Dr ANTHONY COUGHLAN
Dr Anthony Coughlan, a Senior Lecturer Emeritus at Trinity College Dublin, is
one of the Republic of Ireland's leading EU-critics. And is Director of The
National Platform EU Research and Information Centre. This is a think-tank
which produces documentation critical of closer European integration on
democratic grounds for use by ‘No’ campaigners in the Republic's periodic
European referendums.
He regards the growth of EU-critical opinion in the Republic of Ireland to be
part of a growing international movement throughout Europe in defence of
national democracy and the Nation State and subscribes to the dictum of the
late President Charles De Gaulle that, "Europe is a Europe of the nations
and the states or it is nothing."
Tony Coughlan was responsible for initiating the 1986/7 Crotty case before the
Irish Supreme Court. This judgement laid down that a popular referendum was
necessary before there could be a surrender of sovereignty to supranational
European institutions, as the people are the repositories of sovereignty under
the Irish Constitution, so only they can surrender it. It is because of this
judgment that Ireland is required to hold a referendum on the Treaty of Lisbon
before it can be ratified.
He is also involved in a number of cases before the Irish Supreme Court to try
and ensure that the forthcoming Lisbon II referendum is fair and not distorted
by the Irish Government.
EDWARD LEIGH MP
Edward Leigh is the Chairman of the Cornerstone Group of Conservative MPs. He
has had a distinguished Parliamentary career serving on many committees
scrutinising legislation and the government. Since 2001, he has been Chairman
of the Public Accounts Committee.
Mr Leigh worked in the private office of Mrs Thatcher from 1976 - 77 as her
Private Secretary. From 1990 - 1993 Mr Leigh was a Parliamentary Under
Secretary of State in the Department of Trade and Industry; prior to that he
was a Parliamentary Private Secretary in the Home Office.
His political interests are; families, foreign affairs, agriculture and
defence. Edward Leigh was Chairman of the National Council for Civil Defence
and was Director of the Coalition For Peace Through Security.
Mr Chairman, ladies and gentlemen, I’m very honoured to have the opportunity
of saying a few words here this evening on the Lisbon Treaty first of all and
then some points about the euro. I’ve got a document which I’ve handed out,
which summarises the main reasons why democrats everywhere around Europe, in
Ireland and Britain, France, Germany, Poland and so on should be concerned
about this Lisbon Treaty and it elaborates in more detail than I’m going to be
able to expand on in the next 20-25 minutes on why the Lisbon Treaty is a bad
thing.
I’m sure many of you are well aware of the main points made but somebody the
other day compared the whole business of the Lisbon Treaty and the EU
Constitution to a Russian doll. In the next two days beginning tomorrow
there’s going to be a summit of the EU Heads of State of Government and the
centrepiece of this summit are going to be various assurances to the Irish
voters who voted no to the Lisbon Treaty on the 12th June last year, that
their concerns are being met by various statements and assurances being given
by the Prime Ministers and Presidents.
This will take place in the next couple of days, we’ve already got leaked
versions of these assurances and as a friend of mine said, its like a Russian
doll: on the surface there will be the Irish assurances, which are meant to
goad Irish voters into changing their vote in a second repeat referendum on
exactly the same Treaty, probably in early October, possibly in late
September. Then the next layer of this Russian doll would be the Treaty of
Lisbon and then remove that and inside again is the EU Constitution which was
rejected by the French and Dutch in Referendum in 2005.
The so called assurances to Ireland would not change a jot or tittle of the
Treaty. There will be declarations, statements, political commitments and
promises by the Prime Ministers that their successors in a few years time will
do such and such but they won’t change a comma of the Lisbon Treaty. In other
words the Irish voters will be expected to say yes to something that’s exactly
the same as they said no to last year, but the Government hopes that they will
concentrate the debate as well as they can on the so called assurances and
distract attention from the real content of the Treaty so that last year’s no
will be turned into this year’s yes.
And of course if that were to occur and if the German Constitutional Court
resolved to adjudicate the under-Treaty, it says its okay on June 30th, well
they’ll give their judgement as I expect they will, I don’t think we’re going
to be saved from this constitutional monstrosity by some German judges, and
then if President Vaclav Klaus of the Czech Republic can no longer keep his
pen in the air from signing the Treaty on behalf of the Czech Republic, well
then if those things happen the Treaty will come into force on January 1st
next, it is hoped before there is a General Election in the United Kingdom
which would bring in inevitably it looks like a Conservative administration.
So there’s a kind of race on in time between the ratification of the Lisbon
Treaty and the advent of a Conservative Government in Britain, whose official
policy is that if it comes into office and the Treaty is not ratified when it
comes into office, in other words if the Irish haven’t voted yes or if
President Klaus still keeps his pen in the air and the Treaty has not come
into force for all 27 States, then the Conservative position is as I
understand it, that they will have a referendum in the United Kingdom and
recommend a no vote to that.
Obviously it’s very important that we should do our best, we will do our best
to defeat the Lisbon Treaty again but the circumstances have altered a lot.
Last year when we voted no in the Republic of Ireland there was still an
economic boom on, there’s anything but a boom on now, there’s a severe slump
and that of course effects the people’s mood, they are much more fearful and
timid and the Government would be trying to exploit that. On the other hand
the Government is very unpopular in the Republic, this year the Republic
Ireland has got another 10% economic decline. Instead of having an economic
growth, we’re going to have an officially recognised figure of some 10%
decline in output, which is almost unprecedented anywhere for decades and
heavy unemployment and a huge public sector deficit and so on, so there’s a
very bad economic situation there.
So this is exactly the same Lisbon Treaty and that’s the background against
which this Referendum would be held and the campaign will begin more or less,
as soon as the declarations are issued in a couple of day’s time.
I’d just like to emphasise what I suggest are the most important elements of
the Lisbon Treaty which would make democrats everywhere opposed to it. It’s a
constitution revolution in both the European Union itself and in its Member
States because for the first time it gives the European Union or what we know
as the European Union the constitutional form of a super national federation.
Way back in 1950 when Monnet drafted the Schuman Declaration, which gave rise
to the coal and steel community which is celebrated on May 9th every year,
Europe day of the Schuman Declaration, said it is the first step in the
federation of Europe, the federation of Europe, and the last step on the
constitutional side would be the Lisbon Treaty, which is of course the EU
Constitution in another form, which would in effect establish a legally new
European Union, the Constitution new European Union.
Its very different from what we call the European Union at present because the
European Union at present does not have legal personality, unlike the
community its not a legal person, that would change. So if Lisbon goes through
the European Union becomes a legal person, they could sign treaties in all
areas with powers and competences with other States, all these States sign
treaties with one another. And of course the Member States who are present are
at least notionally sovereign, would become as provincial States within this
super national European Union federation. That’s a constitutional revolution
in every sense of the word.
And angle to that, which I think is not that widely appreciated is that all
500 million citizens of the 27 Member States would become real citizens for
the first time of this new constitution European Union. The Treaty of Lisbon
proposes that the 27 Member States should be given an additional citizenship,
‘additional’ is the word used in the Treaty, that’s the amendment, additional
citizenship on top of the national citizenship. You would still remain a
British citizen or an Irish citizen or a German citizen but you’d also be a
European Union citizen in a real sense because this would be an entity with
legal personality for the first time and you can only be a citizen of a State
as you know and at present the European Union is not a State, it doesn’t have
legal personality, it can’t have individuals as members of it but that would
all change with the Treaty of Lisbon.
You’d become citizens of this new European Union and as a citizen you’d have
rights and duties of citizenship. The right to set out in the Charter of
fundamental rights of the European Union which would be made legally binding
for the first time and which would empower the European Court of Justice to
decide what are the rights of EU citizens, of 500 million of them. You’ll
still have rights as British citizens or as Irish citizens as the case might
be but in the case of any conflict between the rights and duties attaching to
national citizenship and the rights and duties attaching to the European Union
citizenship, the latter would prevail as being superior in European Union law.
And that is exactly the situation in the United States of America and the
Federal Republic of Germany. I don’t know if most of you are aware, but in the
USA you’re not only a citizen of the United States of America but you’re also
a citizen of California or Texas or Kansas as the case might be. In the
Federal Republic of Germany you’re not only a citizen of Germany, you’re also
citizens of Bavaria or Baden-Württemberg or whatever. So you’re casting your
federal constitution, you have two citizenships, the federal level, which is
superior and the local provincial level, which is subordinate in any case or
continent. Now that is a constitution revolution which most people are totally
unaware of. I’m sure people around this city, very few of them are aware that
if Lisbon goes through they’ll be made real citizens for the first time of
this new entity. So that’s a constitution revolution by any standard with
major implications for our rights and duties into the future if it goes
through.
The second thing on the par political side – I mentioned the constitutional
side of Lisbon but on the par political side the most important change which
the Lisbon Treaty would bring about is that it would greatly increase the
power of the big states and above all of the Federal Republic of Germany. At
present to have European Union laws, to have East European community laws
because the community actually makes the laws at the moment rather than the
Union, to have European community laws you must have a majority of Member
States and the laws must be passed by a qualified majority voting system, 245
votes out of 355, and each State has so many votes in this system. At present
all the big States, Germany, France, Britain and Italy have 29 votes each, the
Republic of Ireland has 7, so we have a quarter of the votes of the big
States. Under existing European Union law qualified majority voting there must
be a majority of States who together have 255 out of 345, each State having so
many votes, as I said the big States having 29 votes each.
Now that system is abolished by the Treaty of Lisbon. Under the Treaty of
Lisbon European laws in future will be made by slightly more than the majority
Member States, 55%, 15 out of 27, 15 out of 27 States can make an EU law as
long as they constitute 65% of the total EU population. So there is a shift
from each State having so many weighted votes, which has been the system since
their old Treaty of 1957, to putting the whole thing on a population basis so
that if the Treaty of Lisbon goes through and the EU Constitution which it
embodies goes through, European laws in future will be made 15 States would
outvote 12 of the 27 as long as the 15 have 65%, just lets say nearly two
thirds, of the total EU population. And of course the biggest State is the
Federal Republic of Germany so at present the 29 votes each which all the big
States have means that each of the big States has 8% of the total votes. Under
the new system based on population size, Germany’s relative weight would go
from 8% to 17%, so under the Treaty of Lisbon Germany would have 17% of the
vote, voting weight. Britain, France and Italy would go from the present 8% to
12% each move up by 50%, Ireland would go from 2 to less than 1 and the middle
or smaller States would tend to diminish also. But in par political terms,
Germany more than doubles its relative voting weight under the Treaty of
Lisbon, which is one very good reason why they would very much want to have it
through. And the other big States would increase their relative voting rate
quite significantly. Now on par political terms that’s hugely important, 50
over the population basis and so on.
There are quite a lot of other things in the Treaty and they are elaborated on
in that document. We hand over to the EU the power to make laws binding in 32
new policy areas such as public services, crime, justice, policing, control of
immigration for the EU as a whole as given to the EU on the basis of qualified
majority voting. Energy, transport, tourism, sport, culture and so on. The EU
would be given power to impose its own taxes for the first time. Now this must
be unanimously by the Governments but once they’ve got the new powers I think
there would be every incentive to Governments to agree to EU taxes under the
‘Own Resources’ provision of the Treaty, Article 311 I think. They could
impose any tax, it must be unanimous, but any tax, an EU tax for the first
time and no doubt that will come down the road.
I mentioned earlier the Charter of Fundamental Rights, which sets out all
sorts of rights, right to life, right to property, right to free speech and so
on but this would be interpreted for EU citizens, all 500 million of them on a
uniform base across the EU and that of course has happened in the
constitutional development of the United States of America. Many of you will
be well aware of the importance that American Supreme Court in laying down a
common standard, harmonizing common standard across the various states of the
American union and this is envisaged for the Treaty of Lisbon down the road.
Also there is a self-amending clause, Article 48, which allows the Heads of
State of Government, the Governments, to agree to shift most areas of the
Treaty from unanimity to majority voting without having new treaties or
referendums. If they unanimously agree they can shift a policy area that at
present requires unanimity to majority voting without having to come back to
the people through new treaties which would require Parliamentary
ratification, our referendums and so on.
So these are reasons I think why democrats should be opposed to the Lisbon
Treaty and why we will do the best job we can in trying to oppose it in our
referendum in early October. And any assistance you can give in the form of
symbolical solidarity and so on would of course be very welcome because the
two things that are likely to hold this Treaty up are a possible Irish no, or
Václav Klaus in the Czech Republic refusing to sign the Treaty.
I was in Prague last week and I met some people who were quite close to him
and I learned, although I hadn’t known, that there is no time limit on
President Klaus having to put a signature to the Czech ratification. As you
know the parliament in the Czech Republic has approved the Treaty but I was
told that the President is the embodiment of the Czech State and that if the
Czechs say just ratify the Treaty Klaus wants to do it by signing his
signature and of course repudiating thereby his own position of many years.
But there’s no time limit on him doing that. On the other hand if we are
bullied and bamboozled into voting yes in October he’d be under enormous
pressure to do that, to put a signature and allow this Treaty then to come
into force for all 27 States before there is a British Election.
So I would have thought that it makes a lot of sense for people in Britain,
who are concerned about this undemocratic development, to encourage President
Klaus, should write to him or you know say we want you to stand fast and give
us a chance to have a referendum because people all over Europe want
referendums on this Treaty. This is the same Treaty as the French and Dutch
people turned down when it was called a Treaty establishing a constitution for
Europe in 2005. It’s been rejected by the Irish people already. So three
peoples have rejected that Treaty and the British people are of course being
denied a referendum and so if I was Mr Hague I would write privately to Dr
Klaus and say you know you hold your hand in the air until we have a General
Election in Britain which would bring into office a Government who is
committed to having a referendum. But this I suggest is something that might
be worth doing, particularly if the Irish are bullied and bamboozled into
voting yes. As far as I can see, those are the only two things that would hold
up this Treaty.
Finally a few words about the euro, Irish public policymakers are generally a
very unified lot. For years we got heavy subsidies from the European Union
because we’re an agricultural section of the economy and that brought a lot of
money for Ireland over the years, 35 years now we’ve been a member of the
European community and that has generally made Irish policymakers quite
unified. But one expression of that was their decision a way back in 1998 to
join the euro without the United Kingdom. 160 or 166 members of the Irish
Parliament voted to join the euro and to abolish the Irish punt at the time.
Even the most Irish economists warned against it because they said hold your
horses because you do so much trade with the United Kingdom, wait to see
whether Britain is going to join. But the assumption at the time was that the
British were going to join the euro within a couple of years and to show how
communautaire we were our politicians said well we’ll sign up in advance. So
they signed up to the eurozone and they’re now stuck with it.
And it has had two adverse consequences, the most obvious one was that in
1998/9 and of course the euro became common currency then in 2000/2001, we had
an economic boom in Ireland, house prices were escalating, we joined the
eurozone and we halved interest rates. Now when you’ve got an economic boom
and house prices and other things are going up and you halve interest rates
you of course increase demand and you just make things boom even more and
house prices to rise even more rapidly and that of course is what occurred.
And that is the principle single reason why the Republic Ireland has had the
biggest bubble of any of the western economies you might say aside from the
European economies in recent years. Now the consequent puncturing of the
bubble has been disastrous of course for us but it was significantly
contributed to by the adoption of an interest rate regime which was too low
for Irish circumstances, it suited Germany and France which were in
semi-recession at the time to have low interest rates so we had low interest
rates when we joined the eurozone but we actually needed higher interest rates
because we already had a boom. So the one size fits all interest rate policy
which goes with a single currency – you have 16 States in the eurozone now,
they all have the same interest rates and yet they have very different
economic circumstances but they have the one interest rate across the board
and that certainly didn’t suit the Republic of Ireland and contributed hugely
to our boom in house prices and so on which has now burst and is causing great
pain.
The second point worth noting about the Irish economy and the euro is that the
Republic of Ireland does two thirds of its trade outside the eurozone. Trade,
if you take trade as being exports and imports together, we do roughly a third
with the eurozone countries, 16 Member States of the eurozone the continental
Europe west Europeans, a third with the United Kingdom, Britain and Northern
Ireland and a third with the Americans and the rest of the world. That’s
roughly the proportion of Irish trade, a third with the eurozone, a third with
the British and the United Kingdom, a third with America and the rest of the
world. So we do two thirds of our trade outside the eurozone. All the other
eurozone countries do half or more of their trade with one another, so we are
more exposed to exchange rate movements outside the eurozone than anybody
else.
Now Irish economists, I think it’s been fair to say the majority of Irish
economists whether academic or – and I’m from an economic background myself,
I’m particularly interested in the euro currency project, which is essentially
a political project, it didn’t make any economic sense really to have so many
different countries with the same interest rate regime and the same exchange
rate and so on with such disparate economic circumstances among them, but most
of the Irish economists were against that step. Wait until we see what the
United Kingdom does, but our politicians were confident the United Kingdom
were going to join in a couple of years so we signed up. We had the low
interest rates, it certainly encouraged the boom and so on, I made that point,
but its now exposed us to the fact that we do only one third of our trade with
the eurozone countries, we do two thirds outside it, mainly with the United
Kingdom and America and the rest of the world and of course exchange rate
movements, the pound sterling had gone down, we’re stuck with the euro so we
have shoppers flocking north from Dundalk in the south of Ireland to Newry in
the north of Ireland to take advantage of the devaluation of sterling.
The British economy has many problems but at least you held out to the euro
currency and of course you have devalued the currency vis-à-vis the euro and
its gone down and that has certainly helped British exports and should help
them in the future, that’s one of the big advantages the British economy has
and of course if we were outside the eurozone we’d be doing the same. We’d be
going down with the United Kingdom but instead we’re stuck with the euro and
an overvalued and inappropriate exchange rate considering we do two thirds of
our trade outside the eurozone.
And if you’re deprived of the right to change the exchange rate of your
currency, if you’re deprived of the ability to vary all your prices by
changing your exchange rate, well then the only way you can restore it, if you
can no longer restore your competitiveness if you’ve got into an uncompetitive
situation by altering your exchange rate, the only other way is to cut pay,
profits, pensions and social welfare for years on end and that is what’s
currently occurring in the Republic of Ireland.
The only way you can restore your competitiveness is by cutting real costs, by
cutting pay, profits and pensions and that is happening. We’ve had two bad
budgets this year; years of endless paying ahead it looks like, trying to get
the Irish economy into a more competitive position because we are stuck with
the euro. And of course you’ll be reading these days about how the Latvians
have tied their currency to the euro but of course they’re not actually in it
but they’re trying to maintain a better exchange rate with the euro currency
for political reasons because of course the euro was essentially a political
project, for reconciled France the reunification of Germany in 1990 or
thereabouts and use economic means totally inappropriate for the project.
So that’s the situation we’re in, we’re experiencing very much the drawbacks
of having given up our currency and that’s one very good reason why you could
look at the Irish lesson and say, at least thank heavens we’ve held onto the
pound sterling and can use currency movements to improve your competitiveness
if it gets out of hand.
So those are just the general points I’d like to make. I very much appreciate
being able to put some points before you on the Treaty of Lisbon. They are
further elaborated on here and I’d be happy to try and deal with any questions
people may have. We’d be happy for any moral support you can give us,
symbolical solidarity, letters to the Irish media and so on as long as they
are well put and diplomatically put that can be quite helpful in the context
of our Lisbon debate and I leave you with the suggestion also that maybe
people might consider writing to Dr Klaus, Prague Castle, Prague, a very nice
place and say that you know history will be going through his pen if the Irish
are bullied and bamboozled into voting yes.
I hope they won’t be it’s not inevitable that we will lose the referendum. And
I do think the economic decline and the economic collapse are bad situations,
the Republic of Ireland would induce people to vote yes this time, it’s not by
any means guaranteed, the Government is extremely unpopular. Even though the
main opposition parties are broadly in favour of the Treaty of Lisbon, they
also know that if the Government loses this vote it will be the end of the
Government and they hope to come into office. So there will be interesting
inter-party tensions I think in the context of the Irish Referendum and we
will be saying we’re the same people that brought you the borrowing binge and
the burst bubble and the shattered banks are the same people as are bringing
you the Treaty of Lisbon because they are the same people.
So I’ve been asked to talk to you about fraud and corruption in the European
Union and I’d like to add a further topic, financial management. This is quite
a sort of complex subject but I’ll try not to make it too dry for you but I’ll
have to obviously refresh myself with very detailed notes. It is a very
complex subject so sit tight.
As sure as Christmas occurs once a year there is another annual tradition in
the Cabinet and that is the qualification of the European Union’s accounts by
the European Court of Auditors. Qualification is a sort of technical term but
it basically means these accounts we do not accept as reliable.
Last November for the 14th successive year, the 14th successive year, the
Court declined to provide a positive statement of assurance on the legality
and regularity of the underlying transactions. In effect the Auditor has
qualified the accounts. Just as I can guarantee that this December we will
celebrate Christmas, I can also guarantee to you that this November the
Commission will go a 15th successive year without a positive statement of
assurance, which is a fairly extraordinary state of affairs.
Let me set the scene, if you cast your minds back to the 15th March 1999 you
will recall that the entire Santer Commission resigned following the
publication of a report on fraud, mismanagement and nepotism – yes nepotism –
in the Commission by a committee of independent experts. Individual
Commissioners were criticised and the Commission as a whole was found by a
committee of independent experts to have lost political control over the use
of community funds and the appointment of staff, you will remember that.
Following the appointment of the new Commission there was another well
reported incident, that of a suspension and subsequent dismissal of Marta
Andreasen, Chief Accountant of the European Union, you’ll remember that very
well. Mrs Andreasen in 2002 refused to sign off the Commission’s accounts
because she believed the accounting system to be unreliable and the finances
open to fraud. Well of course she’s just been re-elected hasn’t she to the
European Parliament, but I’m not allowed to say anything nice about her
because she’s a member of UKIP, God forbid that I said anything nice... this
is being filmed, I might be drummed out of the Conservative Party. Anyway I
think she’ll make a very good Member of the European Parliament. Am I allowed
to say that, oh God I might be in one of the scrutiny committees or something.
And then came the appointment of the Barroso Commission in 2004, spurred by
the perceived lack of financial controls, corruption and fraud. President
Barroso set his Commission the challenging task of achieving a positive
assurance by 2009. Well its now 2009 so what has the Commission achieved?
The Commission working with Member States, I have to say to you, has made an
effort, a real significant effort over the recent years to improve financial
management of the European Union and my Committee has been putting, as much as
we can, pressure and others have as well.
Now some progress is detectable. The Commission has successfully introduced
accruals accounting, which is another sort of technical term but we’ve done it
in the UK, it’s a sensible way of proceeding. And for the first time the
Commission obtained a clear opinion from the Court on the ‘reliability’ of the
2007 accounts, that is the accounts accurately reflected income and
expenditure, that’s all it means, the accounts accurately reflect income and
expenditure. You would have thought that wouldn’t be a terribly difficult
hurdle to meet but it took until 2007 to do that.
But that’s I’m afraid not the whole story at all. On legality and regularity
the Court gave a clear opinion on some 45% of European Union expenditure
compared to an estimated 5% in 2003, so some progress has been made.
Staggering isn’t it, 5% in 2003.
Unfortunately that’s where the positive story ends. As I mentioned in my
opening remarks in November 2008 for the 14th successive year the Court did
not provide a positive statement of assurance on the legality and the
regularity of the underlying transactions. Now just think, in any private
sector organisation an external auditor’s refusal to sign off the accounts
would be a shock to shareholders. Refusal to sign off the accounts for 14
successive years would not happen, shareholders would have removed the Board
long before that, but this has simply not happened.
The qualification of the European accounts year after year undermines public
confidence in the financial management of the European institutions and Member
States and devalues the significance of the qualification. If you qualify
something every year it becomes less and less of an issue and when we get
round to November, Christmas as I’ve said, and these accounts are qualified
yet again, you know this would not be the front page of The Daily
Telegraph, it says well it always gets qualified but actually it is quite
a shocking state of affairs.
Qualification should be an exceptional procedure, it shouldn’t be the norm and
yet although the Court has noted improvements the same criticisms are repeated
year after year and I have to say to you that progress is absolutely glacial.
In 2005 my Committee, that’s the Public Accounts Committee, looked at the
reasons behind the Court’s findings. We also looked at them again this year
and I’ve encouraged the Committee in its work and we work with the National
Audit Office, they’re very good, so we do have some expertise there. We have
found again and again the same issues. First and foremost of course is the
issue of complexity, complexity in the number of organisations involved in
spending European funds and complexity in the rules and regulations governing
the way programmes are administered.
Now by the way, I know that there are some people here who are not entirely
pro-European so one must be pretty fair about this. Complexity is the devil of
this whether you’re pro or anti-European and everything. Any organisation as
complex as the European Union probably can never have their accounts... except
I’ll give you some examples in a moment, but just so we don’t get all high and
mighty about this, our own much beloved Department of Work and Pensions has
also had their accounts qualified for 13 successive years so don’t by the way
distinguish this as a problem with Europe, I have to make that clear.
Why has the Department of Work and Pensions alone of all these Government
departments got such an appalling record, almost as bad as the European Union,
because our Social Security is far too complex and Chancellor Gordon Brown has
made it infinitely worse with this massive churning which is going on. So it’s
not just a European problem but I mean the European is the par excellence in
the top of this field of bad boys of Government organisations being qualified,
i.e. their accounts not being accepted.
Now I’m going to give you an example of what’s going on and I’ll have to warn
you this will confuse you but that’s the whole point because after all we are
in Euro land now. The second largest element of European Union budget is
cohesion policy. This as you know is designed to reduce regional economic
disparities across the EU, I mean I think a lot of it is rubbish but there we
are. You know as Chairman of the Public Accounts Committee we have to be
frightfully sensible, I don’t get involved in politics so I’ve got to say its
fine okay.
In 2007 the Commission spent some €42 billion on cohesion,
quite a lot of money, 42 billion. Most projects within this
area are jointly funded by the Commission and a Member State. The Commission
sets the broad rules by which the expenditure should be made and then the
Member State then sets some further rules to ensure it delivers the policy
objective and by the way our Civil Service are hopeless, consistently gold
plating, we know all the problems, I don’t need to repeat all that. But this
happens to a greater or lesser extent across all the Member States.
Now a large number of programmes are funded under cohesion policy and the
seven years to 2006 there were some 545 programmes ranging in size from under
€500,000 to over €8 billion and the projects
within these programmes can range in size from a grant to an individual of a
few hundred euros to an infrastructure project of several hundred million
euros, this is big time money which of course we’re paying for but I’m not
going to get involved in all that, you know all that already.
Some of these projects take many years to complete and that’s where it gets
complicated, but every seven years a framework within which the programmes are
designed are reviewed. We are now in the 2007/13 framework, but until 2010 – I
hope you’re listening carefully – money can still be paid for projects under
the 2000/2006 framework and to complicate things further some programmes from
the 1993 to the 1999 period are yet to be closed.
Now if that isn’t confusing enough, each of these frameworks has a different
set of rules and regulations. You therefore have officials trying to apply
several different rulebooks to different elements of the expenditure programme
at the same time and don’t forget this is just one of seven policy areas in
the European budget. By now you are completely confused which is the object of
the exercise because you are just merely taxpayers paying for all this and you
shouldn’t really have an opinion at all.
Is it any wonder then that the European Court of Auditors found a high level
of error in this expenditure? It estimated that at least 11% of the money
spent in the cohesion policy area should not have been reimbursed by the
Commission. That is to say at least 11% of the £42 billion
expenditure in this one policy area is irregular. 11% of £42
billion expenditure is irregular; I mean it beggars belief doesn’t
it. It’s clear that civil servants trying to implement these programmes are
grappling with massive complexity.
Our Committee, the Public Accounts Committee recommended in 2005 and again in
2009 that the best way to reduce these errors is to simplify the rules; well
it’s obvious isn’t it. To simplify the rules and regulations governing the
spending of European funds to make sure one framework is closed down before
another begins and the problem with complexity is it’s not limited to the
cohesion area. The largest expenditure area is agriculture at over €51
billion in 2007. There are many examples where the complexity of the
legislation means that the Commission, Member States and the European Court of
Auditors have different views of what the regulation means.
Take late payment legislation in agriculture is just one example. Each year
European farmers as you know can claim a subsidy for the amount of land they
farm, fair enough, subject of course to certain other qualifying criteria.
These farmers must apply to a paying agency in their particular state for the
subsidy. If the application is made late the paying agency is obliged by
European legislation to withhold 1% of the value of the claim for each day
late it arrives. I hope you’re concentrating because it gets more difficult.
So if the claim is 10 days late then the claim is reduced by 10%.
In 2007 in several cases paying agencies of the Member States asked the
Commission for claim receipt deadline extensions, this sort of thing happens.
The Commission granted these extensions, some of these paying agencies then
applied the late payment penalties from the date of this new extended
deadline. The Court of Audit however in conducting its audit interpreted the
legislation differently and suggested that if the new deadline were missed the
penalty should be applied from the original deadline. The Commission had not
envisaged this interpretation of the legislation. The result of this example
is that the Court, the Commission and the Member States are now in discussion
about whether any putative action is required and against whom, they just
don’t know. Whatever the resolution it will result in some irregularity but
you can start to see the devil is really in the detail here.
These issues are not now, I have to say, some abstract debate amongst
accountants bearing little relevance to the European taxpayer. I’m not an
accountant, I don’t pretend, I Chair the Public Accounts Committee I know
nothing about accounts, I’m not interested, I’m interested in the taxpayer,
I’m interested in value for money and efficiency and good government and this
is not value for money or efficiency or good government. So this is not some
obscure accountancy thing, it actually effects all of us.
These problems and these issues impact directly on the money in our pocket.
Its easy to think that these errors are made by other Member States and that
we in the United Kingdom are somehow better than our colleagues in Germany,
France, Spain and the rest of Europe, this is what my farmers tell me in
Lincolnshire all the time by the way, you know the argument. But we’re honest,
we’re efficient, we do all this right and its all a problem of corruption in
Spain and Italy. It’s much more complex actually than that, that’s not quite
true; it’s simply not true actually.
When expenditure does not conform to the Commission’s rules and regulations it
can impose a financial correction to recover the irregular expenditure. You
may not know but in England alone the Department for Environment Food and
Rural Affairs included provisions including some £320 million
in its 2007/8 accounts for estimated financial corrections. The Department for
Communities and Local Government included a provision of some £73
million in its 07/08 accounts for possible financial corrections.
Since these accounts were published some £100 million of
financial corrections have crystallised in this country. It is unacceptable
that the United Kingdom authorities through mismanagement have exposed the
taxpayer to this level of recovery. So everything in the European project, I
do assure you that we are not whiter than white in this matter if one is
allowed to use expressions like that nowadays.
The question must be asked, if the level of error is so high, where is all
this money going, is it fraud or is it irregularity. There is an important
distinction here, let me explain, irregularities are transactions which have
not complied with all the regulations that govern European Union income and
expenditure may be intentional or unintentional. Fraud on the other hand is an
irregularity that is committed intentionally and constitutes a criminal act as
defined by a Court in the Member State. Member States are required to notify
the Commission of any irregularities including possible fraud, fair enough.
In 2007 the European budget of €114 billion as you know and
the UK made a net contribution, again as you very well know, of €6.1
billion, that’s our bill. If we take the official figures, in 2007
Member States notified the Commission’s Anti-Fraud Office, OLAF, which we have
visited two or three times of 11,033 irregularities with a total value of
€1.4 billion of which some €297 million was
estimated as possible fraud, which is just under 0.3% of the budget.
€828 million of these irregularities was in the cohesion
policy area, I’ve talked about that, the vast majority. €125
million of the irregularities was in agriculture, I’ve talked about
that as well.
Focusing just on fraud for a moment, in 2007 OLAF opened 210 new fraud cases;
they closed 232 fraud cases, which left 355 fraud cases outstanding. Of the
closed cases OLAF recovered some €203 million of European
funds. Looking at country specific information in the United Kingdom we
reported 1,666 irregularities including possible fraud valued at some
€281 million in the United Kingdom alone. Now this is a bit
surprising, this was the highest value of irregularities, the highest value of
irregularities were here reported. Now whether you actually believe that they
were actually in reality the highest level of irregularities I don’t myself
but this was the highest value reported here right.
We were followed by Spain, Italy and Germany. OLAF’s latest published figures
for the year 2007 show there are 21 fraud cases outstanding in the UK. As with
most statistics however there is a big health warning. OLAF right observes
that these data should be treated with caution as they are dependent on the
time and accurate reporting of irregularities of possible fraud by Member
States. OLAF considers that some Member States – and this is real under-speak
but I have to sort of tell you it – OLAF considers that some Member States are
under-reporting irregularities and not consistently identifying possible
fraud, well you can say that again.
This makes comparisons between Member States I think completely inappropriate
by the way, and indeed suggests that the figures for fraud are at best highly
uncertain and probably can’t be believed at all, but this is again is Euro
land for you. The United Kingdom is consistently near the top of the league
table for irregularity and fraud. Does anybody actually seriously believe that
the United Kingdom is at the top of the league for irregularity and fraud, I
don’t believe it, I’m sure you don’t either; in fact I know it’s not true. I
would hope this is because we take seriously the discharge of European funds;
we are fastidious in the accurate and timely reporting of irregularities to
the Commission more so than some Member States. I’m being very diplomatic. But
the lack of reliable data covering all Member States is simply alarming,
particularly when we consider what prompted the crisis in the Commission back
in 1999.
Now I have to say there’s one thing I have achieved, I think a bit of personal
credit for this, I’ve worked with the Controller General, our Controller
General, we persuaded the United Kingdom Government to have what’s called a
consolidated statement of accounts for the first time ever, so you will know
published by the Treasury all the European Union spends and I have been
travelling around Europe trying to campaign for this and as you might expect
I’ve had success in Holland, in Denmark you know but absolutely complete no
success, absolutely not in France, France will not do this. Are you surprised?
It’s not going to happen in France ever. France will never provide French
taxpayers and European taxpayers with a consolidated statement of account of
what the European Union is spending in France. This is frankly scandalous,
there’s nothing we can do about it. To be fair to Gordon Brown he has... I
requested him; I wrote to him, he has now done it, so you’ve got to give this
poor man some credit but complete non-interest in France. In fact the further
south you get the interest seems to get less and less, it’s always the Swedes,
the Dutch you know the British. The Germans aren’t that keen, not because
they’re against it because they’ve got a federal system blah blah blah, but
with the French not.
And so in conclusion, I’m now coming to an end, I hope you’ve been very amused
by all these facts and figures but you know if you ask the Chairman of the
Public Accounts Committee, you’ve got to have a few accounts read to you, it’s
your fault.
In conclusion therefore, the financial management of the European Union has
improved, alright; I think we’ve got to accept that under the Barroso
Commission to a point, where some 45% of total expenditure is given the green
light by the European Court of Auditors so we’ve got 45%. I take heart from
the Court’s finding last year that for the first time the European Courts are
‘reliable’ but it is simply unacceptable in conclusion that for 14 years in a
row the Court cannot give a positive statement of assurance on the legality
and regularity of underlying transactions.
To make progress the Commission needs to simplify the complex rules and all
the regulations covering the expenditure areas. Member States including us
must do their bit in the areas where they jointly manage which we don’t do and
to clearly identify where irregularity and fraud occurs, OLAF and the
Commission have to make sure that the Member States report data in an accurate
and timely fashion, which they don’t do, and name and shame those who are
tarred with reporting what is happening with European taxpayers’ money, which
they don’t do. Without these actions and concerted action and effort by all
the European institutions I fear ladies and gentlemen that the Commission’s
failure to achieve a positive statement of assurance will continue to be as
traditional as turkey at Christmas.
Norman Tebbit and the Czech President Speak Out Against EU
Centralisation Dinner in the Presence of Baroness Thatcher Václav Klaus
The Rt. Hon Lord Tebbit of Chingford, CH
The Rt Hon. Baroness Thatcher LG, OM, FRS
Saturday, 17th November 2007 2007 Conference Gerard Batten MEP
Christopher Booker
Bernard Connolly
Dr Anthony Coughlan
Marc Glendenning
Roger Helmer MEP
Martin Howe QC
Ruth Lea
Cllr Steve Radford
The Rt Hon. John Redwood MP
Ignoring the French Non and the Dutch Nee the EU takes more
powers Conference: Integration marching on Christopher Booker
Ruth Lea
Professor Kenneth Minogue
The suggestion that EU Constitution was just "tidying
up" is a silly phrase best forgotten Wednesday, 19th May 2004 Gisela Stuart MP
The European Union - an Unionist/Ulster perspective and Tax
harmonisation and EU Competition policy Wednesday, 5th May 2004 Jeffrey Donaldson MP
Carl Mortishead
British politicians and the Brussels Bureaucracy have
combined to destroy Britain's agricultural industry Agriculture and the Mad Officials Dr Richard North
Bruges Group International Conference Alternatives to the EU Dr Anthony Coughlan
Professor Christie Davies
Margit Gennser
Roger Helmer MEP
Dr Brian Hindley
Dr John Hulsman
HE the Rt Hon. Don McKinnon
Professor Ivar Raig
Dr Helen Szamuely
Honorary President: The Rt Hon. the Baroness Thatcher of
Kesteven LG, OM, FRS Vice-President: The Rt Hon. the Lord Lamont of Lerwick,
Chairman: Barry Legg Director: Robert Oulds MA, Head of
Research: Dr Helen Szamuely, Washington D.C.
Representative: John O'Sullivan CBE Founder Chairman: Lord Harris of High Cross,
Former Chairmen: Dr Brian Hindley, Dr Martin Holmes &
Professor Kenneth Minogue
Dr ANTHONY COUGHLAN
EDWARD LEIGH MP