Reporting back - Richard Ashworth MEP, November 2007 Court of Auditors report Even before the European Union’s

 Court of Auditors delivered its verdict on the EU’s accounts on Monday night, it was easy to predict what its contents might be. For the thirteenth year in a row, the EU’s auditors were unable to give a positive statement of assurance for the EU’s 2006 accounts.

For in depth analysis see http://www.oxfordprospect.co.uk/Euaccounts.htm

Trust in the integrity of the accounting procedures is a vital foundation stone of any democracy. If the people don’t have confidence in the integrity of the governing institutions of Europe then we have all the credibility of a banana republic.

I would like to explain in a little more depth why the auditors came to their decision, and some of the steps I have been working towards that will enable us to move closer to ending this annual debacle.

Firstly, there is the issue of inadequacy of internal controls and the regularity of the transactions the EU conducts. The court makes reference to administrative errors, misapplication of funding and the failure to follow correct budgetary procedures. While the auditors rarely make reference to fraud, they are absolutely right to say that inadequate fiscal discipline and controls inevitably leave the Commission vulnerable to corruption. But the comments above are usually as far as the Court can go – because they can only comment on the transactions they can see, and that’s a mere 26 percent of them. 74 percent – the overwhelming majority – of transactions are carried out by the national governments and their agencies.

For example, in the UK a large amount of EU money is spent by Defra. If you’re one of the farmers I recently met still waiting for their 2005 CAP payment, you will not be filled with confidence! The Court of Auditors is unable to scrutinise these accounts and, while that does not mean each of them are cooking the books, it does create a lack of transparency and accountability. Cast your mind back to 2005, when EU leaders agreed to the seven year budget deal.

The European Parliament threatened to block the whole budget unless the national governments promised to provide the parliament with evidence of self-certification for the transactions each member state carries out on behalf of the EU. Frustrated with the glacial pace at which the Commission and Council of Ministers were moving on this matter, I put down a parliamentary question in September demanding to know what progress has been made. The response was far from encouraging.

Reading between the lines, the earliest a system of self-certification could be up and running would be 2010 but, because the auditors work two years in arrears, that would mean 2012 would be the earliest we might see a positive declaration of assurance. That is simply not acceptable. Although the bulk of the criticism for this ongoing debacle rests with the governments, we must never forget that the buck stops with the Commission. Thirteen failures in a row is NOT acceptable, the Commission MUST attach far greater urgency to solving this problem. Sarkozy Last week, in his first major address to the European Parliament, French President Nicolas Sarkozy left his audience under-whelmed. President Sarkozy was elected with a mandate to reform the French economy, to give greater labour flexibility and to liberalise the French markets.

To achieve this goal, ‘Old’ France had to be brought into the new era and, inevitably, that meant sooner or later the President would have to face a showdown with French trade unions. This week the world watches and waits to see if Sarko has got what it takes to triumph over the strengths of the French transport unions. It is important he succeeds and we applaud him for having the courage to stand up to the Unions so far. But he is going where no French President has gone before and it will be interesting to see if, like Margaret Thatcher, he really does have the staying power to see it through.

Truly this is France ’s ‘Arthur Scargill’ moment. If he succeeds, the road will be open to further economic reform. If he fails, France will hold back economic reform in the whole of the European Union. This is why MEPs were so disappointed to hear him make a speech justifying protectionism. CAP Health Check 2008 will be the first year in the history of the EU that the Common Agricultural policy is not the largest spending item in the EU budget. And now, this week, the Commission have prepared the ground for a major review of the whole EU budgetary priorities to take place during 2008. The CAP was last reformed in 2003/4 when production was decoupled from subsidy. While this was a welcome first step, the CAP still needs further fundamental reform if we are to cope with the modern challenges to food production.

For the first time in a generation, food security is rising up the political agenda. The world food industry faces a growing challenge from a billion Chinamen starting to eat Western diets, from emergent economies like India , China and Russia placing ever-more competitive demand on the world’s resources and from the effects of climate change. The CAP, born out of post-war famine - re-fashioned to control food surpluses of the 1980s - is now completely inappropriate to the challenges of today and the 2008/9 review presents an enormous opportunity to create a new rural policy relevant to the future. If you know of anyone who would like to receive this newsletter, please ask them to send ‘add to newsletter list’ to my email address below.

Contact me: Richard Ashworth MEP, 5 Hazelgrove Road , Haywards Heath , West Sussex , RH16 3PH Telephone: 01444 474858, E-mail: rashworth@europarl.eu.int  Website: www.richardashworth.com