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European Commission

[Check Against Delivery]

Algirdas Šemeta

Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud

Protecting EU taxpayers' money: The Facts

Statement - European Commission Press room

Brussels, 4 April 2014

Ladies and Gentlemen,

Yesterday, the European Parliament granted discharge on the EU budget for 2012, in line with the Council's recommendation earlier this year.

This is the 5th – and last – budget discharge procedure to be successfully completed in this mandate.

This is a good time therefore to underline the huge importance the Commission puts in protecting the EU budget and to outline some of the measures we have taken to this end.

I hope it will also be a chance for me to challenge some of the negative misperceptions we too frequently hear in relation to EU spending.

So what are the facts?

First, it is a fact that the Court of Auditors has declared our accounts to be clean and correct for many years now.

Thanks to our world class accounting system, every euro spent from the EU budget is properly recorded and accounted for by the Commission.

This is no mean feat, given the hundreds of millions of euros that are disbursed every year to beneficiaries across Europe.

Second, it is a fact that the tighter rules, stronger supervision and strict corrective measures we have imposed on EU spending have paid off.

For the past 5 years, the overall error rate has been consistently below 5%. In other words, over 95% of all EU spending is in line with the rules.

Moreover, when financial corrections are taken into account, the average error rate falls below 2% (for 2009-12) - the threshold required for the Court's green light.

Although corrections are not a factor that the Court of Auditors considers in its calculation, they are nonetheless an important indicator of good financial management.

Another indicator of sound financial management is the extent to which we safeguard EU taxpayers' money in a cost-effective way.

We have a responsibility to consider the point at which the burden of controls starts to outweigh the benefits – both in terms of costs and administration.

Perhaps if we were to put a full-time auditor on every farm, in every laboratory and in every SME that receives EU funding, there might be less errors.

But that would be nonsensical.

Instead, the Commission focusses on ensuring that, when errors do occur, the EU budget is protected. The money is not lost or wasted.

For example, our financial corrections amounted to €4.4 billion in 2012.

And even today, you will see that we are reclaiming €318 million from Member States that did not manage agricultural funds correctly.

The Commission also conducts many on-the-spot checks and audits, particularly in the most risk-prone areas.

Based on our findings, we ensure that rules and procedures are as watertight as they can be.

In fact, from now on, Member States risk losing part of their EU funds completely if they don't manage and control them properly.

And those who operate best practice will be rewarded with extra funding.

This stick-and-carrot approach is very important.

The Court and Parliament have consistently criticised Member States for not doing enough to protect the EU budget, given that they share responsibility for 80% of it.

And I am not talking about one or two countries here.

In 2012, the Commission had to interrupt payments in every single Member State, due to our concerns with how they were managing EU funds. So improvements must be made across the board.

Meanwhile, the Commission will continue to use every tool at its disposal to further improve financial management.

The Court of Auditors recently praised the Commission's diligence in following up on its findings. And I gave full commitment to the Parliament this week that its recommendations would be acted upon.

Our annual report on the protection of the EU budget will give comprehensive details of this work, thereby upholding our transparency and accountability.

Before I conclude, allow me to emphasize one particularly important point.

Errors in EU spending are essentially administrative mistakes.

They are not the same as fraud.

Press reports of an "EU budget riddled with fraud" are simply false.

In fact, fraud only accounts for around 0.25% of all spending every year.

Of course, any fraud is unacceptable. And, as the anti-fraud Commissioner, I have put forward a host of measures to strengthen our defences against this activity in recent years.

The new anti-fraud strategy, the reform of OLAF and a proposal to harmonise criminal sanctions are just a few of the important initiatives.

And, of course, the European Public Prosecutor, which we proposed last year, will ensure better investigation and prosecution of fraudsters throughout Europe.

Ladies and Gentlemen,

Allow me to conclude with my final fact of the day.

The EU budget is the one of the most transparent and accounted for public budgets in the world. And it is one of the most scrutinised.

It is hard to find a national budget that is as open or as accountable.

The Commission gives the highest priority to ensuring that the budget is well-managed and well-protected. And we will continue to do so in the years ahead.

We do not do this to get a "gold star" from the Court, Council or Parliament.

We do it because we truly appreciate the value that the EU budget brings to our Union.

Our shared budget is a vital source of funding for citizens, businesses, scientists, students, villages and regions across Europe.

Its importance as a source of growth-friendly investment has only increased with the economic crisis.

So protecting the EU budget, and ensuring that it is well-targeted and well-spent, is our duty to EU citizens.

It is a duty that the Commission takes extremely seriously – and I really urge Member States to step-up and do the same.

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