Call to veto EU contributions

Richard Bacon, a member of the Commons public accounts committee, was speaking as the National Audit Office published its report into the refusal of the EU's financial watchdog to give the annual euro-accounts the all-clear - for the twelfth year running.

The South Norfolk MP commented: "My constituents work extremely hard to earn money to feed their families and pay their bills. They will not be happy to see yet more of their cash slip through the EU's fingers, whether through fraud or incompetence."

The European Court of Auditors sparked a row with the European Commission by refusing to give unqualified approval to the 2005 EU accounts. They voiced concern about the way some of the millions of individual payments in the 80 billion-pounds-a-year budget were handled.

The Commission said the picture painted by the auditors was unfair because they only checked a relatively small batch of EU payments - 800 out of 1.5 million - and then passed judgment on the whole budget on the same basis.

The Commission has regularly pointed the finger at EU governments themselves for errors in transactions - because about 80% of EU spending is filtered through national and regional authorities.

The problem is that the EU audit system categorises funds as "irregular" even if there has been a technical mistake in the paperwork or a change in funding arrangements but where all the cash is accounted for and properly used. And, argue officials, there will always be glitches which will prevent the Commission achieving its aim of winning back full unqualified approval for the way the budget his handled.

The Commission has cited the UK's own Auditor General Sir John Bourn, who told the House of Lords recently that if the he had to operate the EU auditing system he might be unable to deliver a clean bill of health to the Government's handling of the domestic budget.

Sir John said there were 500 separate accounts representing central Government spending, of which he "qualified" 13 in his last audit: "If I had to operate the EU system, then because I qualify 13 accounts, I might have to qualify the whole of government expenditure," he explained to the Lords.

Wednesday's National Audit office report points out that in 2005 the EU's anti-fraud office was notified of 12,000 cases of "irregularity" in EU spending, including suspected fraud, to the tune of 680 million pounds - less than 1% of the entire budget but a 5.3% increase in reported irregularities compared with 2004.