UK "facing £1bn fines"

Roughly £398m of "financial corrections" have already been imposed by the European Commission (EC), and the Treasury has set aside a further £601m to cover additional penalties.

The money is stopped when the EC feels that countries have failed to meet its rules and regulations on the allocation of cash. Most of the problems relate to agricultural payments.

The National Audit Office figures were contained in a report Britain's use of EU funds.

Auditor general Amyas Morse said of the 2008/9 accounts that there was "a number of significant accounting and other issues" which the Government needed to address.

"The confirmed losses totalling £398 million set out in this report and the provisions for further losses of £601m... represent huge past costs and potential future costs to the taxpayer of implementing EU schemes in the UK," Mr Morse said. Telegraph