Wednesday, 6 March 2013

Unscrambling the EU accounts


Last week I travelled to Luxembourg to meet the UK member of the EU court of auditors with my colleague Ashley Fox, MEP for the South West.   For the last 18 years the accounts have not had a clean audit.  The EU budget is tax payers’ money, much of it from British purses.  Continually failing audits is unacceptable.  Whether or not this can be sorted out will be a big question in an EU referendum.

Since 2011 the auditors have had no problems with the accounts themselves i.e. the sums do add up.  The problems are  in the underlying payments where “too many are affected by error”.   Auditors estimate that 3.9% of payments do not comply with EU rules i.e. nearly double the 2% level which auditors usually consider “tolerable”.   

The “errors” are invariably not in the money being spent by EU central institutions payments but tend to be how funds are spent in each of the 27 different countries.    

Some examples feel downright fraudulent (payments to look after sheep when no sheep exist) others are mis-interpretation of sometimes complicated rules (a bridge was built but the procurement rules were not followed).  

Value for Money is a different issue. Even if payments have “no error” it does not always follow that the money has been well spent  (that new bridge, does it actually lead to anywhere?). On the other hand there are many examples of spending by EU institutions which pass the audit but are downright wasteful, take the Strasbourg Parliament. 

One East Anglian constituent with first hand experience  wrote “one sometimes had the feeling that once a budget had been allocated it was to be spent”.  This is especially true where money has been pre-allocated to a country or region.  

Furthermore, if we in the East of England have a high priority local project we would  expect our local councillors and MPs to try to do all they can to get the cash out of Brussels to pay for it rather than use local budgets.  Stretching and even breaking funding rules doesn’t just happen in olive belt governments, the UK has been guilty too. 

Currently the only sanction leads to the entire EU Commission being forced to resign, as happened in 1999.  Whilst I and UK Conservatives vote annually for this, the majority of MEPs feel this is too heavy a sanction and vote against.  

What is to be done?  Various EU commissioners suggest increasing the “tolerable” level to make the audit easier to pass.  This would not solve the problems.  

Ideally I would like a root and branch review, reducing the budget to limited areas where international collaboration actually adds value.   But if I can’t get that, then I recommend  to Simplify, Scrutinise and Sanction.

Simplify rules so it is very clear what should be eligible for funding and what is not.  

Scrutiny powers should be given to local MPs or Councillors so money has the same level of care as if funds came from the local council or national budget.  

Sanctions need to be improved so that they are used and targeted.  One reform could  be to give individual Commissioners responsibility for their own department’s spending like in the UK.   

Finally, we shouldn’t shoot the messenger, but we need to listen more carefully to their message and take action. 

2 comments:

Robin Bligh said...

I am a little surprised the error rate is only 3.9%, we often get the impression it is much higher than this. Ensuring a project is worthwhile and not fraudulent is to do with management, once it has been authorised, presumably having followed lax procedures, it is valid expenditure from an audit point of view. What are the sanctions for officials who authorise improper expenditure? We had a similar experience in Corsica where subsidies were given for cows where there was no suitable vegitation (grass) for cows to eat.
Countries are bound to try to extract the maximum funding so the emphasis should be on rigorous approval procedures and sacking officials who by pass them.

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