UK faces ultimatum on audit of EU funds

The UK’s Department for Communities and Local Government (DCLG) has been warned by the European Commission that it must sort out shortcomings in its auditing of European Union regional development spending in England or risk aid payments being suspended.

A formal note from the EU’s regional policy directorate general, headed by commissioner Danuta Hübner, has given Whitehall six weeks to say how the problem will be fixed.

A spokesman told Accountancy Age the problem lies with the certification by English regional government offices of projects financed by European Regional Development Funds, which pumped E2bn (£1.34bn) into the UK in 2005. ‘We have to

be sure all the correct controls are made and executed before, during and after the spending,’ he said.

A DCLG spokesman admitted there were problems: ‘We are having intensive and constructive dialogue with the Commission about their concerns.’ But he said that these talks had lasted for months and agreement had yet to be struck over what should be done.

The Commission remained hopeful a suspension could be avoided: ‘We have good cooperation between the Commission and UK authorities,’ said its spokesman.

The issue could prove embarrassing for both the EU and the UK government. The EU is putting pressure on Westminster, after years of qualified European accounts.

Complaints were recently made that national governments took little responsibility for auditing EU money arriving from Brussels.

This resulted in Treasury minister Ed Balls stating that the UK would take the lead in auditing EU accounts in Britain by making the National Audit Office sign off on a new statement to be made by government on all European spending in the UK.