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EU spends 5% of funding 'in error'

Europe's governments have been challenged to get a grip on EU spending after a financial watchdog warned of "material errors" in last year's £88 billion (£102 billion euro) budget.

National and local authorities are responsible for disbursing 80% of the EU budget in regional, social and agriculture grants every year, and every year the European Court of Auditors highlights errors in the way the money is spent.

The latest report says most funds are spent correctly, but warns: "Payments from the budget continue to be materially affected by error."

They involve money paid out from five of the seven policy areas financed by Brussels, said the President of the European Court of Auditors, Vitor Manuel de Silva Caldeira.

The errors were uncovered in spending ranging from agriculture and development aid to fisheries and research - policies accounting for 92% of EU spending. But the European Commission pointed out that, in financial terms, the figures show that less than 5% of EU spending was spent in error.

"That means that at least 95% of total payments made in 2009 were correct," said EU anti-fraud and audit commissioner Algirdas Semeta.

According to the Court of Auditors, an "error" can be anything which amounts to "a deviation from the regulatory requirements". In many cases that means a wrongly signed form, or EU money spent after a contract deadline has passed, is chalked up as a spending "error".

In some cases it means EU farm payments handed over to subsidise crops without the necessary proof of any "agricultural activity" at all. The court cited the example of auditors visiting farmland owned by a company only to find no evidence of any cultivation at all.

In another example, fisheries cash was paid out to help build a fishing boat nine months after the deadline for eligibility had passed. In another "error" found in Italy, "the same sheep were counted for two different farmers to meet the minimum stocking density requirements".

The report said errors did not mean fraud - the court reports around three cases of fraud a year to EU anti-fraud chiefs, based on its audit work. But Mr Caldeira told MEPs that the error rate remained high in some budget areas, particularly "cohesion policy" which distributes more than £30 billion a year to poor EU regions, helping small companies, and boosting social and economic regeneration.

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