EU suspends £45m cash for Scotland over 'irregularities'
Accounting irregularities force Brussels to suspend payments to Scotland
By Matthew Holehouse, in Brussels
21 Aug 2015
The European Union has suspended around £45 million of payments to Scotland after the discovery of accounting “irregularities”, it emerged today.
The EU said that the Scottish Government had done too little to resolve concerns about its accounting, seven months after the problems were first reported.
The payments relate to the European Social Fund, which provides training to unemployed people with the aim of alleviating poverty.
The suspension amounts to nearly a quarter of the £193 million allocated to Scotland under the fund in the 2007-13 spending round.
It is an embarrassing blow for the SNP administration. Other countries to see their EU funding suspended in recent years include Bulgaria, Hungary and the Calabria region of southern Italy.
Payments could be restored in a matter of months, it is understood.
Alistair Carmichael, former Scottish secretary and Liberal Democrat MP for Orkney and Shetland, said the affair put Scotland’s reputation for financial management at risk.
“It’s not just the financial loss, it’s the reputational damage to Scotland, and it’s also the projects that are going to now lose funding,” he told the Press and Journal newspaper.
“These suspensions are not unknown but they are very unusual, and the commission usually goes out of its way to reach an accommodation with the member state before taking an action of this sort.
“I think we need to see earliest and fullest possible disclosure of what has been going on here.”
Scottish Labour said it was "hugely concerning".
In a statement, the European Commission said: “The commission has taken the decision to suspend payments from the European Social Fund for Scotland.
“Member states have the obligation to ensure that EU money is spent properly and that all procedures and documents respect the rules set out under the structural funds.
“In December 2014, the Scottish national authorities reported problems in the management and control system within the managing authorities (Scottish Government).
“The control report from 2014 also found irregularities concerning expenditure in several operations.
“On the basis of these findings and after an extensive dialogue with Scottish national authorities during several months, the commission decided that there is insufficient assurance that all the measures to rectify the problems have been taken.
“The commission has therefore adopted a suspension of payments for these two programmes. The funds suspended date back to the previous programming period 2007-2013.”
“The commission will now continue to work with the Scottish authorities to resolve this.”
An official EU report, compiled earlier this summer, found a dramatic increase in the number of suspected fraudulent and irregular transactions in the EU budget.
The largely related to agricultural and development subsidies handed to member states by the European Commission, and to taxes on goods collected by member states on behalf of the central EU budget.
European Commission believes the increase is in due in large part due to improved detection and reporting mechanisms.
In 2014 there were 16,473 reported irregularities totalling 3.24 billion Euros. That included some 1.8 per cent of total spending, and 4.4 per cent of taxation collected.
Compared to 2013, it is an increase of 48 per cent in incidents and 36 per cent in terms of cash.
Of these, ten per cent – 1,649 – were thought to be a case of fraud. The suspected fraud bill came to 538 million euros. That compares to 309m euros the year before - a jump of 68 per cent – although the four-year trend highlighted by the report is more stable.
The UK accounted for 1.3 million euros of suspected fraudulent spending, relating to 15 different contracts. Poland, reporting the most cases, had 123 suspected cases of fraudulent spending worth 210 million euros.
Pawel Swidlicki, the policy analyst of the Open Europe think tank, called for countries that misuse money to be denied funding.
“While it is welcome that the EU appears to be getting better at detecting fraud its own budget, the scale on which it is taking place suggests this is a much bigger problem than the Commission lets on.
“With the vast majority of fraud perpetrated at the national level, member states which persistently fail to improve their own detection and prevention procedures should see their funding reduced, although this is a problem exacerbated by the overly complex and inefficient design of the EU budget itself.”
A European Commission spokesman said: "Fraud against the EU budget is fraud against the European taxpayers. We have a zero tolerance policy against fraud and we call on Member States to prevent, detect and prosecute any fraud against the EU budget. "
http://www.telegraph.co.uk/news/wor...5m-cash-for-Scotland-over-irregularities.html
