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Wednesday, 1 February 2006 - Brussels OJ edition

14. National management declarations – Responsibilities of the Member States of in executing the EU budget

  President. The next item is the debate on the oral question to the Council on national management statements – Member States' accountability for the implementation of the European Union's budget, by Szabolcs Fazakas, Terence Wynn and Jan Mulder, on behalf of the Committee on Budgetary Control (O-0102/2005 – B6-0347/2005).


  Terence Wynn (PSE), author. Mr President, the oral question includes six specific questions to which I hope the President-in-Office will respond. However, there is also an equally important seventh question: it is the old issue about national declarations. Will the Council actually sit down and discuss this issue with Parliament, so that we can seek a common objective? That is the one aspect in this old debate that has been missing since we voted on the discharge in this Chamber. At the time, we made the recommendations which this oral question refers to.

We asked the Member States to get their house in order, to give us an assurance that the control systems they were putting in place were adequate and sufficient and that when EU money was being spent, it was being spent correctly. The problem we have is that when the Court of Auditors reports every year and cannot give a positive statement of assurance, it is because of problems within the Member States. Unless we are going to have a Commission official monitoring just about every item of European expenditure in the Member States, we are never going to solve the problem.

It is incumbent upon the Member States to help us ensure that European taxpayers’ money is being spent correctly. I have to thank Commissioner Kallas in particular for the way he has encouraged Parliament by persuading the Commission to take on board those recommendations and to produce the roadmap towards getting a positive statement of assurance.

In that process, we had a two-day hearing organised by the Commission and the previous Presidency on how this could or could not be achieved. I attended that hearing on both days. I was saddened at the negativity of some Member States who just wanted to continue with the status quo. They claimed nothing was wrong and nothing needed to be changed. Two things were clear from that hearing: there might have been other minor problems, but there were two major problems. The first major problem was that the supreme audit institutions of the Member States feared that somehow or other this was a takeover by the European Court of Auditors. Hopefully that fear has been allayed. I attended the annual gathering of the supreme audit institutions along with the European Court of Auditors in Stockholm, and I am led to believe that there is an acceptance that it was not the intention. I am also led to believe that the supreme audit institutions are prepared to play their part in helping us to solve this problem.

The other major problem that occurred from that two-day hearing, and probably the biggest one, was the fact that we had asked for a political signature from the Member States to actually give these national declarations. For some Member States, such as the Netherlands, that is not a problem. This task falls on the Minister, and no one else would argue that it should be anybody else. However, for a lot of Member States it was a major problem. On reflection, I have to say that if we had left out the words ‘political signature’ in our discharge report we may not have scared the Council as much as we did. We are now in a situation where we need to come to an agreement with the Council on how to get national declarations that can actually satisfy not only the European Court of Auditors, but the Commission and the Member States themselves, to ensure that we can show European taxpayers that their money is being spent correctly.

I would hope that the President-in-Office gives us clear answers to the six questions listed within the oral question and that he does not give us the answers that Ecofin gave us on 8 November 2005. Quite frankly, that was not leading us forward. I should also like him to answer the seventh question, which I shall put orally: will the Council sit down with Parliament to discuss this matter in the hope that we can get a resolution to it?



  Hans Winkler, President-in-Office of the Council. (DE) Mr President, Commissioner, ladies and gentlemen, thank you for this opportunity to explain the Council's opinion on this important issue, the statement of assurance (DAS) to be issued by the European Court of Auditors on the management of the Community budget. I would like to begin with the rather obvious comment that the management of the Community budget is very complicated, and is unique in the world.

It covers many levels of government, from the various Commission services, via central, regional and local government in the Member States, to the individual final beneficiaries. It is in the interests of all those involved, including the budgetary and discharge authorities, to contribute to the proper management of budgetary funds.

As you have in this House, so likewise we in the Council have repeatedly expressed our disappointment at the situation, particularly in connection with the discharge procedure. Following detailed discussions in the Council and in the Council bodies, the Council adopted conclusions on the Commission communication on the roadmap on 8 November, and I can assure you that it was not easy.

This document summarises the discussions held by a group of experts from all the Member States, representing the ministries of finance, the operating authorities and the audit authorities, in a two-day hearing held jointly with the Commission. This preparatory work formed a good basis for the detailed discussions in the Council bodies, and proved to be useful in that we reached agreement on the aforementioned Council conclusions. I assume you have already had an opportunity to read this document, so I need only mention the most important points here.

I would like to leave the aspect of the declarations to be made by the individual Member States to the end of my comments. I know that this issue is particularly important to you, but I would ask you to be patient.

The Council emphasises in its conclusions that numerous efforts have already been made to improve sound financial management: the introduction of internal audits, stricter requirements regarding the accountability of the Commission's accounting officer and implementation of the integrated administration and control system, to name just a few.

In view of the importance of the Structural Funds in the European Union's budget, I would like to draw your attention to the efforts that have been made to set up paying authorities and to further extend the internal and ex-post controls of the structural measures. One of the first points mentioned in the Council's conclusions is the balanced relationship between the competences of the Commission and the Member States in implementing the European Union's budget in accordance with the Treaty, which must be taken into account when it comes to improving the relevant controls and assurances.

Furthermore, the Council considers it to be extremely important that these improvements should build on the existing control structures and that we should aim to improve the cost/benefit ratio and to simplify the systems. The Council believes that an effective integrated internal control framework based on the principles set out in the Court of Auditors' opinion on the single audit will provide assurances regarding the management of the risk of error in the underlying transactions.

One of the most important points in the Council's conclusions relates to improving the control systems. The Member States and the Commission need to optimise the effectiveness, economy and efficiency of current control systems. Despite the differences in administrative arrangements between the various Member States, the Council advocates that general common principles and elements regarding internal controls should be drawn up.

In the Council's opinion, the Member States should continue to work with the Commission to implement and improve controls in relation to funds for which they have joint responsibility for managing. This should take account of the competences pursuant to the Treaty, the Financial Regulation and the relevant provisions of the sectoral regulations.

For example, some Member States are prepared to take precautions within the framework of the Confidence Pact, as provided for in connection with the Structural Funds programmes. As the Member States are in agreement in the Council, I am speaking for all the Member States, not just for the Council itself.

As you know, the Commission's services have published an initial analysis of the deficiencies of their internal control framework in comparison with the control principles set out in the Court of Auditors' proposal for a Community internal control framework. In connection with the shared management, the Council has requested the Commission to assess the implementation of the current regulations concerning sample checks on operations, paying authorities and winding up bodies' activities.

The Council conclusions propose that the Commission, working with the Member States, should provide an assessment of the present controls at sector and regional level and the value of existing statements and declarations.

I will now turn to the subject of the audit. In setting up the internal control framework we must make a distinction between internal controls and the external audit. Any form of cooperation between independent supreme audit institutions can only be based on the Treaty, as these authorities are not part of the internal control framework. This is an important point. Some audit authorities are willing to discuss with the Court of Auditors how they might strengthen their contribution. I can assure you that all the Member States have expressed a willingness to do everything they can to reduce the risk of error and to improve controls.

The Commission and the Member States should ensure that their approach to the integrated internal control framework is based on common control standards, and to confer with one another on how these standards can most effectively be implemented.

To that end, the Council encourages the Member States to hold bilateral discussions with the Court of Auditors on the results of their DAS audits, in order to solve systemic problems. It requests the Commission to provide it with a report on solutions for problems common to several Member States. Finally – and this is particularly important – the Court of Auditors has proposed that the European Parliament and the Council should come to a common understanding regarding the risks to be tolerated in the underlying transactions.

The Council's conclusions place considerable importance on this common understanding, and the Council eagerly awaits further progress in this regard.

I now come to a subject that is very important to all of us: simplification. There is a need for simplification regarding harmonisation of the control principles, of legislation and of the control requirements in connection with the regulations to be adopted for the programming period 2007-2013. In the Council's opinion, simplification must under no circumstances lead to an increase in the current administration and control costs. What is more, it should ensure elimination of multiple internal controls by the various parties involved in the control framework.

Finally, I would like to talk about the extremely important subject of the declarations associated with the decentralised management of EU funds. The Council sees the existing declarations at operational level as a means of providing the Commission, and ultimately the Court of Auditors, with assurances. They must be useful and cost-efficient and can be taken into account when it comes to achieving a positive statement of assurance. It must be ensured that the existing balance between the Commission and the Member States is not threatened.

I am aware that you expected more in this connection, but I am sure you will agree with me that the text itself can be regarded as a significant and important step forward. In order to make further progress in this matter, the Council has agreed, on the occasion of the 2004 discharge process, to examine the Commission's Action Plan to fill the gaps in the present control framework. The Council conclusions of 8 November will, of course, be followed by further steps in 2006.

A positive statement of assurance is, as has already been said, an important and very ambitious goal, which cannot be achieved overnight. I think, however, that the Council conclusions are an important step towards reaching this goal. They also confirm that the Council continues to support the Commission in its efforts to make an active contribution to financial management at all levels.

Some of you perhaps take the view that the Council should have gone a step further, and I can well understand that. You should bear in mind, though, that on this topic the Presidency was restricted by the need for unanimity. Thank you for your attention!


  Siim Kallas, Vice-President of the Commission. Mr President, already during the entire period of the work of this Commission we have a common concern to get a positive DAS. It has not been possible. This is a very technical issue with a very bad political outcome, which seems to give good reason to whoever wants to say that money in European Union has been spent improperly. Of course, this is completely untrue.

We have worked together to find solutions and ways of joining all our efforts to provide enough evidence for the Court of Auditors to give an assurance that the transactions are reliable. We do not deny that Member States are doing a lot of work to secure the proper control systems. I have just come from one Member State where I met the national audit authority, and huge work has been done to secure the proper use of national and European money where there is shared management.

The Commission does not deny its responsibility for implementing the budget, including in shared management. But we have a missing link: how to make all the results of the control and audit work readable finally for the highest level, for the Court of Auditors.

So, the Commission strongly supported the proposal to the Council made by the rapporteur Mr Wynn and the Committee on Budgetary Control to have a political declaration, a signature on the national level, which, in our view, could cover this missing link. This proposal was rejected last November and now we have to think about what to do next, because the problem will continue to exist.

The Commission adopted an action plan on 17 January and has sent it to the Council and Parliament. The action plan designates 16 concrete actions at all levels and in all sectors. Action 5 specifically addresses the topic for this evening’s debate and reads: ‘Member States should designate a national coordinating body per policy area which can (…) provide all stakeholders with an overview of the assurance available in respect of Community actions under shared and indirect management in their Member State. The cooperation of Member States is necessary when ensuring such a provision in forthcoming legislation, and steering its implementation via implementing rules and guidance’.

Maybe this can be a solution or a least an intermediary solution that can link together the technical levels, the paying agencies and the audits and provide good evidence for overall discharge.


  José Javier Pomés Ruiz, on behalf of the PPE-DE Group. (ES) Mr President, we expected more from you in fact, Mr Winkler. We expected more from the Austrian Presidency in this regard. This is not the first time that this Parliament has seen the Council fall short with regard to what we ask.

Now we Europeans have a serious problem: in the financial perspective, this Parliament wanted us to spend 1.14%, but the President-in-Office, Mr Blair, lowered this to 1.04%. From this it would appear that Community policies, which are so effective and which have done so much to move Europe forward, are being badly managed by the European Union and that, therefore, the best thing we can do is reduce the budget, because things are not being handled properly. In that case, what we should do is see to it that there are no European policies, but national policies: let us renationalise the common agricultural policy, let us spend in the Member States. Behind this lies the fact that for 10 years the Court of Auditors has said that it cannot approve the European accounts. But what European accounts, if 80% of the Community budget is managed and spent in the Member States; if just a fifth is managed in Brussels. What is happening? Some national authorities, which want to pay less and want Community policies to have less fuel, now that we are in a Europe of 25 and are about to be a Europe of 27, are telling us, ‘you are spending badly’.

What is the Committee on Budgetary Control asking for? We are asking to be told where money is spent badly; if a Member State is spending badly, we want it to be said that that State is spending badly, that it is not Brussels. We want to be told whether the problems have arisen here in Brussels or there in the Member State. And to this end, it would be helpful for us if the Member States confirmed the way in which Community money is spent.

I believe that Community money is spent better and more effectively in Brussels than in the average Member State. Nevertheless, as a result of the system we have, Brussels is blamed for bad management, rather than the Member States. I know that the Council has to defend the good name of the Member States.

We would ask for co-responsibility, an approval, by whichever authority, whether it be the Finance Minister or the appropriate Court, which confirms that the accounts are managed in each Member State in the way that the European citizens want, so that Vice-President Kallas or Parliament’s Committee on Budgetary Control are not always to blame; that the blame be shared out and the parties responsible exposed.

I would therefore ask you to confirm how each Member State spends the European citizens’ money.


  Szabolcs Fazakas, on behalf of the PSE Group. (HU) As President of the Committee on Budgetary Control and one of the representatives of the new Member States, I would like to express my gratitude for the opportunity of discussing the issue of national declarations with members of the Commission and Council. I very much hope that as a result of this debate, we will not only receive a previously prepared statement from Mr Winkler, State Secretary, but also concrete answers to the questions submitted by Terence Wynn and ourselves. We very much hope that we will have the answers, as the European Parliament is politically responsible to assure the citizens of the European Union of the lawful and proper utilisation of European Union funds.

In view of the fact that the European Court of Auditors is unable to issue a positive declaration of assurance (DAS) in the absence of national assurance declarations, a negative public opinion is beginning to emerge, namely that European Funds are used in a non-transparent manner, not always in compliance with the regulations. This is why the report prepared by my colleague Terence Wynn, supported by the great majority of this Parliament and also confirmed by the Böge report on the financial perspective of the European Union, pressed for the introduction of the national assurance declaration in the course of the exemption procedure last year. Additionally, we are delighted that this has also been included in the roadmap to an integrated internal control framework, announced by the European Commission, namely by Vice-President Siim Kallas. This reform, involving Parliament, the Commission and the European Court of Auditors, is based on mutual trust and close cooperation, but in addition to this, we also need the support of the Council and the Presidency, because some Member States are still resisting the introduction of the national assurance declarations. As a representative of Hungary, I would also like to call attention to the fact that new Member States have not only prepared themselves for the acceptance of the acquis communautaire and the reception of structural funds, but were also aware that they had to set up their payment and control systems according to the principles of legitimacy, lawfulness and compliance with regulations. Therefore it would not cause them any difficulty to comply with the expectations of the European Parliament and Commission, because by doing so they would serve a Europe that works more efficiently, as well as in a more regulated and transparent manner.


  Jan Mulder, on behalf of the ALDE Group. (NL) Mr President, the resolution we are discussing this evening is self-explanatory. It is a direct result of Mr Wynn’s discharge resolution of 2003. It is important that we should gain better control over EU funds. We all know that the Court of Auditors has failed to issue a positive statement of assurance during the last 11 years. It is to the Commission’s credit that it has adopted Parliament’s recommendations almost in their entirety. That is to be welcomed.

The Member States, unfortunately, take a different view, and a much dimmer one, and that is why this evening is mainly intended as a debate with the Council. I have to say that I am not entirely won over by Mr Winkler’s responses and observations this evening. In actual fact, what we demand in this resolution is not that different from what is already happening in some cases. We would like to refer back to the previous statement in which we ask the highest political authority to sign that statement.

In that resolution, we go no further than statements at a lower level. If we study current practice in agricultural spending, certification bodies are already in place that monitor payment bodies independently and that carry out independent checks. It is beyond me why Member States can accept this in the area of agricultural spending, but not in the other areas of budgetary spending, such as structural spending. This evening’s discussion does come with some strings attached. I assume that the Council is familiar with the Böge resolution on the financial perspectives.

Not only are we asking for more funds following the Council’s decisions, we are also asking for better financial supervision, which is the very purpose of the resolution that we will – it is to be hoped – be adopting tomorrow.


  Bart Staes, on behalf of the Verts/ALE Group. (NL) Mr President, this is indeed, first and foremost, a debate with the Council. I have to say that I found the Minister’s performance a disappointing one; he has not really answered our question, and that at a time when confidence in the European Union is at an all time low. Tomorrow, Commissioner Wallström will be presenting a White Paper on communication as a means of boosting confidence in the EU, but, in my view, a thousand white papers, or a thousand measures, will make no difference if the European Union fails to spend its funds wisely.

That is why I ask you, once again, why you are organising organised irresponsibility here. Why are you, the Council, getting Member States to spend 80% of the European funds instead of ensuring that the individual Member States and regions, where they are responsible for doing so, can say that the funds they are spending are being monitored properly and funds are being spent wisely? I cannot fathom why the Council cannot do as Parliament requires in this respect. I think that you are creating an enormous difficulty for this House.


  Jeffrey Titford, on behalf of the IND/DEM Group. National management declarations! Mr President, I would like to ask Mr Kallas, will these be like the EU’s own accounts, in which the directors-general of the Commission sign off their respective departments with reservations, because they have not got a clue where the money has gone? Because if it is so, it strikes me as a little like trying to repair a severed artery with a band aid: too little too late.

As everybody knows, I do not believe in the European Union; I regard it as an enemy of democracy, and I approach this from an opposite direction. No nation should be pouring taxpayers’ money into a corrupt system. After 11 long years in which the EU’s accounts have been rejected by its own auditors, this weak-kneed attempt to change the system seems to me like pouring huge amounts of gold dust through a sieve, thinking ‘oh, perhaps we better try and stuff up a few of the holes’. No one thinks about the wisdom of pouring the dust through the sieve in the first place and quite simply the way to stop the dust being lost is to stop pouring.

Therefore I call on the Members here present to go back to their various countries and make urgent representations to their own governments to pull the plug. Simply stop paying this monstrous bureaucratic dictatorship, which has no respect for either the governments or the people of Europe. We have a saying in my country: ‘charity begins at home’. Save the money you are currently wasting on the EU, a large part of which is lost simply by fraud and corruption anyway.


  President. Mr Titford, I would call you to order. On two occasions you have accused the European institutions of crimes. You have said ‘fraud’ and ‘corruption’ twice. I would ask that, in the future, you bear in mind that, in this House, accusations against persons or institutions of crimes must be backed up by evidence. Otherwise, you are abusing a Member of Parliament’s freedom to speak.


  Hans-Peter Martin (NI). – (DE) Mr President, when this House discusses financial matters, it is not very often that I am much less forthright than those who have spoken before me. Although this national responsibility is something I dare not even dream of, I have not forgotten, Mr Winkler, what your Chancellor – and mine – said, standing in this Chamber where you are now, regarding the issue of subsidies using EU funds. Chancellor Schüssel's words, in his capacity as President of the Council, were: 'It is only right that such information should be published so that people know who has actually benefited'. I will repeat that: 'It is only right that such information should be published'. So publish it!

In some Member States, where they are much more critical about many things, such as the United Kingdom, for example, that goes without saying. Let Austria be a shining example to follow, and finally tell us what happens with the 80%! Who gets what, how much and when?

My second request, which you might find rather easier: side with your own political group, namely with Mrs Gräßle. She is introducing reforms in the new Financial Regulation with which we will really be able to work, and with which you will very easily be able to ward off unjustified criticism – provided, that is, that you become more transparent.


  Paulo Casaca (PSE).(PT) I feel that this has been a most worthwhile debate in the context of the EU’s budgetary control procedures. The key issue at stake here is legislative clarification. I feel that, with both the Structural Funds and the common agricultural policy, the regulations make it clear that Member States must carry out an independent audit, both ex ante and ex post. These regulations have remained unchanged since the beginning of the current financial programming framework. In this context, the main priority, in my view, is to ensure that the Member States comply with the regulations and that the Commission monitors that compliance. Anything else will only lead to a lack of clarity as regards responsibilities.

I should therefore like to call on both institutions to clarify the level of compliance with Community regulations as regards these ex ante and ex post audits, so that we can be properly informed when we take action.

I should lastly like to say a few words about information on who has received Community funds. I made this request in a report that I drew up a number of years ago and am pleased that Mr Kallas has followed this initiative. I hope that, when you criticise politicians for a lack of transparency, you will recall that Parliament requested such transparency a number of years ago in a report that I drew up.


  Hans Winkler, President-in-Office of the Council. (DE) Mr President, ladies and gentlemen, I have paid close attention to your comments and will, of course, pass on to the Council the opinions you have expressed. However, I would like to repeat one thing: I am here to represent the Council and the Member States; in other words, the opinions expressed by the Presidency of the Council here are those expressed in a unanimous vote in the Council. I am sorry if I have disappointed some of you, but there is nothing more I can say at this stage. I can, however, reiterate – and I hope you will be so kind as to accept this – that we have agreed to examine, in connection with the 2004 discharge process, the action plan drafted by the Commission. I can also confirm that the Council will continue to support the Commission in its efforts to make an active contribution to financial management at all levels.

It is a matter of certainty that the Council will take on its share of responsibility, which it has no intention of abdicating. We will continue to work with the Commission to find solutions that everybody, including all of you in this House, can accept. I am afraid that, at this relatively early stage of the Austrian Presidency, I cannot say any more.


  Siim Kallas, Vice-President of the Commission. Mr President, thank you very much for this debate. This question seems very technical. It is very difficult to explain to the larger public what is actually behind this declaration of assurance. However, we must work to find solutions which do not bring the very negative political outcome of having to say that the money is not under control. I hope, therefore, that the Council and Member States will consider this new basis for merging their work. This is already done at the level of paying agencies and other implementing authorities. Let us try to provide a single integrated assurance, which also offers positive evidence to the Court of Auditors. Let us try to find solutions.

As I mentioned earlier, the Commission is fully aware of the areas in the Commission itself in which the Court of Auditors has found a lot of mistakes in internal policies and in research and development. The action plan includes 16 actions, only one of which is directly aimed at the Member States. However, I hope that this cooperation will bear fruit.

I would like to make a factual remark concerning the statement that the Court of Auditors has rejected our accounts. This is not true. During my term of office, the Court of Auditors has never rejected our accounts. It cannot always assure the legality and regularity of underlying transactions, as provided in the Treaty. This means that it cannot claim that millions of transactions are properly checked. This is true.

It is also very important when we meet journalists to describe the complexity of the picture. This is a huge exercise. The budget discharge includes millions of details. A better understanding of the picture will certainly help.


  Jeffrey Titford (IND/DEM). – Mr President, I should like to make a point of order under Rule 145. I am afraid that there seems to be a misunderstanding of exactly what we are here for. I thought we were talking about the management directions and the reason we were asking for these directions to come in was because money was going missing.

As a member of the Committee on Budgetary Control, my role has always been to look into where the money has been lost or misused and where mistakes have been made – the phrase that Mr Kallas has just used. I was working entirely on the assumption that the reason we were calling for these declarations was that the Member States would look into where the waste and fraud had come and, maybe, even corruption. It was under those terms that I was asking to express my opinions in my speech.


  Terence Wynn (PSE). – Mr President, on a point of order under Rule 108, this was an oral question with six questions; I added a seventh question verbally this evening, and we have not had an answer to a single one of them. Could the Presidency at least give us those answers in writing, please?


  President. Yes, Mr Wynn, you will have the answers in writing.

Mr Titford I have full respect for any political opinion in this Chamber. That is why I did not interrupt you and let you finish your speech. My remark was just to remind you that the language we use in the Chamber should express our opinions and our political positions. It was just a friendly remark from me as I chair this sitting that we should try to use language and words that are not unduly offensive or disrespectful. Apart from that, you have full freedom of expression here, Mr Titford.

To end the debate, I have received one motion for a resolution(1) pursuant to Rule 108(5) of the Rules of Procedure.

The debate is closed.

The vote will take place tomorrow at 11.00 a.m.


(1) See Minutes.

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