Revealed: EU hands money to poor member states faster than they can spend them

Matthew Holehouse, our Brussels Correspondent, reports The European Union is handing money to poor member states faster than they can spend them, a report has found. The European Court of Auditors, the EU’s independent fiscal watchdog, has refused to give the accounts a clean bill of health for the 21st year running. It found that countries are “struggling to absorb” the sums of money allocated to them, leading to poor spending. It identified an error rate in spending of 4.4 per cent – more than double the 2 per cent error margin that is tolerated. It is a measure of money that should not have been paid out because it did not comply with the rules. The worst affected area was cohesion spending – funds to develop the infrastructure of poor countries where there was a 5.7 per cent rate of error. The growth budget had a 5.6 per cent error rate, whereas the administration units of the EU had a rate of 0.5 per cent. It increases the pressure on David Cameron, who has previously called for the EU to become less wasteful as part of his renegotiation. Vítor Caldeira, president of the ECA, told MEPS: “There is a persistently high level of payment errors, which means too much money is still not spent in accordance with the EU’s financial rules.” “Some Member States are struggling to absorb the EU funds they have been allocated. In fact, in four Member States, the total not yet claimed from the EU budget is equivalent to 15% or more of their governments’ annual spending. “The Commission has put funds at the disposal of Member States, without sufficiently considering their capacity to invest them. And some Member States have had difficulty identifying sufficient projects and finding the funding they need to contribute. “This puts value-for-money at risk. With few projects available, there is less incentive to apply rigorous selection criteria. We also note again this year the high level of unused funds in financial instruments and the small increase in unpaid claims.” At the same time, he said the budget is under “severe pressure” and called for funds to be freed up to focus on pressing matters. The greatest level of error was in schemes where recipients could reimburse the costs they claimed to have incurred during works. The European Commission said the error rate had declined from 4.5 per cent, and said the accounts had been signed off by the auditor. It also noted that error is not the same as fraud.