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Monday, April 07, 2014

MEPs miss an opportunity to do their job

Last week, the European Parliament had the opportunity of doing what most other elected bodies in the free world consider a core task: making sure taxpayers' money is spent in a transparent, accountable and regular way.

MEPs were asked to provide discharge to the 2012 EU budget, in which according to the European Court of Auditors, the rate of error rate had increased to 4.8% compared with 3.9% in 2011 and affected every area of EU spending. The COA's own benchmark for acceptable levels of error is 2%. Of the total €138.6bn spent by the EU in 2012, €6.7bn was affected by errors.

However, MEPs voted to approve the discharge report, drafted by German CDU MEP Markus Pieper, with 488 votes in favour, 121 against and 10 abstentions - effectively signing off the budget.

The report admits that: 
"For the 19th time in succession, the Court of Auditors was unable to grant a positive statement of assurance regarding the legality and regularity of the payments underlying the accounts". 
(Yes, we know the Court of Auditors signed off the Commission's own accounts, so no need for any Commission officials reading this to make that well-worn point). The MEPs provided various justifications for nodding through the budget despite the errors, including:
"a distinction must be drawn between errors and fraud, and [the EP] considers that, in the vast majority of cases, errors stem from administrative mistakes, many of which are linked to the complexity of Union and national rules, which can be corrected".
They have a point. Errors and fraud are not the same thing - though the line can be awfully blurred. However, we doubt the average taxpayer would be entirely content with that explanation. The bottom line is that the cash should not have been paid out. As we've argued before, the high level of error is primarily due to the nature of the EU budget itself - it's size, complexity, confused objectives etc - and this will persist until it's fundamentally reformed.

What's interesting about the MEPs' behaviour is that they are a lot less forgiving when it comes to the spending by European Council/Council of Ministers - i.e. the member states.The EP decided to postpone the approval of the Council's accounts "because of its lack of cooperation".

EU Anti-Fraud Commissioner Algirdas Šemeta reacted to the EP's decision by saying that "The EU budget is the one of the most transparent and accounted for public budgets in the world", while arguing that "For the past 5 years, the overall error rate has been consistently below 5%. In other words, over 95% of all EU spending is in line with the rules."

The Netherlands, Sweden and the UK- three of the biggest net contributors to the EU budget collectively responsible for 20% of the funding - take a radically different approach. They again voted against discharge in the Council of Ministers, regretting that
"the overall error rate in recent years has increased to 4.8 %, being significantly above the acceptable threshold of 2 %."
Surprisingly, Labour and Lib Dem MEP, but also Dutch VVD MEP Hans Van Baalen voted against the position taken by their member states in the Council.

Not inspiring confidence.

11 comments:

Average Englishman said...

Duhhh.
Situation normal.

DuncanPT said...

There may be a difference between error and fraud - but as you say, the current issue is whether taxpayer's money has been properly spent and the answer to that is "we don't know".

If the rules for spending are so complicated that errors creep in, isn't the answer to make the rules tight but simpler to understand? Surely that is not beyond the wit of such clever people as the eurocrats?

I'm tempted to suggest that allowing a situation where a high error rate is regarded by the EP as excusable because of difficult rules, almost allows an unacceptable level of fraud (which they cannot at present distinguish) to be overlooked. That is why it's important to reduce the error rate overall - so that the level of fraud becomes clear.

I speak as a former corporate auditor.

Denis Cooper said...

"... errors stem from administrative mistakes, many of which are linked to the complexity of Union and national rules ..."

Of course they will, because half the time people have no idea what the rules are until some helpful member of the EU priesthood explains it to them, usually with a heaped spoonful of derision for their ignorance ... but then I recall what the then French Foreign Minister said after the Irish rejected the Lisbon Treaty in their first referendum:

"Mr Kouchner told reporters that two factors were damaging European citizens’ faith in the EU: the first, economic uncertainty and fears related to globalisation; and the second, an inability to understand the EU’s complex institutions and legal arrangements.

“No one understands the institutions and no one’s interested. No one understands anything, not even me,” he said. “My feeling is that we need to return to fundamentals, improve transparency and give more confidence to people. A Europe of sincerity and openness will be an effective Europe.” "

Of course his lack of understanding hadn't held him back from issuing threats against the Irish during the referendum campaign.

There is a strong suspicion that the complexity is in part quite deliberate as it helps advocates like Nick "7 per cent" Clegg to bamboozle the public.

And they have been quite successful in that: only a few years ago, nearly four decades after we had signed up to the Treaty of Rome, some otherwise well educated person confidently told me that our Parliament wasn't forced to implement EU directives, they were only advisory.

Quite a gap in understanding there, and an even bigger gap before he would understand that not only have EU directives always been legally binding but EU regulations have always automatically become law in this country without the need for our Parliament to lift a finger.

Freedom Lover said...

When EU countries' private citizens & business people fail to balance their commercial budgets, they can be - & often are - severely punished for fraud & financial irregularities. So also should all on the EU's payroll & recipients of EU largesse be if they are similarly guilty. A regular stream of such fraudsters going to prison would soon bring these EU-related frauds to an end!

christhai said...

In EU "Accounting" there is no real difference between error and fraud.

How very true. This must account for the veritable fortunes, even in Billions of euro, acquired by some if not all Commissioners and DGs.

In the "Normal" (that is outside the EU) World, they would be investigated before being charged.

Then after their day in Court they would be sent to jail.

Ah - but wait - after the fraud of the Santer Commission, the Barroso Commission passed "Laws" which protect them from ANY crime.

Indeed a Commissioner may not even be "investigated".

And we wonder where these missing Billions disappear to?

Rik said...

Kicking Clegg is yesterday's news.
This seems like an excellent opportunity to start the hunting season for the Labour voter.

Van Balen is an indication that Dutch VVD is possibly only reacting on Wilders and Co and public opinion. The guy is borderline competent (to say it friendly) and not anywhere near a votermagnet hard to see why he is their EP no 1.

We start to see now all sort of 'academic' research about the financial advantages of the EU. However all seem to forget to mention that it is only the freetrade part that is fincancially attractive. The rest simply isnot.
A bit strange that 5-10% of the organisation is creating all the advantages while 90-95% has basically no financial added value and nobody is mentioning that.

Denis Cooper said...

Rik -

"Kicking Clegg is yesterday's news."

Not really, not while there is any chance that his rotten party might get even a single MEP elected.

At present the opinion polls say they will get 8% or 9% of the votes, which is far too high and would probably be enough to get at least one of them into the EU Parliament to betray us.

Rik said...

@Denis

Not agree with that.
The best support for a party like IP is the media attention people like Clegg (national level) and Reding (EU level) get.
They are the 'living proof' for the potential UKIP voter that something has to be done.

From another angle Clegg, Reding&Co mobilise the traditional not voter on behalf of IP. While the people that support these 2 very unlikely will ever vote for a party like IP.

Again from another angle. You need media attention. Farage by himself gets already alot of that. Partly/mainly because he is different from the standard politicians.
But having a bit of a fight generates considerably more media attention.
And all this media attention are basically free TV commercials for UKIP.
As long as Farage doesnot move into controversial waters himself. And I donot see him doing that. Looking at the general public opinion the traditional politicians are more controversial than Farage. And it is controversial for his potential voterbase (not for Guardianistas or even the public in general) and a lot is possible there. Wilders who is largely fishing in the same sort of pond as Farage could say 'Maroccans out' and it might not have any effect for his backing and Farage will simply not do that sort of thing.

From again another angle. IP is at the end of the day a protestparty. If you look realistically Tories are not so much different now. Even IP admits it will take years of negotiation to get out of the EU.
Basically the main difference is that IP is the original, the 'real' thing. With Clegg (but also with Mr Ed) he has a much better target as the debat apparently did clearly show and makes it easy to distinguish IP clearly from these 2. You need clear and relatively simple differences. That is why AfD is not properly working.
IP should now clearly go for the Labour voter. Their position vis-a-vis the Conservatives has distilled itself more or less out now. The good thing is that Clegg isnot a coward like Mr Ed (who is dodging nearly all controversial issues).

You need a platform for change. Whether an (direct) exit a you probably propose or a large reform (like OE does).
But you have to work on that first. And you donot get that from one day to the other. Basically most UK voters simply still miss most of the relevant facts. I do believe a platform in the UK is there in potential but it should be a sustainable one and one that makes a difference in the polls.
Clegg is basically helping to establish such a platform. Which opens a no-lose opportunity for Farage (also against Labour). They run away it is bad for LibLab. They get into a debate they lose (bad as well). Unless Farage really messes the debate up it is hard to see how he can lose this one. In the UK context (and in a lot of other coun tries as well) any real EU-phile will simply always get his/her backside kicked simply because of the low approval rate, disconnectiveness with their voters, too many things gone wrong and the inability to correct them. With on top of that thechnically way too complicated to explain in detail.
It is not a 50/50 discussion. And certainly not a 70/30 pro EU as many EUphiles still think. It is probably a 30/70 or so (impossible to win under normal circumstances).

Denis Cooper said...

But at the end of all that, Rik, I still hope that Clegg's party will end up with zero MEPs.

Rik said...

Denis,

Better win the war than this battle. Crap leadership at the otherside only increases the chance of victory.
Eg Putin will be more than happy with Obama/Kerry and the EU jokers at the other side. There always will be some sort of leadership at the other side of the table. So when they are failures like now let them mess things up further.

For people like yourself every Europhile disconnected from ordinary people is a godsend.
Hague digging himself deeper in the Ukraine disaster. Cameron not firing a certain minister. Clegg defending everything EU.

IP looks a bit dodgy in the eyes of a lot of people. And they are probably right. Hard to see where they get the management team. Always a question if they end up with MPs as well.
You need a big part of the voter market being so fed up with traditional politics that they basically donot care anymore. But simply want to try something else. Everything is better than....
Something else that has clearly its disadvantages but as the traditional alternatives have even more they still get the votes. You need mainly irritation for that.
That is basically the recipe of every protest party or populist party or how you ever want to call them.
And all 3 competitors of Farage are easy to hate and are actually hated by a lot of people. Not only their usual competitors (other side of the political spectrum) but also by their traditional backers.

Zero Lib MEPs would at the end probably be a disaster for IP. Likely Clegg will be kicked out and anything is better than Clegg for the party. Or at the same time worse for IP.
Even Clegg's twin (non-identical ones) would be a huge problem. Every new guy/gal gets a bit of credit to start with and possibly if they are wise they take a new leader that doesnot look so disconnected. This new guy will again have to burn his credibility before he is at Clegg level again. Why replace a guy that irritate your voters now by somebody for whom that will take say 1,2,3 year.

Same in Brussels. Look at the whole bunch Juncker, Schultz, Vanhofstadt, Reding again a godsend. All people anyone who could vote IP already hates (or close to that). They not fist have to rubbish their credibility. Which as Obama shows can take years. Took him 5 year and there are even now still believers.

Denis Cooper said...

No, Rik, every LibDem not elected as an MEP is a LibDem deprived of a public platform which he would use to mislead the UK electorate, and the same with councillors, and that would feed through to the general election campaign. They can't all be taken on as special advisors to Rumpy-Pumpy, like the Labour eurofederalist Richard Corbett after he failed to get back into the EU Parliament in 2009. Can they?