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Tuesday, November 06, 2012

Deja vu anyone? EU auditors refuse to sign off EU spending for 18th year running

This morning, the EU’s Court of Auditors published its report on the EU’s 2011 accounts. Although the auditors concluded that the Commission’s accounts are reliable, they also found that the actual spending was “affected by material error”, and for the 18th year in a row they refused to sign off on it.

Here are the key points:

Total spending in 2011 was €127.2bn, of which 3.9% - or €4.96bn - was “affected by material error”. In 2010, the corresponding figures were 3.7% and €5.38bn, meaning an increase of €580m in the amount of erroneous spending.

Breaking down the budget into policy headings, we see that only the areas of External relations, aid and enlargement and administrative spending were deemed to be “free from material error”, i.e. an error rate of below 2%. For the other policy areas:
Agriculture: market and direct support
Total Spending = €43.8bn
Estimated error rate = 2.9%
Erroneous Spending = €1.27bn

Rural development, environment, fisheries and health
Total Spending = €13.3bn
Estimated error rate = 7.7%
Erroneous Spending = €1.02bn

Regional policy, energy and transport
Total Spending = €33.4bn
Estimated error rate = 6%
Erroneous Spending = €2bn

Employment and social affairs
Total Spending = €10.2bn
Estimated error rate = 2.2%
Erroneous Spending = €0.22bn

Research and other internal policies
Total Spending = €10.6bn
Estimated error rate = 3%
Erroneous Spending = €0.32bn
The Court also found that controls over 86% of the EU budget were only "partially effective".
The Court also highlighted a few practical examples of how such errors were made. Here are a few examples from the report:
  • A farmer was granted a special premium for 150 sheep. The Court found that the beneficiary did not have any sheep. The corresponding payment was therefore irregular.
  • In two Member States Italy (Lombardia) and Spain (Galicia), the Court found cases where ‘permanent pasture’ reference parcels were recorded as being 100% eligible despite the fact that they are fully or partially covered with dense forest or other ineligible features.
  • European Social Fund - one of the so-called structural funds - gave money to a commercial association, as support for its activities, which included advising small and medium-sized enterprises (SMEs). The costs of several staff members of the association were charged to the ESF project, although evidence supporting the charging of their time to the project could not be provided. The Court considers that the project staff costs have been overcharged by 60%.
  • A beneficiary from the EU's research funding pot declared overheads amounting to €366,891 and included the indirect costs of all its departments while only considering the research personnel as an allocation key when charging these costs to research projects. This resulted in non-related costs being charged, leading to an over-claim of €180,670.
Vitor Caldeira, the ECA's chairman, is quoted in the Telegraph as saying that auditors had "found too many cases of EU money not hitting the target or being used sub-optimally", an argument we have also made repeatedly, not least in recent reports on the EU’s largest spending areas – Regional and Agricultural policy. Caldeira concluded that: 
“With Europe's public finances under severe pressure, there remains scope to spend EU money more efficiently and in a better targeted manner. Member states must agree on better rules for how EU money is spent, and member states and the commission must enforce them properly. In this way, the EU budget could be used more efficiently and effectively to deliver greater added value for citizens." 
We couldn't have put it better ourselves. Brussels needs to get its own house in order (albeit many of the faults lie with national managing authorities) rather than demanding ever more money from European taxpayers.


Rik said...

Good point to make part of the budget negs. It is clearly something that needs improvement and substantially anyway from an EU perspective (and I donot see them doing it by themselves).

Furthermore by starting next to the budget issue other more sympathetic ones for non-UKers will make it easier (and you got change)like:
-proper audits;
-follow up and supervision (10% over budget 2012 is simply unforgiveable);
-CAP (miss the r, but it is officially not in it) and the relation with lower UK contribution;
-regions (as OE);
-research (they are planning to subsidise dysfunctional (mainly French of course) carmanufacturers from that budget.

Partly bring in Balls 2006 or so paper. These look pretty good (mentiones all the main points) and it makes support by Labour more likely/stronger. Which will increase the neg position.

Rollo said...

Deja Vu all over again. We have a national audit office; if any spender of public funds in the UK failed to audit their accounts, they would be called to account. Why does the NAO not simply ban paying any money at all to this corrupt organisation until they can account for funds previuosly paid?

Anonymous said...

There is an answer to the budget demand. Pay what is demanded less the lost amounts. That should concentrate a few thieving minds.

Dr R D Ogilvy said...

I received many R&D grants from the EU Commission over a period of 30 years. Believe me, the EU is corrupt, inefficient and undemocratic in the way money is allocated. It does not surprise me at all that the auditors refuse to sign off the accounts. For the EU to ask for an increase in its budget is breath-taking arrogance. Fraud is not "material error"!

Gosporttory said...

Fully agree with Rollo, Anonymous and Dr. Ogilvy.

However, it is only a matter of time until the British people get the very long overdue referendum on whether we are prepared to continue to subsidise the ever profligate corrupt undemocratic EU gravy train.

I trully believe that it is only a matter of time for us to have this long overdue right after my party loses the next general election due to increasing numbers of us life long Tory members voting UKIP. The majority of the British people have voted time and again in opinion polls confirming that we all want out of the gravy train.

It is so very frustrating to see Cameron sucking up to Liberal Socialists who now have a lower national support that UKIP in the opinion polls!!!!

Anonymous said...

What is perplexing is that the Liberal Democrats sit in the European Parliament with the Irish Fianna Fail Party, a party that twice tired to abolish Proportional Representation, a policy the Liberal Democrats consider of prime importance. Fianna Fail also persecuted Irishmen who fought against Hitler's Germany and at the same time gave refuge to several war criminals from Germany, France and Belgium. Perhaps the Lib Dems like Fianna Fail's internationalism.