David
Sumberg MEP
Date: 10/11/2008
North West Euro MP David Sumberg is reacting angrily to reports that the EU’s budget has again revealed widespread fraud.
Mr Sumberg was commenting on the annual report on the EU's budget by the European Court of Auditors (ECA). The budget is worth around £100bn a year, into which the UK pays more than £10bn a year. In its report, the Court draws two main conclusions:
For the 14th consecutive year, there are substantial irregularities in the EU's budget owing to fraud and mismanagement. The ECA said that "The Court's audit opinions on the EU accounts and the transactions underlying these accounts are similar to previous years. The estimated error rates in some spending...have fallen - however not enough to affect the overall picture." Of the samples undertaken by the ECA, 54% of the Structural Funds projects and 31% of agricultural transfers were subject to "errors" in 2007.
While there are "weaknesses in the accounting systems", the Court notes that the Commission has made improvements in its internal book-keeping.
"While the Commission's improved book keeping is a step in the right direction, the most fundamental flaws remain: the EU's budget is misspent, badly targeted and wide open to fraud. There has hardly been any improvement in terms of the actual amount of taxpayers' money that is being wasted on fraud," said Mr Sumberg.
The budget is dominated by two failing policies which even the current UK Government is essentially opposed to: the Common Agricultural Policy, and the so-called Structural Funds. The sheer size and complexity of these two top-down spending programmes means the EU's budget is highly prone to fraud and mismanagement.
Moreover, funding that may be classified as legal is often spent on projects that are of little or no economic value.
To illustrate the wastefulness of the EU's budget, the Think Tank Open Europe has published a list detailing 100 examples of EU waste and fraud. The list can be obtained here:
Key areas still open to fraud
Agriculture
The Court concluded that agricultural spending remains "affected by a material level of error of legality". Out of 196 transactions of agricultural subsidies it examined, 61 were affected by error. 40 of these errors (two thirds) were classified as 'serious'.
The Court noted that rural development expenditure, which amounted to 12.4 bn euros in 2007, is "particularly prone to errors" because of the complexity involved in complying with EU rules.
The Court also pointed to problems with the Single Farm Payment Scheme (55% of CAP expenditure), which essentially pays subsidies to farmers based on land or historical earnings, rather than levels of production. The Court concluded that little improvement had taken place compared to 2006, noting that in Italy and Greece, for instance, four out of five transactions audited contained errors, some of which led to significant overpayments.
Structural Funds
The Court found that for the Structural Funds - which were worth 45.5bn euros in 2007 -54% of the funded projects contained "errors". In terms of "financial impact" the Court concluded that around 11%, or 4bn euros, of the total amount reimbursed to member states in 2007 should not have been reimbursed, compared to 12% in 2006