Richard Ashworth MEP: EU accounts debacle enters its unlucky 13th year

Richard Ashworth, MEP for the South East and member of the European Parliament's committee on budgets, explains what went wrong with the EU's accounts.

Even before the European Union's Court of Auditors delivered its verdict on the EU's accounts on Monday night, I could have told you what it would say. For the thirteenth year in a row, the EU's accountants felt they were unable to give a positive statement of assurance.

Trust in the integrity of the accounting procedures is a vital foundation stone of any democracy. If the people don't have confidence in the veracity of the governing institutions of Europe then we begin to resemble a banana republic. I would like to explain in a little more depth why the auditors came to their decision, and some of the steps I have been advocating that will enable us to move closer to ending this charade.

Firstly, there is the issue of inadequacy of internal controls and the regularity of the transaction the EU conducts. The court makes reference to administrative errors, misapplication of funding and the failure to follow correct budgetary procedures. While the auditors rarely actually refer to fraud, not having adequate controls can leave the Commission vulnerable to accusations of corruption.

But the comments above are usually as far as the Court can go – because they can only comment on the transactions they can see, and that’s a mere 26 percent of them. 74 percent – the overwhelming majority – of transactions are carried out by the national governments and their agencies. For example, in the UK a large amount of EU money is spent by Defra. If you’re one of the farmers I recently met still waiting for their 2005 CAP payment, you will not be filled with confidence! The Court of Auditors are unable to scrutinise these accounts and, while that does not mean each of them are cooking the books, it does create a lack of transparency and accountability we would expect.

Cast your mind back to 2005, when EU leaders signed up to the seven year budget deal. The European Parliament threatened to block the whole budget unless the national governments signed up to an ‘Interinstitutional agreement’ which contained a commitment to providing a mechanism for independent self-certification of the transactions each member state carries out on behalf of the EU. To date, a few countries – including the UK – have made suggestions about how this may be achieved, but no real progress has been made towards honouring this pledge.

A few months ago, frustrated with the glacial pace at which the Commission and Council of Ministers were moving on this matter, I wrote to the Commission asking for a progress update. The response was far from encouraging. Reading between the lines of what they were saying, the earliest a system of self-certification could be up and running would be 2010, but because the auditors work two years in arrears, that would mean 2012 would be the earliest we might see a positive declaration of assurance. After 18 years, that will simply not be acceptable. Although the bulk of the criticism for this ongoing debacle rests with the governments, we must not forget that overall responsibility for the budget rests with the European Commission. Both institutions must attach a far greater urgency to solving this problem.

On Monday night, when the auditors first presented their findings, I was critical of them as well. It is always helpful to know that the auditors must qualify their statement of assurance, but the auditors provide us with no information that may help us resolve the problem. This was best illustrated last week when the BBC’s Europe editor, Mark Mardell was putting together a piece for the 10 o’clock news. His producer called me asking for some specific examples of irregular spending highlighted by the auditors last year, which they may be able to film to illustrate the story. Unfortunately, I couldn’t really help them because – apart from the odd broad mention of olive groves – they rarely give specifics. The entire multifaceted European Union budget is tackled in a blanket approach, which gives us no clue as to where the real weaknesses lie. This approach is like saying your car has failed its MOT but not telling you whether it’s the lights, the brakes or the engine. Unless the auditors tell us in depth which areas are worse than others – while naming and shaming the agencies and individuals who misspend our cash – we as elected politicians will struggle to know how to resolve it.

For me, the debate about the EU’s financial priorities and the transparency of its accounts is an integral part of the Conservative agenda of making the EU do less but do it better. With the European constitutional debate, the EU has focused its blinkered attention on forcing integration, yet it has failed to address issues that matter to the British people. Knowing that our governing institutions are not misspending their hard-earned cash must be up there among the priorities of the voters, and for that reason, the lack of urgency displayed is totally intolerable.