By Tash Shifrin
20 August 2009
The government has dismissed as ‘misleading’ claims that it will have to pay almost £300m in fines to the European Union because of financial irregularities in regeneration projects.
The Conservative Party seized on declarations in the Department for Communities and Local Government’s 2008/09 resource accounts, which show a series of ‘control issues’ over programmes funded through the European Regional Development Fund.
The DCLG’s policy is to recover money from grant recipients when expenditure is disallowed by auditors, but where it cannot retrieve the cash, the department must bear the cost.
The Conservatives highlighted a total of £285m liabilities revealed in the accounts on top of £40m fines already paid to the EU. This was due to ‘administrative bungling’, including failure to follow procurement rules and lack of supporting documentation, the Tories claimed.
Shadow communities secretary Caroline Spelman said: ‘Having to pay out almost £300m in fines will mean more cuts to regeneration and business support when firms are struggling and the public coffers are empty.
‘Rather than trying to bury this scandal in the small print of financial accounts, Labour ministers need to come clean and make a full public statement on this sorry tale of incompetence.’
But a DCLG spokeswoman told Public Finance: ‘These claims are misleading and distort the current situation – as we’ve seen with previous audits we do not expect to repay anything like these amounts and it’s premature to be speculating about any impact.’
The department had been ‘responsible and prudent to plan for all eventualities and been completely transparent throughout, having openly published these estimates in our accounts’, she said.
The DCLG argues that the fines that will actually be paid are likely to be much lower than forecast. Challenges to the European Commission’s audit this year had brought the amount down by 80%, the department said.
20 August 2009
The government has dismissed as ‘misleading’ claims that it will have to pay almost £300m in fines to the European Union because of financial irregularities in regeneration projects.
The Conservative Party seized on declarations in the Department for Communities and Local Government’s 2008/09 resource accounts, which show a series of ‘control issues’ over programmes funded through the European Regional Development Fund.
The DCLG’s policy is to recover money from grant recipients when expenditure is disallowed by auditors, but where it cannot retrieve the cash, the department must bear the cost.
The Conservatives highlighted a total of £285m liabilities revealed in the accounts on top of £40m fines already paid to the EU. This was due to ‘administrative bungling’, including failure to follow procurement rules and lack of supporting documentation, the Tories claimed.
Shadow communities secretary Caroline Spelman said: ‘Having to pay out almost £300m in fines will mean more cuts to regeneration and business support when firms are struggling and the public coffers are empty.
‘Rather than trying to bury this scandal in the small print of financial accounts, Labour ministers need to come clean and make a full public statement on this sorry tale of incompetence.’
But a DCLG spokeswoman told Public Finance: ‘These claims are misleading and distort the current situation – as we’ve seen with previous audits we do not expect to repay anything like these amounts and it’s premature to be speculating about any impact.’
The department had been ‘responsible and prudent to plan for all eventualities and been completely transparent throughout, having openly published these estimates in our accounts’, she said.
The DCLG argues that the fines that will actually be paid are likely to be much lower than forecast. Challenges to the European Commission’s audit this year had brought the amount down by 80%, the department said.
