One of the arguments most used by eurosceptics is the fact that the European Court of Auditors (ECA) has refused to sign off the European Union’s accounts for the 18th year in a row. That does sound like a pretty devastating argument against the EU and its recent attempts to increase its 7 year budget. Why would European citizens want to pay more for the EU when its current funding is already misused?
Over 5 billion euro wasted in 2011
Since 1994, the ECA has been unable to give the EU’s finances a clean bill of health. ECA’s last report in November 2012 even revealed that the EU had paid a farmer for 150 sheep which did not exist, as well as 200,000 euro worth of taxpayers money for a so-called “laboratory” for producing fruit which ended up being “predominantly the charters of a private residence”. The report added that there were “too many cases of EU money not hitting the target or being used sub-optimally”. In fact, 3.9% of the 130 billion euro 2011 budget have been misused; that is over 5 billion euro of wasted money in only one year!
This report came as no surprise to Marta Andreason, a renowned Eurosceptic MEP, who was also formerly a European Commission Chief Accountant who emphatically declared that “there is a new generation who will be voting later this month who have never known an EU with clean accounts”.
Based on that info, it comes as no wonder that the European Council has agreed to a reduced budget. Indeed, if the EU wastes so much of our taxpayers’ money, why would our leaders agree to give the EU even more money?
Are the eurosceptics being hypocritical?
Although that argument might seem quite strong, it includes in reality significant misunderstandings.
The ECA audits the EU’s annual budget every year and assesses the revenues, payments and commitments made by the EU. When this is done, they are able to establish the legality of the sums and which have been subject to error.
The European Commission explains that “solid mechanisms” – such as OLAF, the EU’s anti-fraud office – exist to recoup the lost funds. However, the ECA also explains in its report that only a small proportion of errors are a result of fraud as the “overwhelming majority of errors arise from misapplication or misunderstanding of the often complex rules of EU expenditure schemes” and that “the Court reports around four cases per year to OLAF, based on its audit work”.
This means that although the waste of funds is certainly highly problematic, it is a mistake to place the error solely on the European Commission and its bureaucrats, when the mistakes are often made within the member states themselves rather than in Brussels. This is confirmed by the fact that the ECA has always signed-off the European Commission’s accounts, but not the “legality and regularity of the underlying transactions” resulting from these accounts. In other words, when the EU distributes its money directly to the recipients, the accounts are signed-off. When the EU distributes its money to Member States, for them to redistribute the funds, then there are issues of fraud and error.
Even in national public spending, “errors” rather than “fraud” account for the majority of misplaced money. Using the example of the UK, David Cameron declared in 2010 that welfare and tax credit fraud and error was costing the taxpayer £5.2 billion a year. Of this amount, £1.5 billion can be accounted for by fraud and £3.7 billion a year must be considered as “errors”.
According to the head of the UK National Audit Office, Sir John Bourn, if the UK operated a similar system to the EU, then his office would be unable to give a positive statement of assurance regarding the spending of UK public money in Britain.
On the basis of such arguments, it is quite hypocritical for eurosceptics and certain European leaders to blame the EU of misusing their funds when they have similar issues within their own countries.
Significant efforts must be made by the EU
Yet, this does not go to say that the European Commission’s public spending cannot be criticised. There are cases of misused funds which need to be dealt with and significantly improved.
The EU must continue to improve its transparency and accounts if it is to increase trust in its institutions. Mistaken it might be, but it is a current reality that most European citizens will have more trust in their own Member State’s accounts than in those of a supra-national body.
As unfair as that might sound from a European perspective, even more efforts should thus be made by the European institutions to improve the transparency of their public funds. According to Algirdas Šemeta, Commissioner for Taxation, Customs, Audit and Anti-fraud, the upcoming EU budget “is a chance to further improve the quality of EU spending and to get more value for money from the EU budget, especially in policies managed together with Member States”.
Don’t just say it, do it!
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