In a resolution passed by the UE Commission Budgetary Control Committee today, MEPs urge EU member states to claw back EU funds lost through fraud or irregular spending. The EU Commission is to use its executive powers to help member states to fight fraud and tax avoidance. The Commission will assess member states’ corruption-fighting performance each year and will suspend payments in the event of spending irregularities.
Member states manage up to 80% of EU budget spending in areas such as agriculture, growth and employment aid to EU regions (European Structural and Investment funds), though ultimate responsibility for this spending rests with the EU Commission. National governments are responsible for protecting EU financial interests, which involves cooperation with the Commission and its Anti-Fraud Office (OLAF).
Key findings and requests
Reported spending irregularities affected 1.8% of total payment. The impact of financial fraud and errors went up significantly in 2014, though the number of financial errors fell slightly.
In a press release issued today, the Commission notes that EU member states are responsible for collecting EU own resources, in the form, inter alia, of VAT and customs duties. MEPs are concerned that the share of Traditional Own Resources (TOR) affected by fraud was 191% higher in 2014 than in 2013 and the amount affected by non-fraudulent irregularities was 146% higher. In 2013, reported fraudulent irregularities had affected 0.29 % of TORs (i.e. €61 million) and non-fraudulent ones 1.57 % (€327.4 million).
The average TOR recovery rate for 2014 was only 24% - an historic low. The recovery rate for 2013 had been 62% (€234 million) the best result in a decade. Member states must demonstrate firm political will to fight VAT fraud and tax avoidance, while the Commission should use its power to both check on and help member states to this end".
Non-Compliance with public procurement still high
MEPs believe that simplifying administrative rules should reduce the number of non-fraudulent irregularities. The Commission is requested to release detailed information on best and worst-performing member states by policy area and by sector.
The number of irregularities due to non-compliance with public procurement rules remained high. MEPs point out that the new EU directives on public procurement must be implemented by April 2016.
MEPs urge the Commission to assess the planning, implementation and checking of the EU’s multiannual budget spending on the results-based budgeting principle and to focus on getting value for money from public spending.
MEPs reiterate their call for whistle-blower protection to be enacted.
The resolution will be voted by the full Parliament at the March plenary session in Strasbourg.