Tory leader resigns

So, Giles Chichester has resigned as Tory leader in the European Parliament – their shortest-lived leader ever!

Giles Chichester was once the luckiest politician to be elected. He won the Devon & East Plymouth constituency in 1994 by a whisker, thanks to the Liberal Democrat votes being split by a “Literal Democrat” (spot the difference!) candidate, who did no campaigning, but siphoned off more than 10,000 votes from the Liberal Democrat who would certainly have won by a mile:

G.B. Chichester Conservative 74,953
A.M. Sanders Liberal Democrat 74,253
R.J. Huggett Literal Democrat 10,203


At the following election in 1999 under the new regional PR system, he competed against his Tory MEP colleagues and others for a place high enough on the Conservative list of candidates to guarantee election. The Tory party selection method was a vote among whichever party members turned up to a single general meeting in the region. The South-west is pretty vast, and having the meeting in his very own constituency was no doubt what ensured his survival.

Well, there must be many Tories who now wish he hadn’t been so lucky! But, had the Conservatives followed the example set by Labour MEPs eight years ago in having our spending of staff and office allowances reviewed by an independent external auditor every year to ensure that all monies are properly spent, then maybe they would have avoided such humiliation.

I suppose I should be jumping up and down with glee at another case of Tory trouble, but I'm afraid that for large swathes of public opinion we will all get tarred with the same brush. Parts of the media that never covers the European Parliament’s actual work will cover this in detail - and that is all that some people will ever read or hear about the Parliament. The Eurosceptics will even argue that the system is inherently corrupt and we should scrap it – a line they of course don’t take for similar scandals such as that of Derek Conway MP at Westminster. Yet the answer is the same in both cases: clear, transparent rules, properly applied and enforced.

The EU's accounts: the whole picture

Here we go again: today begins the annual saga of the Court of Auditors report on the EU accounts.

For almost as long as the Britain's Department of Work and Pensions (whose budget is far bigger than that of the EU), the EU's accounts have not been subject to "unqualified approval" in all fields of expenditure.

The auditors have again found fault with spending of EU funds (largely by national governments) as regards agriculture, structural funds, and a proportion of external action.

However, they do explicitly say that "this does NOT imply that the errors found are a result of fraud, or that all, or most, transactions in these areas are irregular" - a vital point which I predict will not be quoted by most media commentators.

Nor will the media focus on the unqualified approval of the administrative expenditure of the EU, carried out by the EU institions themselves, not the Member States.

The errors that there are in the EU spending system need dealing with and ractification. But what you won't realise from most of the media is that they are no worse (and some say not as bad as) than those that occur at national level.

For years, one of UKIP's main lines of attack has been that "the European Commission is so corrupt that its books have not been signed off by the auditors for the last 12 years".

With this in mind I'm looking forward to them giving a statement on this week's report from the House of Lords, which finds "no evidence to support this suggestion".

According to the Lords, the problems that have prevented the auditors from signing off the books, comes not from corruption but from other problems and an inadequate system of auditing that gives an inaccurate, negative impression.

Sir John Bourn, head of the UK National Audit Office, stated that he would not be able to sign off the accounts of the UK Government should he have operated the same system here.

The Lord's report calls upon the European Court of Auditors to:

- Make a clear separation between the audit of the Commission's accounts - which has always been positive - and the statement of assurance on the regularity and legality of underlying transactions - which has always been qualified in certain specific fields

- Give separate verdicts on each different category of spending, instead of one overall verdict

- Make a clear distinction between fraud and other kinds of irregularity, giving separate figures for each

- List member states which demonstrate poor management of EU funds


Far be it from me to contradict an in-depth report from the national parliament of a sometimes sceptical Member State. But I would expect UKIP to rubbish it. Yet maybe even they are backing off: only one UKIP MEP was present in the Parliament this morning to hear the President of the Court of Auditors present its report - usually something UKIP focusses on - and even he didn't stay to hear the reply to his question.

Is UKIP backing off? Are they running out of genuine things to criticise? Has even their vivid imagination deserted them?

The headlines will scream that the the EU's auditors have highlighted irregularities in EU spending for the 12th year running in their annual report.

In fact, as in previous years, the auditors will declare the accounts reliable overall, but criticise the way some funds have been spent on the ground - by the EU's 25 member states rather than the European Commission.

Spending on EU administration is actually expected to get a clean bill of health, with the auditors praising new monitoring systems.

Like all large organisations (for example, the Department of Work & Pensions, which has not had its accounts - for its far larger budget - approved for even longer than the EU), the auditors cannot certify that every single item of expenditure has been in accordance with all the relevant procedures. But what they are talking about is not normally fraud, but mistakes in the paperwork, timing or procedure.

This time, the European Commission is apparently set to try to rebalance the media slant, and even to do the unthinkable: criticise the Court of Auditors for its methods and its presentation.

I gather (from the BBC) that the Commissioner for Administration, Audit and Anti-fraud, Siim Kallas, is expected to respond by saying that the Court of Auditors Report:

* Ignores the fact that money mis-spent one year is normally clawed back the next year. If you lose your wallet, but get it back with the money inside, you do not count it as a loss.

* Considers money lost even when it may have been spent as intended - if say, a grant recipient makes a minor mistake with the paperwork

* Refuses to name which member states are lax in controlling use of EU funds

In 2005, Mr Kallas says, the Commission clawed back 2.17bn euros (£1.45bn) from member states, and wrote off 90million euros (£60million).

It will be interesting to see whether the Commission's efforts result in any better balance in the reporting of this issue!


Background:

A positive verdict from the auditors on the reliability of EU accounts means that all transactions, assets and liabilities have been completely and accurately recorded.

A negative verdict on the regularity and legality of transactions in one area of spending or another means that there is insufficient evidence that funds have been spent in accordance with the rules.

Most of the problems occur with payments made by member states, because 76% of EU payments are delegated to them, but efforts are under way to encourage them to exercise greater care when spending EU funds.

An agreement was reached in April requiring the member states to produce an annual assessment, starting next year, of the way EU spending has been controlled at national level.

Yet again the Eurosceptics raise the old chestnut of the EU Court of Auditors stating that "93.5% of the EU's accounts are subject to fraud and corruption" - a piece of eurosceptic nonsense which, through repetition, has become increasingly believed by many people.

In fact, if you look at the reports of the Court of Auditors then you will see that every year since 1994, which was the first year it had to produce such a statement, it found that the accounts are reliable, the revenues have been handled in a legal and regular way and the spending commitments are legal and in order. They also found no evidence of fraud anywhere in the budget.

Where, then, are the problems? They lie in spending handled by member states – not by the European Commission itself. This amounts to more than 80% of the budget and it is the responsibility of individual countries such as Britain. It is at that level - not at EU level - that there have been mistakes.

If anyone wishes to verify for themselves what the Court of Auditors have said they can visit its website.

When the EU’s Court of Auditors were unable to sign off the EU accounts fully this year, I knew that some politicians back in the UK would try to make political capital out of it. So I made sure I read the report very carefully to find out what it actually says.

The auditors found that the EU’s accounts were “legal and regular as far as the revenue, commitments and administrative expenditure are concerned”. In other words, everything the Commission manages centrally is in order. The auditors also point out that reforms introduced by Neil Kinnock are working.

Where, then, does the problem lie? The auditors say: “owing to persistent weaknesses at member state level in systems for supervising and controlling the implementation of the EU budget, payments were still affected by the same types of error occurring with the same frequency as in previous years”. In other words, it’s national governments, not the EU centrally, that are causing the problems!

One last, very important point. The Court does not mention a single case of fraud anywhere in its report! The “errors” reported are either procedural or to do with accounting systems.