Problems with the EU and a few suggestions of how to overcome them.
The Pensions Scandal (9th November
1998).
Euro-MPs are benefiting from a multi-million pound scandal which has
enabled them to top up their pension contributions out of office expense allowances funded
by Europe's taxpayers.
A spokesman for the Dutch socialist Euro-MPs said that the scheme was a well-known scandal within the Parliament. "I don't know of any member who pays back the money." As well as withdrawing from the scheme, the seven Dutch socialist members agreed recently to turn their back on the expenses regime and accept reimbursement for travel and other expenses that was strictly related to cost.
According to some elected members and parliamentary officials, many Euro-MPs who take part in the Additional Voluntary Pension Scheme are - either deliberately or out of ignorance - breaking its rules by having their personal contribution of around £500 a month paid by the taxpayer.
Investigations have shown that a lack of clear rules has allowed Euro-MPs of all nationalities to avoid paying for their own 730 ecus-a-month (£500) personal contribution to the scheme. The Parliament's two-thirds contribution of 1,460 ecus per month (about £1,000) - far higher than most companies would pay in employer contributions - is paid out of the overall EU budget.
But Euro-MPs are paid by their national governments and so to avoid "difficulties of cross-border money transfers" their personal sum is deducted from an office expense allowance designed to help them serve their constituents and is supposed to be repaid by the members. Officials running the scheme say members are expected to pay that money back somehow, perhaps into an office account. But they admit that there are no checks and no means of ensuring compliance.
Staff Costs & Expenses.
- MEPs often employee their wife's and friends in well paid jobs within the EU.
- MEPs are allowed to earn extra money as consultants, advising firms about EU legislation. An MEP can easily double his salary.
- Claims expenses are not scrutinised very well. MEPs pocket large sums of much from expense claims by claiming for the full amount when they've only a spent a fraction of their allowances.
- Last month, a plan to relate expenses to costs was voted down by members.
It is quite clear that the expenses and pensions procedures need to be reformed. Clear rules on what expense allowances were for and how they could be claimed have to be established and checks to be put in place to ensure compliance.
Problems with the structure of the European Union.
- The EU buildings are in three separate sites, which increase inefficiency, too many staff members, higher running costs. Every time it is suggested that all the buildings are moved to one country, the other two nations involved throw a tantrum.
- The travel costs are high due to EU employees moving from one location to another, also wasting an individuals time. Most employees are based in Luxembourg.
- The EU could save an estimated £70 million a year if it was based in just one location.
- Each MEP is in Strasbourg for one week each month. Each has their own luxury office with en-suite bathroom and the latest communications technology. Similar accommodation is provided in Brussels at great expense.
- The EU was advised to buy their building instead of renting them. The EU decided to rent, costing an absolute fortune.
The Fisheries and Agriculture Policy.
- Foreign fishing vessels use very small nets to catch undersized fish.
- Rife with fraud. At least 10% of subsidies costing 1.5 billion pounds a year goes to fraudulent claims for EU subsidies.
- Over generous subsidies have produced over production which cost money to store and destroy.
- Tobacco is the most over produced product which is burned due to over production of the crop.
- The Common Agriculture Policy adds 15 billion a year to our food bill.
- Billions of EU money goes to inefficient farmers producing food on-one wants to eat and to farmers that grow nothing at all.
Europe's cereal farmers have been overpaid £5.8 billion in subsidies since 1992, according to the European Commission in Brussels.
But the true discrepancy, arising from over-compensation for anticipated crop price falls that failed to materialise, is almost double, according to Government economists. The Ministry of Agriculture estimates that the overspend amounts to £9.5 billion - a figure used by the Conservative Government to demand urgent reforms of the subsidy system and cuts to the payments.
The ministry estimates that EU farm policy reforms in 1992 have cost farmers about £13.3 billion in price cuts. By contrast, compensation payments, designed to cushion farmers from the shock of enduring prices more in line with the world market norm, totalled about £23 billion.
Under the 1992 "MacSharry" reforms, farmers cannot claim subsidies for crops unless they agree to remove part of their land from production under set-aside agreements. The reforms had two aims - to compensate farmers for anticipated falls in the market prices of grain and oilseed crops and to cut surpluses.
However, farmers were needlessly compensated because the impact of price cuts was far less than expected. About 1.2 million acres were removed from production in Britain last year in return for set-aside payments of up to £135 an acre. Under this arrangement farmers receive about:
- £107 an acre subsidies for cereals.
- £205 for oilseed rape.
- £154 for linseed.
- £135 for beans and other protein crops.
The Common Agriculture Policy needs to be reformed to protect the countryside and to provide safe, cheap food for the consumer.
EU wastes £3bn in fraud and lax control (18th November 1997).The EU's Court of Auditors reported that the European Union has wasted nearly £3 billion through fraud, bungling and lax controls. Overall, the financial watchdogs found 5.4 per cent of the £55 billion budget for 1996 had been paid in error. While this was 0.5 per cent lower than the previous year, the percentage of cases in which bad bookkeeping had muddied the audit trail rose from 2.3 to 4.3 per cent.
More than £2 billion of the £2.97 billion of misspent funds went into the pockets of cereal farmers, whose subsidies remained unchanged even though world prices rose far above the level of payment guaranteed by the EU. Beef and veal farmers were overcompensated to the tune of £540 million, again because the regulations did not allow for premiums to be lowered when market prices proved to be higher than forecast.
The result is, according to the auditors, "that producer incomes increased by 10 per cent overall between 1992 and 1994 and thus acted as an incentive to increase production". Highlighting one of the many shortcomings of the EU's Common Agricultural Policy, the auditors said no individual ceiling exists for capping aid to arable farmers. They said: "As a result, large sums are paid to very big producers in addition to their revenue from normal sales - on average twice the amount of aid." This was illustrated by a survey of the three biggest farms in each of the EU's five largest countries (Germany, Spain, France, Italy and Britain), which found that these 15 farmers alone received a total of £18 million in subsidies. The largest British farm, which received £1.8 million, was second only to a German, which got £2.3 million.
Other weak spots in the EU's financial housekeeping include an estimated £54 million lost to alleged customs fraud when cases are not settled within three years. Also undermining the EU's attempt to tighten up on fraud and waste are members of the Economic and Social Committee and Committee of the Regions, whose travel claims "that did not conform to the rules" came to £270,000.
These committees, whose members include experts from industry, social affairs and trade unions, are allowed to claim attendance allowances of £100 if they do not stay overnight, plus first-class air fares averaging £200. The commonest method of fraud is to cash in the return half of the ticket and travel home more cheaply.
European Parliament costs £750m a year (22nd May 1996).The huge increase, caused mainly by having to build chambers in Brussels and Strasbourg, has shocked even MEPs. In 1994 the cost was around £500 million. It has also re-opened arguments over how and why MEPs signed contracts for the Brussels complex in 1988 and that in Strasbourg in 1994, at an estimated cost of more than £1.5 billion.
The new figures, and past decisions on the buildings, are attacked in reports by senior MEPs which will be debated in the Strasbourg Parliament this week.
As the bills come in, the reports make clear that the parliament is faced with the short-term choice between drastic cost cutting or breaking EU rules on the proportion of EU money it is allowed to spend. In the longer term more and more MEPs fear that parliament's image as a wasteful "flying circus" travelling between the two cities at huge expense while achieving little will stick. Terry Wynn, a Labour MEP, said: "People cannot understand why we have to move between two places to do our business. But we are saddled with paying the bills and there is nothing we can do except try to cut our costs."
A report by the former president of the parliament and ex-foreign minister of Holland, Pieter Dankert, MEP, savagely attacks the decision by his predecessor as president, Ego Alfred Klepsch, a former German MEP, to sign the lease for the Strasbourg building in 1994. Dankert says this was done without consulting the appropriate authorities and criticises failures to learn from experience with the Brussels building, for which an original lease was signed in 1988.
In the other report, the Spanish MEP, Juan Manuel Fabra Valles, says Parliament's costs will rise by 16 per cent between this year and next year to around £750 million in 1997. Apart from the cost of the buildings, the fact that MEPs and their staff have to travel between the two cities, has also taken its toll. MEPs expenses totalled more than £120 million last year and will exceed £130 million next.