H.M. TREASURY NEWS RELEASE

HM Treasury News Release

108/99
30 June 1999

ANTI-FRAUD FOCUS IN EUROPEAN COMMUNITY REPORT

Latest developments on anti-fraud measures in the European Community were published today as part of the Government's annual statement on the EC Budget.

Commenting on the publication of European Community Finances - the nineteenth statement in the series - Economic Secretary, Patricia Hewitt said :

"As in previous years, this Statement clearly sets out the latest key developments and measures to counter fraud and financial mismanagement in the EC.

"We are determined to crack down on fraud at every level within the European Community. That is why we pressed hard, and won agreement for, UK proposals to reform the EU's anti-fraud system, drawing on a number of strengths of the UK model:

a strong, independent Head of Fraud investigations, with statutory protection from dismissal, like the independent Comptroller and Auditor General;

a Head with wide ranging powers to initiate any investigation on his own initiative, with rights of immediate and unannounced access to papers and buildings and to question officials and Commissioners;

powers matched by responsibility for making recommendations and ensuring speedy follow up when problems are found;

powers matched by accountability through the Council and the European Parliament to the taxpayer.

"The new European Anti-Fraud Office meets our requirements. The EU fraud buster will be independent, will initiate its own investigations, and will make sure its recommendations are followed up.

"But getting the new Anti Fraud Office in place is only the vital first step. We need thorough reform in Brussels. And it is coming. The Cologne European Council stressed the importance of reform and modernisation of the Commission and of the European civil service, and proposals will come forward soon."

Details about EC financial management and measures to counter fraud include:

the European Court of Auditors' Annual Report for 1997 and Statement of Assurance, published on 17 November 1998;

the Council's recommendation to the European Parliament on the discharge to be given to the Commission for its implementation of the 1997 budget;

details of progress on the major areas of work under the Commission's Sound and Efficient Management 2000 Programme;

the 1998 "Fight against Fraud" report;

the new European Anti-Fraud Office.

The Annual Statement also sets out a breakdown of expenditure and sources of revenue in the 1999 Community Budget, along with details of the UK's contributions to, and receipts from, the Budget.

NOTES FOR EDITORS

1. The Economic Secretary announced the publication of European Community Finances in answer to a Parliamentary Question from Jackie Lawrence (Preseli, Pembrokeshire).

2. European Anti-Fraud Office : The European Anti-Fraud Office was formally established by the Commission on 1 June 1999. Investigations into fraud against the European Community budget had previously been carried out by the Commission's UCLAF (Unité de coordination de la lutte anti-fraude) unit. Following calls for a stronger, more independent unit, the Commission put forward a proposal, which was discussed and amended by Member States. On 25 May ECOFIN agreed on the Regulation for a European Anti-Fraud Office within the Commission in line with Chancellor's initiative at the January ECOFIN. The Regulation had already been agreed by the European Parliament.

3. The new Office will have a strong independent head with statutory protection similar to that which the Financial Controller already has. It will have operational independence: it will be able to initiate investigations on its own initiative, have automatic right of access to documents and buildings and the right to question officials. But this independence will be matched by a responsibility for making recommendations for ensuring speedy and effective follow up once problems have been identified. This responsibility will be based on accountability: the Office will report direct to the Council and to the European Parliament, and through them to the European taxpayer.

4. Community Budget : In 1980, following a recommendation by the Public Accounts Committee, the Government agreed to present an annual statement to Parliament giving details of the European Community Budget. This White Paper is the nineteenth in the series. It describes the Budget for 1999 as adopted by the European Parliament and the UK's gross and net contributions to the Community Budget over the years 1996 to 1999.

5. Details of information in the report includes:

total payment appropriations (the amount of money which is available to be spent during 1999 arising from commitments in the Budgets for 1999 or preceding years) of 85,558 million euro (£60,358 million) for 1999, 2.4% higher than 1998, and 1.10 % of Community GNP (well within the Own Resources ceiling of 1.27%);

total commitments (the total cost of legal obligations which can be entered into during 1999 for activities which will lead to payments in 1999 and future financial years) of 96,929 million euro (£68,380 million) for 1999, 6.9% above 1998;

and new estimates of the amounts for the UK's contributions to, and public sector receipts from, the Community Budget for the years 1998 (outturn) (£4,597 million) and 1999 (forecast) (£2,486 million). As expected, the contributions for 1998 are high compared to 1997 and the forecast for 1999. This results from the intricacies of the timing of payments including corrections to UK payments and abatement in earlier years. Over time these technical factors even out. 1998 falls within the Financial Perspective agreed in Edinburgh in 1992.

6. Copies of European Community Finances (Cm 4382) are on sale at all Stationery Office bookshops and can also be ordered by telephone on 0171 873 9090, price £6.70.

7. If you have access to the Internet, you can find this news release and other Treasury information at www.hm-treasury.gov.uk.