Court of Auditors Report 2015 – the silliest examples of waste

The European Union’s Court of Auditors has failed to give the accounts a clean bill of health for the 22nd year in a row. The report, which can be read here, blasts the payments underlying the accounts as being ‘materially affected by error’, leading the Court to issue an adverse opinion on the legality and regularity of the payments underlying the accounts. An adverse opinion is rare in accountancy, and is issued only in serious cases where there has been a substantial departure from generally accepted accounting principles.

In the 320-page report, the Court of Auditors blasted various examples of EU waste and mismanagement. But the Court of Auditor’s findings only told a small part of the true scale of EU wastefulness, because only a small sample of all expenditure is scrutinised by the Court. There are undoubtedly many similar examples which will simply never be found. The error rate is 3.8%, almost double the 2% threshold which is the maximum considered acceptable by the Court of Auditors, affecting a whopping €5.4 billion of EU spending.

UKIP MEP Jonathan Arnott, a member of the EP’s budget control committee said: “It’s a good thing that the British people voted to leave the European Union when we did because the levels of waste and bureaucracy are absolutely breath-taking. That’s the nature of a system that simply isn’t fit for purpose.

“These examples of waste would make you think the EU is being run by ‘Count Von Count’ from Sesame Street. Taxpayers’ money is being wasted left, right and centre, the EU has obviously lost control of the money tap. I am sure that when we’re outside the EU we can cut waste, when we can cut out the middleman and look after our own businesses ourselves.”

Some examples of the problems that are highlighted by the report are below (n.b. the page number corresponds to the page numbers in the actual report, not the page numbers on the Adobe Reader):

1. The Commission committed to more expenditure last year than it did in any previous year in history. (p53)

2. The European Union’s liabilities now exceed its assets by a huge €72.4 billion. Last year the deficit was a further €10.3 billion. (p15)

3. The error rate for Economic, Social and Territorial Cohesion was much higher, at a massive 5.2%. This is partly explained (p147) by Commission failings: “In 16 cases of quantifiable errors, the Commission, national authorities or independent auditors had sufficient information to prevent, or detect and correct the errors before accepting the expenditure.” [Note: this is 16 cases from the Court of Auditor’s sample, not from the whole EU accounts]. This does not include projects which were effectively money wasted.

4. There is not yet any procedure in place to ensure that projects actually provide value for money, or that they have been used in the way that they were intended.

5. Even within the Horizon 2020 project, where some performance indicators do exist, the Court of Auditors blasts the structure of the spending, stating “The mechanics of Horizon 2020 do not consistently drive a focus on performance”

6. The European Union fines member states if projects fail to breach the rules. But instead of using the money to deal with unpaid bills, the European Union has spent the money on additional projects (p53, footnote 12)

7. Other ‘amending budgets’ throughout the year cost the taxpayer an additional €500 million.

8. A €4,000 mountain bike, a €10,000 donation to a local church and a €3,500 panoramic spyglass were claimed for in Italy as part of an €80,000 spending spree on unnecessary items for a project. (p238)

9. A youth club in Azerbaijan was given €16,500 but the Court of Auditors was unable to actually trace the youth club, leading to fears that the money had disappeared altogether (p260).

10. The Court of Auditors points out that many objectives for EU funding aren’t properly set out. For example (p107): ‘To secure investment for climate related issues’ is not specific as it does not indicate the volume of investment to be secured, and it is not time-bound as there is no deadline to achieve it.

11. Some projects (p108) were designed to achieve results but were defined by the amount of money put in: “Indicators presented as result indicators but were instead input-oriented, for example in DG AGRI ‘Total investment in renewable energy production’ — This indicator measures the activity directly realised by the intervention instead of focusing on the increase in renewable energy resulting from the investment.”

12. The Court of Auditors states that when countries found themselves in financial difficulties, “warning signs went unnoticed by the Commission, with the result that it found itself unprepared when requests for financial assistance started to arrive” (p110)

13. A €250,000 euro grant for cloud computing services (p149) was used to pay staff for hours they didn’t work, and give them bonuses that they weren’t entitled to.

14. Part of a grant for SMEs in the UK (p170) was never passed on to SMEs. In the Czech Republic (p171) similar funding was given without first checking that it was actually going to a small business.

15. In Germany (p173) the cost of building a road was claimed under regional development funding, giving over 50% of the job to a single company without following EU procurement rules.

16. Seven projects which breached EU state aid rules (p175) were EU-funded. EU state aid rules have hampered the UK, for example making it more difficult for us to help our steel industry to survive, but the EU itself is effectively paying countries to breach those rules.

17. In Hungary (p182) a company claimed EU funds, which it then loaned to another company in its own group.

18. European Agricultural Guarantee Fund (EAGF) – (Includes the direct aid ‘Single Payment Scheme’ (SPS), 29.3 billion euro in 2015, and ‘Single Area Payment Scheme’ (SAPS), 7.8 billion euro in 2015.)

The huge CAP funds were found to have errors, the main reason being that EU funds were being granted for areas of land that were reported larger than they actually were. These errors were found in 12 of the 18 Member States investigated. (Page 215)

19. In Spain a case was found where 48 hectares of land had wrongfully been granted money when a portion of it was clearly not in use. (p216)

20. In France the authorities approved EU funds for grazable land but examples were found that these in part or in full were not eligible due to some of the land being forested or otherwise clearly un-grazable. (p217)

21. In Romania it was found up to 152 million euros in animal welfare payments were ineligible (page 220)

22. In Slovakia (p237) a company charged to the EU the cost of building materials at 6 times the going rate.

23. In Italy nearly €100,000 was awarded for building dry stone walls which the Court says had no link to any EU objectives (Page 240)

24. In Mozambique an agency claimed €874,309 for office and lab supplies, but no documentation or proof was provided for these items (p303)

25. According to the Commission only 58% of the expenditure declared for the European Regional Development Fund (ERDF), Cohesion Fund (CF) and European Social Fund (ESF) operational programmes (OP) were “free of a material level of error”. (p188)


The Great Exhibition of the North will hopefully be a terrific boost for the locality and the wider region

The announcement that Newcastle and Gateshead have been selected to host a major exhibition of art, design and innovation is positive news.

This Great Exhibition of the North will hopefully be a terrific boost for the locality and the wider region – and heaven knows it needs it.

The idea for this exhibition in 2018 is part of George Osborne’s ‘Northern Powerhouse’ and it is estimated it will attract three million visitors.

It sounds good on paper but one of the greatest problems facing the North East is its transport links which need urgent improvement, even more so with so many potential visitors heading our way to this 77 day show.

We all know that such major infrastructure developments take planning, time and a lot of money and so far all the Northern Powerhouse has produced is hype. Meanwhile the North East is languishing behind the rest of the country and lovely though this exhibition could be we need massive investment and permanent jobs.



The North East needs a business boost

MEP Jonathan Arnott is calling for the government to urgently provide more investment in the North East after shocking figures released today (Tue) revealed no growth in businesses in the region.

“These Office of National Statistics figures are truly dire in terms of the North East and something must be done as a matter of urgency,” said Mr Arnott, UKIP Euro-MP for the region.

“Business must be encouraged to come to the North East so creating much needed jobs and giving the area the boost it so desperately needs. These figures show no percentage growth as compared to 7.2% in London.”

The number of companies in the region registered for VAT and PAYE is just 2.7% of the total registered in the UK, putting it on a par with Northern Ireland.

“Time and again the North East comes out worst in surveys and it is totally demoralising for those who live there and are desperate to make a good life for themselves and their families,” said Mr Arnott.

“The area needs more jobs and without more investment this will not happen and the region will continue to top the unemployment rates in the country.

“It is just not good enough for the term ’Northern Powerhouse’ to be bandied about by those in high places as if catch phrases will make everything better. We need action – and we need it now,” he added.


The North East must not be overlooked for housing funding

After government plans to build a million homes by 2020 were unveiled, UKIP MEP Jonathan Arnott has written to the Communities Secretary for assurances that the North East will get its fair share.

Mr Arnott, Euro-MP for the region, has penned a letter to Sajid Javid because he fears that the plan, with a first phase price tag of £5bn, will focus on the South East despite Theresa May confirming her commitment to the so-called ‘Northern Powerhouse.’

“Time and again the North East gets overlooked in terms of investment in homes, transport and jobs and I want an assurance that the region will not be sidelined,” said Mr Arnott.

“I am glad that brownfield land is to be the target of the plans as I am bitterly opposed to building on green belt land, both in my region and elsewhere. The homes shortage has, of course, been exacerbated by uncontrolled immigration.

“It is vital that these are affordable homes as so many people, particularly young couples, are struggling to get on the housing ladder. The situation is painfully aggravated in the North East as the regional unemployment rate is the highest in the country with figures between May and July standing at 98,000 out of work.

“Transport links must be improved to encourage investment to the area and also to help workers reach a wider job market,” he added.


North East poverty needs to be addressed

In the wake of a report showing that more than half of all people in the North East have less than £100 of savings, UKIP’s local Euro-MP Jonathan Arnott has urged more to be done about the high levels of poverty within the region.

The report by the Money Advice Service found that 50.7% of people in the North East have less than £100 of savings to fall back on, one of the highest rates in the country.

“At its core, people can afford to save when they’re in stable, regular employment. We need to end the abuse of zero hours contracts and ensure that our government does more to create jobs in the region with the most unemployment in the country,” said Mr Arnott.

“That means standing up for manufacturing, among ideas we’ve proposed in our Vision for the North East document.

“We also need to do better in our education system at teaching the value of saving for a rainy day, because all of us have at one time or another faced unexpected bills. When a bill strikes, the cycle of payday lenders can lead to a debt trap that is very hard to get out of.

“It’s a combination of making sure that there are enough jobs paying a decent wage to live on, and helping to ensure that people recognise the huge financial value to themselves of putting some money aside.

“The government’s decision in April to introduce a Personal Savings Allowance so that modest interest earnings aren’t taxed was a good one – credit where credit is due,” he added


An extra €31,000 for Eurocrats coffee break

North East MEP Jonathan Arnott has criticised spending an extra €31,000 on drinks and biscuits for internal EU meetings.

A report was passed today (Wed) in the European Parliament’s budget committee without a vote to transfer that amount of taxpayers’ money to cover the increased cost of tea, coffee, water and biscuits.

Mr Arnott, UKIP Euro-MP and member of the budget committee said later, “Spending an extra €31,000 on that is ludicrously inefficient. If the new contractor is forcing prices up then why not find the most cost efficient provider?

“This is small change to the EU but it sums up their convoluted financial approach. Throwing good money after bad and hoping that nobody notices. It is time for the EU to wake up and smell the coffee and frankly they’re really taking the biscuit this time.”

The extra money will be used to provide those refreshments at plenary sessions of the Committee of the Regions.


The new North East devolution plan is a political hotchpotch

News that three North East councils are believed to be going it alone on a devolution deal has been described as a “political hotchpotch” by local MEP Jonathan Arnott.

The government had declared a devolution deal was off the table when the proposal involving all seven local authorities collapsed earlier this month.

But ITV Tyne Tees has reported that Newcastle, North Tyneside and Northumberland – the three areas that voted for a devolution deal – have got together and now negotiations are taking place with the government over forming their own separate deal.

“This is just bizarre,” said Mr Arnott, UKIP Euro-MP.

“It would be crazy to have Newcastle and Gateshead having separate arrangements and we would end up with a political hotchpotch in the region and no actual North East plan.

“Nobody ever planned a three-Council mini-devolution scheme and I’m concerned that this will be pushed through for political reasons rather than based on any evidence to suggest it could work.

“There seems to be no overall strategy and some people would lose out in the inevitable funding postcode lottery,” he said.


North East education has been underfunded and neglected

Comments by the country’s senior schools inspector about the North-South divide in secondary education have been welcomed by North East MEP Jonathan Arnott.

“I fear that the worries expressed by Sir Michael Wilshaw,  Her Majesty’s Chief Inspector of Schools, are totally justified and therefore welcome him bringing this important matter into the public arena,” said Mr Arnott.

Sir Michael has said that the growing divide in performance between secondary schools in the North and South should make us “worry as a nation” and poses serious consequences for the future.

“He is quite right that this divide must end; the youngsters of the North East deserve the best start in life,” said Mr Arnott, a former teacher and UKIP Euro-MP.

“Sadly education in the region has been underfunded and neglected in the same way as so many other aspects such as transport links and investment in industry and technology.

“Only today George Osborne has been talking about the Northern Powerhouse but we want and need action now. We have the highest unemployment rate in the country and our education standards need be among the best in the country to empower our youngsters to succeed in life.

“It is encouraging that Sir Michael singled out North and South Tyneside as areas where secondary schools are doing well and perhaps detailed analysis of why that is could help to raise standards elsewhere,” said Mr Arnott.

“We must never be complacent about education, it is vital for our country that children’s abilities are not wasted,” he added.


Jonathan Arnott MEP calls for investment not more empty words

The latest unemployment figures for the North East – showing it is still the highest in the country – demonstrate the ongoing need for investment in the region, said local MEP Jonathan Arnott.

“It is just not good enough for the government to keep muttering about the ‘Northern Powerhouse’ as if that is some magic panacea.

“We need to see it put into action now – as these latest figures show. Empty words and promises mean nothing,” said Mr Arnott, UKIP Euro-MP.

Official figures released today show that the national unemployment rate is 4.9% but in the North East it is 7.5% with the number of jobless up by 3,000 to 98,000 between May and July.

“I have repeatedly urged action to improve job prospects in the region and I don’t want to sound like a broken record but empty words don’t put food on the table.

“The difference between the North East and the UK average is now more than five times greater than it was a decade ago,” said Mr Arnott.

“It is because of our deep concerns for the North East that we have just issued ‘A Vision for the North East’ in which we set out detailed proposals for the region post-Brexit. We need positive action and UKIP is determined to show the way.”


Jonathan Arnott MEP reacts to report about problems facing girls in Middlesbrough

Middlesbrough’s MEP Jonathan Arnott has reacted to a report that the town has been branded the worst place for girls to grow up with a mixture of sadness and anger.

The report revealing that the town is the worst place to be a girl was produced by the charity Plan International UK. Having looked at factors including child poverty, educational attainment and teenage pregnancy rates it found a stark geographical divide for girls’ prospects, with inner city areas performing the worst.

Jonathan Arnott said “Last week I visited two charities in Middlesbrough (Teen Challenge and Tickle The Taste Buds) working with people at risk of substance abuse and to combat homelessness and provide support for families who simply can’t cope. I know that the charitable sector is doing phenomenal work, and I think it’s vital that we recognise the positives as well as the negatives.

“I hope that this report doesn’t result in people talking Middlesbrough down, especially at a time when there seems to be the prospect of some development and even the football team is on the way up!

“But nobody should be under any illusions about the reality of the lives of those hit hardest by poverty in Middlesbrough. It can be no coincidence that the town has one of the highest unemployment rates in the country with the North East region topping the regional figures again last month with 7.6% unemployment,” said Mr Arnott, UKIP Euro-MP.

The charity is calling for girls’ committees to be set up, mandatory sex and relationship education, and greater cross-departmental government cooperation to address the problems which include daily harassment.

Mr Arnott said, “We already have mandatory sex and relationship education in this country. This must be age-appropriate and I’ve consistently opposed calls for this to be extended to children as young as five. But the report is absolutely right to say that girls are being let down and we all have a responsibility to eradicate this situation.

“The North East is the region of the country most in need of improvement across the board and I fear only when that happens will the inequalities facing girls and young women be remedied.”

Last week, UKIP launched its Vision For The North East which demanded a fairer deal for the North East in terms of funding and a range of policies to create jobs and get the economy moving again.