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EU: Financial Management and Fraud

Volume 703: debated on Thursday 17 July 2008

My honourable friend the Economic Secretary to the Treasury (Kitty Ussher) has made the following Written Statement.

The Government announced in November 2006 that, as part of their work to improve accountability for EU funds across the EU, HM Treasury would prepare an annual consolidated statement, audited by the NAO, on the use of such funds in the United Kingdom. We are today laying before Parliament the first of these Statements, along with the Comptroller and Auditor General's (C&AG) audit opinion and report.

The purpose of this arrangement is to strengthen the audit and parliamentary scrutiny of the UK's use of EU funds and help detect any weaknesses in the UK's management of these funds so that these can be more effectively and rapidly tackled. The Statement and C&AG's first report sets an excellent basis for doing this.

The C&AG's positive opinion on regularity clearly shows that the management of EU funds by UK authorities during the period covered by the Statement has been sound and that there has been no evidence of material irregularity in the payments made to beneficiaries. The Government welcome this finding, as providing assurance on the management of EU funds in the UK was one of the Statement's key objectives.

The C&AG's limitation of scope does make it clear that more needs to be done to improve the consistency of the recording and the accounting of EU funding by UK central government bodies. The Government are working to ensure these issues are addressed. In particular, improved guidance is being developed so that all future EU transactions and balances are recorded consistently and separately in the accounts of all the relevant entities. The actions taken this year will be the first in a rolling programme of improvement in this area.

This Statement and the improvements that result from it will be important in building momentum for similar action to be taken by our EU partners. Such action is critical, as a positive statement of assurance from the European Court of Auditors on the reliability of the EU's accounts will only ever be obtained if measures to improve the management of agricultural and structural funds are taken by member states as well as the Commission.

In this context, the Government warmly welcome the statements that have been published by the Dutch Finance Ministry and the Danish national audit office, as well the Swedish initiative to publish a statement in the spring of next year. In time, the UK hopes to welcome similar reports on the use of EU funds from other member states.

The Government hope this Statement and the C&AG's audit opinion will be helpful to the European Court of Auditors and the Commission when they are performing their own audits and controls. I will be sending copies of this Statement to both institutions, as well as to my counterparts in other member states.

It is crucial that EU taxpayers are given the necessary assurance that EU money is being spent correctly. The UK's initiative to publish this Consolidated Statement on its use of EU Funds will make a positive contribution to ensuring this is the case. I will continue to work to encourage my counterparts in other member states to show a similar degree of commitment to providing such an assurance.