backs of purchase invoices—where he had written out his various sheep numbers and so on. I could not make head nor tail of them. Of course, our people then turned up from the Ministry of Agriculture, Fisheries and Food and said that they could not make head nor tail of them. He could remember but could not prove what he had done, so he was having difficulty getting his payments. We must have systems, particularly in the A8 countries, that are disciplined, transparent and easy to understand, so that people are not accused of fraud when they are not fraudulent and so that we find fraud where it exists. In the meantime, I hope that the criticisms made in this debate will be passed on to the Government and to the European Union, and I hope that we will see further improvements in the future.