asked Her Majesty’s Government:

What responses they have received to their distribution of the Consolidated Statement on the Use of EU Funds in the UK to European Union Finance Ministers.

My Lords, the statement has been welcomed by the European Commission, the European Court of Auditors and a number of member states, including the Netherlands, Sweden, Denmark and Spain. The Council of Ministers will continue discussion of national statements in the new year. The Government are, of course, very grateful for the support expressed by the sub-committee of this House’s Select Committee on the European Union.

My Lords, I thank the Minister for his Answer. The EU published a qualified audit opinion on the transactions underpinning the budget and urged member states to try to manage European funds better. Does my noble friend accept that member states are to blame and what do the Government intend to do about it?

My Lords, over 80 per cent of European expenditure is conducted and carried out through member states. We expect the highest quality of probity and pursuit of value for money in the expenditure of European funds, as we do in our own national funds. The UK has set an example in providing leadership to our fellow European states in setting high standards of audit and we will continue to make representations to our partner countries in Europe to encourage those that have not yet introduced national audits to do so. I am encouraged by the fact that a number of other countries have already indicated that it is their intention so to do.

My Lords, can the Minister turn his attention not to countries but to programmes? Can he confirm that the highest incidence of accounting problems exists with regard to the cohesion fund and the new rural development fund? Does that not indicate that those programmes ought to be looked at again?

My Lords, I thank the noble Lord, Lord Trimble, for his question. He is correct in his observation. Indeed, the Government have put considerable resource in this country towards increasing our monitoring of the efficacy of those programmes and will be making representations in Europe to the same effect.

My Lords, the Comptroller and Auditor-General says in the report that we are discussing that he has,

“identified a number of accounting and other issues which need to be addressed in order to ensure that the accounts represent a true and fair view”.

How quickly does the Treasury hope to be in a position to give him the assurances that he is looking for?

My Lords, I can advise the noble Lord, Lord Newby, that the Treasury is putting considerable resource behind this issue and will tender those answers as swiftly as possible.

My Lords, is it not rather odd to suggest that all the blame rests on the member states and none on the EU? What right has the EU to dish out money to member states without being satisfied that they have proper accountancy arrangements in place to ensure that the money is properly spent?

My Lords, I thank the noble Lord, Lord Waddington, for his question. Our representations about improving the quality of national audit are an integral part of improving the efficacy of European fund distributions. That will ensure that there is a link-up between the supervision and direction that come from Brussels and the quality of expenditure implementation in member countries.

My Lords, has the Minister read the Thunderer column in yesterday’s Times by the much respected Marta Andreassen, now the treasurer of the UK Independence Party? She is, of course, the former EU chief accountant who was disgracefully sacked in 2002 for refusing to sign off its fraudulent accounts. Are the Government aware that the position of Miss Andreassen and others is that the problem lies not at all—or comparatively little—at the member state level but almost entirely at the level of the Commission, which refuses to put in the controls that would make auditing our moneys possible?

My Lords, we wish to see the highest quality of integrity in the preparation of the EU’s accounts and the control of EU expenditure. That requires efficacy at every level in Brussels and in member countries.

My Lords, section 8 on page 2 of the statement says that,

“at least 5% of expenditure at project level is subjected to internal audit and verification”.

Is that percentage realistically high enough and how does it compare with the level of other leading countries in the EU?

My Lords, I thank the noble Lord, Lord Dykes, for his question. I believe that that figure compares—it is in roughly the same range—with those of other European countries and is, in my judgment, at an adequate level.

My Lords, is my noble friend aware that, during our debates in this House on the amending treaty on the European Union, it was reported that the Comptroller and Auditor-General very much doubted whether, if we applied the same auditing standards in the United Kingdom as those required by the statement of assurance, we would have received a statement of assurance in this country—we would have been on a par with the European Union?

My Lords, I thank my noble friend for his observation.

My Lords, is it not a fact that the European Court of Auditors has qualified the accounts for the past 10 years? I ask this as someone who has sat on the Public Accounts Committee. Is it not also a fact that not a single country—not even ourselves—comes up to the required standards? While we have had hope from the Minister, when will we get some real, positive results?

My Lords, I thank the noble Lord for his observation. There has been consistent progress, as indeed the European Court of Auditors noted in its statement yesterday. However, there is still some distance to travel.

My Lords, is it not the height of stupidity and neglect for an organisation such as the Commission continually to hand over money to member states that then fraudulently convert it for other purposes?

My Lords, I thank the noble Lord for his observation. We have to be very careful. When the EU Court of Auditors points to areas where it cannot give assurance, that does not necessarily mean fraud. In fact, the EU is quite specific in saying that it believes that the amounts that can be attributed to fraud are less than 0.03 per cent of total expenditure. However, there is a serious problem and a continuing challenge to us all to encourage our partners in Europe to improve the quality of monitoring the effectiveness of expenditure.