EU spending not signed off for 16th year running

(PresseBox) (London, ) For the 16th year running the EU's auditing body, the European Court of Auditors (ECA), has refused to give EU spending a clean bill of health. As last year, the ECA has said that the annual accounts for 2009 represent an accurate picture of how the EU spent its funds.

However, the auditors found that "payments from the budget continue to be materially affected by error" except in two areas[1]. In the ECA's opinion, payments in the two biggest spending areas, agriculture and regional spending, as well as in 'Research, energy and transport', 'External Aid, development and enlargement' and 'Education and Citizenship' are all "materially affected by error" and it has therefore refused to sign them off.

Open Europe will tomorrow publish a new list of examples of wasteful spending funded by the EU budget.

Open Europe analyst Stephen Booth said,

"This is a hugely embarrassing annual tradition and it remains absolutely unacceptable that the EU budget cannot be signed off by its own auditors. This year we have seen improvements in some areas, which should be welcomed, but also worrying steps backwards."

"The sheer size and complexity of the EU budget means that it remains vulnerable to waste and mismanagement. Until member states and the European Commission resolve the inherent flaws in the EU's spending there should be no talk whatsoever of budget increases."

BACKGROUND

What did the auditors say about the 2009 accounts?

The EU's auditors have once again refused to sign off EU spending, making it the 16th year in a row they have refused to do so. They found that the overall situation is improving, noting that "the Court's estimate of error has fallen over recent years"[2].

However, the two biggest areas of the EU budget, agriculture and regional spending, have not been signed off and remain "materially affected by error." The error rate for agricultural spending has increased since last year but there has been a significant improvement in the amount of errors for regional spending.

The only two areas to receive a clean bill of health were 'Economic and financial affairs' and 'Administrative expenditure'.

As they did last year, the EU's auditors said that the accounts "give a fair presentation of the financial position and the results of operations and cash flows." This means that, in the ECA's opinion, the accounts are a reliable record of how EU money was spent in 2009[3].

The EU budget had expenditure of €118bn in 2009 but is set to increase to at least €126 in 2011

In 2009 the EU spent €118.4bn. This week the EU looks likely to agree an increase in spending in 2011 to around €126.5bn based on an agreement made by EU leaders in Brussels in October[4]. MEPs have called for a larger increase but Prime Minister David Cameron has argued for a 2.9% cap to any increase on the 2010 budget. Negotiations on the 2011 EU budget are likely to be concluded on Thursday.

The UK Treasury forecasts that the UK's net contribution to the EU budget is set to increase from £4.7bn in 2009-10 to £9.5bn in 2014-15[5].

Agriculture

In 2009, the EU spent around €55.9bn on agriculture programmes under the Common Agricultural Policy[6].

The auditors found that 27% of the transactions they looked at were "affected by error". Based on their sample, the auditors estimate that the financial impact of errors to be between 2% and 5%, an increase on last year where the impact was estimated to be less than 2%[7].

Regional spending

In 2009 the EU spent around €33.9bn on 'Cohesion', which includes the European Regional Development Fund and European Social Fund, which are aimed at creating jobs, boosting growth and reducing gaps in the level of development between different regions.[8]

In their report on the 2009 accounts, the EU's auditors found that "As in previous years, a large number of payments to projects in Cohesion was affected by errors". Of the payments they inspected, 36% were "affected by error"[9].

However, there has been improvement compared to previous years. The auditors estimate that 3% of the payments made in 2009 should not have been paid out. This is compared to 11% in both 2008 and 2007[10].

Ultimate responsibility lies with the Commission

The EU Commission has consistently argued that responsibility for the mismanagement of the EU budget lies at the national level, not with itself, as 78 per cent of EU funds are distributed by member states in agricultural payments and structural funds.

However, as the ECA made clear in this year's report, "Responsibility for the legality and regularity of spending on Cohesion Policies starts in the Member States, but the Commission bears the ultimate responsibility for the correct implementation of the budget." And in previous reports, the ECA has noted, "Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Communities (Article 274 of the Treaty)."

[1] ECA press release, 'The European Court of Auditors' Annual Report on the implementation of the 2009 EU Budget', 9 November 2010; http://eca.europa.eu/portal/pls/portal/docs/1/5960726.PDF; The areas unaffected by error are 'Economic and financial affairs' and 'Administrative expenditure'.

[2] ECA press release, 'The European Court of Auditors' Annual Report on the implementation of the 2009 EU Budget', 9 November 2010; http://eca.europa.eu/portal/pls/portal/docs/1/5960726.PDF

[3] ECA, 'Annual report concerning the financial year 2009', 9 November 2010, p12; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF

[4] http://www.europarl.europa.eu//eplive/expert/multimedia/20101021MLT89628/media_20101021MLT89628.pdf

[5] Office for Budgetary Responsibility, 'Budget 2010: The economy & public finances - supplementary material', p27; http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_188584.pdf

[6] European Commission, http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_09_data_en.pdf

[7] ECA, 'Annual report concerning the financial year 2009', 9 November 2010, p84; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF

[8] European Commission, http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_09_data_en.pdf

[9] ECA, 'Annual report concerning the financial year 2009', 9 November 2010, p101; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF

[10] ECA, 'Annual report concerning the financial year 2009', 9 November 2010, p101, footnote 9; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF

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