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Lord Pearson of Rannoch: There is, however, one matter which the new Government could do in that respect, which is to stop the £12 million per annum that this country pays to Spain to repair boats and build new boats to come to steal our fish. That is £12 million more than they give to our fishermen to destroy their boats and their livelihoods.

Lord Whitty: I am not sure on what basis the noble Lord claims that we pay £12 million. Perhaps he will explain that to me in writing.

That slow and difficult process to put the bones on the exchange of letters between ourselves and the Commission and to turn them into regulations here will shortly bear fruit. We are still awaiting the Commission's final opinion on those proposals which were put to it at the end of January. We hope to give the British industry some better news for a change. I have nothing to apologise for in terms of the Government's conduct. The Opposition should be shame-faced about pushing this amendment when they let the fishing industry down for the past 18 years.

Lord Moynihan: I am grateful to your Lordships for contributing to the debate. It is only appropriate to make a few concluding observations on some of the comments made, not least by the Minister. He seemed to rely exclusively on the performance of the previous government as he saw it. He paid no attention to the fact that, whatever may have happened in the election campaign and whatever exchange of views may have taken place over the inheritance of this Government, that is no excuse for the Government.

They said that they would hold up the IGC business if they did not obtain a deal on fishing. They obtained no deal. Their Prime Minister, Tony Blair, told the country, "We certainly have not ruled out holding up IGC business in order to get the right changes to fishing policy in the British interests. Where Britain's interests are at stake, we are perfectly prepared to be isolated". But, oh no, despite the importance he attached to the matter, and despite all the difficulties which the Minister believed that the Government had inherited, they washed their hands of it. By doing so they washed their hands of the interests of British fishermen.

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That is the truth. It is no use the Minister talking about his interpretation of the past. The reality is that at the IGC the Prime Minister failed to obtain a deal. He said that he would be prepared to be isolated in Europe, but he did not support the former government's protocol because no other member state supported it. That was not because it was important for British interests, not because it was important for British fishermen, but because both of those interests could be binned in the greater interest of not upsetting any other member state.

It is no good saying that he did not go to the IGC with a clear mandate and a clear picture of what the Conservative Party would have done in the same circumstances. A clear 10-point package set out the way forward for the British fishing industry in the run up to the general review. The package aimed to insist that the six- and 12-mile limits were not negotiable; to give fishermen more say in policy; to give a further £12 million to decommissioning; to exempt small vessels from regulations; to press the technical conservation measures; to give agency status to MAFF fisheries laboratories; to give the best value from UK quotas by working with the industry; to reject the idea of a single European fleet managed and policed from Brussels; and to invest in fisheries dependent areas.

Crucially--dealing with the point about competition and the relevance of quotas in the context of the policy--the package sought, I thought with unanimous all-party agreement, to ensure that the quota-hopper problem was dealt with once and for all at the IGC. The problem was not to be buried in rhetoric about what had happened during the election campaign, but we were to ensure that the IGC would allow UK quotas to provide an economic benefit to UK fishing communities and not to fishing interests in other member states. That is what the Government went to Amsterdam to achieve and that potentially included pressure to amend the Treaty of Rome to stop the practice of quota-hopping if the problem could not be resolved within the framework of the existing treaty and the CFP. If treaty changes proved to be necessary, the previous government alleged that they would seek them. The current Government ditched them. That is not posturing; that is an accurate reflection of exactly what happened and I have gone into that in detail.

Lord Thomas of Macclesfield: Surely, that is posturing. The noble Lord read out a long list of aspirations. What did his party achieve when it was in government?

Lord Moynihan: We achieved a tough and consistent line by government to ensure that the necessary changes--

Lord Thomas of Macclesfield: But--

Lord Moynihan: No, I have not finished. Will the noble Lord please do me the courtesy of hearing me out? We achieved a tough and consistent line that built up to a package which was widely publicised as our agenda for Amsterdam. I have outlined that package to the House tonight. It was made clear by the former

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Prime Minister, John Major, and his Cabinet and it was on the basis on which we were going not only to the IGC--

Lord Whitty: Will the noble Lord--

Lord Moynihan: In a moment. I can answer only one question at a time. We were going to carry that through from the IGC to the Treaty of Amsterdam. Tonight's amendment does not focus on what happened in the previous government. If the noble Lord, Lord Thomas, is unhappy about the performance of his Government and would like to see us cross sides we would happily take over the reins again. Sadly, I have not had the privilege of debating with the noble Lord during 18 hours of Committee in the past two days. What he will have seen is that we have consistently and without hesitation questioned the Government on a whole range of issues, put to them what have been their failures and commended them where they have succeeded.

The reason why I proposed the insertion of the new clause under Amendment No. 54A is because at Amsterdam this was an area of clear failure. It is for that reason that tonight we are questioning the Government. I have summarised the points I have made and outlined the strongly-held views that we have on this issue. Despite being very strongly pressurised by my noble friends to push a vote on this issue, I shall refrain from so doing.

I thank the Minister for his comments and other members of the Committee for their interventions. We shall reflect on the points that were raised and consider whether this is an appropriate issue to bring back at Report stage and, possibly under strong pressure, move a vote on that occasion. I again thank the Minister for his comments and beg leave to withdraw the amendment standing in my name.

Amendment, by leave, withdrawn.

11.30 p.m.

[Amendments Nos. 54B and 54C not moved.]

[Amendment No. 55 had been withdrawn from the Marshalled List.]

Lord Pearson of Rannoch moved Amendment No. 56:

After Clause 2, insert the following new clause--

Community finances and fraud: report

(" . This Act shall not come into force until--
(a) a Minister of the Crown has laid before both Houses of Parliament a report setting out the implications of the Treaty for the sound management of Community finances and the prevention of fraud in relation to Community expenditure; and
(b) the report has been approved by resolution of each House.").

The noble Lord said: I apologise if the wording of Amendment No. 56 appears somewhat weak to some of your Lordships who may feel that the British Houses of Parliament should not merely have to approve a report saying what the Amsterdam Treaty might do to

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prevent fraud and financial mismanagement in the Community. They might feel that we should be free to withhold the vast amount of money that we send annually to the European Union until we are satisfied that its finances are run as honestly and as competently as our own. That is a very distant prospect indeed, and one which may never be achieved if the EU continues on anything like its present path.

I suggest that that is because the scale of fraud and mismanagement in the Community is simply too large, its perpetration too endemic and profitable for too many recipients and the will to do anything about it too weak. Indeed, the scale of such fraud and negligence is now admitted by the EU's own court of auditors to be around 5 per cent. of its budget, or some £4,000 million per annum.

When I had the honour to sit on your Lordships' European Select Committee a couple of years ago, we feared the figure might have been more like double that. Indeed, there have been no less than four reports on fraud in the Community compiled by your Lordships' Select Committee over the 10 years from 1984 to 1994. I understand that these reports are still regarded as the most authoritative analyses of this vast scandal, however uncomfortable their conclusions.

Perhaps these reports' most depressing finding was the lack of will in the Community to stop the rot. So the reform of fraud is like reform of the common agricultural policy and, indeed the common fisheries policy. It has been talked about for many years but no progress has been made, and one is forced to the conclusion that these problems may never be solved because too many votes in the Council come from people who are doing too well out of them.

The recent annual report from the EU's own Court of Auditors confirms this unhappy position. Amongst other things, it finds that the agriculture compensation scheme regulations have failed to take account of changes in world market prices. This has resulted in unnecessary expenditure; for example, £2.2 billion paid out to arable farmers.

It finds that advances to member and non-member states were accounted for as actual expenditure and substantial funds have remained for long periods in the hands of intermediary authorities.

Then it reveals that the structural funds are riddled with errors which make it impossible to give any kind of sensible evaluation, even of their effectiveness. Finally, it finds quite simply that the member states and the Commission have failed to develop appropriate systems of accounting.

The report makes depressing reading. It carries many examples of lack of supervision and accountability, overpayments, unnecessary subsidies and all the lack of care and responsibility which inevitably occurs when human beings are at two removes from the source of the money they are frittering away, which is, of course, the taxpayer.

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And we should not forget that these criticisms come from the EU's internal Court of Auditors. Six days ago, our own Treasury, notwithstanding its presumable allegiance to the Government's charm offensive in Brussels, had this to say about the court's report:

    "The European Court of Auditors makes few observations about the motivation behind the 'errors'",

and the word "errors" is in inverted commas,

    "in legality and regularity which it identifies".

Another little vignette which helps us to understand the attitude to money of the European Commission--that guardian of the Treaty of Rome--came recently when a Member of the European Parliament, Caroline Jackson, had the audacity to ask the Commission to reveal the net contributions from each member state to the Community budget, a perfectly fair question, one would have thought, and one which the Commission should be proud to answer accurately, especially as it has just been exhorted by the Court of Auditors to produce,

    "clear and simplified financial statements of the Community budget with more accessible financial information".

But the Commission refused to answer the question, saying that the actual amount of money which each member state pays to keep the Community's employees in the style to which they have, alas, become accustomed is really not the point. The point, in the view of the European Commission, is instead all those wonderful, if intangible, benefits which membership of the European Union bestows on its fortunate paymasters, benefits which so far outweigh the mere vulgar money which they contribute as to make those contributions unworthy of analysis or, indeed, disclosure.

It is with this sort of attitude in mind that one has to doubt whether the proposed Amsterdam amendments to Article 209a, now Article 280, will make the slightest difference. One only has to glance at the new bits to see that it is just so much waffle. The new paragraph 1 of Article 280 reads:

    "The Community and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Community through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the Member States".

The best one can say about that is that it is a pious hope, is it not?

We then come to a couple of the original clauses, with which I need not trouble the Committee, one of which exhorts member states to counter fraud affecting the financial interests of the Community in the same way that they counter fraud affecting their own financial interests; and that does not give much comfort.

Clauses 4 and 5 of the new article are equally ineffective, I fear. They state:

    "The Council, acting in accordance with the procedure referred to in Article 251, after consulting the Court of Auditors, shall adopt the necessary measures in the fields of prevention of and fight against fraud affecting the financial interests of the Community with a view to affording effective and equivalent protection in the Member States. These measures shall not concern the application of national criminal law and the national administration of justice".

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That is just as well.

Clause 5 states:

    "The Commission, in cooperation with Member States, shall each year, submit to the European Parliament and to the Council a report on the measures taken for the implementation of this Article".

So the good news is that we are to have annual reports, which will no doubt be just as anodyne as these clauses which will have inspired them.

At this stage in the debate, European integrationalists usually advance the theory that the only way to cut out fraud against the Community is to give the Commission power to root it out in all member states. Bad workmen must be given newer and sharper tools. That plan would mean such a massive extension of what is known in the jargon as Community competence, which actually usually means incompetence, that it is luckily unacceptable to our own Government and other Governments.

A solution could be at hand--a solution that has always been the only sure way of avoiding fraud. That is, to remove the money from the reach of the fraudsters. I make that suggestion because some of us have come to see that there really are not any benefits at all from our membership of the European Union. The widespread pretence that there are any such benefits is perhaps the biggest fraud of all. That discovery is not just the product of a rabid Euro sceptic mind. It is shared by a growing number of British people and has been well articulated by my right honourable friend Mr. Norman Lamont, who had the educating experience of being our Chancellor of the Exchequer when the foreign exchange markets were good enough to eject the United Kingdom from the exchange rate mechanism in 1992.

All frauds depend on two things--access to the cash and sleight of hand. One of the smoothest sleights of hand, through which many of our people have not yet seen, is the pretence that we get any money at all from the European Union. We do not. We are net contributors. So all the talk about our poorer regions, research budget, farmers or any other British interest being blessed by European Union munificence is, in fact, so inaccurate as to be dishonest.

Despite the Commission's refusal to give us the figures, I understand that our contribution to the budget amounts to some £11,000 million per annum. Of that, the Community gives us back some £7,000 million per annum, provided of course that it is spent on projects which are designed to enhance the Community's own image--thus helping to propagate the fraudulent claim that it is the EU's money, for which our people should be grateful, when it is not. It is our money, spent through the Community's profligate and corrupt filter. If we spent it all ourselves, we could make far better use of it--not only the £4,000 million a year that we give the EU, when no doubt it is largely wasted, but our £7,000 million which it gives back to us.

As I have indicated, this is the sort of story which makes some of us see that there is really no longer any point in our staying in the European Union; or that there really is not any point in the European Union continuing at all. There are other problems which contribute to that view. The common fisheries policy, for instance--

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which we have just debated--is one of them. But perhaps this is not the moment to rehearse those problems.

I come back to where I started, to say that the only way sure way to stamp out fraud and maladministration in the Community is to withhold our contribution until we are satisfied that the disease is indeed cured. I fear that the Government are unlikely to take that obvious course, so I hope that they will see the amendment as a useful step in the right direction.

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