Member states 'lose millions'

European MPs accused national governments of incompetence after a report showed that millions of euros of taxpayers' money remained routinely unaccounted for.

The annual report of the European Court of Auditors showed little change in 2000 from previous years, despite a reform programme instituted by Romano Prodi, president of the European Commission. Most of the accounting problems within the 90bn euros European Union budget derived not from the European Commission but from the 15 member states, many of which failed to administer farm and regional subsidies effectively.

The auditors did not give a figure of money lost but EU sources estimated that some 5 per cent of the budget could not be fully accounted for.

The document also failed to give examples, but it highlighted weak controls at the national level over livestock numbers and a huge overpayment in Spanish subsidies for growing flax. The latter is an embarrassment to Loyola de Palacio, the European Commission's vice-president, who is a former Spanish agriculture minister.

Eluned Morgan, a spokeswoman for the socialist group of MEPs at the Parliament in Strasbourg, said: "Although there is room for improvement in the Commission's management, these reforms are under way. The blame must be placed at the door of those responsible and, in this instance, it is the member states who are not doing their job properly."