The annual report on the EU budget for 2012 financial year was published today by the European Court of Auditors (ECA). As independent auditor, the ECA has signed off the 2012 accounts of the European Union, as it has done each year since the 2007 financial year. But in most spending areas of the EU budget the report finds that the legislation in force is still not fully complied with.
The ECA calls for a rethink of EU spending rules and recommends simplifying the legislative framework. The 2014–2020 programming period looks likely to remain expenditure oriented – designed for getting the EU budget allocated and spent – rather than focusing on the value it is intended to bring.
“Europe’s citizens have a right to know what their money is being spent on and whether it is being used properly,” said ECA President Vítor Caldeira, “They also have a right to know whether it is delivering value, particularly at a time when there is such pressure on public finances.”
Looking at the EU budget as a whole, the ECA’s estimate of the error rate for spending is 4.8 % for the 2012 financial year (3.9% in 2011). All operational spending areas were affected by material error in 2012. The estimate of the error rate is not a measure of fraud or waste. It is an estimate of the money that should not have been paid out because it was not used in accordance with the legislation concerned. Typical errors include payments for beneficiaries or projects that were ineligible or for purchases of services, goods or investments without proper application of public purchasing rules.
In 2012 the EU spent €138.6 billion, of which approximately 80% is jointly managed by the Commission and the Member States. The ECA was critical of Member States’ authorities where they had had sufficient information available to have detected and corrected errors before claiming reimbursement from the EU budget. The rules for the current 2007-2013 spending period provide limited incentives for Member States to use financial management systems more effectively. For example, in cohesion spending erroneous claims can just be withdrawn and replaced without losing money from the EU budget.
UKIP leader Nigel Farage said:
"The court of auditors have failed to give all clear to EU accounts for 19 years in a row.
"This EU fraud is a because the EU is institutionally flawed.
"In golfing terms, while the British and European taxpayers are working to keep their families afloat, Barroso and the Commission are sitting happy at the 19th Hole (golf club bar) having an easy life.
"It is about time the peoples of Europe were able to get this EU albatross off their backs, or at least out of their pockets.
"This week, it has been revealed that the EU has just wasted thousands of pounds on studies into toilet behaviour and use of vacuum cleaners – this is a huge waste, but according to the auditors is not counted as fraud. This is an example of ridiculous waste of money."