Bernard Ingham, Margaret Thatcher’s former press secretary, made his views on EU membership perfectly clear in his latest column for the Yorkshire Post. He wrote a wide-ranging assault on Brussels, peppered with blunt opinions and inaccurate assertions. One of his main arguments, picked up in the national press, was that the EU is “corrupt and so riddled with fraud that the auditors have felt unable to sign off its accounts for nigh on 20 years”. Not only is this factually incorrect, the error is repeated elsewhere almost annually.
Every year the European Court of Auditors (ECA), the EU’s independent external auditor tasked with looking after “the interests of EU taxpayers”, publishes its report on the EU budget. The report often criticises Brussels’ management of its spending, but to say it has been unable to “sign off” on the budget for 20 years is to misunderstand auditing.
The ECA has signed off on the EU budget every year since 2007. Failure to do so previously has much to do with the way the EU budget is audited. In 2006, John Bourn, then Comptroller and Auditor General at the UK’s National Audit Office, told parliament’s European Union select committee that were he required to audit the UK accounts as the ECA does he would also be unable to sign them off because the previous year he issued a qualified opinion on 13 of the 500 accounts of the British government (22).
However Ingham, like many before him, might have been confusing the auditors’ seal of approval with something called the “estimated error rate”. This is an estimate of the total money the EU should not have paid out because it was “not used fully in accordance with EU rules”.
This can happen for a number of reasons. For example, farmers may exaggerate the amount of land or livestock they own, or administrators become confused by the “complex eligibility rules” of EU funding (see VIII). Alongside its latest report the ECA stressed that error is “not a measure of fraud, inefficiency or waste”.
If the error rate in a spending area is less than 2% it is classified as “free from material error”. For the 2014 budget, the only category to meet this target was administrative expenditure (see 21). All other spending areas failed the test. The overall rate of “material error” was 4.4%. This is too high, but error is fairly common when large budgets are concerned – the EU’s budget last year was over 162.2 billion euros (£123.4 billion).
The European Commission also points out that 80% of EU funds are actually managed by member governments, and when undue payments are made the Commission works with the EU countries concerned to recover the money. The ECA’s consistently critical reports are evidence of a high degree of transparency in EU spending. What’s more, all beneficiaries of EU funding are a matter of public record.
InFacts tried to contact Ingham through his agent but he was not immediately available for comment.
Confusion over the EU budget audit turns into a story for the British media every year. Last November The Times said a whopping 133.6 billion euros of EU spending was to be considered “irregular and possibly illegal”. It reached this figure by adding the totals of each spending area affected, rather than just payments which didn’t follow the rules. The paper also suggested that auditors had not approved the 2014 budget, a trap that the Daily Mail, Telegraph and others have all fallen into over recent years.
This article was updated on 22 April to include the quote from John Bourn, former Comptroller and Auditor General at the UK’s National Audit Office.
Edited by Alan Wheatley