Fight Against Fraud

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Mr. Hopkins: I interested in the hon. Gentleman's current line of argument. I am concerned about differential levels of fraud between different EU member states. If OLAF discovered a preponderance of fraud in one or two specific member states, might it not cause political difficulties for the European Union? It could lead to pressure being applied on OLAF not to be too rigorous.

Mr. Bercow: I am not flummoxed, but intrigued by what the hon. Gentleman said. He is in many respects charitable, but his last observation was not. He is cheekily opening up the possibility of a political motivation for the effective frustration of the work of the anti-fraud office within the European Union. If the hon. Gentleman asks me whether the thought had occurred to me, I will confess that it had. I hope that he is wrong and that there will be no such political motivation. I hope for a genuine determination to crack down on a problem that afflicts all EU taxpayers, though some to a greater degree than others. The idea that people in member states where fraud is extensive might favour the suppression of anti-fraud investigations that could save their own taxpayers money is anathema to me as to the hon. Gentleman. I hope that his suspicions are wrong, but I fear that they are right.

At the risk of gravely embarrassing the hon. Gentleman—I have made a regular practice of doing so recently—and reducing to zero what limited prospects he, an outspoken bastion of old Labour, has of advancement within the ranks of new Labour, I must tell him that he anticipated a point that I was about to make. Obviously, we are both interested in comparing the levels of fraud and misappropriation

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between one member state and another. I shall be tempted to return to the point again soon. The trouble with the hon. Gentleman is that he tends to steal my best lines. Most of the time he has thoroughly sensible things to say.

In 2000 a second investigation was undertaken into allegations of serious irregularities in possible breach of European Community public procurement regulations and in the use of European regional development fund and European social fund moneys. What is the upshot of the investigation by OLAF and the four different competent investigative authorities in the UK that were involved?

I move on to the Commission's annual report on the protection of the Community's financial interests and the fight against fraud in 2000. The Minister will be aware that pages 33 to 68 cover several important administrative changes to checks and inspections. Many measures relate to other member states and I will therefore not dwell on them, unless provoked. However, those appertaining to the United Kingdom are a particularly fitting concern of this Committee.

What has been the impact of section 126 of the Finance Act 1999 allowing interest to be charged on customs debts in accordance with regulation 2913/92? Is the Treasury satisfied that the guidance note from the former DETR to all Government offices in the regions, regarding the implementation of regulation 2064/97 and covering 5 per cent. checks on European regional development fund expenditure, has been heeded in practice, and what is the evidence for that?

Is the protocol between the former Department for Education and Employment and the European Commission providing assurances on the level of control and the framework of the European social fund now operational and if so what impact has it had? What assessment has the Minister made of the control plan for objective 5B and how has it impacted on the allocation of funds in our country? Is she content that all fraud investigations are, as intended, now undertaken within one national investigation service?

There was a slightly confusing reference to the need for local investigative work still to take place, alongside the primacy to be attached to the national investigative service. I presume that it is intended that the overarching authority is vested in the national service and that local outlets that are charged with research feed into that national service. That is merely my surmise and I would like the authoritative factual verdict from the Minister herself. Can she explain the reference on page 44 of the Commission document to

    ''Multi-disciplinary co-ordination: customs accounting systems aimed at a whole trader approach to control and debt management''?

None of us needs to be embarrassed at this point, Miss Widdecombe. It is conceivable that even you are a little uncertain—you may not be and you may reprimand for daring to suggest it—as to the meaning of customs accounting systems that are

    ''aimed at a whole trader approach to control and debt management.''

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If you are thoroughly seized both of the concept and its practical operation and result, I can only say, good for you. I am not so well advised on the matter. If the Minister can release me from my woeful ignorance about that I shall be doubly grateful to her.

Has the merger to form a single paying agency now taken effect as planned, and is it working smoothly? What has been the impact of the relaunch of the freephone fraud line by the anti-fraud unit of the Intervention Board Executive Agency? It is hotting up now, as they say, or as my English teacher said back in 1977 at page 321 of ''Great Expectations'', just as we were all falling asleep. I do not want that fate to befall members of the Committee. Although there has been some reordering to take account of the earlier question session, they will be pleased to know that I have reached no. 44 of 50 questions. I hope that they will not hold it against me if I try to finish before long.

Are the promised regular meetings of an inter-departmental group, previously led by MAFF, to discuss regulation 595/91 to co-ordinate investigative work on the common agricultural policy fraud taking place? Can the Minister assure me about that? Who is involved? What resources in time or staff terms have been allocated to that exercise? What have been the practical results of the internal audits undertaken by the Department for Education and Skills on European social fund expenditure? As dairy products from New Zealand are top of the list of 25 products most frequently the subject of fraud within the EU and the Commission noted in 2000 the steep rise in that—its words, not mine—what will be done and when to arrest and reverse that tide?

Reference is made on page 84 to cases when recovery fails through the negligence of a member state and the fact that the Commission might decide in such circumstances to invoke procedures provided for in three different EU regulations to charge the member state. Has that happened?

One does not refer to officials in this Committee: were I to do so, I am sure that I would be subject to the sternest ministrations of the Chair. I thus refer to no particular individual, but I just saw a mirage of a wagging pen. I just wondered whether it was mooted or bruited or starting to foment in the Minister's mind that she could respond to most of these questions later. I would be delighted if she could reply to as many questions as possible now. If she cannot, I would like some commitment that she will reply quickly in writing. She knows that I am keen to progress and conclude my investigations. In respect of three different EU regulations to charge the requisite member state for an irrecoverable debt, has any member state in fact been charged? If so, can we have details of individual cases?

We are rightly proud in this country—and here I suspect consensus across the Committee—that both our public and commercial life is relatively free of corruption in comparison with many other countries. Will the Minister provide me, the Committee and—though I risk discriminating against him by so saying—the hon. Member for Luton, North, a snapshot of the level of fraud committed by British

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individuals and organisations? Will she go one step further and provide some comparison with the performance of other EU member states? I ask not just to knock others or boast about ourselves, but because it is important to know where the problem principally lies.

The hon. Gentleman's suspicion that anti-fraud procedures will not be rigorously invoked—because people have something to hide and would prefer it to remain under the carpet—may be unfounded, but I fear that it might prove all too well founded. We must know the position across the European Union. An EU league of shame on fraud, corruption, misappropriation, waste and negligence should be published. Will the Minister press for such a league table? Does she agree with the hon. Member for Luton, North and me that such a development is desirable? It would act as a form of competitive stimulus to the principal offending countries to do better. It is a stick, but carrots could be offered, too. That would have much to commend it.

I know that the Minister does not want to lose her reputation for robustness in preserving the good health of public finances. What applies in this country should also apply across the rest of the European Union, especially when joint resources have been pooled.

To the enormous relief of the Committee and probably of you, Miss Widdecombe, I shall conclude. The Minister has adopted a constructive approach, which is appreciated and respected. As she said, measures are being taken. Nevertheless, a huge task lies ahead in identifying and counteracting the spiralling cost and incidence of fraud across the European Union.

Will the Minister press the Commission more effectively to use its existing powers before clamouring for more? Does she agree that complex rules and a labyrinthine decision-making structure can be the enemies of fair play in the EU? Does she acknowledge that, far from stemming the flow of fraudulent behaviour, such rules and structures all too often act as a green light to the sophisticated professional fraudster? The Opposition's, the Government's and the European Commission's fight must be against those who purloin resources that are not theirs—resources that should be used to improve the lives of the law-abiding majority of citizens throughout the member states of the European Union.

5.54 pm

 
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Prepared 12 February 2002