§ Mr. David Davis (Haltemprice and Howden)
I beg to move,That this House takes note of the First to Twenty-fifth Reports of the Committee of Public Accounts of Session 1996–97 and of the relevant Treasury Minutes (Cm 3559, 3577 and 3714), with particular reference to the following Reports:Second, Progress in Completing the New British Library (HC 38);Fifth, Highways Agency: The Bridge Programme (HC 83);Eighth, Information Technology Services Agency: Outsourcing the Service Delivery Operations (HC 98);Thirteenth, HM Treasury: The Second Sale of Shares in National Power and PowerGen (HC 151);Sixteenth, The Work of the Directors General of Telecommunications, Gas Supply, Water Services and Electricity Supply (HC 89);Twenty-second, British Rail Maintenance Ltd.: The Sale of Maintenance Depots (HC 168).This is a unique occasion in that it is the first time in the history of the modem Public Accounts Committee that the motion has been moved by anybody other than my predecessor, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). It will become apparent that I hold the right hon. Gentleman in great esteem, admiration and affection. He held the post of Chairman of the Public Accounts Committee for a record 14 years, during which he presided over the publication of almost 600 reports, all of them unanimous.
The right hon. Gentleman developed a formidable reputation based on hard work, good judgment and fearless tenacity in pursuing public officials who wasted or mis-spent taxpayers' money. All his reports made a significant contribution to better government and better service for the taxpayer. If I have to pick out one report, it is the seminal eighth report of 1994. It investigated the standards of conduct in public life and set out the measures needed to uphold integrity and competence. I look to that report as a benchmark for the future.
As the only Chairman since the National Audit Act 1983, my predecessor has been the man most responsible for the power and effectiveness of the Public Accounts Committee in its modem form and for the respect in which the Committee is held today. I shall consider myself successful if I can even approach the standard the right hon. Member for Ashton-under-Lyne has set. All in the House will join me in thanking him for his sterling work over many years.
I am fortunate in several other regards. First, the Committee has the formidable asset of the National Audit Office under the capable command of the Comptroller and Auditor General. The NAO does an extremely effective if somewhat unsung task in scrutinising the Government's accounts. The Comptroller and Auditor General, Sir John Bourn, has done a first-class job in enhancing the professionalism and the professional recognition of the NAO in recent years. The Northern Ireland Comptroller and Auditor-General, John Dowdall, and his staff in the Northern Ireland Audit Office have also done a very good job in the uniquely difficult conditions in Northern Ireland today.
The Committee is very fortunate in its excellent Clerk, Mr. Ken Brown, who has steered the neophytes of the Committee, including me, through the ocean of documents that the Committee receives. We are all very grateful for his skill and patience.
475 Judging by the first few meetings, I am also fortunate to have an outstandingly capable Committee—terrifyingly so, sometimes. My only concern is that the members are so good that I shall lose rather a lot of them to Front-Bench posts before long. I must tell the hon. Member for Leeds, East (Mr. Mudie), who is the Whip today, that given their interrogation skills some of them may end up in the Government Whips Office.
I welcome the Financial Secretary to the Treasury as an ex officio member of our Committee. I do not think that I am speaking out of turn when I tell her that she has been described in many ways in the Committee already. She has been referred to as our fairy godmother at the Treasury and, on a rather more aggressive note, as someone who might give a new meaning to the phrase "dawn raid". We shall see.
The Public Accounts Committee has existed since 1861, when it was created by Gladstone who was then Chancellor of the Exchequer. Throughout its history, it has been a powerful and effective force for good in British public life. It has been no small contributor to the outstanding international reputation for integrity and competence that has, rightly, long been held by British public servants.
What the Committee stands for is still highly relevant today. First, it stands for propriety and integrity in the administration of public affairs. The importance of that barely needs restating in modern times. Secondly, it stands for keeping tight control over the expenditure of taxpayers' money. In an era in which most political parties recognise the importance of low taxes, that is a vital function. Thirdly, the Committee stands for value for money in service delivery. That has been at the centre of a huge amount of policy innovation in many countries, including the United States, New Zealand and, in recent years, the United Kingdom. The 1983 Act was ahead of its time in that it recognised the importance of the measurement of service delivery—the efficiency and effectiveness criteria. I expect the new Committee, as was true of the previous Committee, to deal with a growing proportion of cases that deal with how well the Government deliver public services.
The previous annual debate on the subject took place on 16 October 1996 when the motion encompassed 48 reports and the associated Government replies. This year's motion covers 25 reports agreed by the previous Committee before the general election and the replies are those of the previous Administration.
The sheer number and technical complexity of the reports can make drawing useful lessons difficult; it is easy to lose sight of the wood for the trees. It is a little simpler if we divide the Government's public service delivery into three stages or phases. The first is the acquisition of assets and services, the second is the operation and delivery of those public services and the third is the redeployment and/or disposal of those assets and services.
The first phase includes project management, the acquisition of buildings and major equipment, the procurement of supplies and services, the contracting out and outsourcing of public sector activities and private finance projects. The second phase involves an emphasis on service for the customer, including the timely and effective delivery of services, the regulation of service providers, management and control processes, target setting and 476 performance measurement. The third phase—asset redeployment and disposal—covers the effective use of assets, the disposal of surplus assets and property, and privatisation.
Those phases cover the full cycle of how Her Majesty's Government acquire assets, employ them to provide public services, and analyse, redeploy or otherwise dispose of them. Each phase can lead to a different type of problem and a different lesson to be learnt. In each phase, we in the PAC look for good practice to encourage and disseminate, bad practice to discourage and eliminate and improper practice to condemn and punish. In short, in each phase we look for the good, the bad and the ugly aspects of public service.
I shall start with the acquisition of assets and services. The best example of good practice that the Committee considered last year has not progressed to a public report, so I cannot properly debate it at length. I can however direct the House to the National Audit Office report on the management of utilities by the Ministry of Defence, which demonstrated the advantages of procuring services competitively. It demonstrated millions of pounds of savings in the procurement of electricity and the proposal to extend such competitive processes to other service acquisitions, particularly gas. The Committee's report on this subject will be published shortly.
The report in this area that has been published is that on the outsourcing of service delivery operations by the Information Technology Service Agency—the eighth report. It shows the potential financial benefits of outsourcing the activities of public bodies and the need for strong contractual provisions to allow effective monitoring and control of contractors' performance.
The service delivery operations of the Department of Social Security's Information Technology Service Agency mainly cover the operation of computers on which social security benefits are calculated and administered and which produce giro cheques and order books. The contracts are worth £577 million over 10 years and were placed in 1995 with three separate firms. The Department estimated that it would save £399 million through outsourcing those services.
The Committee was surprised at the difference of £399 million between the agency's costs over 10 years and the contractors' price and concluded that there must have been substantial inefficiencies in the agency prior to outsourcing. I suspect that many permanent secretaries around Whitehall see a PAC inquiry as a no-win game. Perhaps they think that the PAC always sees a half-full glass as half empty. I have some sympathy with them in this case, but a £399 million saving is just that: a £399 million saving. That is why I list it as a good example.
That being said, the Committee agreed with the Comptroller and Auditor General that the agency needed to monitor the contractors' performance closely and make full use of contractual provisions to control price increases. There were already potential increases in the pipeline of £74 million as a result of increases in volume of business and changes of specification. There was a need for control and monitoring and the agency accepted that.
The Committee was also surprised—rightly—that the agency was not able to tell it what safeguards contractors had in place to prevent the use of benefit claimants' 477 records for financial gain and recommended that the agency seek specific information and assurances from contractors in that regard. Again, the agency has done that.
The bad example under the heading of acquisition of assets—the example to avoid—is in the Committee's second report, "Progress in Completing the New British Library". The report illustrates the dangers of failing to define adequately responsibilities for major procurement projects. The Committee observed that it was unacceptable that responsibility for the construction of the library was not vested in a single Department until 1992 and that the project management arrangements had been far too complicated so that responsibilities could not be clearly attributed to individuals.
The effect of those errors contributed to unacceptable delays of more than four years before the building could be opened to the public. They also led to a reduction in the scale of the completed building and a cost increase of £115 million in the first phase of the project. There is little better way to summarise that than to quote the Committee's report, where it says that the new British librarycould be used as a model of how not to manage a major construction project".Now to the ugly aspects. The clearest issue of propriety was raised by the Committee's 12th report, "Overseas Development Administration Turkish Universities Equipment Project". It demonstrated the importance of proper controls and effective monitoring of bodies involved in public sector transactions to protect against potential conflicts of interest which could lead to impropriety.
In 1991, the ODA agreed to provide £23 million in support of a contract between the Turkish higher Education Council and a United Kingdom company, TecQuipment, for the supply of facilities to engineering faculties in 28 Turkish universities. A number of conflicts of interest arose. TecQuipment was not only the project manager but the supplier of equipment and the adviser to the Turkish Higher Education Council. Fisons assisted TecQuipment to secure a bank guarantee and bid to supply equipment. Another company, Sangari International, acted for TecQuipment as well as for a number of other suppliers to supply goods.
The Committee was—not surprisingly—disturbed that so many conflicts of interest had arisen in one project. It was especially concerned that TecQuipment had significant overlapping roles in the project and was therefore potentially in a position to influence the placing of contracts in its favour. The Committee commented:such conflict gave rise to potential dangers for the taxpayer, not only in terms of value for money but of propriety in the use of public money.It acknowledged that the ODA had learnt a number of lessons from the project and that action had been taken to implement them, but it was disturbed that such basic lessons had to be learnt by a Department that has so much experience in administering aid projects. I agree with that conclusion.
I come now to the operation and supply of public services. The first good example in this area is in the Committee's 16th report, "The Work of the Directors 478 General of Telecommunications, Gas Supply, Water Services and Electricity Supply" which demonstrates the importance of effective regulation of privatised industries to protect the interests of customers. The report covered four directors general responsible for regulating the telecoms, gas, water and electricity industries, which between them use assets valued at £240 billion. In 1994–95, they had a combined turnover of £51 billion. The regulators were appointed due to the limited competition in the industries.
The Committee noted that all the directors general were taking action to promote competition in their respective industries and expected competition to provide customers with greater choice, better service and increased value for money. It welcomed the reductions in prices in real terms that had occurred in the telecoms, gas and electricity industries, but noted that, in the five years immediately after privatisation, before current regulation arrangements were in place, the water companies made profits totalling £7.4 billion. The Committee also noted that average water and sewerage bills increased in real terms by 40 per cent. and 37 per cent. respectively and that the Director General of Water Services attributed increases to the need for investment to improve water quality while expressing concern over future profit levels.
The Committee recommended that the directors general impress on companies the risk that they faced through loss of public confidence and trust if they paid excessive emoluments to top executives. The directors general recognised the widespread public concern about the level of executive remuneration.
The example of bad practice in the supply of services is best seen in the fifth report, "Highways Agency: The Bridge Programme". The Committee expressed concern at the slippage in the programme for assessing and, where necessary, strengthening bridges to meet the European directive to carry 40-tonne lorries from January 1999. The slippage in the programme, which the National Audit Office brought to light, has meant that the UK will comply with the European directive only by using temporary measures to strengthen some bridges. That is likely to result in traffic restrictions on some bridges and inconvenience and congestion for road users. It may lead to extra costs in temporarily propping bridges until such time as they can be permanently strengthened.
The Committee also highlighted failures in programme management, including a shortfall in the number of bridge inspections, failure to compare the costs of doing similar work across the country and a lack of accurate national information on the condition of bridges and the progress of the programme. All contributed to the failure to keep costs and progress under closer control and, therefore, gave a serious lesson in bad management and programme control for the rest of the Government.
The ugly issue of service supply is the question of propriety that arose in the 14th report on "Financial Control of Payments Made Under the Training For Work and Youth Training Programmes". It demonstrated the importance of ensuring that strong financial controls operate in the bodies funded by Government Departments to provide public services. The training programmes are managed by 74 training and enterprise councils, which are private companies operating under contract to the Department for Education and Employment.
479 For the most part, TECs subcontract the provision of training to training providers, including local authorities, voluntary bodies and private companies. The Committee examined the handling by the Department for Education and Employment of allegations of irregular payments, the financial control of payments to TECs and training providers and the steps taken to secure value for money from the programme. The Committee was concerned that £150,000 had been overpaid by the Department to Cumbria TEC because of irregular claims from a training provider and that overpayments of £231,000 were made to Durham TEC in respect of claims made by another provider. It found deplorable the fact that money that should have been spent on equipping people with skills for work had been siphoned out of the system in this way. It is hard to disagree. The Committee expressed concern that as many as 71 cases of suspected and alleged irregularity had been recorded by the Department for Education and Employment since 1995, of which 41 had been investigated and only one referred to the police.
On the public accountability framework in which the Department and the TECs operate, the Committee asked the Comptroller and Auditor General whether he would be prepared to be the external auditor of TECs, which derive most of their income from public funds. The Committee welcomed his positive response and I will return to that subject when I deal with the issue of access.
The third phase of Government activity is asset redeployment and disposal. The best example of that is described in the Committee's 13th report on "The Second Sale of Shares in National Power and PowerGen" and it provided an example of a well-managed sale of Government assets by the Treasury. It demonstrated the significant advantages that can be gained by selling public utilities in stages if the market is uncertain at the time of privatisation. The Committee welcomed the fact that additional proceeds of some £2.3 billion were raised by not selling all the shares in 1991. That was consistent with the Committee's long-held belief that when the market value of the shares was uncertain it could be advantageous to the public purse to conduct such sales in stages. That was what was done and it was a very good example to the Treasury for future privatisations.
The bad example in this category is described in the 22nd report on "British Rail Maintenance Ltd. The Sale of Maintenance Depots", which demonstrates the need to undertake proper valuations of assets prior to disposal and to ensure the extraction of cash before the sale to maximise the return to the taxpayer. The Committee expressed regret that the then Department of Transport did not ensure that the comprehensive valuations of maintenance depots were carried out and strongly recommended that vendors carry out valuations in advance of sales. The Committee was also concerned that cash was not extracted prior to sale, allowing £13 million to accrue to the purchasers. Both those points are straightforward and should automatically apply to every such sale throughout government.
I have described only a few of the past reports and achievements of the Public Accounts Committee. My predecessor and his team did an excellent job promoting the good, highlighting the bad and exposing the ugly. The new Committee has every intention of following in their footsteps, but I would especially like the Committee to pursue the efficiency and effectiveness criteria and seek out ways to enhance the Government's delivery of high 480 levels of public service at the best possible value for money to the taxpayer. There is still work to be done to enhance further our capabilities as a Committee to that end. That brings me to the question of access.
It may surprise the House to learn that the Comptroller and Auditor General does not have automatic access to all areas of Government expenditure. To achieve what we are setting out to do, we need to improve the Comptroller and Auditor General's access powers to all bodies that spend public money and deliver public services. For example, for some large and important bodies such as the Legal Aid Board—which does not have that brilliant a record and which spends more than £1.3 billion of public funds a year—the auditor is appointed by the Lord Chancellor. The Comptroller and Auditor General has to rely on inspection rights to report to Parliament.
Other bodies, such as housing associations—which spend £1.8 billion a year—appoint their own auditors and the Comptroller and Auditor General has to negotiate to obtain access on a case-by-case basis. At the worst end of the spectrum, some important public services are under contract to private firms. Camelot is the biggest and has the highest profile of such bodies, but the Comptroller and Auditor General has been refused the access he needs to confirm that its systems are operating properly and that the income to the national lottery distribution funds is complete.
We should deal with the problem of access and I shall discuss how that can be done. First, the so-called executive non-departmental public bodies—I hope that the House will forgive me for spelling that out, but they are normally known as quangos—should be dealt with by making the Comptroller and Auditor General responsible for the audit in all cases. That would include the Legal Aid Board, the Housing Corporation and 140 other bodies covering some hundreds of millions of pounds. Secondly, we should deal with so-called local spending bodies by providing independently guaranteed rights to the Comptroller and Auditor General. That would cover TECs and housing associations.
Thirdly, the functions provided by contractors should be covered by providing independently guaranteed rights in all cases to the Comptroller and Auditor General that are at least equivalent to the powers of the European Court of Auditors. Some £6 billion of public money is spent through contractors already and it is a serious anomaly that the Comptroller and Auditor General of the House is not in at least as good a position as the European Court of Auditors. The private finance initiative, for which I understand the Government have great plans, will make that issue even more important.
Finally, for publicly owned companies—companies owned by public bodies or the state in large part or in total—we should allow the Comptroller and Auditor General to undertake the audit. Some 200 such companies have been set up in the past few years and the Companies Acts preclude the Comptroller and Auditor General from auditing them. We will need legislation, when we next have a Companies Bill, to correct that.
Those are general issues, but I wish to address another, perhaps more controversial, aspect of access. Our predecessors examined the estate management of the royal palaces in occupation, including Buckingham palace, Windsor castle, Kensington palace and St. James's palace, originally as a result of the public funding of the repair 481 of damage caused by the fire—five years ago today—at Windsor castle. The Committee received reports from the Comptroller and Auditor General on that and related matters, based on examination by the National Audit Office of the Department of National Heritage's monitoring records and related correspondence. The reports were not based on a direct examination of the books and records of the royal household because the Comptroller and Auditor General has no right of access to them. That said, to be fair to the royal household, it did assist the Comptroller's study and supplied information and statistics to staff of the NAO. In addition, the director of finance attended the Committee's meetings, but this is insufficient.
It is a principle of audit and of parliamentary Supply that Parliament's auditor, the Comptroller and Auditor General, should have direct access to papers and people, rather than have to depend on the willingness of those whom he is auditing and the papers they choose to make available. That cannot be right.
The Government often provide for access to funding bodies outside, but they do not have to and can, as in this case, decide not to. We are not talking here about the private matters of Her Majesty the Queen and, as a confirmed and committed monarchist, I would not countenance such an idea in any event. I must say, en passant, that I got as much pleasure as everyone else from the pictures in today's newspapers and, for once, I agreed with the Prime Minister's words. The royal family is making great efforts to increase transparency and openness in its affairs. Those efforts will strengthen public support for the monarchy and we can all applaud them. Our proposals go entirely with the grain of those efforts.
We are talking about a departmental grant in aid of £20.4 million of taxpayers' money in 1995–96, given to the royal household to run the functions of the monarchy, including the maintenance of properties and gardens that form part of Britain's heritage, grace and favour residences and their rents and remuneration for public servants who work for the Queen. Wherever these are financed from public money, it is in the interests of Her Majesty the Queen and Parliament that the usual principles of access for the Comptroller and Auditor General should apply.
The consideration of this matter was not concluded by our predecessors and my colleagues and I must consider it and associated issues, including the civil list, where the Comptroller and Auditor General, and hence the PAC, is excluded.
Taken together, the general increases in access would allow the Comptroller and Auditor General to follow public money wherever it goes and to report to Parliament whether that money has been used as intended and in line with the proper conduct of public business. That does not mean that there would be a greater burden of audit and regulation; indeed, it would reduce the total audit burden on quangos or executive non-departmental public bodies. Elsewhere, it would rationalise unnecessary bureaucracy.
A series of critical questions are posed by the Government's devolution measures. It is important that devolution does not diminish the PAC's oversight of the £21 billion a year that is to be granted to the Scottish Parliament and the Welsh Assembly. Effective audit and 482 accountability arrangements are needed to ensure robust practices for financial management and accountability. Audit arrangements should provide for independence without the mushrooming of auditors and regulators.
The Committee needs to be able to consider issues involved in the administration of the new Parliament and Assembly; for example where a breakdown in financial control occurs. The Comptroller and Auditor General will need continued access to support the Committee in considering these issues.
In recent years, there has been some concern at the proliferation of regulators, inspectors and auditors of public services. I have some sympathy with that view. Oversight bodies such as the PAC and the NAO must continually justify their existence. To that end, I shall finish with a short review of the impact of the work of the previous Committee. Over the past year, 92 per cent. of the recommendations made by the PAC have been accepted by the Government. In 1996, audited bodies made around 2,600 significant changes to their systems and procedures as a result of recommendations in the reports of the PAC and the NAO.
As a result, the PAC and the NAO saved the taxpayer more than £900 million in the past three years—more than £7 for every pound spent on running the NAO. Beyond that, advice and guidance on good practice provided by the reports of the Committee and the NAO have a further impact that it is not possible to quantify, but provide long-lasting savings as well as benefits to the quality of service and the governance of public bodies.
Perhaps I may finish as I began: all of this arose as a direct result of the excellent work done by my predecessor as Chairman, the right hon. Member for Ashton-under-Lyne, and his Committee and from the excellent relationship they maintained with the Treasury. I look forward, as I am sure do my colleagues on the Committee, to equally hard work and, I hope, an equally good relationship with the present Financial Secretary.
§ Mr. Robert Maclennan (Caithness, Sutherland and Easter Ross)
I would like to begin by echoing the words of the new Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), in paying tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), whose distinguished 14-year-long chairmanship gave the Committee a degree of solidity and a reputation for assiduity in its supervision of the public expenditure of the previous Administration.
The Committee that the right hon. Member for Haltemprice and Howden has the honour of chairing has acquired its reputation in no small part because of its traditional ability to reach consensus and produce unanimous reports; it is the Committee least scarred of any by cross-party tensions. I value that, and it must be the way in which the Committee continues in the future.
In wishing the right hon. Member for Haltemprice and Howden all success in the discharge of his new job, I express a little wry internal amusement that someone who conducted himself in the Foreign Office—perhaps the least contentious Department—with a degree of combativeness that was not characteristic of Ministers in that Department may find the ambience of the PAC somewhat different, although no doubt challenging.
483 The right hon. Gentleman comes to his new job with the good wishes of all who serve with him, and I have been greatly encouraged by his opening remarks this afternoon. He homed in on the critical questions of policy: how the work of the Committee should be conducted; how it should be valued; and how the audit of public spending should be conducted. I particularly agree with his concluding remarks about access, a point repeatedly made by the previous Chairman and members of the Committee, on which I had the honour of serving for a number of years.
It is right that the National Audit Office should follow public money wherever it goes. That broad principle is one that I hope will inform the Government in their review of the work of quangos, initiated in a recent consultation paper. It must be right to start, as the Chairman of the Committee suggested, with the scrutiny of the spending of the executive non-departmental public bodies. However, I think that the Committee could go beyond that to look at some of the advisory bodies, which involve a considerable expenditure of public funds.
I am happy, too, that the right hon. Member for Haltemprice and Howden referred to the oversight of expenditure on the upkeep of royal palaces. He made the point, in a wholly non-partisan and appropriate way, that it cannot but be in the interests of the sovereign to have public moneys voted for that purpose brought under the scrutiny of the House.
The question is often asked: how effective is the Public Accounts Committee? It is difficult to evaluate that, but the right hon. Gentleman has done so by making projections of possible savings. We can legitimately try to make such claims, although they are sometimes difficult to carry through.
Given the sheer number of reports undertaken by the Committee, it is a virtual certainty that all senior civil servants will fairly frequently be subject to its scrutiny. They and those close to them know that they will be treated fairly but with considerable probing. That, I believe, affects their view of their role as accounting officers; it is not a remote role, but one that exposes them directly to democratic accountability to the House.
It is sometimes asked, when a large phalanx of people troop in to the hearings behind the accounting officer, whether that is really necessary—whether it takes so many people to answer the questions. The answer is almost certainly no, but there is a certain educative effect on civil servants, which most people would consider extremely valuable. It makes them realise that, although under the Armstrong memorandum they have formerly been regarded as primarily—Lord Armstrong of Ilminster would have said solely, and I believe that he errs constitutionally in that—accountable to the Government of the day, they must also answer to the House of Commons on some important matters.
How does one construct a debate logically, sensibly and coherently around such a proliferation of interesting reports? It can be done thematically or by illustration, and the right hon. Member for Haltemprice and Howden chose both approaches. I intend to duck out of those approaches and simply refer briefly to a few reports that raise points in which I am personally interested, not because I think that they are more important than the other reports, but because they caught my fancy and illustrate something of the way in which the Committee works.
484 The right hon. Gentleman referred to the second report, "Progress in Completing the New British Library". If he had not already quoted its conclusion at paragraph 68, I would have done so. The saga of mismanagement goes back a long way. The single most important lesson is that the Treasury should have insisted at a much earlier stage that the project be overseen by a single Government Department. The Department of National Heritage must take some of the blame for that.
The story of the mishaps became all too familiar, and I will not rehearse again the losses incurred. As is clear from the report and from the evidence given to the Committee, we have less than we bargained for as a result of the mismanagement: we have a library which is smaller than was envisaged and which will be full by 2003. That is a serious consequence for the country. As we have already spent so much money, the Government should now secure enough money to ensure that the new library operates effectively.
Budgetary evidence that has become available since the report's publication shows that the Government have cut the library's grant in aid by £1.7 million from their own planning figures, which is worrying given the plague of technical problems that has afflicted the building. The story of the project has been of people not knowing when to cancel aspects of the development and admit that money has been wasted, or not taking the decision to bite the bullet and build it as it should be.
I hope that the use of the four acres of land to the north of the site to enable the library to expand, to deal with the problems of space and access to electronic media, will be authorised, and that the necessary money will be made available. It is not satisfactory if the library cannot be run effectively and cannot continue to buy books internationally and conserve those that it has. There is already a backlog of items awaiting conservation that will not grow any smaller if the grant in aid is cut.
I candidly admit that I have gone beyond the Committee's recommendations, but that we should be in this position today is due to the inefficiencies—to put it as moderately as one can—in the expenditure of the vast sums of money already dedicated to the project.
Like the right hon. Member for Haltemprice and Howden, I alighted on the 20th report, "Payments to the National Lottery Distribution Fund", which was published on 17 March 1997. The Committee noted that the director general of Oflot had been unable to levy a fine on Camelot, despite a serious breach of its licence agreement.
In the Treasury minute of July 1997, the Government agreed with the Committee's point and said that they would consider the necessary legislative change. We anticipate that legislation will be introduced before Christmas and I hope that it will deal fully with that point.
The Committee expressed concern that the National Audit Officewere only able to satisfy themselves that all payments recorded as due to the Distribution Fund had been made punctually and in full. They were not able to express an opinion on whether the sums recorded as due were correct.Again, I agree wholly with the right hon. Member for Haltemprice and Howden about the nature of audit and that the Committee and the National Audit Office should have the power of direct access that was denied in this case.
485 In its 17th report, "Health of the Nation: a Progress Report", published on 15 March 1997, the Committee expressed concern thata working definition of severe mental illness has not yet been agreed, and at the length of time it is taking to gather data on the incidence and severity of mental illness.That may be thought a narrow point, but it has attracted a not entirely satisfactory response in the Treasury minute. I do not expect the Minister to allude to it, because it is a matter for the Department of Health. I confess that the point flows from a certain lack of tautness of expression in the Committee's original recommendation.
The Treasury minute response to our report referred to a national survey on mental health that was undertaken three years ago, for which much is claimed. No doubt that historical survey is of value, but it appears to lack a continuing collection of current statistical information about severe mental illness on an agreed national basis. The minute referred to a current pilot study which it is hoped will be completed by the autumn of next year, with implementation, if the study is deemed satisfactory, one or two years later. That does not support the view that the allocation of resources to mental health today rests on a firmly based evaluation of need. As mental illness apparently accounts for about 14 per cent. of national health service in-patient costs, 23 per cent. of pharmaceutical expenditure and 14 per cent. of certificated absence from work, it is astonishing how little effort has been made, or is being made, on the incidence and definition of severe mental illness and the needs of those suffering from it.
The Treasury minute, rather than simply accepting our Committee's call for a working definition of severe mental illness, apparently encourages what it callsthe development of appropriate local definitions, taking into account the diverse nature of services and local population's needs.I candidly confess that I do not understand the point that the Department is making. The measurement of medical need cannot, surely, depend on the availability of particular medical services.
My interest in this issue is not merely academic. Mental illness not only has an impact on the purse of society but can cause acute distress to sufferers and their families and can sometimes result in anti-social behaviour. In certain sectors of the community, as the Committee found, specific therapeutic interventions may be necessary. We noted the need for measures to prevent deliberate self-harm among farmers and among women of Asian descent—two groups on which we heard evidence about the high levels of suicide.
Perhaps the Committee's use of the words "working definition" of severe mental illness allowed the Department to interpret our concerns as being the problems of clinicians and carers. Their problems of diagnosis are not made difficult by a lack of statistics; their problems flow from inadequate or unsuitable resources for treatment, which in turn flow from failures to measure need. It is extremely important that such a survey is carried out and that severe mental illness is defined so that proper allocation of resources can be made in future.
The reason why our Committee's recommendations seem to carry weight is that they focus not on policy—in some cases not even inferentially—but on experience of 486 administration and actions. They may flow from policy, but we are interested in the outturn when assessing whether the country has had value for money. That is the Committee's distinctive role. We come in after the event. Our Committee's reports cast long shadows, and can—and do—result in better administration in this country. The Committee's work is one of the most effective areas of the work of the House of Commons. I hope that it will long remain so.
§ Mr. Christopher Leslie (Shipley)
I am grateful to have the opportunity to speak in this debate, particularly as new Member of Parliament.
As a Back Bencher I want to play a role not only in scrutinising legislation, but, equally important, in checking the Executive and ensuring that the functions of Government are monitored rigorously. I am enormously privileged to have been placed on the Public Accounts Committee so early in my parliamentary career. We should emphasise more often than we do that the Committee monitors Government expenditure—the expenditure of taxpayers' money—and works in conjunction with the National Audit Office to ensure efficiency, effectiveness and value for money. Those are the aspects that I particularly value. All Back Benchers, regardless of party, need to keep an eye on those aspects of our role—not that it is for me to lecture hon. Members, who are always more senior than me.
I was interested to join the Public Accounts Committee not only because of its role in acting as a check on the Executive, but because of the circular way in which the accountability mechanism has developed over time. To me, the history of the Public Accounts Committee is fascinating. Representatives from Departments can be subpoenaed and witnesses cross-examined. The Committee makes its recommendations, to which the Treasury responds, and then we debate them annually, as we are doing today.
I should emphasise that accountability is a good mechanism for government. It is one of the best ways in which the Committees of the House of Commons work. I join other hon. Members in paying tribute to the staff of the Public Accounts Committee, to the Comptroller and Auditor General and to the National Audit Office, as well as to the Committee's former Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), and to its current Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), who has been doing sterling work so far. I am sure that that work will continue.
I have been a local councillor in Bradford for the past four years. Perhaps it is a small amount, but Bradford council spends £400 million annually. Councillors have a great deal of hands-on involvement in deciding how money is spent, especially when budgets are tight and resources are decreasing. They go through local government expenditure line by line, scrutinising exactly where the money is spent.
Members of Parliament have a different experience, partly because most spending decisions are taken by Ministers, which makes it much more difficult for Back Benchers to scrutinise the way in which every penny is spent. We need to make a special effort to ensure, through the Public Accounts Committee and similar institutions, that we scrutinise Government expenditure more closely.
487 Although I was not a member of the Public Accounts Committee in the year that we are debating, I have read through all 25 reports—at least trying to skim through the summaries—and I can see that it has done excellent work in uncovering not only waste but incompetence and mis-spent money. I shall point out a few examples that highlight those aspects.
The activities highlighted in the 19th report on the former Yorkshire regional health authority, which merged and became the North Yorkshire health authority in 1994, will be of great interest to my constituents. The report highlights crucial issues of corporate governance, which need to be monitored and implemented more rigorously throughout all Government Departments. What stood out most was the way in which relocation expenses were paid to managers, board members and consultants. Some £447,000 was paid to members of staff. We learn from the report that only £143,000 is ever likely to be repaid. An astounding amount was spent on dinners and functions—£695,000—between April 1992 and March 1994. That is an appalling amount. I get very angry when I think how that money could have been spent far more effectively and to the benefit of my constituents. Yet it seems that there is little that the Government can do to recover that money. That is also a theme I detect throughout the PAC reports and Treasury responses. There is great need to look at individual responsibility for mis-spending and to ensure that we chase up those individuals and bring them to justice if there has been wrongdoing.
The report on the Yorkshire health authority details severance payments and specialist payments made without necessary approvals and describes how a personnel manager awarded contracts worth £43,000 to her husband's company without declaring an interest. Yorkshire health authority entered into a long-term contract—15 years—with Yorkshire Water for clinical waste disposal, which involved £7.2 million expenditure; yet the contract was awarded without competitive tendering. It seems obvious today that competitive tendering in the awarding of Government contracts is vital and we need to ensure that Government Departments never again operate as the former Yorkshire health authority did.
The second theme that I want to highlight comes in the 16th report: "The Work of the Directors General of Telecommunications, Gas Supply, Water Services and Electricity Supply". The report shows the good work done by the directors general, but also highlights other failures of general Government expenditure. For example, in 1989, proceeds from privatisation totalled £3.6 billion, yet now the replacement value of the companies involved is estimated to be £138 billion. That is an enormous amount of money. The fact that those companies were sold off at such a low price is a scandal to which the PAC rightly drew attention.
My third theme can be seen in the 23rd report on: "Ministry of Defence Management of the Military Operations in the Former Yugoslavia". There were massive failures and weaknesses in accounting for stores, assets and ammunition, examples of which include £1.3 million-worth of ammunition with no supporting documentation and £4.1 million-worth of untraced ammunition. To me, the outstanding example of the need for greater concentration on accounting for the way in which the Ministry spends its money is the matter of 488 vehicles that were either refurbished or written off. The estimate of the cost of that has risen from £20 million to £134 million—an astonishing figure and a lot of vehicles.
A further theme running through the reports is that—unlike the arrangements obtaining in local government, where there is personal surcharging—there is no real holding of individuals to account for such failures. That is why the PAC calling witnesses and cross-examining them is the vital link in the chain, and I am glad to play my part in that. However, there are several other matters that the PAC should promote and persuade the Treasury to implement as soon as possible.
To highlight more effectively mis-spending of Government money where it occurs and to throw a spotlight on inefficiency, we need to ensure that resource accounting is implemented across more Government Departments, more speedily, because that way of presenting departmental finances helps to show which areas are more questionable than others. I urge Ministers to consider the way in which resource accounting mechanisms are being implemented throughout Government and to ensure that the process is accelerated.
I agree with the comments of the right hon. Member for Haltemprice and Howden about access. It is anomalous for the PAC to have access to some areas of Government expenditure but not others. The Committee is limited in respect of publicly owned corporations, recipients of grants and contractors. Representatives from the National Audit Office should have access to training and enterprise councils, so that they can examine how money is spent. TECs are required to hold only one public meeting a year, which provides nowhere near enough accountability to the public, never mind to the other arms of Government or to Parliament. There are other areas of Government spending—housing associations, Rai1track, Camelot, the royal palaces and so on—that need to be opened up to access by the PAC and the NAO so that we can ensure greater rigour in the scrutiny of their expenditure.
I would also suggest that there is a need for greater co-operation between the Treasury and other Departments, not least because, too often, when the Treasury can be held to account for certain aspects of expenditure and the Department for others, certain matters slip through the net. Progress has been made in recent years, but I urge my hon. Friend the Minister to seek to create a system of government that works across the divides and artificial boundaries between Departments. Then we can look at Government expenditure as a whole and highlight general areas of policy and expenditure, which should be reviewed.
In conclusion, I emphasise that, when we are talking about rigorous monitoring of Government expenditure, we are talking about taxpayers' money. I become angry when I read through the reports and see how much money is wasted, goes missing or is unaccounted for. One way of quenching that anger has been to become a member of the PAC, because there is no greater pleasure than to haul some of those guys in front of us and put them on the spot. That should be done more often. All the matters I have raised have been touched on before by the PAC and the NAO and I hope that, in the coming year, we can be equally rigorous in our examination of public expenditure.
§ Mr. Richard Page (South-West Hertfordshire)
It is quite like old times to return to the annual Public Accounts Committee debate after an enforced absence of two or three years. As I look around, I see that little has changed: only a small number of hon. Members are attending, despite the wealth of ammunition and the excitement that our reports can produce. Year after year, I keep hoping that the debate will be better attended, because of the enormous amount of valuable work that should be given better public examination and see more of the light of day.
Before turning to the reports, I add my thanks to those already expressed to the previous Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). He guided our Committee for some 14 years quietly and without histrionics, although the opportunity for drama certainly presented itself. With quiet determination, he put greater emphasis and underscored more strongly the importance of our reports when they emerged. I wish the same success to his successor, my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). I shall watch with interest to see what profile he stamps on the chairmanship as the weeks and months unroll.
At the end of his speech, my right hon. Friend the Member for Haltemprice and Howden was right to flag up the importance of the NAO's role in following taxpayers' money. There should be no bar to finding out how the money has been spent: it comes out of our people's pockets and is spent via the various systems of government, so it is absolutely right that we look carefully and closely at that expenditure. I want to flag up well in advance my belief that the role of the National Audit Office should not be diminished because of the results of the referendums in Scotland and Wales. It might be different if Scotland and Wales were financially self-sustaining, but as each receives a substantial amount of money per head of population under the Barnett formula, the role of the NAO and the PAC should continue undiminished.
In fact, I should like to take that argument even further and extend into European financial affairs the work of the NAO in examining where our money goes. I suspect that the NAO might be slightly more rigorous than some other bodies in tracing where the money goes, finding out how it is spent and ensuring that we get value for money. That concern was taken up in the Committee's sixth report. Paragraph 16 of its conclusions says:We are pleased to note the extensive co-operation between the Court and the National Audit Office on the audit of the Community's transactions. However, we are concerned that the scope for such co-operation is restricted in that, unlike the Court, the Comptroller and Auditor General does not always have access to the final recipients of European monies.That includes some of our money.
The report continues:We expressed our concerns over this limitation in the Comptroller and Auditor General's powers in our 10th Report of Session 1995–96, and we recommended that his powers be brought in line with those of the Court and the Commission.I look to the Minister to bring about a change. It goes on:We are therefore disappointed that, in the Treasury Minute of 22 May 1996, the Government rejected our recommendation on the grounds that the Comptroller and Auditor General does not need to perform work carried out in areas covered by the Court in order to report fully and effectively to the House.490 We should reconsider the National Audit Office's remit so that the Committee can monitor how our money is spent in Europe.
When I first served on the Committee, more years ago than I care to remember, I looked through the catalogue of horrors and thought to myself, "Good heavens, the Departments will realise their mistakes and these disasters will dry up." Then I thought, "Hang on, the Public Accounts Committee has been going for a hundred years, so it is unlikely that matters will dramatically improve just because Richard Page is on it," and thus it has proved.
The pile of reports is equally as impressive as it was when I was on the Committee two or three years ago. One or two old friends have come back to greet me, such as the new British library and the various excitements in a health authority. Two hon. Members have commented on the new British library. I query the word "new", because it was started in 1982, and it will not seem new when it eventually opens—I am tempted to say "if' it eventually opens, but let us travel in hope.
The second report refers to the PAC's examination in 1990. I took part in that examination and in the critical report. Quite frankly, we wasted our time seven years ago. We need not have bothered. We hear about the power of the PAC, but it did not work very well on that occasion. At that time, we were told thatthe new British Library would be completed in 1996 within a cash limit of £450 million.Is it open now? No. Is it within the £450 million limit? No. The report says thatthe building will be on a scale less than was envisaged at the outset; the building will not be fully open to the public until 1999; and the cash limit has increased to £511.1 million".I queried the word "new", because technology has moved on. The report says that there will be only 12 per cent. more reader seats. With the advent of new technology, that is unacceptable: in fact, it is a disaster. I knew that it would be a disaster, because I visited the site 10 years ago. I asked the gentleman who was showing me round, "What will go in this big hole in the ground?" and he said, "All the books will go in there." I asked him what sort of books, and he said, "All sorts of books." I said to him tongue in cheek, "Will you have the assembled works of Lord Archer?" and he said "Yes." I then knew that the British library would not travel smoothly towards its completion.
Information technology has not been used correctly. The British library has another site in Boston, so a good fibre-optic cable and more automatic readers should be the way forward.
My right hon. Friend the Member for Haltemprice and Howden summed up the general lessons to be learnt. The report says:In our view the new British Library could be used as a model of how not to manage a major construction project.I emphasise that comment. The Committee examined this matter seven years ago, and there is precious little to show for it.
The 19th report dealt with the former Yorkshire regional health authority, which the hon. Member for Shipley (Mr. Leslie) touched on. I can do no better than to quote my close friend the late Sir Michael Shersby, who took evidence from Mr. Langlands. Sir Michael said:I must say that when I read this report I came to the conclusion that it was really one of the worst cases that I have had the misfortune to consider since I joined this Committee in 1983.491 He was absolutely right. It is unacceptable that the personnel director of the former authority was awarding contracts worth £43,000, one of which she was intending to manage when she retired. She did not declare any of them.
The former local authority spent £695,000 on luncheons, functions and dinners at hotels, including £10,000 on two "Super Sleuth" weekends, which may have been exciting and interesting, but did not significantly advance the general health care of people in Yorkshire.
I could go through the report and refer to the failures and errors one by one. The £447,000 relocation expenses were paid after the employees had relocated: they were not paid in advance to enable them to move. It would be interesting to know to what extent health care in Yorkshire has suffered as a result of those vast relocation expenses and the sums that were spent on "Super Sleuth" weekends and grand dinners. As I said at the beginning of my speech, it is as though I had never been away.
§ Mr. Marsha Singh (Bradford, West)
Mr. Deputy Speaker, I thank you for allowing me this opportunity to make my maiden speech. I freely confess that accounts are not one of my strong points, even though I began my professional career in banking. I am grateful to my hon. Friend the Member for Shipley (Mr. Leslie) who, with his enthusiasm for this topic, almost persuaded me that it was exciting. Scrutiny of accounts is essential for good and prudent government. We must never forget that we are merely the custodians of the people's money.
Before I come to the main body of my speech, I should like to pay tribute to my predecessor, Max Madden, who served Bradford, West from 1983. He will be remembered as a hard-working and conscientious Member of Parliament. I am proud to have been the chair of his constituency party for many years. Max had a distinguished parliamentary career, which included service on the Front Bench. He will be remembered as a man of principle: a man who was not afraid to speak his mind, and a man who stuck to his guns. Max was not a man who courted popularity at the expense of principle, and although he did not seek unpopularity he never shirked difficult issues. It is an honour and a privilege to follow in his footsteps.
I feel that it is also appropriate to pay tribute to another past Member of Parliament for Bradford, West. I refer to the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who represented the constituency in the early 1970s. He is still well remembered and respected for his services to my constituency.
It gladdens my heart to see the strong connection between the House and Bradford, not only on Government Benches but on the Opposition Benches. I refer to the hon. Member for Brentwood and Ongar (Mr. Pickles), a former leader of Bradford city council. I thank him for the warm welcome that he gave to me on my arrival in the House.
Before talking about my constituency, I should like to refer to the identity crisis that I am undergoing. None other than The Times referred to me as the first Asian woman Member of Parliament. I was even invited to the first meeting of the parliamentary Labour party women's 492 group, which I found delightful. I have also been congratulated on my success by women's groups throughout the country, for which I am grateful.
I must tell hon. Members the truth: I am not the first Asian woman to enter the House. I am not even a woman Member of Parliament. I am not one of Blair's babes—although I hope that that is not too much of a disadvantage at the outset of my parliamentary career. I also hope, Mr. Deputy Speaker, not to make the mistake that others have made in addressing you as Madam Speaker.
Other sections of the media have sought to pigeonhole me as an Asian Member of Parliament, an Indian Member of Parliament or a black Member of Parliament. I do not seek to deny my Asian background—I am proud of my cultural heritage—but I state emphatically that I am a Labour Member of Parliament, a Bradford Member of Parliament, a Yorkshire Member of Parliament and a British Member of Parliament, and I will represent all my constituents irrespective of colour, creed or religion.
I am a product not only of my parents' culture, but of Britain's many cultures. In today's multicultural Britain, I and others like me are the presagers of the truly multicultural person. I believe that that will be a positive strength not only for my city, but for my country.
I have lived in Bradford all my life, and I have lived in my constituency for well over 20 years. I was educated at Midland Road nursery school and at Green Lane primary school—which, incidentally, was the first school in the country to introduce school meals, and one of whose headmasters was the father of J. B. Priestley. I then went to Frizinghall junior high school and to Belle Vue boys' school. Belle Vue had the distinction of having taught J. B. Priestley himself.
One of the great things about Britain is that although privilege bestows advantages—as we know—a lack of privilege is not necessarily a bar to progress and ambition. If I am proud of anything, it is precisely that—the fact that, from the streets of inner-city Manningham, a working-class lad can reach the House of Commons. If I have a message for youngsters in Bradford schools today, it is this: with education, hard work and commitment, the only limits on their ambition will be the limits of their own imagination.
My constituency comprises the wards of Heaton, Toiler, Little Horton, University, Thornton and Clayton, and Fairweather Green, the ward in which I live. There is a mixed population, with a large community of Asian origin. The constituency contains some of the poorest areas of Bradford, as well as some of the best residential neighbourhoods in the city—but its problems are all too real. Nearly a third of the population of working age are unemployed, and the constituency ranks 14th in England and Wales in that regard. Overcrowding is three times the national average, and Bradford, West ranks as number eight in that table of shame. More than 43 per cent. of households lack central heating.
I give the House those few statistics only to highlight the problems faced by my constituents. Unemployment, overcrowding and poverty have led to increased levels of crime. I am particularly concerned about the problem of drugs, especially heroin. I know that my constituency is not alone in that regard, and I know that the House will agree with me that the peddlers of heroin are particularly loathsome and evil. First they kill their victims' will, then they poison their character, and finally they destroy 493 their lives. The police cannot tackle that evil alone; the courage, commitment and vigilance of communities themselves, in partnership with the police, are required to stamp out that evil and wickedness.
I am also concerned about educational achievement. I praise the efforts of teachers in my constituency who often work with insufficient resources, in poor buildings and in difficult circumstances. I believe that we must have the highest possible expectation of every child, and that no child should be allowed to see school as a soft option. The primacy and mastery of English is paramount. English is the essential currency of our society, and without a high degree of literacy and numeracy school leavers will be left behind in the competitive world of the modern job market.
A considerable percentage of my constituents are of Kashmiri origin. I share their concern, distress and anger at the continued human rights abuses in Indian-held Kashmir. That dispute is the historical legacy of partition and British rule and I hope that the House shares my sense of responsibility for the present situation. The dispute continues to destabilise the region and frequently threatens to cause the outbreak of a disastrous war. A continuing military build-up and an arms race between India and Pakistan are not in the interests of either the Indian or the Pakistani people, and certainly not in the interests of the Kashmiri people.
I am sure that the money that is spent on arms would be better spent on education, health, jobs and homes. Internal repression cannot be a solution, short, medium or long term. Repression cannot be a substitute for dialogue and conflict resolution. Self-determination is not a privilege: it is a right, and I will continue to support the aspirations of my Kashmiri constituents for self-determination in Kashmir.
I love Bradford. Bradford is the most tolerant city in the world, and Bradford people are the best people in the world. However, love should never blind us to unpalatable truths. The American author Bill Bryson visited Bradford three years ago and wrote in his book "Notes from a Small Island":Bradford seems steeped in a perilous and irreversible decline. Nearly everything suffers from well intentioned but misguided meddling by planners. You would never guess that Bradford had ever known greatness.A natural Bradford reaction would be to tell him to shove off, but every Bradfordian knows the truth of his words, and the effects of what has happened to our city in the past 20 years.
So what went wrong? Recessions were largely to blame, but no one took Bradford by the scruff of its neck. I lay part of the blame at the door of Bradford's leading organisation, the local authority, which has in the past lacked collective leadership and long-term vision. There is no doubt in my mind that many fiddled while Bradford declined.
I genuinely believe, however, that Bradford has turned the corner. We now have a chance to grow. My message to the city's fathers and mothers is that this is not a time for political machinations—it is a time for vision and dynamic leadership, but we need real achievements and not pipe dreams. I well remember the 3D development project, which was meant to be a spectacular regeneration 494 of Bradford's west end. The council was led by the nose for more than a decade, but nothing happened—so please let us have no more pipe dreams.
There is much to be optimistic about, however. I welcome the council's new regeneration committee, which should be a flagship committee. I welcome the economic strategy for Bradford and district which has been produced by the Bradford congress. I welcome the new commitment to co-ordination, partnership and leadership. But we need to do more. We need to involve Bradford's entrepreneurs and captains of industry far more than we ever have. We need to tap into the imagination, energy and experience of entrepreneurs such as the late Jonathan Silver who single-handedly transformed Salts mill into a gallery containing the world's largest collection of David Hockney paintings and a high-tech factory containing Pace Electronics. That is a shining example of what regeneration is all about. We also need the Government's help, which is why a regional development agency is so important for Bradford.
Bradford has much to offer. It has an excellent communications network with access to the M1, M6, M62 and the A1. Leeds-Bradford airport is only half an hour away and Manchester international airport is a mere hour away. Bradford has a growing, young and vibrant work force. My constituency contains Bradford university and Bradford and Ilkley community college—two well-respected institutions with nearly 9,000 full-time students and providing employment for 4,000 people.
Grattons plc, Morrisons, Yorkshire Co-operative and Provident Financial are all key employers in my constituency, which also contains thriving businesses set up by Asian entrepreneurs, including Kashmir Crown bakeries, Mumtaz Paanhouse, Empire Electronics and Nirmal Razai mart.
My constituency also boasts the Alhambra theatre and the national museum of film and photography with the world's largest Imax cinerama screen.
Bradford is the gateway to Brontë country and the spectacular scenery of the dales. It also boasts the rugby league champions: the Bradford Bulls—the best rugby league team in the country. I congratulate the Bulls.
The Independent Labour party was founded in my constituency. Consequently, we in Bradford lay claim to the founding of the Labour party itself. I take this opportunity to invite the first Labour Prime Minister for over 18 years to come to Bradford and see the challenges and opportunities that face us in the lead-up to and into the next millennium. He will be made very welcome with traditional Bradford hospitality.
I am proud to represent Bradford, West and honoured to be elected in Bradford's centenary year. My electors have sent me here to bat for Bradford and that is exactly what I intend to do.
§ Mr. Charles Wardle (Bexhill and Battle)
I congratulate the hon. Member for Bradford, West (Mr. Singh) on his witty, entertaining and eloquent speech and on his enthusiastic account of his constituency. I am sure that he will turn the gender confusion that he has experienced to his advantage. I admire him for saying so unequivocally that he will represent all his constituents. No one who has heard him could have any doubt about that. As a son of Bradford, he said that he had much to do and I wish him well in that regard.
495 I join the hon. Gentleman in his tribute to his predecessor, Max Madden. When I was the Minister with responsibility for immigration, I saw a great deal of Max Madden from the Dispatch Box and in Committee, and when he presented case after case. I had the utmost admiration for his fearless integrity and his commitment to his constituents, now those of the hon. Gentleman. I appreciate his warm remarks about two of my hon. Friends who hail from his part of the world.
I join right hon. and hon. Members who have paid tribute to the previous Chairman of the Public Accounts Committee, the right hon. Member for Ashton—under—Lyne (Mr. Sheldon). When I joined the Committee in the final months of the previous Parliament I appreciated his hugely helpful advice and encouragement. I am sure that my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) will be a fitting successor. On this day of royal celebration, fainter hearts might have set aside what my right hon. Friend said about palaces. He has set an excellent example.
I have brief comments on two of the reports that are listed in the Treasury minute of October and then I shall make some general observations about the work of the National Audit Office and the Committee and about the response of senior officials from Departments to the Committee's questions. The way in which officials react to cross-examination by the Committee says a great deal about the weight that they attach not just to prudent financial controls on the use of taxpayers' money but to modern management methods.
My right hon. Friend the Member for Haltemprice and Howden alluded to the 12th report and I have a few comments about that and about the 18th report. They dealt with quite different operations—the 12th report with the Turkish universities equipment project, which was run by the Overseas Development Administration, now the Department for International Development, and the 18th report with National Savings financial reporting. They effectively illustrate how little financial acumen and practical management controls that would be taken for granted as routine disciplines in the private sector exist in some parts of Whitehall.
In the case of the Turkish universities equipment project, the ODA officials seem to have been completely ignorant of the financial standing of the UK company TecQuipment, which had been approved as the main agent for the project. The amount of taxpayers' money that was shelled out to TecQuipment was considerably more than that company's net worth and represented much more than the company had ever achieved in annual turnover. In the private sector, where one's own money or that of shareholders is at stake and there is not a bottomless pool of funds from the Exchequer, which some civil servants think it is their right to spend, it would be more than one's business life was worth not to run a credit check on a bidder or supplier. Most business men and business women know that small companies are at greatest risk in periods of rapid expansion, even when they are to receive money from the Exchequer.
There were disturbing examples in the Turkish universities equipment project of conflicts of interest in regard to a major supplier to the project that also stepped in as a financial guarantor of the agent, and there were serious questions about single tender bids whereby orders that were worth more than £23 million were placed without any vestige of competition.
496 Anxiety was also expressed about the role of Sangari International, the Turkish company which was contract adviser and negotiator for successful suppliers from other countries as well as for TecQuipment from this country. Sangari emerged with a commission of more than £6 million out of a total project value of £33 million. It is encouraging that the Department has accepted most of the criticism about this dubious set of arrangements under which taxpayers' money went to a very small opportunistic firm without any notion of the need for competitiveness or value for money. Large backhanders seem to have been paid to the Turkish middleman.
For British followers of our foreign aid programme who might have hoped that undiluted aid and trade were being directed for the good of Turkish universities and their students, the reality must have been a disappointment. The Department now says that its standing instructions to procurement agents deal with the correct handling of bids, but it is astonishing that such lapses could ever have occurred. It is even more disturbing that, during the Committee hearing, the ODA' s senior civil servant at first seemed reluctant to grasp the import of the full and frank criticism that the 12th report prompted from many members of the Committee.
The 18th report, on National Savings, is another example of appalling omissions in the most rudimentary financial controls. In this case, the language used in the Committee's conclusions was as blunt as it was strong. The conclusions state:We consider that the number and size of the discrepancies and unreconciled balances which have been shown to exist in National Savings financial accounting systems are unacceptable. The Agency's failure to tackle in a timely manner the serious weaknesses … point to a lack of competence on the part of those managing the Agency … the amount due from Post Office Counters Limited is some £12 million less than is shown … by the statements provided by Post Office Counters Limited … and … one of the Agency's accounts showed an amount owed by investors of £37 million, although depositors cannot owe money to the Agency".That is because those depositors are creditors. The report referred to "seriously inadequate" financial accounting systems and to a failure to apply "basic accounting controls". This is a horrendous tale of neglect and it is made all the more disturbing by the thought of millions of small investors, thrifty and responsible people, putting their money and their complete faith in the hands of National Savings which either did not understand accounting and control procedures or could not be bothered and left the whole system wide open to the possibility of fraud and malpractice. The fact that the taxpayer would effectively indemnify any saver from losses is no excuse for this hopelessly bad performance.
It is encouraging that, following the NAO's exposé and the Committee's tough line, accounts are now to be produced for all National Savings products and to be audited by the NAO, but one is left wondering about the fate of the culprits in this saga of neglect. In the private sector, there can be no doubt that they would have faced the sack and a deservedly hard struggle to justify employment elsewhere. Under the protective umbrella of the civil service, however, the probability is that they will be given a sideways move—at worst, a spell of gardening leave until the storm blows over, and the prospect of a secure index-linked pension on retirement.
497 It is little wonder that there is such impatience in the private sector, whose wealth creation and taxes largely fund the salaries of officials, with the all too frequent failure of Government Departments to subject themselves to the rigours of modern management disciplines.
On those and other reports, the NAO's investigative work has thrown light on management shortcomings in many sectors of Whitehall. If taxpayers' money is to be deployed to best effect by the Government of the day, it stands to reason that the officials who are charged with responsibility for public expenditure and for the operations and services, whether delivered in-house or contracted out, should meet the highest possible management standards.
That is not always the case in Whitehall, where the prevailing culture among successive generations of mandarins, and all the people who aspire to succeed them, has for too long been all about policy rather than administrative excellence. Policy remains the great adventure in Whitehall for the ambitious career civil servant. The object is to influence policy, preferably to create it when Ministers do not even notice and to concentrate ministerial minds on the political rewards to be won by translating policy into legislation in Parliament and, more recently, in Brussels and Strasbourg. However, once a Bill makes it to the statute book and the next step is implementation of the new measure, official enthusiasm has been known to fade.
Without doubt, many executive and administrative officers—the backbone of the civil service—work tirelessly and impartially, coping with endless amendments to statutory authority in the day-to-day duties of public administration, but the higher echelons of officialdom, who should provide the cutting edge of modern management, have traditionally relegated management skills and judgment to a lower priority than policy formulation. That is a serious weakness when much of the rest of the United Kingdom has undergone a management revolution—and not before time—in which a new generation of computer-literate, market-aware and outward-looking executives and entrepreneurs have emerged in the private sector.
That is not yet true in Whitehall, where the initiative tests for would-be fast streamers—higher executive officer development staff—are years behind the times, and where senior officials scarcely know a lot of their own rank and file staff, and understand too little about the modernisation processes that have been thrust on them in attempts to introduce a more efficient, at times even commercial, sense of reality through contracting out, privatisation, market testing, agency status, the private finance initiative and so on.
As a result, the careers of too many people in middle management—executive officers and the grade 7s and grade 5s—remain undeveloped and unfulfilled. I hope that that will change. Perhaps it will, with the introduction of resource accounting and the use of corporate plans and budgets that genuinely involve officials down the management line, and facilitate the allocation of measurable tasks and challenges to junior staff, thereby enhancing job satisfaction.
If ministerial policy about the future transformation of Whitehall into a modern management machine is a matter for the Government, and perhaps for another debate, 498 the measurement of current performance and the evaluation of departmental effectiveness in delivering the declared objectives are the responsibility of the NAO and the Committee.
In that context, I add my support to the concern of my right hon. Friend the Member for Haltemprice and Howden and of other hon. Members that, as things stand, the Comptroller and Auditor General does not have automatic access to significant sectors of public expenditure for audit purposes. If the CAG is to help the Committee and the House to hold the Government of the day fully accountable to Parliament, and if he is to demonstrate how inefficiencies can be remedied, taxpayers' money saved and public services improved, he needs greater access.
In particular, as the House has already heard, the CAG needs access to non-departmental public bodies that are audited by private firms appointed by the relevant Secretary of State, to local spending bodies, to public sector companies, to recipients of Government and European Union grants, to housing associations, to bodies operating under the auspices of the Office of Passenger Rail Franchising and the Office of the National Lottery, and to private sector contractors carrying out functions for the Government, at taxpayers' expense, under contract.
Central Government have contracted out work worth £6 billion to private sector companies and the PFI has already extended private sector involvement with orders worth £7 billion. If the CAG is to be able to follow public money wherever it goes, he needs access to those private sector contractors, to be in a position to audit the accounts of the recipient of the contract or grant, and to examine value for money in the work undertaken at the Government's behest.
The CAG has powers of access to the papers of audited Departments, but he cannot automatically lay his hands on the records of private firms working under Government contract, if such access has not been stipulated in the contract. Therefore, the CAG has to negotiate on a case-by-case basis the access that he should properly have. That allows the audited body to determine whether access to him should be allowed; there is evidence, as we have heard, that, on occasions, access may be refused or, at any rate, limited. It is essential, if genuine accountability to Parliament is to be maintained, that access is written into every contract as a standard clause, and made a standard condition for grants. That should be provided for in legislation.
To do that would merely put the CAG on an equal footing with the European Court of Auditors and the European audit and accounts commissions. It cannot be right that the CAG is at a disadvantage to his European counterparts in meeting his responsibilities to Parliament.
I shall conclude with two examples of where the CAG's access to the information he needs is unsatisfactory; my right hon. Friend the Member for Haltemprice and Howden has alluded to one. Camelot, the national lottery operator, has annual turnover of some £6.4 billion, of which £1.9 billion is payable to the national lottery distribution fund. The CAG does not have the access that he needs to be able to confirm whether the systems at Camelot operate correctly and to obtain assurance about the completeness of income to the distribution fund. The Committee's 20th report of 1996–97 said that he should have full access to Camelot's records relating to 499 the financial control of lottery activities. The matter is under review, but the CAG does not yet have the right to such access.
In 1996–97, the Office of Passenger Rail Franchising made payments of £1.8 billion to train operating companies, but the franchise agreements with those companies do not give the CAG a right of access to verify independently the Opraf data that are used to ensure that the franchisees have met their objectives, as they are required to do. The need for such access is generally agreed, but it is not yet available as a matter of right.
There can be no doubt that there is growing public interest in, and enthusiasm for, greater accountability on the part of the people who spend taxpayers' money. Nor is it in doubt that the demands on the Exchequer for public expenditure will continue to grow. That means that the pressure on Whitehall to achieve greater efficiency and to use up-to-date management techniques in public administration will inevitably increase. For the NAO and the Committee to be able to assure the House that the spotlight is fully on the providers of public operations and services in that regard, unfettered access for the CAG—wherever public money flows—must be an immediate priority.
§ Mr. Mike Hall (Weaver Vale)
I join the hon. Member for Bexhill and Battle (Mr. Wardle) in the fullest praise of my hon. Friend the Member for Bradford, West (Mr. Singh). I was delighted that my hon. Friend paid tribute to Max Madden, because those of us who class Max as a friend know that he was a strong and fine parliamentarian. My hon. Friend was right to praise him, and I hope that he follows in his footsteps during his time in the House. If his maiden speech is anything to go by, we can be assured of that.
My hon. Friend also gave a detailed account of his constituency. He was right to criticise the corrosive nature of drug abuse and to say that we need to tackle that in a firm and positive way. I join my hon. Friend in his condemnation of those who push drugs in our communities; we see daily the damage that they cause.
My hon. Friend talked positively about Bradford, and I view with great approval his reference to the Yorkshire Co-op. I have been a lifelong member of the Co-operative movement and value the benefits that it offers. Its presence in Bradford is a great sense of pride within the movement.
On a serious note, my hon. Friend referred to the multicultural nature of society today. His call for tolerance was a powerful message. Given events elsewhere this week, the demand for greater tolerance within the international community must be underlined, and his speech has done a great deal to promote that. It was an important part of a good speech.
My hon. Friend had the temerity to remind us about the success of Bradford Northern, or should I say Bradford Bulls. I am a member of the all-party rugby league group and a supporter of Warrington—the Wire. My hon. Friend is right to say that the Bradford Bulls is the best team in the super league now—but not for long, we hope.
My hon. Friend made an eloquent speech, full of insight. He said that it is polite in Bradford to tell people to, "Shove off." I can reassure him that when he next 500 speaks in the House he will be listened to with great interest because of the quality of his maiden speech and we will certainly not invite him to shove off.
My hon. Friend also referred to the confusion over his gender. I know that at one time he was down to be a member of Emily's List. I was envious of the fact that he was invited to join the photocall with the Prime Minister after the first meeting of the parliamentary Labour party. There would have then been 101 women and two men, not one. We look forward to many contributions from him in the future. If they are anything like his speech today, they will be absolutely fantastic and well worth listening to.
I join other hon. Members, particularly the new Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), in their praise for the outgoing Chairman of that Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). I nearly referred to him as Bob because, when I was growing up in Ashton-under-Lyne, my right hon. Friend was my Member of Parliament. I have a great deal of respect for him. He has been a close friend of my family over the years and has done a terrific job as Chairman of the Public Accounts Committee. I am sure that that had nothing to do with the fact that I was appointed to that Committee on 9 June 1992 when a vacancy occurred at short notice.
It was a great pleasure to be a member of the PAC. It taught me a great deal about what goes on in the Departments. As an Opposition Back Bencher at that time, it gave me great insight and enabled me to come close to the workings of government. Membership of that Committee is of great benefit to Opposition Back Benchers.
My right hon. Friend the Member for Ashton-under-Lyne always used to tell us that the Public Accounts Committee was the hardest-working Select Committee in the House. When one looks at the volume of work that it gets through and the number of reports produced, one can see that that is not just a boast but a statement of fact.
We are considering 25 reports from 1996–97. We must remember that we are looking at only half a year and that there are still 22 outstanding reports from that year. I hope that they will be published, because they are important pieces of work that need to be drawn to the Government's attention. We need to learn the lessons in government of some of the mistakes that have been made in the past.
I offer full praise to the Comptroller and Auditor General and his staff for the work they do behind the scenes on the Public Accounts Committee. Their value-for-money audits and full financial audits mean that when a report appears before the Committee, it is no trivial matter. The National Audit Office and the Comptroller and Auditor General deserve fullest praise from the House for the work that they do on financial probity and protecting taxpayers' money.
The current Chairman of the Committee was right to draw attention to the national lottery and to the lack of access that the Comptroller and Auditor General has to Camelot's books. That has concerned the Committee greatly since the inception of the national lottery. It is an apposite reference at this time when Camelot has just disclosed its six-monthly pre-tax profits at something short of £34 million, which means that it wins £1 million 501 on the national lottery every week. Personally, I would like to see the lottery run by an organisation that is not involved in making profit. I am sure that that will happen at some time, and I look forward to it.
The seminal report of the PAC—the eighth report, published on 17 January 1994—has already been mentioned. The opening paragraph of that report is still relevant to the problems that the Committee addresses. I make no apology for repeating it in this debate as I have done in previous years. It says:In recent years we have seen and reported on a number of serious failures in the administrative and financial systems and controls within departments and other public bodies, which have led to money being wasted or otherwise improperly spent. These failings represent a departure from the standards of public conduct which have mainly been established during the past 140 years. This was the period following the publication of the Northcote and Trevelyan Report which condemned the nepotism, the incompetence and other defects of the Civil Service and brought about fundamental change. It is from that period that we acquired the principles and the standards which have come to be copied by some countries and admired by many more. It is our task to retain those standards.Paragraph 6 of the report makes some important comments, particularly in the light of the 25 reports before the House today. It says:We emphasise that we are not calling for any more detailed rules. Almost every case we have examined involved breaches of existing rules or guidance.I can say with confidence that, when we consider the reports before us, that paragraph still applies. If the proper rules of accountability had been applied in the subjects considered in the reports, we would be debating a far better state of affairs from the 1996–97 series of PAC reports.
The first report to which I wish to refer in detail is the 12th report on the Overseas Development Administration and the Turkish universities computer equipment project. It is an astonishing project. A total of £23.36 million of aid has gone to support a total project worth £66.7 million. It was managed by a United Kingdom company called TecQuipment Ltd.
The first mistake made by the ODA was that it did not award the contract after competitive tender, which was a breach of the existing rules. The project involves the provision of technical equipment to support undergraduates and postgraduates in 29 Turkish universities.
The PAC found that TecQuipment had significantly overlapping roles in the aid project. I think that that is a slight understatement, because TQ was the project manager, it supplied the equipment procured with the ODA aid and advised the Turkish Higher Education Council on the tender evaluation. TecQuipment was involved in every stage of the project: no Chinese walls, no declarations of interest and no avoidance of any pecuniary interest by the organisations involved in the bid. Therefore, TQ was in a powerful and pivotal position to influence the contracts awarded. It was not surprising to note that TQ received orders worth £5.8 million, with £3.3 million of that coming from one bid.
TecQuipment had only small financial assets and, before entertaining the idea of its working on the project, the ODA demanded a bank guarantee. TecQuipment went to Fisons for a guarantee. Coincidentally, Fisons underwrote its guarantee for £10 million and the House 502 will not be surprised to know that Fisons won a bid for the project totalling £10 million. The coincidence is too obvious to miss.
This sorry and sleazy affair is topped by the involvement of a company called Sangari International, which acted for TQ in managing the project. It also acted for companies bidding to supply the equipment and—guess what?—it advised the Turkish Higher Education Council on placing the contracts.
The House will not be surprised to hear that Sangari International secured £33 million of business on the project for the companies that it was advising. There is a lack of value for money, there is a threat to financial probity, and taxpayers' money has not been properly used. Sangari received £6 million for its share of the action, as well as undisclosed management fees. The new Chairman of the PAC was right to draw attention to that sorry state of affairs.
The second report to which I want to refer has already been referred to by my hon. Friend the Member for Shipley (Mr. Leslie). It is closer to home for him than it is for me. It is the 19th report into the former Yorkshire regional health authority. It was to the credit of Alan Langlands, the chief executive of the national health service, that he commissioned an inquiry into what happened in that region before 1 April 1994. The inquiry uncovered abuse, unlawful payments, tax avoidance, financial conflicts of interest, fundamental management failure, complacency over accounting of public money, breaches of financial controls, abuse of authority, dodgy land deals and money borrowed for one purpose and spent on another. That refers to the money given to secure loans for people who had moved house. They borrowed the money under a deal that had not been approved by the Treasury and then spent it on something else.
The health authority also took advance payments, a practice completely outside Treasury rules. I believe that in the days before the abolition of the health authority, the rule book had been thrown away.
I want to pick mit three aspects of what was going on. The first is minor, but lessons were learned from it. Before the merger, Yorkshire regional health authority provided the chair of the trust with a Range Rover. That was outside Treasury guidance. When it was sold, it cost the taxpayer £10,000. It also provided a car for another member of staff, but the report does not say how much that cost the taxpayer. The NHS executive then issued guidance to all trusts stating that it was not appropriate for trusts to spend money on providing Crown cars for the chairs of regional health authorities, health authorities or trusts. That guidance has generally been followed, although there are at least two examples of action having to be taken after the guidance had been issued.
Secondly, the health authority joined with Yorkshire Water to provide a clinical waste incinerator. It was a capital investment cost of £7.2 million, with a guarantee of £2 million a year for 15 years for the incineration of clinical waste. Again, that contract was not let subject to competition. The contract was far too long as it stretched over 15 years—and, more important, it did not receive the necessary approval of the NHS executive. Health authorities and trusts now have to write any corporate projects into their business plans. When they need to borrow money and get involved in such deals, they need the approval of the NHS executive. That is another lesson learned from this very sorry affair.
503 The third issue, which has already been referred to by a number of hon. Members, was the authority spending £695,000 on functions and dinners between April 1992 and March 1994. The report records that it must have bought some very expensive wine. As has already been mentioned, the functions included two "Super Sleuth" weekends in a hotel, costing £10,000. We do not need to be super sleuths to work out that that sort of expenditure on hospitality is wholly unacceptable.
The PAC was right to demand that health authorities and trusts should have a clear responsibility to ensure that the funds that they are given for health care are spent on health care and not wasted in the way outlined in the report.
The seventh report, on the hospital information support systems initiative, is rightly critical of the NHS executive, for two main reasons. First, in 1992–93 the Committee, in its 63rd report, on the Wessex regional health authority regional information systems, made severe criticisms about the lack of management, a lack of planning, the lack of a corporate approach to computer purchasing and the lack of proper project management. It was very critical.
The seventh report shows that the same problems have repeated themselves. For example, it found that the day-to-day project management was slow to deliver the benefits of improved patient care. There were delays of between eight months and three years in the six pilot projects referred to in the report. The initial project cost was £47 million, but that rose to £61 million. The report records that the extra £14 million had to be found from other budgets, with a consequential impact on patient care in the hospitals involved. When we tried to draw comparisons with the Wessex report some years previously, Alan Langlands disputed that there was any connection. Despite his protestations, the PAC recorded extreme disappointment that some of the Wessex problems had been repeated.
There was all the more cause for concern when I read Ceefax yesterday and noted that the Audit Commission has reported that there isno good central information about the effectiveness of drugs and treatmentwithin the NHS. We have two critical reports from the PAC about the need to co-ordinate information to improve patient care, yet in 1997, the Audit Commission has drawn attention to the fact that there is no central information about the effectiveness of drugs and treatment within the NHS. I hope that Ministers in the Department of Health with take heed of that report and act swiftly to ensure that we get the sort of information that we need in the NHS to ensure that all patients receive the care to which they are entitled.
One report that has not been referred to so far is the third report, into the mining operations of British Coal. I shall refresh the memory of those who do not remember the details of the sale of British Coal. The Government sold British Coal in December 1994 for the reported sum of £926 million. However, the PAC drew attention to the fact that the Government, in preparing British Coal for privatisation, had spent £37 million specifically on those preparations. They had spent another £582 million on minor redundancies. A post-sale adjustment to the price reduced it by £6.4 million. Another £136 million was deferred. Logic and mathematics show that the Government received only £212 million in cash for the whole of the British coal industry.
504 That is not the full story. Before the Government sold British Coal, they wrote off £2 billion of debt and, at the point of the sale, they wrote off another £1.6 billion. The class IV vote for 1994–95 shows that in that year the taxpayer was receiving £112 million per anum from British Coal in interest payments. The Government had only to keep British Coal in public ownership for another three years and we would have had more money in the public purse than they received for selling it—unless we take into account the fact that, because British Coal was sold, the Government were able to reclaim £2 billion from the surplus in the British Coal pension fund. Even taking that into account, by my reckoning the taxpayer is still £1 billion out of pocket. Only this month, we have heard of the problems now besetting the privatised British coal fields.
I am very concerned about the role of Rothschild in that privatisation. It was awarded a £9.1 million contract to advise British Coal on the sale. Initially, firms were invited to tender for the provision of advice on the preliminary sale. Rothschild was the preferred bidder for the preliminary work, but it was then appointed, without further competition, to advise on the whole sale. The decision was taken by the then Secretary of State for Energy, now Lord Wakeham. It was contrary to the guidelines set out in the PAC's eighth report in 1993 about open competition for Government business. It was probably also outside European guidelines. What concerns me most is that on 20 May 1996, when we took evidence on the sale of British Coal, we were told that Lord Wakeham was then working for Rothschild.
The report on the completion of the new British library has been referred to by many hon. Members. When I cross-examined the permanent secretary at the Department of National Heritage, I referred him to the story in "Yes, Minister" when Jim Hacker said to his permanent secretary at the Department of Administrative Affairs, "It takes longer to get planning permission for a bungalow than it took to build the pyramids." I put that to Mr. Hayden Phillips, and he said that he did not consider the project in those terms. He had looked back in history and found a better comparison. It took 939 years to build Prague cathedral, whereas it took only 22 years to build the new British library.
The British library project was started in 1988 and was estimated to cost £300 million. By the time that the PAC took evidence on it, in June 1996, the estimated cost had risen to £511 million. I made a note saying that the British taxpayer would probably be charged an additional £61 million in settling construction work charges.
As we have been told, once the library fully opens, it will not be long before it is filled to capacity. We were told that we will be provided with only 12 extra reading rooms, which is a 25 per cent. capacity increase over the previous location. We were told also that, when the building construction work at the new library was inspected, 230,000 items—dealing with shelving, cabling and fire protection—required correction.
Laing was involved in the project, for the benefit of the British taxpayer. It was given the job—at a cost to the taxpayer of £38 million—of supervising the works. It was responsible for ensuring that the works were completed to standard specifications, for maintenance and for quality control.
505 Laing did not achieve what it had been paid to do. The House will therefore be surprised to learn that the supervision contract, when it was renegotiated in 1991, was awarded to Laing. That beggars belief. Although the British library project was never a contender for the best civil service project of the year award, the British taxpayer certainly did not get value for money.
The Committee's sixth report, which was encouraging, deals with the European Court of Auditors. The Chairman and some of the members of the PAC went to Luxembourg to observe how the court operated. Some reports in the press this weekend stated that the European Union has been found to have lost in waste and fraud 5.4 per cent. of its £52 billion budget for 1996. I hope that the sixth report will help to enable the European Court of Auditors to do the same work for the European Union that the Public Accounts Committee does on behalf of the British taxpayer.
I am reassured that the Amsterdam treaty changes have strengthened the powers of the European Court of Auditors, and that they will make it easier for the European Union to agree legislation to deal with fraud in the EU budget. I am even more encouraged that—in the first half of next year, under the British presidency of the European Union—one of our Labour Government's first priorities will be to propose an active agenda to deal with waste and fraud.
§ Maria Eagle (Liverpool, Garston)
Thank you, Mr. Deputy Speaker, for giving me an opportunity to speak in the debate.
I congratulate the right hon. Member for Haltemprice and Howden (Mr. Davis) on his elevation to the chairmanship of the Public Accounts Committee. It is a momentous occasion, because it is the first time since 1983 that the chairmanship of that important Committee has changed. I hope that he will not think that I am making a partisan point if I wish him as long and successful a tenure in the position as that enjoyed by his predecessor.
I should like to add my voice to those paying tribute to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) for his tenure and success in carrying the flag, since 1983, for the Public Accounts Committee. Although 14 years seems a long time, it soon becomes apparent—once one sniffs around a bit—that his interest in the Committee's workings and in the subject of Government audit goes back much further. He was first appointed to the Committee in 1965, and he was writing Fabian pamphlets about auditing Government accounts in 1973. His interest, understanding and experience are therefore about as long as any other hon. Member's.
My right hon. Friend the Member for Ashton-under-Lyne may also be credited with having shaped the Government audit regime since the advent of the National Audit Act 1983. The right hon. Member for Haltemprice and Howden will have a hard act to follow, but I am sure that he will do so with great flair.
I should like to echo briefly the tributes paid to the Comptroller and Auditor General and his staff at the National Audit Office. It is apparent, even in my 506 extremely short time in the House and on the Committee, that it would be impossible for us to do our job were it not for the work that they do. I am constantly amazed not only by the speed with which we manage to deal with issues, but by the amount of good work that we must get through every week to do our job. I add my appreciation to that of other hon. Members who have seen at first hand the extent of good work done by the Comptroller and Auditor General and the National Audit Office.
It would not be possible for the Committee to work well without the efficiency and effectiveness of the Clerk to the Committee and his staff.
I was not a member of the Committee or an hon. Member when the reports that we are debating were considered by the Public Accounts Committee. I have therefore decided to take a rather wider look, through the eyes of a new hon. Member, at the work that we try to do.
The Committee operates at the very centre of one of the traditional roles of the House—to scrutinise the Executive. For many hundreds of years, it has been difficult for the House to get that task right. Such scrutiny was even an underlying and serious cause of civil war and regicide. With the maturing of our democracy and the passage of years, however, we have managed to become at least a little more civilised in performing it. It now seems to come down to a close examination of how money granted to the Executive by Parliament is spent.
Over the years, hon. Members and other parliamentarians have wrestled with the issue of how to perform that role, which is one of the House's most difficult jobs. Until the end of the 19th century, Supply was examined on the Floor of the House, when each Department would bring to the House its estimates. There would be a Committee of the whole House, and hon. Members were able to examine—line by line, as some people in local government still do—the estimates, to suggest amendments and occasionally even to win votes on amendments. These days, however, such consideration is no longer practical—if it ever was.
In 1905, in the first debate when the Public Accounts Committee's work was submitted to the House, Mr. Winston Churchill examined the effectiveness of how things were done in those days, when there was a Committee of Supply and Supply days. On the Committee of Supply, he said thatthe value of Supply days as occasions for raising grievances and discussing questions of policywas evident,but so far as any systematic and scientific examination of the expenditure of the country was concerned, they were a series of farces from beginning to end.Mr. Churchill also suggested that it was not possible for any human beingnot possessed of expert information or access to official documentstopossibly bring any effective criticism—except by accident—to bear upon the details of expenditure in Committee of Supply.On proceedings on the Floor of the House, he said thatIt was absurd to suggest that a system under which 670 Members, dominated by partisanship and Party feeling, strolled in and out on Supply days, and voted without having heard the debates, involved any definite, methodical, and scientific examination of the expenditure of the country."—[Official Report, 26 July 1905; Vol. 150, c. 443.]507 The issues that Mr. Churchill was dealing with on that day are still with us—to the same if not to a greater extent, because we deal with much more Government money, and the Government undertake a much wider range of activities. The issues that he raised are as serious now as they were then.
How can the House scrutinise seriously and effectively the spending of public money by the Executive? These days, we do it slightly differently. We have reached a compromise in the sense that the PAC itself will formally examine appropriation accounts but, in reality, will concentrate on issues flagged up in the reports of the Comptroller and Auditor General. As has been said, the PAC also does a great deal more work on value for money, which is a good thing. I do not think that it is possible to scrutinise the vast amount of public expenditure any more sensibly than we do already. However, it is important that the PAC retains a reputation for being a formidable body, especially in respect of its hearings.
It is appropriate that accounting officers who come before the PAC should quake in their boots a little before they come through the door. I shall certainly do my bit to ensure that they continue to do so. I know that some accounting officers have complained about the confrontational way in which members of the PAC take evidence. I make no apologies for that; it is important that it continues. Last year, when my right hon. Friend the Member for Swansea, West (Mr. Williams) questioned the accounting officer for the Office of the National Lottery in a confrontational way, he found that it was possible to discover by cross—examination things which even the National Audit Office had not uncovered. That is an important contribution that hon. Members without accountancy skills can make.
It is clear, even to a new Member of Parliament like me, that the Executive do not enjoy being scrutinised, and that has been true for centuries. The 22nd report of the PAC deals with British Rail Maintenance Ltd. and the sale of its maintenance depots. Referring to the Department of Transport, one of the report's conclusions states:We welcome the Department's decision to abandon the 'Not for NAO Eyes' convention".Government Departments and elements of the Executive developed their own ways of dealing with the challenges of external audit and tried to keep things covered up. One of them was the convention of writing on the top of papers, "Not for National Audit Office eyes". I, for one, am glad that the Department in that case has agreed to abandon that convention, but it is a warning to us all: while we enjoy a cosy relationship with the Treasury and the Executive, and while the Financial Secretary to the Treasury is a member of the PAC, it is still possible for the Executive and Government Departments to take steps to try to avoid our scrutiny. It is important that those of us participating in the scrutiny do not get taken in, but retain our critical faculties.
In my brief experience, I have found that there are one or two issues of general concern and faults in the way in which we do things. I do not yet have the answers, but I shall certainly be thinking about them in the coming months and years.
It seems that the accounting officers who come before the PAC are often not the people who have made the decisions that they are having to defend to us. They are accounting officers, and, in that sense, have to account for 508 decisions that are made, but I wonder whether dragging along a chairman or two, especially those of non-departmental public bodies, might make some of the people who do take the decisions think a little more carefully before doing so.
Despite the general feeling that the PAC and its proceedings are well covered by the media, I do not think that the media make enough of what we dig up. The green reports prepared by the NAO are well covered when they are published, but that is less so in respect of oral evidence and PAC reports. The media may like to take a closer look at all stages of the scrutiny process.
Despite the fact that 92 per cent. of recommendations are accepted by the Government and the Treasury, those recommendations are not always acted on. The hon. Member for South-West Hertfordshire (Mr. Page) and some Labour Members expressed dissatisfaction with the action taken following the reports. All we can do as members of the PAC is return to a subject and produce another report—perhaps we ought to think of another way to ensure that recommendations are acted on.
In any event, I am grateful to have been appointed to the PAC, although I was somewhat surprised, being a new Member of Parliament. Who knows how the minds of those on the Committee of Selection work and on what basis I was appointed? I am grateful to have been appointed and look forward to participating in this debate in future years, when I shall know more of the detail of the reports being considered, as I shall have contributed to them.
§ 7.5 pm
§ Mr. Alan Campbell (Tynemouth)
I am grateful for the opportunity to make a brief contribution to the debate, albeit as a new member of the Public Accounts Committee commenting on reports of a previous Committee. Before I do that, I, too, pay tribute to the role of Sir John Bourn and his staff in providing support to Committee members. New members in particular benefited from that support. I also thank the Clerk to the Committee.
We have, quite rightly, heard a great deal about the need to scrutinise the Executive. In last year's debate, my right hon. Friend the Member for Swansea, West (Mr. Williams) spoke about the "redefining of ministerial accountability". I should like to comment on that against the background of enormous change in public service and, in particular, to say something about the growth in the number of public service regulators.
Regulators have become something of an industry in their own right. There are now some 134 regulators employing 14,000 staff, at a cost of about £766 million of taxpayers' money. Recent research by the London School of Economics stated:It is an industry which seems to have grown topsy-like with no overall rationalisation or consistent practice".Furthermore, it would appear—I am not making a party political point—that the previous Government saw the increase in the number of regulators, but failed to ensure that the regulators themselves were properly regulated. Clearly, regulators cover diverse and often unrelated areas, but they are nevertheless linked by their obligation and duty to seek the highest possible standards for the public.
My comments refer almost exclusively to the 20th report, dated 17 March, on the workings of the Office of the National Lottery. The report contains 509 some serious criticisms of the role of Oflot and, in particular, of the role of the director general. Some of those criticisms arise from weaknesses in the original licence provisions and from confusion over whose role it was to intervene and to regulate.
For example, the report draws attention to several instances when interest from accounts went to Camelot rather than to the players' trust. It draws attention to the two-day delay in paying in receipts from retailers, which meant that £420,000 in interest went to Camelot rather than to the players' trust. Similarly, the interest paid from the annual prize shortfall, worth some £6 million in 1995, again went to Camelot rather than to the distribution fund. I understand that that was to be put right on 1 April this year, but it is interesting to note that that decision was taken only after a recommendation by the PAC.
The clear Treasury view is that such matters are the responsibility of the director general. If there is still confusion, it must be cleared up. There may be confusion in the original licensing provision, but the report makes further criticism of the director general and the way in which he sought to apply his powers. For example, he failed to give sufficient priority to the compliance programme, although I am again pleased to note that after the PAC's criticisms, work on most of the programmes is under way. The report comments on the director general's lack of vigour in ensuring that money was paid into the players' trust, which resulted in losses to the trust of £500,000. The trust's difficulties stem partly from the director general's decision not to get involved in the detail of the trust.
The report concludes that the director general's approach wasless active and vigorous than that adopted by other regulators, such as the Directors General who regulate the electricity, gas, water and telecommunications services.I hope that he takes that on board. I believe that there was a call in last year's debate for his resignation. If my comments fall short of that, I hope that he does not take it as a vote of confidence.
The most worrying aspect of the report has already been touched on by other right hon. and hon. Members—the lack of access for the National Audit Office to Camelot's records. The NAO was unable to satisfy itself that payments to the distribution fund had been correctly made. Unless the NAO can negotiate sufficient access to do its work, it cannot advise Parliament properly. That is unacceptable. I welcome the fact that the Government are considering ways of accessing Camelot's records.
The Committee notes that the lottery has raised substantial sums for good causes. We all acknowledge that. I hope that we shall get a sports hall development at Marden Bridge in my constituency, which will transform sport for schoolchildren there. However, that does not remove the need for vigorous examination and criticism, when warranted. It also does not excuse the lack of a more proactive and positive approach from the director general. He has an important role in facilitating parliamentary accountability. The report acknowledges his crucial role in maintaining the integrity of the lottery and reassuring the public.
I welcome the action of the Department for Culture, Media and Sport and its intention to transform the national 510 lottery into the people's lottery. If it is to be a people's lottery, it must have public confidence. The public buy the tickets and keep the lottery going, and their interests must be paramount. The regulator must promote the public interest, not the operator's interest. There are lessons in that for all regulators. It may well mean making operations more transparent. If it means giving regulators more powers to be able to discharge their work better, so be it.
I welcome the report, as I welcome the lottery White Paper. In view of the serious concerns raised in the report, the Government's determination to carry out a significant overhaul of the system is fully justified.
§ Mr. Phil Hope (Corby)
I congratulate the right hon. Member for Haltemprice and Howden (Mr. Davis) on his elevation to Chairman of the Committee. I look forward to serving under his stewardship. As a new member of the Public Accounts Committee, I have found the first few meetings most enlightening, reinforcing the importance of democratic scrutiny of Government spending. I add my congratulations to all former members of the Committee on the determination and rigour with which they have exercised their duties. Preparing for and participating in the work of the Committee requires a good deal of time. The value of its work can be seen in the Committee's reports. I add my tribute to the former Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), for his superb leadership—an example that we all aspire to follow.
The reports show the vital role of the Comptroller and Auditor General and the Public Accounts Committee in holding the Government to account for their performance and ensuring value for money. I have chosen my top four reports from the 25 before us. I wish that I had been here to take part in those debates. My No. 1 was the second report, revealing incompetence in the delays and cost overruns in completing the British library—a tale of appalling mismanagement. The 16th report exposes the billions of pounds of excess profits made by water and electricity companies following privatisation. The 19th report reveals the intolerable irregular relocation payments made by the former Yorkshire regional health authority. The 22nd report shows that the failure to ensure comprehensive valuations of the British Rail maintenance depots before their sale resulted in a bad deal for the taxpayer.
I hope that the new Committee, with many new members, including me, will continue the excellent work that has been done in the past. In the four or five hearings so far, we have exposed gross inefficiency in the work of the Child Support Agency, revealing that 85 per cent. of its maintenance payment balances are wrong, causing great distress and misery. We have also uncovered some appalling judgments, such as the Inland Revenue's decision not to implement a £20,000 computer database scheme, leading directly to the loss of several millions of pounds—if not hundreds of millions—of tax revenue from employers.
Given the benefits to the public purse of past and current PAC scrutiny, I add my voice to those of other right hon. and hon. Members who have asked for increased access for the Comptroller and Auditor General—and therefore for the PAC and Parliament—to follow and scrutinise public money wherever it goes. 511 In particular, we should increase his powers over and access to executive non-departmental public bodies, such as the Housing Corporation and the Legal Aid Board.
All local public bodies funded at arm's length should be included in the Comptroller and Auditor General's remit. That includes the further and higher education institutions, training and enterprise councils and, in particular, housing associations. We should ensure that we can scrutinise the final recipients of Government and European Community grants, including farmers, companies and voluntary bodies. We need to scrutinise contractors when Government functions are under contract to the private sector. We need to ensure that Railtrack and the rail operating companies, which are regulated by the Office of Passenger Rail Franchising, are properly scrutinised by the Comptroller and Auditor General. As my hon. Friend the Member for Tynemouth (Mr. Campbell) said, we must ensure that Camelot, regulated by the Office of the National Lottery, is properly brought under parliamentary scrutiny.
Extending access in that way would increase the scope of the NAO to many more areas of public spending and extend the benefit to the taxpayer of its work, which recoups at least £7 for every £1 that it costs to run.
Every member of the PAC is committed to ensuring the best value for money from Government spending. Like our predecessors, we shall perform our duties with determination and rigour. Already in the new Parliament, our hearings have exposed inefficiency and ineffectiveness in the Child Support Agency and the Inland Revenue. I ask for the Comptroller and Auditor General and the Public Accounts Committee to be given the extra tools and powers that we need to pursue economy, efficiency and effectiveness wherever public money is spent.
§ Mr. Andrew Love (Edmonton)
I am pleased that my hon. Friend the Member for Bradford, West (Mr. Singh) has returned to the Chamber as I now have the opportunity to congratulate him on a witty and entertaining speech that will, I am sure, go down exceptionally well in his constituency.
I am a new member of the Public Accounts Committee and I am acutely aware of my lack of knowledge and experience of its work. In my brief period on the Committee, I have been overwhelmed not only by the diversity and complexity of the reports, but by the work load. I do not know whether there are any Whips in the Chamber at the moment. If there are, I suspect that they will be smiling. My hon. Friend the Member for Liverpool, Garston (Maria Eagle) said she did not know why she had been appointed to the PAC. I do not know either; I wonder whether the last laugh is with the Whips rather than with us.
I pay tribute to all the previous members of the Committee. They produced not only the 25 reports that we are considering, but another 22 that have come out in the past year. Much of the credit for that record must go to the National Audit Office and to the Comptroller and Auditor General, Sir John Bourn.
I thank Ken Brown, the Clerk to the PAC, and his staff for dealing efficiently with the bewildering array of papers that we are sent continually. I also thank them for 512 their helpful attitude and their patience and forbearance in dealing with new Members such as me.
I join other hon. Members in paying tribute to the previous Chairman of the PAC, my right hon. Friend the Member for Ashton—under—Lyne (Mr. Sheldon) and I welcome the new Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis). I wish him well in his duties during this Parliament.
When I became a member of the Committee, I was worried by the fact that it always reached a consensus—something that is very hard to achieve in politics—but having seen the Committee in operation over the past few weeks, I can understand the strength of the concept that Gladstone envisaged when he set up the PAC. It does not comment on policy; its role is to scrutinise, to combat fraud and corruption, to ensure that public funds are spent according to the purposes they are voted for by Parliament and to achieve value for money.
Unanimity adds greater force to our recommendations. According to the National Audit Act 1983, the PAC has a duty to investigate "economy, efficiency and effectiveness" in the public sector. That requires access, but access is not available in certain areas of the public services. I associate myself with the comments made by the Chairman and other members. We must have access to all areas of public expenditure and to all bodies, whether quangos, housing associations, Camelot or, as mentioned by the Chairman, royal palaces.
We often think of this country as having a reputation for public probity and scrutiny. I am concerned that the European Court of Auditors has greater powers of access than the National Audit Office. That point applies not only to European institutions but to some British bodies. We need to look at that matter carefully.
The second report dealt with progress in completing the new British library. In this context, "progress" is a misnomer. The report followed a 1991 PAC report that catalogued the disasters that had overtaken the project. There had been a delay of three years in opening and, as I understand it, the library has still not opened. It has been developed on a smaller scale than originally envisaged, with increased costs of £61 million. The reason was described in the report, somewhat euphemistically, as "technical defects"; book shelving and electrical cabling had to be replaced. I was amazed to read that four years passed before the Department of National Heritage was informed that there had been problems. That is a shocking indictment of the control of the project.
The problem was exacerbated by there being two clients—the Department of National Heritage and the British library—rather than one and by a complicated management arrangement that resulted in weak quality control and difficulty allocating responsibility for defects and cost overruns. That was a recipe for disaster. It was, however, nothing compared with the lack of control over expenditure. There was no total cash budget and no firm budgets for work packages. That left the Department, as the report says,poorly placed to resist claims".513 There was great concern that that was not the way in which to manage a major construction project. The report concluded:In our view the new British Library could be used as a model of how not to manage a major construction project.I was attracted to the fifth report, "Highways Agency: The Bridge Programme" because of experience of the programme in my constituency. About a year ago, the Highways Agency commenced remedial works to a bridge on the A10 which is the largest trunk road and the busiest north-south route through my constituency. We thought that the remedial works were intended to cover deterioration that had taken place over the past 10 years. Less than two months after those works had been completed, further work was undertaken and we discovered that the second round related to bridge strengthening under the Highways Agency programme. We had a series of disruptions the first time round and within two months we had a second series of disruptions, which are only now coming to an end. That was incompetence of the highest order and it led me to take a close interest in the report.
The PAC examined the 15-year programme to restore motorway and trunk road bridges to good condition and to enable them to cope with vehicles of up to 40 tonnes, in line with the European directive. That is what was explained in my constituency. The report highlighted the fact that, halfway through the programme, only £131 million out of the £700 million that had been spent had been devoted to assessment and strengthening. That is against the backdrop of an increased work load due to an increased number of bridges with problems and improved inspection procedures—which led to concern about ensuring that under-strength bridges remained safe to use without width or weight restrictions that imposed severe traffic disruption.
The report criticised the monitoring of the agency's maintenance agent and the failure to introduce a systematic national approach to monitoring and recommended that the Department set up as a matter of urgency a bridge management information system to ensure that the limited funds were deployed in the most cost-effective manner. That was surely the greatest condemnation of the programme up to that date. I understand that significant progress has since been made on the report's recommendations, which I welcome.
I shall deal briefly with the 13th report, "The Second Sale of Shares in National Power and PowerGen". The sale was overshadowed immediately by the announcement by the Director General of Electricity Supply of a review of regional electricity companies' price controls. The report noted a significant price fall, following the announcement, on the second day of trading.
While I do not demur from the Treasury view that it could not anticipate that the market would interpret the announcement as having implications for other regulatory regimes, the report concluded that Ministers should have been consulted before the final decision to proceed with the sale. There was inevitably some fall-out in the attitude of large institutional investors, although evidence from the Treasury subsequently suggests it to have been a short-term phenomenon that did not affect later flotations.
514 On a brighter note, the report welcomed the additional proceeds from the state's sale of shares. The sale was oversubscribed, in line with Treasury predictions, and achieved with less costly incentives than previous ones. The report recognised the bank of experience and expertise built up in the Treasury from many other privatisations. The only question that remains is whether that expertise will be put to any significant use in future.
§ Mr. Mark Todd (South Derbyshire)
I congratulate all members of the Committee and their Chairman. They have expressed their thoughts on the reports and described their onerous duties. I wish them well.
I am not a member of the PAC and I have but one very narrow focus for my comments. It relates to the eighth report, "Information Technology Services Agency: Outsourcing the Service Delivery Operations". My concern lies more in the Treasury response to the report than in the report itself. There was very useful invigilation by my hon. Friend the Member for Wallasey (Angela Eagle) of some of the issues relating to the Public Accounts Committee about which I am concerned, but the Treasury's response is worrying.
I shall quote the section that worries me most. It relates to PAC conclusion xiii.We note that EDS have won significant amounts of public sector IT business … We are very surprised that Treasury were not able to provide more than fragmentary information of the extent of work done by EDS … We look to the Treasury to provide this Committee with complete and comprehensive information on the distribution of central government IT business amongst private sector computer companies.That is a very reasonable statement to which I shall return. The Treasury's response was:The Treasury notes the Committee's conclusion. It is not part of the Treasury's role or responsibilities to collect information on the distribution of central government IT business amongst private sector companies. Nor is such data collected by either the Government Centre for Information Systems or the Central Information Technology Unit.In other words, nobody does that task. PAC conclusion xiv said:We recommend that, as part of the evaluation of bids for individual contracts in future, the implications of concentrating sources of supply in one or a few contractors should be … assessed across the totality"—I stress the word totality—of government IT business.I shall not quote the Treasury response, but it was essentially complacent and uninformative.
Before I entered the House, I was an IT director of a sizeable company and contributed to the development of an IT strategy for a FTSE 100 company. I would not wish to tempt hon. Members to get in touch with me if their computers are not working—I do not do that—but I have some interest in and knowledge of the development of strategy in information technology.
The Treasury response reveals three things: first, an exclusively departmental focus on such matters—there was no coherent view across government on the issue—secondly, an alarming incoherence of purchasing in an incredibly expensive and complex area, and thirdly, a total lack of an information or technical strategy across government. That is extremely alarming.
515 I have tested the theory more recently through a variety of questions on various issues relating to the purchasing of commodity systems such as payroll and purchasing. A number of major contracts in that area are to be let shortly. I was looking for some reassurance that the situation was changing. I am pleased to say that there is a greater willingness to share information across Departments, of which the Minister has assured me. That is welcome indeed, but there is still no clear grasp of the need for a clear strategy or a coherent purchasing approach.
What is required is a definition of commodity services—what we can basically say are reliable functions that all large organisations use to run their affairs. Such systems are available widely and processes on which we can rely have been mapped and coherently identified over a period of time. Purchasing them is relatively straightforward. Then we need a set of differentiated functions which we can say are clearly different for each Department, for which individual systems must be purchased and individual sets of processes defined. That is quite a small list. No steps have yet been taken to identify the difference between those two categories of systems and processes and it is important that that is done.
If we do not do that, we risk the kind of things at which the report hinted, such as continued incoherence of purchasing from individual suppliers that do not know exactly the scale of their relationship with the Government. We do not have, either, any critical technology focus that defines what technical obligations we place on a supplier when it delivers services. That seems to be desperately lacking. I would very much welcome the PAC devoting rather more time to such things so that it can develop some of the very useful thoughts that emerged in the report.
§ Mr. Tim Boswell (Daventry)
I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) on his appointment as Chairman of the Public Accounts Committee. He made a very thoughtful, clear and trenchant speech, which bodes extremely well for his successorship in the post formerly held by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who served for many years with great distinction. We all appreciate his contribution.
I remember from a debate some years ago comments made by the right hon. Member for Ashton—under—Lyne that appear to have nothing to do with public accounts but which stuck in my mind and which I have often quoted. He said that the House should remember that, when somebody comes to see us during a constituency surgery, we are always on their side. That has a relevance to accounting because, given that resources may be limited—they are—when the Committee or the House stops £1 of public money being wasted, that money immediately becomes available for translation into services. That surely is a central function of the House that is not as well recognised as it should be.
I come to the substance of the reports at relatively short notice and I wish only to draw out two major points. The first is the management of long-term construction projects. The problems of the British library have been extensively rehearsed and I do not intend to repeat what has been said. The lessons of the British library have 516 a wider application to any major project in which the Government have to stitch things together by working with the private sector, because that is always complicated.
I cite in comparison the success of the Daventry international rail freight terminal in my constituency, which was opened by the Princess Royal last week. The project has been led by the private sector with the enthusiastic support of the local authorities, which have been mainly Labour in the past few years. It has been built in remarkably short time and very successfully. It is not lacking in technology, even though building railways—let alone rail freight terminals—is not something that we have done much of recently. The cost is not trivial either; many millions of pounds were spent over an extensive area. It is a good-news story and the moral is that one main customer—obviously with different interests behind it—and one main contractor leads to a simple relationship, which was conspicuously lacking in the British library project.
The second example is drawn from my ministerial experience and involves the relationships between Departments and their non-departmental public bodies and contractors and others who service Government needs with taxpayers' money in different capacities. We have not got those relationships entirely right, but it is a question of experience and a steep learning curve. I always felt uneasy politically, because if anything went wrong in a quango the Minister was, in the end, responsible. That was only right, but Ministers could not intervene in every executive decision made by a quango. We need a means to manage the relationship effectively and to ensure that quangos are properly run in the interests of the public. I strongly endorse, and will return to, some of the points that have been made in the debate.
I shall cite the specific example from my experience in education of the Higher Education Quality Council, which is an academic-run, rather than a Government-run, body. Some years ago, it considered the academic audit systems in Oxford university. I remember that its report, which was a good read, said, "Of course, we know the university, but we understand that there are a lot of colleges that carry out the teaching and we are not quite sure what the relationship is with them and we cannot look into them at the moment"—or words to that effect. That is the difficulty with all such issues—they unpack as they are investigated.
I shall not comment on the details of the thoughtful speeches by hon. Members from all parties, as is traditional on such occasions. All showed a strong bipartisan instinct, but it would wrong of me not to refer to the speech made by the hon. Member for Bradford, West (Mr. Singh). He spoke with great eloquence, knowledge and a passionate commitment to his constituency and he brought an interesting and helpful perspective to the debate. We know the issues are sensitive, but his speech did great credit to him and his constituency. I have had informal conversations with the hon. Gentleman on a few occasions and I am sure that he will have contributions to make in the future. We look forward to them.
I do not know whether Sir Humphrey still stalks the world, but if he were here he might turn to Jim Hacker when he received one of the reports by the Public Accounts Committee and say, "Of course, Minister, the fact that we have been criticised in the report shows 517 the strength of public administration. It is a sign of health, not weakness." If he were to say that, he would be substantially right. I do not say that complacently. The reports to the House rightly reveal severe shortcomings, but they also reveal the strength of the system that has been built up by the Committee and the National Audit Office to delve into the difficulties.
My right hon. Friend the Member for Haltemprice and Howden made a telling point when he said that permanent secretaries—those I have known do not enjoy their appearances before the Committee—are caught in a dilemma. If waste is revealed, it is bad news and a bad mark for their careers; but if savings are revealed, such as £399 million in the case of the information technology strategy, that is also a disaster because the figures must be wrong.
I do not wish to imply that everything is all right—that is not the message of this debate—but we should make the point that public administration is essentially run well, although we all want to make it better. It would be wrong to use this debate as a platform for criticism, although it is understandable that some of our constituents wish to do so. When they have a problem, it is very real to them. When they see change—the closure of a school or a hospital, for example—they extrapolate and think that the education service is failing or the national health service is in crisis. That is not the case. Sometimes things go wrong—I am sure that the Financial Secretary will join me in predicting that things will go wrong in the future, although I will not necessarily make her take the blame politically—but we have to have a system that picks up when things go wrong, reports on them to the House, through the Committee, and does something about them. We have the makings of such a system and, in the members of the Committee, including its Chairman, we have a commitment to do so.
One continuing theme of the debate has been the importance of access. I strongly endorse what has been said. I recall documents—although I cannot remember any specific ones—that had the magic words at the top, "Not for National Audit Office eyes". I do not know—perhaps the Financial Secretary will tell me—whether such documents have been expunged from all Departments. I hope so.
Access is not simply a matter of playing ducks and drakes with the NAO and I hope that Departments do not think that it is. The openness and accountability of the various tributaries through which public money is streamed is the mirror image of what I hope the Government will do—although they seem somewhat diffident about doing anything at the moment—on open government. We need to open up the processes and the way in which money flows and resources are spent to ensure that the taxpayers can be satisfied that they are getting a good service and value for money.
The moral that should be drawn from the debate is that sunlight is the best disinfectant. I do not wish to suggest that our public life or central Government finance are corrupt or unsatisfactory. The civil service, Ministers and the accounting bodies have a strong commitment to seeing that things are done properly. The reports before us tonight cover the failures: the successes do not need to take up our time. The purpose of our debate and of the 518 future work of the Committee is to let in as much sunlight as possible to the benefit of us all, and taxpayers in particular.
§ The Financial Secretary to the Treasury (Dawn Primarolo)
It gives me great pleasure to reply to the debate on behalf of the Government. I start by thanking the Public Accounts Committee for all the hard work it has done in 1996–97. It again proved itself the hardest-working and most effective of our parliamentary Committees. As the hon. Member for Daventry (Mr. Boswell) said, although it is the job of the PAC to throw light where some would wish it not to be cast, it should equally be the Committee's job to praise the many fine things which go on on our behalf within Departments.
One of the reasons for the Committee's effectiveness has been the excellent chairmanship of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who brought admirable dedication to all aspects of his job. My right hon. Friend has now stepped down from a position that he held for 14 years, during which time, by my reckoning, the PAC produced about 550 reports. The whole House will want to join me in thanking him for his excellent contribution and, in particular, for his concentration on the need to ensure high standards in public life.
I give his successor, the right hon. Member for Haltemprice and Howden (Mr. Davis), and the new Committee, my bestwishes. I have never heard a Treasury Minister described in such kindly terms as the right hon. Gentleman used—long may it continue! As an accomplished Member of this place, the right hon. Gentleman will understand that it is no dishonour to him if I say that he has a hard act to follow. However, I know that, under his chairmanship, the PAC will blossom. I have every confidence that the Committee will continue to achieve the high standards to which we have become accustomed.
I welcome the hon. Member for Daventry to the debate and to the Opposition Front Bench. I know that it is a difficult job—I did it a number of times—to struggle with so many reports. But he entered into the spirit of the debate, which has been to ensure cross-party support for the pursuit of the Committee's objectives.
I want to pay tribute to the work of two people who have been very senior members of the PAC. The former Member for Uxbridge, Sir Michael Shersby, was a delightful hon. Member who paid great attention to his work and was courteous to every hon. Member. I know that we will all miss him, particularly the members of the PAC. My right hon. Friend the Member for Swansea, West (Mr. Williams) is still a member of the Committee, but cannot be here tonight. He and the late Sir Michael brought experience to the PAC from which we all benefited.
I wish to thank the National Audit Office and the Northern Ireland Audit Office, and their respective comptrollers and auditors general. Although they are not Government Departments, the bodies have a critical role in promoting good value for money and high standards. We depend on their work to a huge extent, and we are lucky to have such effective organisations. I have met the Comptroller and Auditor General and will be visiting his offices in the near future to ensure that I am fully acquainted with the working practices of the body
519 I shall try to group my responses to the debate by theme. This has been a thorough debate and it would not be appropriate for me to repeat all the points. The right hon. Member for Haltemprice and Howden highlighted the importance of integrity in controlling taxpayers' money, and referred to value for money. He demonstrated excellently the considerations we need to keep in our minds when seeking efficiency in government. Much still needs to be done, as he said, and he will be seeking out ways with the Committee to improve that role. He referred on a number of occasions—in a thoughtful speech to which I listened with great care—to access for the NAO, as did many other hon. Members.
It was suggested that the NAO should have a statutory right to follow public money wherever it goes; the hon. Member for Bexhill and Battle (Mr. Wardle) suggested that it follow public money into the private sector. The Government are listening carefully and we need to have further discussions as part of our commitment to effective, accountable and better government. I caution hon. Members on some of the points made this evening, as these are complex issues—we must look at who audits whom.
pay tribute to the maiden speech of my hon. Friend the Member for Bradford, West (Mr. Singh), who paid tribute to his predecessors—particularly Max Madden, whom we all held in high regard. He will have realised that his speech was incredibly well received by the House for its fluency, wit and confidence, and for the sensitive points he made on behalf of his constituents. He referred to the drugs problem in his constituency, and underlined his commitment to tolerance in our society and the world. Like all other hon. Members, I very much look forward to his future speeches which will add greatly to our debates.
The right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan) raised a number of points, and referred particularly to quangos and their accountability. After consulting on a range of issues, the Government will publish a White Paper on quangos encompassing the points that he made about the importance of accountability. He referred also to the NHS and to the 17th report. My right hon. Friend the Secretary of State for Health will publish a Green Paper on a new health strategy aimed at picking up the issues to which the right hon. Gentleman referred. We must make sure that my right hon. Friend the Secretary of State is made aware of the right hon. Gentleman's comments.
Several hon. Members referred to the national lottery, and in particular to the access of the NAO to Camelot's records. As is now well known, the Department for Culture, Media and Sport is looking at this matter.
My hon. Friend the Member for Shipley (Mr. Leslie) talked about accountability and quangos, and referred to resource accounting and budgeting, to which I shall return in a moment.
The hon. member for South-West Hertfordshire (Mr. Page) made some important points about the role of the PAC and reflected on his experience on the other side of the fence—dare I say it, he is a poacher turned gamekeeper. I am sure that his experience will prove valuable.
The hon. Member for Bexhill and Battle spoke about National Savings and referred to the Turkish universities project. There is nothing to be added to what the report on the latter said, but I can tell him about developments 520 on National Savings, as he is absolutely right to be concerned, and he and other hon. Members have starkly exposed the problems.
The 1996–97 accounts for all products have been completed and passed to the Comptroller and Auditor General for audit—that is very important—but the agency has an urgent programme of work to resolve past discrepancies and improve financial controls. It is too soon to know the final outcome of work on discrepancies and unreconciled balances, but major improvements have been instituted, and I am sure that members of the Committee will continue to take an interest in that.
My hon. Friend the Member for Liverpool, Garston (Maria Eagle) talked about why she was on the Committee and about not getting taken in. In my experience of her considerable abilities, there is absolutely no chance of her being taken in by anyone. Her explanation of the development of the Committee's role since its first debate in 1905 and the comments of Winston Churchill showed the complexities that exist for Parliament in pursuing and ensuring accountability in relation to public money. I am not sure whether I would use the phrase, "quaking in their shoes", but I hope that civil servants will strive not to have to come before the Committee and will realise that its work assists them in discharging their duties.
My hon. Friend the Member for South Derbyshire (Mr. Todd) referred to the eighth report. I struggled somewhat with some of the technical points—they seemed technical to me—about systems and processes, but I listened very carefully, because he made some important points. The wheels are turning and, in our facilitating and enabling role, there is a cross-departmental Committee, under Treasury chairmanship, to consider data collection and market shares. We should look carefully at my hon. Friend's other points in Hansard and add them to the points already made by the Committee.
There must be transparency in relation to the work of Departments and agencies. Parliament and the public have a right to know what is going on and need an assurance that the Government are doing what they say they are doing. Effective public sector audit has an important part to play in achieving that, although other factors are important, including the quality of financial reporting and the openness to which the hon. Member for Daventry referred.
Primarily for those reasons, the Government announced soon after taking office that the National Audit Office would be invited to audit the assumptions underlying the forecast of public finances. I hope that hon. Members will agree that that innovation was not only an important step in openness but a clear statement by the Government about the high regard in which they held the NAO. The acceptance of that outside the House shows the high regard in which the NAO is generally held.
It was also with a view to promoting openness that the Government announced in July, in response to the 22nd report, the abolition of "Not for NAO eyes". I can confirm that that applies across government. To get the best out of the public sector audit, we need an effective system of parliamentary scrutiny and accountability; that is why we are lucky that the PAC lies at the heart of our system. It is no surprise that the Committee's work has been a model for other systems in other Parliaments 521 around the world. The prospect of having to appear before the PAC when things have gone wrong provides a powerful incentive to accounting officers to get things right in the first place.
Much has been said about the need to improve the management of projects. The right hon. Member for Caithness, Sutherland and Easter Ross talked specifically about the new British library. By no stretch of the imagination could that project be described as well managed or a model for others to follow. The listed 12 lessons that have been urged on the Treasury to ensure that other Departments and agencies are aware of the problems show clearly that the project was not well managed.
The Treasury originally planned to issue further guidance in March this year on achieving value for money in construction procurement, including project management, but decided to improve the value of the guidance by taking account of the Construction Industry Board's latest codes of practice, which were to be issued in a final form this summer, and to consult widely with the industry's umbrella bodies.
As a consequence, the first batch of new guidance will be available early in December. This is the first time that the industry has been so closely involved in drawing up guidelines. I hope that the guidelines will go a long way towards dealing with the project management points so starkly made in the report.
Public-private partnership is another significant way of improving value for money. We look to the Committee and the NAO to make a continuing valuable contribution in the development of such partnerships, to secure the efficient delivery of public services. The Government have acted swiftly: we commissioned an independent review of the previous Government's private finance initiative, and the recommendations of the Bates review, delivered in June, will streamline and standardise procedures.
The House will note that the Bates recommendations endorsed those of the NAO in the two reports—on the Skye bridge and on the replacement of the national insurance recording system—not yet reported on by the Committee. It is vital that, as mechanisms develop for delivering public services, we ensure that accountability and auditing mechanisms develop alongside them. I know from the comments of the right hon. Member for Haltemprice and Howden that he intends to keep that firmly on the agenda.
The use of resource accounting and budgeting represents an enormously important change in the way in which the Government run business; in the long term, its introduction will be the most effective way of promoting efficient asset use. The PAC is particularly interested in that. Hon. Members have said that they want to ensure that the Government proceed at a pace that is respectable but effective.
The introduction of resource accounting and budgeting represents the biggest change in financial control within Government since the Gladstone reforms more than 100 years ago. The support of the Committee and the National Audit Office for resource accounting and budgeting is crucial if we are to implement the changes effectively.
522 In taking forward the proposals, the Government will pay very close attention to the Committee's views. I note its recommendation that there should be an extended period of live, parallel running of the present cash-based system and the resource-based system for voting and accounting for Supply. The Government believe that there is already sufficient time for dry running—if I may call it that—and testing in this nine-year project, and are confident that Parliament's ability to exercise control will not be jeopardised. None the less, it is very important and we shall pay attention to it.
The right hon. Member for Haltemprice and Howden referred to the deployment and disposal of assets that the Government no longer require. On Monday, the Government will publish the national asset register, so delivering on our manifesto promise that all Departments will have drawn up a comprehensive list of their assets by November 1997. It will be the first time that any Government have had a full picture of all the assets that they own. It sounds breathtaking that that has not happened before—the hon. Member for Bexhill and Battle made a point about National Savings: we did not know what all our assets were. I understand that there have been some interesting discoveries. That will be a vital starting point in the comprehensive spending reviews for an examination of whether efficient and appropriate use is being made of the Government's assets. That echoes the points made by the right hon. Gentleman in his opening remarks.
§ Mr. Maclennan
We await with unbated curiosity the publication of the document. May I, with just a wry smile, inquire whether the Minister knows whether included among the assets are the works of art that the Public Accounts Committee discovered had not been cared for by Departments with any assiduity or concern in past years?
§ Dawn Primarolo
I am sure that the register will make fascinating reading and include the points that the right hon. Gentleman made, and perhaps cross-reference to previous PAC reports. It may take his fancy. He explained earlier why he identified particular points in reports.
Public audit and, more generally, the work of the Public Accounts Committee has a major role to play in promoting high standards in central Government bodies. It is particularly crucial that we use as our touchstone, as many hon. Members did, the eighth report of the 1993–94 Session, "The Proper Conduct of Public Business". Many hon. Members will share my view that among the many reports that the Public Accounts Committee has completed in recent years, "The Proper Conduct of Public Business" ranks first in importance.
In reflection of that, the Treasury's new handbook—to pick up on the point made by my hon. Friend the Member for Weaver Vale (Mr. Hall)—"Regularity and Propriety" includes the checklist from the eighth report in full. No doubt that is why my right hon. Friend the Member for Ashton-under-Lyne described it as wholly admirable. I am pleased to tell the House that more than 8,000 copies have been circulated. I would also draw the attention of the House to the fact that, in the Treasury minute in response to the Committee's report on the Plymouth development corporation, the Government emphasised the importance of high standards of conduct at all levels in the public service.
523 I remind the House that, in seeking better value for money and greater accountability for the taxpayer, we are all on the same side. Although the 25 reports deal with activities under the previous Government, the present Government fully accept the need to carry their lessons into the future. For this purpose, we need to count not only on our own efforts but on the continuing vigilance of the Committee, the National Audit Office and other national audit agencies.
Good government cannot happen without vigorous external scrutiny. We look forward to many more years of constructive engagement with the Committee. The speeches made by hon. Members this evening demonstrate the expertise and ability that they bring to that role, under the chairmanship of the right hon. Member for Haltemprice and Howden. I look forward to continuing excellent relationships between me, the Treasury and the Committee as we strive to reach these objectives.
§ Question put and agreed to.
That this House takes note of the First to Twenty-fifth Reports of the Committee of Public Accounts of Session 1996–97 and of the relevant Treasury Minutes (Cm 3559, 3577 and 3714), with particular reference to the following Reports:
Second, Progress in Completing the New British Library (HC 38); Fifth, Highways Agency: The Bridge Programme (HC 83);
Eighth, Information Technology Services Agency: Outsourcing the Service Delivery Operations (HC 98);
Thirteenth, HM Treasury: The Second Sale of Shares in National Power and PowerGen (HC 151);
Sixteenth, The Work of the Directors General of Telecommunications, Gas Supply, Water Services and Electricity Supply (HC 89);
Twenty-second, British Rail Maintenance Ltd.: The Sale of Maintenance Depots (HC 168).