The Farage allowances episode is primarily a sign of a fundamentally broken allowances system

The Times today uses the news that Nigel Farage is to be investigated by the EU’s anti-fraud office OLAF, following a complaint from an ex-Ukip official that £60,000 of EU allowances paid into his personal bank account have gone “missing”, to attack the “fraudulent prospectus” that he is “the politician who is not a politician”.

The chief allegation is that:

"The Ukip leader has received £15,500 a year from the EU since at least 2009 to pay for the upkeep of his constituency office, a small converted grain store near Bognor Regis, according to transparency reports filed on the party’s website.  

However, the grain store was given rent-free to Mr Farage by Ukip supporters 15 years ago. Utilities and other non-rental costs amount to no more than £3,000 a year, according to the former office manager, leaving about £12,000 a year unexplained."

The paper also notes that Mr Farage “also revealed that he used a proportion of his [General Expenditure Allowance] to pay more than £1,000 a month towards a controversial second EU pension scheme of which he was a member between 1999 and 2009.”

We looked at this additional pension scheme back in 2009, when it closed to new members, and it was controversial for two reasons. Firstly, it was two-thirds funded by taxpayers and, second, the system relied on MEPs being honest enough to fund the shortfall in their allowances out of their own salary. Credit to Farage for leaving the scheme - but being part of it in the first place doesn't reflect well on him (though he's one of many, many MEPs from all parties who were or still are).

Whatever the rights or wrongs of Farage's actions, this illustrates that the EP's allowances and expenses system is still miles away from what taxpayers should accept. The General Expenditure Allowance is notoriously vulnerable to abuse because it is generous, has a wide list of potential uses and does not require MEPs to produce receipts. The Times' leader itself admits that "It is probable, even if these allegations prove to be true, that Mr Farage has done nothing illegal".

Predictably Farage's response casts him as the victim of a "politically motivated attack from what is the establishment newspaper." The general expenditure allowance, he said, "is given to every MEP and we can spend it how we want to," adding:

"We have used the money to promote the cause of Britain leaving the European Union and we have done that unashamedly"

It is right that Nigel Farage is subject to proper scrutiny and that investigations are carried out if he has a case to answer, but there's still no proof he has done anything illegal. And whether singling out Farage will actually help or hurt his cause remains to be seen. However, what's clear is that the EP's allowance system must urgently be reformed.

The EP allowances system is something that we'll most definitely return to.

Sign In, Sod Off... and Slap!

SISO? What could this mysterious four-letter acronym stand for? A complex and bureaucratic way in which MEPs claim expenses back from the European Parliament? Hardly. SISO stands for 'Sign in and Sod Off'.

MEPs receive various forms of allowances (and some expenses), one of which is the daily allowance, intended to cover expenditure on food and accommodation for every day that they are physically present in the European Parliament, be it in Brussels or Strasbourg.

The idea, of course, is that they do work. However 'SISO' involves MEPs rocking up at the EP - signing in - a pre-condition of claiming the €300 of daily allowance - before promptly sodding off without doing any actual work. That's not exactly how the daily allowance was intended to be used.

There have been cases of this practice being captured on film in the past, and while it always makes for hilarious viewing, it remains a PR disaster for a body already struggling with legitimacy.

We hadn't heard about any cases of SISO for some time, so we thought the practice might have stopped. Alas, that might not be the case. At his own peril (as he soon came to find) GeenStijl reporter @TomStaal, decided to take a trip to European Parliament to see for himself. But Staal got a lot more than he bargained for...

The video below shows Staal confronting two MEPs, Czech MEP Miroslav Ransdorf (from the EP's far left GUE group) and  Italian MEP Raffaele Baldassarre (of the European People's Party) after the two have allegedly signed in and left straight away.

Now, we must stress that we haven't seen the whole chain of events and since the MEPs in question aren't exactly keen to talk, we don't know their side of the story either. So we're NOT saying they are necessarily guilty of signing in and sodding off - the jury is still out on that.

But, regardless, the MEPs' reactions aren't exactly dignified. 

shortened version / credit to Geenstijl reporter Tom Staal

To clarify for those who are unfamiliar with Italian hand gesturing, two gestures feature in the video:

1. ‘Lei chi è? Cosa vuole?’ (Who are you? What do you want?): Fingers and thumb come together with hand shaken up and down repeatedly – the arm can also move and the speed varies depending on how angry you are.
   
   
2. ‘Calma, calma’ (Calm down, dear): Move your hand (or both of them) as you were pushing something invisible down, with the palm(s) directed towards your interlocutor. This is the gesture actually made by the other Italian guy - the one in the dark suit - not the MEP himself. 

There should be no doubt that when push comes to shove, MEPs aren't afraid to throw their weight around - literally. So is this a case of unfair and overly aggressive investigative journalism, or a slap on the face of European taxpayers? You decide.

If it's the former, then it's ironic that Baldassarre's most recent activity in the EP is listed as "decriminalising defamation"...

Cash-for-dubbing?

Does the name Ernst Strasser (see picture) ring a bell? If not, let us refresh your memory. Ernst Strasser, from Austria, was one of the MEPs involved in the cash-for-amendments scandal unveiled by the Sunday Times last year. More precisely, he was the one who had been secretly filmed by undercover journalists boasting, "Of course I'm a lobbyist, yes."

Well, in a recent interview with Austrian TV, Strasser has sparked surprise (and some laughter, we're pretty sure) when he claimed that the video evidence being used to 'frame' him had been "deliberately tampered with by Murdoch's people", as the mouth movements do not exactly match up with the text in the film.

Right...

Caviar For Eurosceptic Palates

Why doesn't this strike us as a surprise? MEPs have asked for more of taxpayers' cash, although this time the money will not end up directly in their pockets. The European Parliament's Committee on Budgets voted yesterday to increase MEPs' monthly staff allowance by a further €1,500 - which, multiplied by 12 months and 736 MEPs, amounts to an annual increase of €13.2 million.

Not exactly a wise decision given the wave of austerity that national governments (and taxpayers) are facing across Europe. MEPs already gave themselves a €1,500 office allowance increase last year, following claims that new duties brought in by the Lisbon Treaty had increased their workload. What's more, they already receive a generous monthly allowance of €19,709 to cover staff and other office expenses.

In the words of Italian journalist Marco Zatterin, this really is "caviar for eurosceptic palates".

NB: It's a bit disappointing to see German MEP Ingeborg Grässle (a member of the EP Budgets Committee who has been saying a couple of sensible things in the past, for example on the EU's new diplomatic service budget) saying, "I cannot do the political or control work I have to do if I don't have more staff."

Now who was it who said "where you stand depends on where you sit?"

ridiculously generous

MEPs on the European Parliament's Budget Committee voted on Wednesday to award themselves an extra €1,500 and to hire an additional 150 staff. MEPs say they're in desperate need of more money because the Lisbon Treaty is now in force which means more work for them. In total, MEPs can already cash in on some £360,000 year in pay and allowances. For most people this seems like an incredibly generous amount - but not for the MEPs themselves apparently. The increase will cost taxpayers an extra €13.3 million a year and send the EP's total annual budget past the €1.6 billion mark.

Just like EU bureaucrats' recent über-insensitive demand for a 3.7% pay rise - now awaiting a decision in the Courts - this latest display of the money-hungry culture prevailing in Brussels will not go down well with taxpayers or voters. Nor will this document, published before the EP Budgetary Control committee's meeting, showing how MEPs squander public money. Amongst various spending items, it reveals that the EP last year spent €2.3million to renovate its own sports centre, €4.3million on a new visitor centre (although it already has one), hundreds of thousands of pounds on gas-guzzling cars (some emitting as much 260 CO2 g/km - fighting climate change anyone?) and a staggering €8.8 million on repairing a ceiling that collapsed in the Strasbourg Parliament (which reinforces the stupidity and wastefulness of having a Strasbourg Parliament in the first place). As a side, the document also reveals that the EP lost 54,000 in sick days in 2008.

Although, to be fair, since the new Members' Statute came into effect last year, MEPs do not receive this assistants allowance directly anymore, with assistants being paid directly from the European Parliament's budget. However, this should not detract from the patently ridiculous amount of expenses and allowances available to MEPs.

The editor of the European Voice, Tim King, yesterday summed up why taxpayers and voters have the right to feel very unhappy about this whole affair:

For 40 years, a near-secret agreement has governed how the three main institutions of the European Union divide up administrative spending. That agreement should be brought into the harsh light of day. It should then be ripped up and replaced.

He notes that while the principle behind the agreement is itself not stupid, "what is stupid is the corollary that went with that principle: an agreement that the Parliament would be guaranteed a 20% share of the administrative budget."

He goes on,

Forty years on, it is obvious to many outside observers that the Parliament has more money than it knows what to do with. The Parliament may have set up a temporary committee on the economic crisis, but it is otherwise unscathed by Europe's economic difficulties. Although the Parliament is very fond of climbing into its pulpit to criticise the misuse of EU money when that money is managed by national administrations or the European Commission, it is much less outspoken about the misuse of money under its own palatial (albeit occasionally collapsing) roofs.

He points to the internal 2008 report (that MEPs voted to keep secret) which revealed widespread abuse of allowances in the EP, MEPs' immoral second pensions scheme and other questionable perks and practices.

He concludes,

Now the Parliament's leadership is drawing up its 2010 budget and is struggling to stay within a 20% share of the total spending on administration. Laughably, the MEPs are describing their 20% slice of the pie as 'the long-standing self-imposed limit', not noticing that the description is inherently contradictory: if the 20% was not ridiculously generous, it would not have been 'self-imposed' for so long. The truth is that it is not a meaningful constraint, so MEPs and their officials have been more than happy to live with it...It is scarcely credible that an agreement that dates back to when there were only six member states should remain in place, unquestioned, unexamined.

Exactly.

Lisbon Treaty = even more cash for MEPs

Amid all thee excitement over the EU bureaucrats' demands for an inflation-busting 3.7% payrise smack in the middle of the worst recession since the 1930s, Bruno Waterfield at the Telegraph brings us news that according to an internal document seen by the paper European Parliament officials have proposed a 9 percent increase in the partliamentary assistance allowance, taking it to £203,000 in 2010. It is also understood that staff expenses will be further increased by another £16,000 in 2011, taking the total annual allowance to almost £220,000.

Why? Because EP officials reckon all the extra cash is needed as a result of the Lisbon Treaty.

Don't forget this is on top of the "general expenditure allowance" worth over £44,000 that MEPs can pocket without having to provide any receipts. While working in Brussels or Strasbourg, MEPs also trouser a £265 cash subsistence payment, worth over £40,000 tax-free every year.

And with the expected 3.7% salary rise, an MEP will earn almost £86,000 a year.

Down you go...

And so ex-UKIP MEP Tom Wise has been jailed for fraudulently claiming £39,000 in allowances from the European Parliament. He used his monthly staff allowance to pay for "fine wines" and other personal expenditure.

His researcher, Lindsay Jenkins, was cleared of all charges after Wise admitted that documents he had her sign were blank at the time.

Just a thought - but does anyone out there know if any movement has been made to reclaim the £538,290 in "unduly paid" expenses that Den Dover owed the European Parliament when he was awarded a medal from the very same institution for his "vital contribution" as his term came to an end in the summer?

(This is the kind of thing that caused Chris Davies MEP to go beserk at the Lib Dem conference - see here if you haven't already)

Say what you see

Strong stuff coming out of the Lib Dem conference in Bournemouth today... Hat-tip Spectator Coffee House Blog.

Chris Davies MEP gets worked up over the issue of politicians fiddling their expenses:

"I hate the dirty, cheating b******s, who have taken every opportunity to fill their private pockets with public money. I despise them for dragging down the reputation of my Parliament and all its members. I want them exposed. I want them punished. I want them thrown out."

We don't know exactly who he's referring to but in the past he has singled out disgraced ex-Conservative MEP Den Dover, who apparently still owes the taxpayer £500,000 in "unduly paid expenses", saying that some people see him as "no better than a thief".

Davies' comments are a useful reminder that the problem of MEPs and their expenses is still to be resolved. Since July MEPs have been governed by a new Members' Statute, governing rules on expenses and allowances for MEPs, which offers some very small improvements.

For instance, whereas in the past, MEPs did not have to produce a single receipt for the more than £360,000 available to them every year in allowances (on top of their salary), MEPs must now produce receipts for one chunk of that, which is their travel expenses (although the rules now state that all travel can be by business class). As well as that, MEPs' staff in Brussels are now directly employed, and paid for, by the European Parliament.

MEPs may also no longer employ direct family members (although if they were already working for them in July, they may carry on working for them).

But office expenses and the daily subsistence allowance are still available without receipts - effectively leaving huge amounts of money going straight into MEPs' pockets every year, with no check on how that your money is being spent.

Outrageously, as recently as March this year, MEPs voted to exempt documents which detail how much they are claiming in expenses, and what they are claiming for, from public information requests.

Full credit to Chris Davies - he is one of avery few MEPs who has consistently encouraged and voted in favour of greater transparency in the European Parliament (he voted against exempting documents relating to MEPs' expenses, along with about a quarter of UK MEPs).

Just like at Westminster, the Brussels (and Strasbourg) system needs root-and-branch reform, as we've spelled out before.

MEPs cost taxpayers five times more than UK MPs

Amid the ongoing 'expenses scandal', and on the day of elections to the European Parliament, we've published a comparison between the cost of the European Parliament and the cost of the UK Parliament.

We've found that the European Parliament costs taxpayers a staggering £1.8 million for each MEP per year. This is in contrast to the House of Commons, which costs taxpayers £364,000 for each member per year, and the House of Lords, which costs £208,000 per member per year.

Click here for more.

A very leaky defence

On the Guardian's Comment is Free site, Dermot Scott, the Head of UK Office at the European Parliament, has today responded to an article from our Research Director Mats Persson on the MEP expenses scandal. He argues that Mats' article and the recent media coverage (see here, here and here) of MEPs' expenses is "opportunistic" and "unfair", describing much of it as "inaccurate or tendentious."

His article warrants a response on several counts.

Firstly, think about this for a moment. Where else in the world would a civil servant - in this case a parliament staffer - feel it his or her place to criticise civil society for trying to hold elected representatives and 'democratic' institutions to account? It strikes us as extremely strange - can MEPs not defend themselves?

Imagine an information officer at the UK Parliament penning an op-ed to criticise the Daily Telegraph for its work on MPs' expenses? Or, imagine the same information officer having the nerve to actually defend the system.

That would be unthinkable in the UK and in any other normal, functioning democracy. But apparently, EU 'communications' officers see it within their mandate to engage in highly-charged political discussions. (This isn't the first time we've had a pop at them for that - see here and here)

The question is, on what mandate does an EU information officer act as 'politician', even to the extent of brushing aside concerns over the widespread abuse of taxpayers' money?

But onto the article itself. It describes the recent focus on MEPs' expenses and allowances as "opportunistic." Of course the recent Westminster expenses scandal has certainly roused people's interest in this subject, but to suggest that we have simply jumped on some kind of 'expenses bandwagon' is just silly.

As many MEPs are well aware (and don't appreciate!), for several years now we've been busy campaigning for a more open and transparent expenses system in the EP. Back in May 2008 for instance, we published the results of our 'Transparency Initiative' aimed at opening up some of the opaque practices surrounding MEPs' expenses, asking MEPs whether their accounts were properly audited and how they spent their staff allowances.

Dermot's article also argues that "while the European parliament may still not be perfect, it is only fair to point out that long-awaited reform is at hand". Here, our friend the EP information officer gets completely lost.

In his breakdown of MEPs' salaries and pensions he notes that "Pension rights are the same as for a Westminster MP." Under the old system this is true, but under the new 'long-awaited' reformed system, which will come into force after Thursday's elections, UK MEPs will get access to an infinitely more lucrative pension scheme.

Consider this: Whereas MEPs used to have to contribute 100% of their salary over ten years in order to receive an annual pension of £15,822, under the new rules, they don't have to contribute anything at all and can expect to receive an annual pension of £27,954 because of more generous accrual rates. But Dermot obviously forgot to mention this.

He then moves on to criticise Open Europe's recent league table of MEPs and the criteria we used to compile it. He asks, "why does voting in favour of the Lisbon Treaty mean you're against transparency?"

Well...

A) Our league table was not only concerned with transparency, but also ‘openness and democracy’ and ‘fighting waste and misuse of EU funds’ - which both our press release and our guide to the league table made perfectly clear

B) We did not in fact include the vote in favour of the Lisbon Treaty but a specific amendment which called on MEPs to “undertake to respect the outcome of the referendum in Ireland” before it had actually taken place.

This is completely different to the vote in favour or against the Lisbon Treaty. It's far worse. The proposed amendment was a goodwill gesture towards the Irish people as they prepared to vote on the Lisbon Treaty, but, shockingly, 64% of MEPs voted against it (including 13 out of 78 British MEPs), Only 16% voted in favour of respecting the will of the Irish people.

These glaring errors leave us wondering whether Dermot bothered to read our guide to the league table before he leapt to the defence of democratically elected politicians, who can surely stand up for themselves? He also clearly forgot that he's a civil servant (meaning, not a politican) paid by taxpayers to provide accurate and factual information.

As a parting shot, he adds "the ranking also has some absurdities that would be laughable if they were not serious, for example giving a high ranking to an MEP who has been investigated by Olaf and was obliged by the European parliament to repay a considerable sum."

Ironically, MEPs voted earlier this year to keep documents related to their own expenses and financial disciplinary measures secret and out of public view. This vote was also one of the criteria we used in our ranking. If it wasn't for this vote it would have been possible for the public - i.e us - to identify MEPs caught misuing public money. Hilarious eh.

Most of all, Dermot's article demonstrates that any attempt to shed light on the practices and processes at work in EU institutions is immediately construed from those within them as an attack on their very existence. Such outbursts simply serve to remind the public how far removed the European Parliament is from real world politics.

Clearly Dermot and no doubt the wider EU establishment would much prefer if us mere members of the public did not take an interest in the nitty gritty of how MEPs actually vote on our behalf - despite the non-stop complaints from everyone there that 'no-one understands or cares about what we actually do'.

Expect much more of this bleeting next week when the EP elections are over and the institutions are looking for people to blame for either low turnout or bolstered fringe parties. You can't say we didn't try.

From the horse's mouth

For those unable to believe the sheer scale and size of the allowances and expenses available to MEPs, Swedish Left Party MEP Jens Holm provided a candid account of how the current travel expenses system often leads to MEPs lining their pockets on Monday (25th May) on the BBC World at One:-

Jens Holm: I was shocked because I went to what they call the 'cash office' in the European Parliament and I brought my ticket and the receipt, the statement which said how much the ticket cost me, and I handed it over and they said "we are not interested in the receipt because everybody gets the same lump sum, according to the distance you have travelled"

For that trip from Brussels to Stockholm I got almost €2,000 and the ticket didn't cost me more than €500.
Interviewer: So, effectively you made €1,500 on that one journey alone...

JH: That's correct. But I'd like to underline that I do not take this money for myself. I give away all the money that I don't need for my travels.

Interviewer: But there's nothing to stop you, or any other Member of the European Parliament, just putting that money in your wallet...

JH: No, of course not. And I'd say the vast majority keep the money for themselves, they become rich.

Interviewer: Did you make any assessment of the difference between the money you were spending and the money you were given?

JH: I know that until February this year, the European Parliament has paid me about €200,000 in travel allowances and I'd say that I have donated around €150,000 to charities and also to my own party.

Interviewer: Have the authorities at the European Parliament given you any explanation for why the system operates in this way?

JH: Yes. And they give me different answers each time. Sometimes they say that this is a compensation for MEPs coming especially from central eastern and southern Europe where the salaries for MPs is not that high - so the travel allowance should be compensation for that.

Other times, they say that we should get paid this much because then we are free to buy a business class ticket. But still, if you buy a business class ticket it's impossible to find such an expensive ticket. So there aren't really any good explanations.

Well actually I think that they almost try to bribe us ...When you get so much money from a system you become quite loyal to it.

Interviewer: I'm sure you'll be aware that in Britain there's been a lot of debate in the last few weeks about expenses...Do you think we should be looking much more closely at the money our MEPs receive?

JH: Of course you should. The European Parliament just pays out too much money. I think journalists and also the public should scrutinise this and ask for a better system.

As of June, as part of the new 'Members' Statute', the travel allowance system will be reformed so that MEPs need to provide receipts for their tickets. However, for the rest of their expenditure (office expenses, daily subsistence allowance, staff allowances, etc) MEPs will still not be required to produce receipts.

Given the previously overly generous travel allowance one might wonder how much MEPs will continue to pocket in undisclosed expenses, even with the new MEPs' statute.

The real expenses scandal is in Brussels

See here for our take:

http://www.guardian.co.uk/commentisfree/2009/may/27/expenses-meps-european-parliament

MEPs and their expenses - the facts

Over the weekend Open Europe published a new 'league table' of all 785 MEPs, ranking them on 20 different criteria, including how they voted on proposals to increase transparency and reduce the waste of taxpayers' money, attendance, whether they opt into the controversial second pension fund, and whether they voted to respect the Irish referendum on the Lisbon Treaty.

There are some interesting findings. While the UK, for instance, fares comparatively well among its counterparts in Europe - coming fourth out of 25 - many British MEPs, while talking a good game at home about EU reform, in fact leave a lot to be desired on closer inspection of their behaviour in Brussels (and Strasbourg).

Par exemple:

- In April 2009, a majority of British MEPs (60%) voted to keep details about their own expenses secret, as well as voting against financial disciplinary measures for MEPs found guilty of misuse of funds, and voting to keep secret demands to pay back money. Only 24% of all British members voted to make expenses public.

- Only 13 out of 78 British MEPs voted in favour of a symbolic proposal calling for governments to respect the outcome of the Irish referendum on the Lisbon Treaty -before the referendum had even taken place.

- In 2005, 11 Labour MEPs voted in favour of a proposal to allow the deficit in MEPs' highly controversial, and possibly illegal, second pension scheme to be plugged with taxpayers' money. They also voted against attempts to oblige MEPs to contribute funds from their own pockets, as opposed to from their allowances, as is currently the case.

- Extraordinarily, in 2008 three Conservative British MEPS voted in favour of spending €290 million of taxpayers' money on subsidies to tobacco farmers - despite the fact that the EU simultaneously spends millions on anti-smoking campaigns, such as the €74 million campaign named "Help: for a life without tobacco".

- 30 British MEPs voted in favour of signing off the European Parliament's own accounts for 2006, despite serious concerns raised by the European Court of Auditors over allowances for MEPs' assistants. The auditors noted that only around 27% of the expenditure was adequately accounted for in 2006. Despite this, the European Parliament voted to clear the accounts.

You can also read our key findings from other MEPs here.

In the midst of the currenty public outcry over MPs' expenses, the ranking's findings on MEPs' expenses are particularly interesting.

Because also over the weekend, Gordon Brown told the FT that he would force Labour MEPs to publish receipts for all their expenses in future. This is a big move - as currently, ludicrously, MEPs are not required by the European Parliament to produce any receipts for their spending of public money. The move goes further than that offered by any other British party.

BUT - if they are serious about this idea, then why on earth is it missing from their manifesto for the European elections on 4 June? The manifesto was unveiled just 2 weeks ago - right in the middle of the expenses scandal unfolding at Westminster - so there can be no excuses that they didn't know this was going to be a big issue.

If Labour means business about keeping an publishing all receipts - which we sincerely hope they do, as this would send a powerful message to the EP and would put all 200 odd parties in the EP under pressure to do the same or change the rules - then Labour should change its manifesto immediately to reflect the new commitment. They have more than a week before the elections, so it's not too late.

Voters need to something to be able to hold them to (not that it worked with their manifesto commitment to a referendum on the EU Treaty, mind). Because our study shows that in 2005, three Labour MEPs voted against obliging MEPs to produce receipts for their travel expenses.

After all, as the front page of the Sun newspaper repeated this morning, Open Europe has found that the expenses we're referring to are no small matter - amounting to an enormous £363,000 a year per MEP. This is on top of the basic salary of £83,282 (representing a huge pay rise for UK MEPs from June onwards) £41,573 in ‘transition payments’ when they leave office, and pension rights of up to £30,000 for a single five-year term.

The expenses break down as follows:

£36,778 in 'subsistance allowances' (£259 a day for 142 days of the year)
£5,885 in language and IT courses
£87,407 in travel expenses (the EP's budget for 2009 puts aside €77,988,000 for 'ordinary travel expenses', which works out at €99,347 for every MEP)
£3,756 in 'additional annual travel allowance'
£183,776 in staff allowances, and
£45,648 in office expenses (£3,804 a month)

Unbelievable.

In June, there will be a slight change to the rules, which will mean that MEPs will be required to produce receipts for their travel expenses for the first time - however, offsetting that, is a new, explicit reference to 'business class' for flights even within the EU - raising the barrier instead of lowering it.