Follow the money

20 July 2009

The European Commission last week (15 July) rather quietly slipped out its 2008 report on protection of the European Communities' financial interests – in other words an assessment of whether or not the money is going to the places it should be going to, writes Stephen Gardner. Last year there was a press release and announcements in the midday press conference. This year it was all a bit hush-hush, with a small mid-afternoon briefing attended by just a handful of hacks. Is there something in there this year they want to hide, I wonder? Well, if so, I haven't found it yet. The report itself is a digestible 30-page affair, but it is accompanied by two hefty annexes that will take a while to chew through. Figures on Structural Fund irregularities make interesting reading though. These are sums of money committed to projects by authorities in member states, that later realise they shouldn't have committed them. This can be for many reasons: incorrect paperwork, projects that later turn out not to be eligible, simple mistakes. "Irregularity" can also cover fraud, though this is only demonstrated in a very small number of cases. Once member states spot an irregularity they are first required to tell the Commission, then they must get the money back. This is where problems start. Getting the cash back can take time, but if member states fail to recover it within two years, they must pay the money back to the Commission anyway, and the taxpayers of the country in question end up footing the bill. So one could argue that member states have an interest in declaring a relatively low "irregular" payments amount, so that they are less exposed to losses later on. This certainly seems to be the case with France, which consistently declares unrealistically tiny numbers: for the Structural Funds, €4.6 million in 2007, and €5 million in 2008. Compare this with 2008 figures for Germany (€20.9 million), the Netherlands (€28.7 million) and Italy (€74.9 million). Either the French are amazingly good at dotting the i's and crossing the t's on EU-funded projects or there is some under-reporting going on somewhere. However, if a low number for irregular payments indicates competence on the part of the member state authorities that manage EU funds, then the champions of incompetence must be the British (though of course one can also argue they are most rigorous in declaring irregular payments). In 2007, for Structural Funds, the UK declared €161 million of irregular payments (more or less 10 percent of the UK's Structural Funds pot for that year). In 2008, the figure was €123 million. The UK has form for "significantly higher" than normal error rates in Structural Fund payments, especially when it comes to paying authorities in the north of England. Last year, for failings in the north-west of England, around €25 million had to be paid back to the Commission. Surely there is a case here for some cross-border good practice exchange that will deepen EU integration: send the Mancunians and Liverpudlians to Paris for a bit so they can learn how it should be done! This article was originally published on EU Observer blogs.

 

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