The government has defended Neil Kinnock following the auditing and accounting scandal in the European Union.

Lord McIntosh of Haringey said the accounting reform programme that the commission vice-president is introducing is "quite remarkable".

"If you think that they are moving over to accruals accounting with a proper balance sheet in only four years," said the minister.

"It took us seven years to do it and only three European member states have succeeded in doing it at all."

For the Conservatives Lord Saatchi said that corruption appeared to be endemic in certain parts of the EU.

"Could the minister say why the EU in Austria paid out subsidies to 60 per cent more alpine pastures than actually exist or why it managed to pay out 2.5 billion euros to olive oil producers in Greece last year despite the fact that there is no actual register of olive oil producers in that country," he said.

Lord McIntosh conceded that the newspapers "are full of examples of fraud and irregularities".

"There is no doubt that there are fraud and irregularities. There are in all systems," he said.

Lord Stodart warned on the levels of fraud involved in the CAP.

"Isn't it time that our government and other governments took action, real action to end this awful corrupt regime," he said.

The minister said the Tory peer "was failing to distinguish between those actions which are the responsibility of the European Commission itself and those which are the responsibility of the member states".

"A very high proportion of the irregularities which are there are the responsibility of member states and it is the responsibility of member states to eradicate them," he said.