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Financial Management

My understanding is that the €10.5 billion figure was derived from and based on 2004 prices, and that will remain the case. The hon. Gentleman will understand that exchange rates go up and down and he will be able to do the calculations himself. I want to reinforce the point that I was making earlier, however. There is a complete misconception that the recent deterioration in the euro-sterling exchange rate in the euro's favour will mean that the UK will have to pay significantly more in contributions. That is emphatically not the case, for the reasons that I outlined earlier. I want to refer briefly to the comments made by the hon. Member for Taunton (Mr. Browne). I agree with him that it is disappointing that there has been an increase in the level of irregularities. The figures that he quotes mostly relate to the fact that there is a larger EU following the accession of Bulgaria and Romania. Overall, the levels of fraud that were found by the European Court of Auditors are, as I said earlier, around 0.2 per cent., which is a similar level to that in 2006. We do not name and shame, but we do push for political recognition of member state responsibility as well as Commission responsibility. We also lead the way by taking the initiative and publishing our own statement on the use of EU funds in the United Kingdom. We believe that we have been instrumental in encouraging others to do the same. A number of hon. Members specifically mentioned the UK's position. The hon. Member for South-West Hertfordshire (Mr. Gauke) referred to the UK with particular regard to the subject of the European regional development fund in Merseyside. The Government office for the north-west sent an interim response to the European Court of Auditors in July 2007. It then sent a full response in July 2008 and a further response in September 2008. A reply from the Commission at the end of November 2008 reduced the ineligible amount from £21 million to £2.2 million. Following advice from the Department for Communities and Local Government external legal counsel, a further response rebutting the outstanding issues was sent on 9 January this year and, if accepted, would reduce the ineligible amount to about £1 million, which would be reclaimed from project applicants. I think that that gives an idea of the complexity of some of the existing rules and of how they are interpreted—another point raised by the hon. Gentleman. It also shows our rigorous approach to the recommendations and views of the European Court of Auditors, and to administering ERDF funds. The hon. Member for South-West Hertfordshire also asked some questions about the Commission's integrated control framework. He will be aware that, during our EU presidency, the UK took significant action to create the environment that would ensure that the plan could be success. Measures have already been taken to ensure better propriety and more effective spending, but the programme needs to continue and we shall support that. Several hon. Members asked about international development. I can tell them that the Commission is working very closely with OLAF and taking on board recommendations where fraud is found. We place particular importance on that and, where possible, we have been quick to work through the various European Council committees. We have zero tolerance in respect of fraud, and work closely with the Commission's audit department. I want to reassure the House that we are not weary with this matter. We are certainly not satisfied with the progress that has been made, but there has been some. We believe that a clear need for action remains, and that greater efforts are required from all concerned. The Commission must implement its action plan in full and member states must take more responsibility, especially in the areas of agriculture and structural funds, and budget authority would benefit from making greater use of the ECA's performance reports. We will continue to lead on these matters, and I look forward to the upcoming publication of the second consolidated statement on the use of EU funds in the UK. Question put. The House divided: Ayes 287, Noes 213.