It is right and proper to scrutinise EU spending, and ensure as little waste as possible occurs. But the way this is typically done is grossly disproportionate, and manipulative of the truth. The budget of the European Union persistently comes under attack from the tabloid media (not to mention governments). Articles by the likes of the Daily Mail[1], and others persistently (including the more legitimate press such as the Guardian[2]) engage in similar Brussels-bashing.
The famous claim - oft made – is that the court of auditors have not given the budget a “clean bill of health” in 18yrs, and that the auditors have had their budget cut recently. Both of these facts are true.
But articles reporting these facts by and large fail to explain broader context, and so distort the truth. The auditors have not said since 2005 that the books are perfect. But, as British Influence (a pro-EU, pro-Reform, UK-based media outlet) reported recently[3], they are also, without exception, signed off as legal, balanced and accurate since. The auditors do not say that there is anything wrong with the budgets.
Some reply that the budget is not the issue at hand. Rather, it is the ACTUALS (what is actually spent, and how this matches up against what the budget said it would spend) that are the point of concern. That is true. The actuals are of course what matters (the budget is only a statement of intent). What is delivered against the plan is how one should assess EU spending for fraud. But here again, the media distort the truth. Auditors do not give a “clean bill of health” – because the ACTUALS are perfect. This is hardly surprising. Margins of error are always expected, given that an error of even €0.01 removes the “clean bill of health” status.
Here, EU-detractors are quick to point out that the ACTUALS have an error rate of to 3.9% of the overall budget; roughly €5bn lost annually to accounting error, fraud, embezzlement etc.[4] However, what is omitted from those statements is the fact that other countries regularly witness similar levels of fraud, embezzlement, accounting errors etc. in their ACTUALS, and often to a higher level. The United States typically has an error rate of somewhere between 4.5-5.5%[5]. The UK similarly enjoys error, although they perform well, with their 2011-2012 ACTUALS having only a 1.6% error rate[6] (£700bn (€875bn)).
Pointing out errors, fraud etc. is legitimate. It is important to monitor, observe and work to remove errors as best as possible. However, to argue Brussels is corrupt and without hope because of these problems (as so regularly appears to be the tone of media reports) is unjustified, and wrongly implies that nothing is done to try and correct this wrongs.
The EU has many, legitimate bodies scrutinizing the ACTUALS. Institutions of the EU, and national governments work to ensure that money is not being wasted. OLAF and the Budgetary Responsibility Committee are dedicated to ensuring that – whilst error exists – everything that can be done to stop it is done. The European Parliament for many years effectively acted only as a scrutiny body for the budget.
Now (thanks to treaty reforms), the parliament has a dedicated budgetary committee. This closely scrutinizes projects, and defunds them if they are deemed erroneous. And it must be remembered, that projects that the EU funds can be far harder to control money once they have been given to partners on the ground. Development projects in countries like Azerbaijan, Turkmenistan etc., - surprisingly – are quite difficult to stop “graft” being part of the system. The Budgetary committee debate these projects regularly, to see if the benefit of developing these economies really justifies the expenditure there.
At the national level, governments are obligated to assist in the scrutinization process as well. A report by the House of Lords points this out, and by its simple existence, demonstrates that the scrutinizing process is being successfully done[7].
The member states, as the report mentions, are supposed to be part of the scrutinizing process[8]. The report’s existence proves that they are. If the members have problems, it is thus of course right that they raise these concerns and seek appropriate measures to avoid accounting errors or fraud in the actuals in future.
If this does not happen, or there are still problems, then it is up to the Council of the European Union (ministers of member states) to change the budget (with the input of the Commission and the Parliament). If this does not happen, then member states have nobody to blame but themselves.
Tabloid media does not explain this though. It makes out that the Budget in Brussels is corrupt, whilst conveniently omitting that it is the member states (amongst others) who actually create the budget, and are in good part responsible for the scrutinizing of the budget, to ensure it is spent properly. If there is a persistent problem, then it is the responsibility of the member states to change the situation (they hold the purse strings if nothing else!).
One error or misspent money on a mysterious project is appropriate for auditors to cry fowl. If such a process occurs repeatedly, then it really rather implies that those overseeing the actuals, and approving the next budget are the ones at fault. If they did not like the previous expenditure, why are the approving the new budget?
[1] Daily Mail (2013), “Brussels cuts cash to its own auditors after they refused to sign off their budget for 18 consecutive years”, available at: http://www.dailymail.co.uk/news/article-2349257/Brussels-cuts-cashauditors-refused-sign-budget-18-consecutive-years.html
[2] Guardian (2012), “A €1tn scandal or money well spent: where does the EU budget go?”, available at: http://www.theguardian.com/world/2012/nov/21/eu-budget-battle-brussels
[3] British Influence (2014), “It's the British media that needs auditing”, available at: http://www.britishinfluence.org/it_s_the_british_media_that_needs_auditing
[4] Guardian (2012), “A €1tn scandal or money well spent: where does the EU budget go?”, available at: http://www.theguardian.com/world/2012/nov/21/eu-budget-battle-brussels
[5] White House (2012), “Eliminating Billions in Payment Errors”, available at: http://www.whitehouse.gov/blog/2012/11/21/eliminating-billions-payment-errors
[6] Guardian (2012), “Government spending by department, 2011-12: get the data”, available at: http://www.theguardian.com/news/datablog/2012/dec/04/government-spending-department-2011-12
[7] House of Lords (2013), “The Fight Against Fraud on the EU's Finances: 12th Report of Session 2012-13”, available at: http://books.google.co.uk/books?id=DCA8TGLFeUIC&pg=PA42&lpg=PA42&dq=eu+expenditure+fraud&source=bl&ots=mw98unXOFs&sig=l_SGSnc8yASjqU-jOeM_J1uklos&hl=en&sa=X&ei=ESVnVJjDCtXkarmFgMgG&ved=0CF8Q6AEwCQ#v=onepage&q=eu%20expenditure%20fraud&f=false
[8] Ibid, p.42
The famous claim - oft made – is that the court of auditors have not given the budget a “clean bill of health” in 18yrs, and that the auditors have had their budget cut recently. Both of these facts are true.
But articles reporting these facts by and large fail to explain broader context, and so distort the truth. The auditors have not said since 2005 that the books are perfect. But, as British Influence (a pro-EU, pro-Reform, UK-based media outlet) reported recently[3], they are also, without exception, signed off as legal, balanced and accurate since. The auditors do not say that there is anything wrong with the budgets.
Some reply that the budget is not the issue at hand. Rather, it is the ACTUALS (what is actually spent, and how this matches up against what the budget said it would spend) that are the point of concern. That is true. The actuals are of course what matters (the budget is only a statement of intent). What is delivered against the plan is how one should assess EU spending for fraud. But here again, the media distort the truth. Auditors do not give a “clean bill of health” – because the ACTUALS are perfect. This is hardly surprising. Margins of error are always expected, given that an error of even €0.01 removes the “clean bill of health” status.
Here, EU-detractors are quick to point out that the ACTUALS have an error rate of to 3.9% of the overall budget; roughly €5bn lost annually to accounting error, fraud, embezzlement etc.[4] However, what is omitted from those statements is the fact that other countries regularly witness similar levels of fraud, embezzlement, accounting errors etc. in their ACTUALS, and often to a higher level. The United States typically has an error rate of somewhere between 4.5-5.5%[5]. The UK similarly enjoys error, although they perform well, with their 2011-2012 ACTUALS having only a 1.6% error rate[6] (£700bn (€875bn)).
Pointing out errors, fraud etc. is legitimate. It is important to monitor, observe and work to remove errors as best as possible. However, to argue Brussels is corrupt and without hope because of these problems (as so regularly appears to be the tone of media reports) is unjustified, and wrongly implies that nothing is done to try and correct this wrongs.
The EU has many, legitimate bodies scrutinizing the ACTUALS. Institutions of the EU, and national governments work to ensure that money is not being wasted. OLAF and the Budgetary Responsibility Committee are dedicated to ensuring that – whilst error exists – everything that can be done to stop it is done. The European Parliament for many years effectively acted only as a scrutiny body for the budget.
Now (thanks to treaty reforms), the parliament has a dedicated budgetary committee. This closely scrutinizes projects, and defunds them if they are deemed erroneous. And it must be remembered, that projects that the EU funds can be far harder to control money once they have been given to partners on the ground. Development projects in countries like Azerbaijan, Turkmenistan etc., - surprisingly – are quite difficult to stop “graft” being part of the system. The Budgetary committee debate these projects regularly, to see if the benefit of developing these economies really justifies the expenditure there.
At the national level, governments are obligated to assist in the scrutinization process as well. A report by the House of Lords points this out, and by its simple existence, demonstrates that the scrutinizing process is being successfully done[7].
The member states, as the report mentions, are supposed to be part of the scrutinizing process[8]. The report’s existence proves that they are. If the members have problems, it is thus of course right that they raise these concerns and seek appropriate measures to avoid accounting errors or fraud in the actuals in future.
If this does not happen, or there are still problems, then it is up to the Council of the European Union (ministers of member states) to change the budget (with the input of the Commission and the Parliament). If this does not happen, then member states have nobody to blame but themselves.
Tabloid media does not explain this though. It makes out that the Budget in Brussels is corrupt, whilst conveniently omitting that it is the member states (amongst others) who actually create the budget, and are in good part responsible for the scrutinizing of the budget, to ensure it is spent properly. If there is a persistent problem, then it is the responsibility of the member states to change the situation (they hold the purse strings if nothing else!).
One error or misspent money on a mysterious project is appropriate for auditors to cry fowl. If such a process occurs repeatedly, then it really rather implies that those overseeing the actuals, and approving the next budget are the ones at fault. If they did not like the previous expenditure, why are the approving the new budget?
[1] Daily Mail (2013), “Brussels cuts cash to its own auditors after they refused to sign off their budget for 18 consecutive years”, available at: http://www.dailymail.co.uk/news/article-2349257/Brussels-cuts-cashauditors-refused-sign-budget-18-consecutive-years.html
[2] Guardian (2012), “A €1tn scandal or money well spent: where does the EU budget go?”, available at: http://www.theguardian.com/world/2012/nov/21/eu-budget-battle-brussels
[3] British Influence (2014), “It's the British media that needs auditing”, available at: http://www.britishinfluence.org/it_s_the_british_media_that_needs_auditing
[4] Guardian (2012), “A €1tn scandal or money well spent: where does the EU budget go?”, available at: http://www.theguardian.com/world/2012/nov/21/eu-budget-battle-brussels
[5] White House (2012), “Eliminating Billions in Payment Errors”, available at: http://www.whitehouse.gov/blog/2012/11/21/eliminating-billions-payment-errors
[6] Guardian (2012), “Government spending by department, 2011-12: get the data”, available at: http://www.theguardian.com/news/datablog/2012/dec/04/government-spending-department-2011-12
[7] House of Lords (2013), “The Fight Against Fraud on the EU's Finances: 12th Report of Session 2012-13”, available at: http://books.google.co.uk/books?id=DCA8TGLFeUIC&pg=PA42&lpg=PA42&dq=eu+expenditure+fraud&source=bl&ots=mw98unXOFs&sig=l_SGSnc8yASjqU-jOeM_J1uklos&hl=en&sa=X&ei=ESVnVJjDCtXkarmFgMgG&ved=0CF8Q6AEwCQ#v=onepage&q=eu%20expenditure%20fraud&f=false
[8] Ibid, p.42