House of Commons Hansard Debates for 17 Oct 1991

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in which we conduct our affairs, but it is always interested in the status of the comptroller and I should like to know what it thinks about that issue.

I understand that, in an order under the Official Secrets Act 1989, the comptroller and the staff of the National Audit Office were defined as civil servants. If that is so, why was it done in that way and why are not the comptroller and his staff in the same relationship with Parliament and Government as, for example, the Clerk of the House and his staff ?

Why is the Financial Secretary to the Treasury a member of the Public Accounts Committee, although he never attends? How can it be right that a senior officer of the Executive is a member of the Committee whose job it is to audit the Executive? The Procedure Committee, in its recent report on Select Committees, proposed that he should no longer be a member of the Public Accounts Committee, but the Treasury refused to have him taken off it. That is another example of undue Government influence on the state audit body. In many countries, certainly not in France or the United States, that would not be tolerated. What justification is there for the Treasury to examine the National Audit Office corporate plan and to make observations about the cost of its staff? What has that to do with the Treasury?

Furthermore, the Treasury fixes the salary of the comptroller because it is related to that of a permanent secretary and that salary is decided by the Treasury. That is another example of interference by the Treasury in the management of our state audit body. These examples show that the relationship between the Comptroller and Auditor General and the Treasury is too close. However, there is a much more interesting example and I look forward to the Minister commenting on it.

On 4 June, there was a report in the press that the Comptroller and Auditor General, along with representatives from Marks and Spencer and British Rail, had been invited to Chequers to help to draft the Government's citizens charter. I can understand why representatives of Marks and Spencer, a firm with a well-known record of customer service, were invited along, although I am not so sure about British Rail. Perhaps as British Rail was to be affected by the citizens charter it was right that it should be represented.

The Prime Minister was quoted as saying of this meeting that it was called to form policy. It is odd that, when the Public Accounts Committee cannot comment on Government policy, the Comptroller and Auditor General can help to form it. I fail to understand his position in this matter. What happens if he is later called upon to examine the effectiveness of part of the charter--for example, the quality of service in DSS offices? Does he declare that he has an interest because he had a hand in drafting the policy? I would be pleased if the Minister would explain how an Officer of the House becomes involved in making Government policy.

When I wrote to the Prime Minister about the matter, he wrote back in an extremely shirty way. He was very sharp. He assured me that my complaint was "quite ridiculous". Oh yes. He wrote that the citizens charter

"is not a political exercise."

Mr. Spearing : Who is this man?

Mr. Garrett : The Prime Minister. Like my hon. Friend, I think that that assertion is ridiculous.

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After the Prime Minister had completed the "quite ridiculous" part--this is really rich--he stated :

"I do not see how a Comptroller and Auditor General can be expected to do his job effectively if members of the PAC try to lock him up in Buckingham Palace Road poring over the books."

I never suggested that that should happen. Indeed, the Prime Minister's observation is entirely irrelevant to the argument that I am advancing.

I shall quote from my reply to the Prime Minister because I believe that it sums up my position on the matter, as it should sum up the position of the House. I wrote :

"The duty of the CAG is to report to Parliament on government spending and the efficiency and effectiveness of its administration. It is therefore quite unacceptable that the CAG should be engaged by the Government to assist in the preparation of your Citizens Charter when his duty will be to report on its implementation.

Independence of the executive and objectivity are the most valuable characteristics of the CAG and I think that you have jeopardised them."

Some will say that I am proceeding down a constitutional byway that is of interest to only a few fanatics, but I think that the matter is of constitutional importance. We know that in the past the Comptroller and Auditor General was collared by the Executive for the best part of 100 years, and it seems that the Treasury is moving back in on the role of the comptroller. It is essential that we remember that he and his staff are servants of the House. They are employed by the House to examine the accountability of Government.

That is the end of my questions to the Treasury, so the Economic Secretary to the Treasury can, if he likes, send his gofer to get the answers.

In general, the Committee of Public Accounts seemed to be an especially effective instrument in dealing with parliamentary and public accountability. I have always been impressed by the quality of the Committee's reports. It seems that it and the Select Committees may be able to scrutinise the activities of 30 major Departments, but the circumstances will change when the committees are faced with 30 Departments and 100 agencies. I refer to the new so-called "next steps" agencies.

The Committee of Public Accounts may be in better shape to cope with the agencies than the various Select Committees. I am a member of the Treasury and Civil Service Select Committee and I do not think that it has a hope of tackling the agencies that will be reporting to the Treasury, let alone the Treasury itself. Some departmental Select Committees will end up with the task of scrutinising about half a dozen agencies. I think that bureaucracy is outrunning the powers of parliamentary scrutiny and this will be a considerable problem as time passes. Indeed, the departmental Select Committees are already unable to fulfil their terms of reference. They do not really examine the spending, administration and policies of the Departments that they monitor. The Committee of Public Accounts has a legitimate interest in this question and it should specify the information that Parliament requires from the agencies and the other bodies that remain when agencies are set up.

The National Audit Office has produced one report on definitions of measuring agency performance. So far, it is the only sensible attempt that anyone has made to do so. In the absence of anything else, the Committee of Public

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Accounts should become the common standard setter for reporting on financial and management performance throughout the new agencies. The House will know that the public expenditure annual reports now amount to 1,000 pages. When I first read them in the middle and late 1960s they were very much smaller. I think that the 1969 report amounted to 84 pages. We are supplied with over 1,000 pages of information in estimates and in the appropriation accounts. We are now to have 50 agency reports, all of which will be about half an inch thick. I do not think that we can cope with them.

The Treasury seems unable to impose any discipline in this matter. Variations in terms of performance indicators are ludicrous. It is grandly announced in the Treasury's own annual report this year that its duty is to regulate the banking system, but the report contains no performance indicators. It does not set out what has been done to regulate the banking system. There is no reference to failed banks, for example. It set out, however, the productivity of clerks at the Chessington computer centre. That is a typical mandarin's dodge. They never report on their own performance. Instead, they insist on their clerks producing quantified performance measures. The Treasury is one of the worst providers when it comes to accountability and performance indicators.

A vast amount of financial and statistical data is pouring out of Departments and agencies and the Treasury imposes no order on them of the sort that will enable parliamentary scrutiny to take place. The introduction of some order would be a useful job to undertake and it might be carried out well by the National Audit Office.

I said earlier that I would refer briefly to one of the reports that has been produced by the Committee of Public Accounts. On the whole, the report on university funding disappoints me. As a Member who represents a university seat, it is a matter in which I take a close interest. The conclusion was disappointing. Paragraph 18 states :

"We are concerned at the serious financial difficulties facing a number of universities and the extent to which they are operating at a deficit. It is not for us to comment on the overall level of support for universities from public funds since this is a matter of public policy."

That is dodging the issue. The Committee of Public Accounts may consider that it may not comment on Government policy, but it is empowered to report on the effectiveness of Government spending under the National Audit Act 1983. Given the Government's policy to expand universities, we should return to the matter and examine whether funding allows universities to operate effectively.

Indeed, it has been found that the current level of funding does not allow universities to operate in a way that could be described as effective. Staff ratios in universities have fallen for over a decade. The universities may or may not have become more efficient as a result, but clearly there has been an effect on quality. I have a letter from the vice- chancellor of the university of East Anglia in my constituency. He says :

"The university system as a whole is seriously underfunded and any further expansion without adequate resources can only come at the cost of lower quality. We want to expand, we want to open our doors to more students, but we also want to give them the quality of education which they deserve and the country needs."

He takes the view that with the present level of funding that is not possible.

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The vice-chancellor sent me a useful report prepared by the vice-chancellors and principals of the universities, which makes the point even more strongly. I shall not quote too much of it, but one passage reads :

"There are now worrying signs in the universities that this great national asset is being damaged.

In 1988 a study by the University Grants Committee showed £250 million was needed just to bring existing buildings to a satisfactory and safe condition In 1990, the Advisory Board for the Research Councils estimated that £450 million was needed to replace old equipment and buy new if universities and polytechnics were to continue to provide first class research and advanced level teaching.

Only a small percentage of these sums has been forthcoming. Universities' own efforts to raise money are often hampered by Treasury restrictions on the use of assets and on borrowing. These rules need changing."

The report adds that well-informed observers are now saying that "too rapid expansion, without proper investment, has greatly damaged the international standing of universities on the Continent. None, they say, now ranks as world class, while a number in Britain still do. They are a warning against underfunded expansion." This section of the report concludes :

"Throughout the 1980s UK universities have resisted pressures which would have led to loss of quality and standing. In the face of Government exhortation to take more and more students without adequate funding, they have expanded only where they could still be sure of offering students a high quality of education. They now face a greater determination from the Government and Funding Council to force expansion on the cheap."

That is the message that comes from any study of university finance. I understand why it happened, but I am disappointed that the report of the Committee of Public Accounts concentrates on whether proper financial procedures exist. That is a minor issue compared with the underfunding of universities, a matter to which the Committee should now turn.

7.19 pm

Mr. Terry Davis (Birmingham, Hodge Hill) : I join my colleagues on the Public Accounts Committee in paying tribute to the work of our Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). As several hon. Members have said, the Committee would be much the poorer without his experience and ability. We all value his chairmanship.

I join my right hon. Friend and other members of the Committee in paying tribute to Sir John Bourn, the Comptroller and Auditor General. My hon. Friend the Member for Norwich, South (Mr. Garrett) raised interesting questions about the role of the Comptroller and Auditor General as an Officer of the House. Especially urgent was his question about the circumstances surrounding the presence of the Comptroller and Auditor General at a discussion about policy. Just as the Committee must not stray into areas of policy, it is important that the Comptroller and Auditor General is not involved in developing Government policy, whichever party happens to be in power. I hope that the Treasury will explain what happened. I am sure that my hon. Friend and other members of the Committee would not wish to be critical of the Comptroller and Auditor General for being present at that meeting--the question is how that came about. I emphasise that we have been well served by him over the past year.

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I also pay tribute to the Comptroller and Auditor-General for Northern Ireland, who is often hidden in the shadow of Sir John Bourn. I very much value his reports on the Northern Ireland Office. I think that hon. Members, the Comptroller and Auditor-General for Northern Ireland and his staff feel that we do not give sufficient time to matters relating to Northern Ireland. In fact, the matters he brings to our attention are always fascinating.

The right hon. Member Hertfordshire, North (Sir I. Stewart) referred to the saga of the British Library. My right hon. Friend the Member for Swansea, West (Mr. Williams) referred to the lack of fire precautions at Ministry of Defence stores, and said that stories about that were incredible. On the bestsellers list should also be some of the reports from the Comptroller and Auditor-General for Northern Ireland. We should pay more attention to them. Perhaps we should even have a separate debate in which, I suspect, hon. Members representing Northern Ireland would wish to take part.

I do not intend to deal with any of the fascinating reports about Northern Ireland. Nor do I intend to deal with the reports about the Ministry of Defence, other than to refer to Sir Peter Levene. My right hon. Friend the Member for Ashton-under-Lyne said that while Sir Peter had been responsible for procurement he had introduced the use of cash flow as an incentive to suppliers to deliver on time. I do not disagree with the compliments that my right hon. Friend paid to Sir Peter, but I must say that in my talks with suppliers to the defence industry I hear an increasing number of complaints about cash flow. Indeed, even more complaints come from the sub- contractors to those suppliers, who say that they are not being paid on time after they have delivered the goods.

When we talk to people in manufacturing industry about what the Government do to help their industry, time and again we hear that the most important thing is to ensure that bills are paid on time, and they refer to the late payment of bills by the Government. It may be that some of the major suppliers are hiding behind the Government and pretending that they have not been paid, in the hope of benefiting their cash flow. The PAC is not in a position to know about that. However, there should be some investigation by the National Audit Office into whether the Ministry of Defence is meeting its debts on time, as it should do. It should be setting an example to the rest of industry.

My right hon. Friend referred to the overwhelming need for Government Departments to be clear about their objectives and to quantify those objectives. During the past year, several reports have shown a woeful lack of ability to clarify and quantify objectives. A classic example of that was referred to in our eighth report on the elderly, on the information requirements for supporting the elderly, and on the implications of personal pensions for the national insurance fund. It is an expensive example because the arrangements for subsidising private pensions, at the expense of the taxpayer, are costing the Government not millions of pounds, not hundreds of millions of pounds, but £1,800 million per year. In comparison, the saga of the British Library pales into insignificance. The private pension subsidy is costing £1.8 billion this year, next year, the year after, and so on. The mind boggles at the cost, which already accounts for 1.5p of income tax.

Of course, the Government have transferred the cost of other benefits-- which just happen to amount to £1.8 billion--from the national insurance fund to the general

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fund, so the cost is funded by income tax. It is valid to say that the cost of that subsidy is being borne by taxpayers. Originally, the advice given by civil servants to Ministers at the Department of Social Security--I am not questioning the policy decision, only the advice--was that the scheme would cost £60 million a year, yet it is in fact costing £1.8 billion a year. The forecast of £60 million was based on the very lowest estimate given to the Government Actuary for the number of people who might take up the bonanza. I think that that is the worst example of a Department failing to be clear about its objectives and failing to quantify the cost of its policies. Another impression that I have gained, and which applies to other Departments as well as the Department of Social Security, is what I would define as a lack of concern. There is a far too relaxed attitude towards the problems and difficulties experienced by people. An example of that was shown during examination of the national health service chief executive on the subject of maternity services. All hon. Members would agree that the death of babies causes great distress to the parents, and none of us would want a baby to die unnecessarily. This country has a record on perinatal and neonatal mortality rates that is simply not of the best. Even worse is the fact that the number of deaths at the perinatal and neonatal stages differs between one part of the country and another. If the level of care throughout the country were raised to the level of the best district health authority--in this case, Oxford--4,282 babies would be saved each year. We are making progress in improving the perinatal and neonatal mortality rates, but it is slow.

I have a particular interest in the matter because the East Birmingham health authority, which covers my constituency, is low in the league table. There are 215 district health authorities in Britain, and East Birmingham comes in at 212--third from the bottom. When the Committee asked Mr. Duncan Nichol what was being done, he said that it was the responsibility of regional health authorities, and that he had discussed the matter with them during his reviews. He said that the west midlands had been specially targeted because, although East Birmingham was bad, other authorities in the west midlands were also poor. He said that he had given the regional health authority general managers in the midlands a hard time about the problem, and had done so in the presence of the chairmen of those authorities.

Mr. Nichol gave some details about that to my right hon. Friend the Chairman of the Committee at the start of the examination. When we asked him what had happened it turned out that he had been so concerned that, three weeks after the review, he had written to the regional health authority to draw that serious problem to its attention and to ask for it to be given special action. He wrote on 25 October 1989 and on 25 April 1990 we were taking evidence. Six months had passed but Mr. Duncan Nichol, the chief executive of the national health service, had not yet received a reply to his letter, although it was a serious matter which needed to be examined by the Public Accounts Committee and which he had said was so important that he had followed up his review--when he gave a hard time to the regional general manager--with a special letter. I suggest that that is a matter for some concern.

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However, the situation becomes worse. We asked him more about his procedure for dealing with the problem. He spoke to my right hon. Friend the Chairman of the Public Accounts Committee of personal account-ability for dealing with the problem. One of the lead officers of the regional health authority had been appointed to tackle it. We asked Mr. Nichol who had been appointed and he said that he did not know but that he would find out and let us know. He was as good as his word and, as we may see from the Appendix to the 35th PAC report, he identified Ms. Anne Coulson, the director of planning, as the person who was accountable for dealing with the problem. Ms. Anne Coulson subsequently left the employment of the regional health authority. I make no bones about that. What is much more important is that Mr. Nichol told us that Ms. Coulson was responsible for the problem and was accountable to the regional general manager, who in turn was responsible to him.

Unfortunately for Mr. Duncan Nichol, I and some of my hon. Friends visited the chairman and general manager of the West Midlands regional health authority before we received the letter giving us the name of the person responsible. Naturally, as we were fresh from the PAC examination we asked who was personally accountable for dealing with that most serious problem. The chairman of the regional health authority could not tell us, and nor could the regional general manager. Not only did they not bother to reply to a letter from the chief executive--I became of the opinion that they had ignored it--but there was general confusion at the regional health authority. Meanwhile the chief executive had been far too relaxed about it. He received no reply for six months--perhaps his letter had gone astray in the post--but one would have thought that he would have done something about the problem when he had regarded it as being so serious that he had given the general manager a hard time about it. It seems to me that none of them knew about it and they had certainly not been very impressed by his hard time.

In our report we said :

"We consider that NHS review processes are weak and we recommend that, as a matter of urgency, the Management Executive examine and strengthen their arrangements".

That is a fairly moderate comment and a modest criticism. It was a reasonable suggestion to make to the NHS executive, but what do we get in the Treasury minute? That stated that the executive recognised

"that there is always scope for improving review procedures" but did not accept that they were "currently weak". I do not know how weak review procedures have to be before management and the executive of the NHS accept that there are weaknesses.

Other accounting officers also seem out of touch with problems experienced outside London. My hon. Friend the Member for Leeds, West (Mr. Battle) referred to the problem of homelessness and to our report on that appalling problem. He was absolutely right and I associate myself with his remarks. The only difference between Birmingham and Leeds is that because Birmingham is two or three times the size of Leeds it has two or three times more problems with homelessness.

My right hon. Friend the Member for Ashton-under-Lyne pointed out that the Committee discovered--not surprisingly--that it would be more cost effective to build a house than to keep a family in bed and breakfast accommodation. It is not merely a question of bed and breakfast accommodation. Cities such as Birmingham,

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which avoid the use of such accommodation, still have a major problem with homelessness. Concentration on bed and breakfast accommodation tends to concentrate attention on the problems of London alone, but there is a problem elsewhere. Birmingham does not get a fair share of the resources to deal with the problem because it does not use accommodation of that kind.

Today I have been dealing with a constituent who has been homeless for two months--a woman with a 13-year-old child. It is two months to the day since the housing department accepted that she was homeless, but she has still not been offered anything. That is not surprising because she is not alone. Hundreds of homeless families have been waiting two months to be given accommodation in Birmingham. That family is accepted by the Government's definition as being homeless--they are what is called the statutory homeless. However, many more people are not regarded as homeless by the Government and therefore are not considered to be homeless by the accounting officer, the permanent secretary at the Department of the Environment, as he was constantly at pains to tell us during our examination of him. Any reasonable person and any hon. Member would accept that people and families are homeless if they have nowhere to live, regardless of whether they have children. People are living in tents in the woods around Birmingham and are not classed as homeless. It is a ridiculous situation.

I heard of another case two weeks ago in which a young couple were not regarded as homeless under the Government's definition because they have no children although they had nowhere to live. The council could not give them any accommodation because they did not have anything and because many people, such as the constituent with the 13-year-old child whom I mentioned earlier, have been waiting for months to be given accommodation. That young couple with nowhere to live are not regarded as homeless and therefore not included in the statistics. Worse than that, they are not even able to maintain an application for council accommodation because they do not have a fixed address. They drop right through the black hole. It is like the Bermuda triangle--homeless people are disappearing from the statistics, but they are not disappearing from the streets. That applies as much in Birmingham as in London and I believe that it is true of other parts of the country. I was left with the overwhelming impression that witnesses from the Department of the Environment do not appreciate the scale of the problem.

Another problem is that when a homeless person or family is fortunate enough to be offered accommodation by Birmingham city council or by some other caring local authority, they often find that they cannot furnish it. That brings me to the social fund, which was the subject of another examination when I again found the witnesses to be totally out of touch with what is happening in the country. We all know of people who have been refused by the social fund. We know people who are homeless and who go into hostels. I have in mind a case of a young woman with two young children. Through no fault of her own she became homeless and I obtained a place in a hostel for her. The council then gave her a flat, so she moved into it from the hostel and applied to the Department of Social Security for some money to buy furniture. However, she was refused on the ground that there was no risk of her going into an institution. One does not merely have to be

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homeless to quality for the social fund--one also has to meet other criteria. One has to be not merely a priority but a high priority person.

When I asked the accounting officer what he regarded as essential furniture he volunteered, "A bed". The very same day I heard that an unemployed man had been refused the money to buy a bed. How can we expect people to find work if they are sleeping on the floor? What could be more essential than a bed? He had also been refused a table, a chair and other furniture. That case is not unique--it happens every day in my constituency in the city of Birmingham and in the constituencies of other hon. Members from both sides of the House. Even if homeless people are given accommodation they often cannot furnish it because they are not regarded as a high priority group. We found inconsistencies. In some offices applicants would be lucky and get a bed. However, the situation varies and we found that it was totally inconsistent. That is inherent in the social fund system that the Government have introduced as distinct from the single payment system which applied before. Inconsistencies are inevitable. The accounting officer tut- tutted, seemed to be concerned but did not think it was a major problem. In our experience, it is a major problem. There are inconsistencies between different people at the same office at different times of the year because it all depends on how much money the local department of social security has left. Again, the Treasury's response was totally inadequate. The Committee concluded that

"the scale of the variations in the treatment of applicants is considerably more than is desirable" ;

and we added :

"The Department should give urgent consideration to Social Fund assistance for essential items more generally available to eligible applicants, while safeguarding the Fund from abuse"

The response was :

"The Secretary of State's directions and guidance to Social Fund Officers are designed to ensure a degree of consistency nationally, without restricting the Fund's flexibility to address the needs of individuals which is an inherent part of the scheme."

For the homeless person without furniture or the unemployed person without a bed, that is a totally inadequate response and ought to be regarded as inadequate by all hon. Members.

My hon. Friend the Member for Norwich, South put his finger on another problem which has become clear to me during the past year. It is what my hon. Friend calls the mandarin's dodge, which I would define as a lack of personal accountability among senior civil servants. As my hon. Friend said, that does not apply to junior civil servants. When we were taking evidence from accounting officers, who are permanent secretaries, it always seemed to be junior civil servants who were disciplined. During the past 12 months I have not heard one example of someone at a senior level in the civil service being held responsible for something that was wrong and costly and had wasted taxpayers' money. We have had some classic cases. Some have been mentioned already today.

It was worrying to find at least one example of the Treasury's failure to protect taxpayers' money and interests. I refer to the Committee's report on Herstmonceaux castle. It is worth considering what happened to Herstmonceaux castle. First, it was sold by the Science and Engineering Research Council for £8.1 million, despite the fact that there were other offers,

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including one for £14 million. I shall not enter into an argument about whether offers were good or bad, whether they came from people who had the money or did not have the money ; I shall concentrate on just one aspect of the saga.

It became clear to the Committee that in April 1986 the district valuer had valued Herstmonceaux castle at £3.25 million. Hon. Members might feel that that was a good deal. It had been valued at £3.25 million and sold for £8.1 million. In the meantime, however, it had been given a planning brief which increased the value of the property, but that had not been taken into account because it happened after the district valuer's valuation and the valuation was not updated at the time of sale in 1988.

That is important because if a Government Department sells an asset at a price below the district valuer's valuation it must ask the Treasury to approve the sale before it takes place. That is the point on which I wish to concentrate. The Science and Engineering Research Council did not take that action, as it should have done under the provisions of "Government Accounting", the manual which is supposed to guide all accounting officers on the way in which they should deal with such matters.

What is more, the Science and Engineering Research Council also failed to tell the district valuer that it had had an offer as high as £14 million. The district valuer said--and, I believe, told the Comptroller and Auditor General--that that was information which he would have wished to be given and would then have reconsidered his valuation in the light of that information, taking into account possible questions about the financial viability of the offer. He was not given that opportunity, and because of that he did not revise his valuation. That meant that the Science and Engineering Research Council could go ahead and sell the asset for £8.1 million because that was higher than the valuation that it had been given on a different basis two years earlier.

What is important about that is that the Treasury did not bark. The Treasury accepted that. It accepted that its manual "Government Accounting" could be flouted and ignored.

Mr. Campbell-Savours : A hands-off approach.

Mr. Davis : Not just a hands-off approach, but a pat-on-the-back approach, as I will show.

The Committee found that the council's failure to have the property valued by the district valuer before it was offered for sale and its failure to inform the district valuer of the £14 million bid were serious omissions. The Treasury minute, however, makes the rather lame statement :

"Although the council did not follow the letter of guidance in Government Accounting in that they did not seek an updated valuation from the District Valuer immediately before the property was put on the market the Council did consult the District Valuer about the £9.25 million and the £8.1 million bids"--

which at that point were irrelevant. It goes on to say : "The Department considers that little would have been gained by seeking advice from the District Valuer on bids which the Council had consciously discounted for other reasons."

The council is not entitled to do that. Under the provisions of "Government Accounting" the council was obliged to seek the district valuer's view, but it did not do so. The

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accounting officer was apologetic about that and the Committee accepted his apology. He recognised that he or his predecessor had made a mistake and that the council should have asked the district valuer to examine the matter.

What worries me is the Treasury's laid-back attitude. The Treasury is prepared to defend that situation. It is not apologetic and it does not think that the council has anything to apologise for. The question that arises is what can be done about such attitudes.

Mr. Campbell-Savours : It might also be worth mentioning that the cost to the taxpayer of that incompetence on a single transaction was 10p for every man, woman and child in Britain.

Mr. Davis : I am not sure how my hon. Friend does his calculation, but I accept his intervention. I am not trying to quantify the cost because often in such situations we are not so much concerned with the cost--we do not know what the cost has been--as with the risk. That problem has been mentioned in connection with the Foreign and Commonwealth Office, a subject which I think we are to debate in a year's time. In that case, there was only a small amount of abuse. I am not even sure whether any taxpayers' money was lost through the failures of the Foreign and Commonwealth Office to introduce a proper computer system in a tidy and efficient way to provide for its accounts. What I do know, and what the Committee knows, is that there was a tremendous risk involved in the way in which that issue was dealt with, that the Department was incompetent in the way in which it introduced the new computer, and that that laid it open to abuse and fraud.

Similarly, the SERC laid itself open to criticism that it had not followed procedures which are designed not to stop them doing what they did, but to ensure that the taxpayer's interest is protected. What is disappointing is that the Treasury does not bark in such a situation.

What can be done about such problems? The National Audit Office needs another stage and I am glad that the Comptroller and Auditor General has agreed that he will follow up some cases. In other words, this debate will not be the last stage. At present, a stimulating report from the National Audit Office is then considered by the Public Accounts Committee. Two filters are involved there, so it follows that the Committee is considering only the most serious matters. Then we issue our report and then we have a Treasury minute. Then we have a debate in the House.

The National Audit Office will now introduce a further stage beyond that. It will choose--without any consultation with Government, I hope--some reports on which to go back to see what has happened, not two months but perhaps a year or two years after the event, as a result of the Committee's recommendations and Treasury minutes which may have accepted our recommendations. That will be the most effective sanction for accounting officers.

7.48 pm

Mr. Nigel Spearing (Newham, South) : The debate has illustrated well the joint functions of the Public Accounts Committee and the Comptroller and Auditor General. I enter into the debate not as a member of the Committee but as a member of the public in one sense and as a

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Member of Parliament in the other. I shall make a few general remarks as an amateur onlooker and then dwell longer on the 17th report, on ambulance matters.

It appears that the joint function of those two bodies is to encourage effective and proper use of public expenditure and to ensure that there is no over-expenditure that may develop into waste. As was evident in certain cases that were brought to our attention, their function can also be to identify marginal under-expenditure, which might render what expenditure has been incurred--which could be considerable--ineffective. The best example of that was the ordnance depot fire. The absence of a small investment in fire precautions brought enormous losses--not just in money terms.

There are also the questions of ensuring proper collective purchasing, the setting of purchasing standards and the handling of contracts, pricing and tendering. Above all, attention should be paid to correct procedures. The House is sometimes criticised outside for being careful about procedure, but that is an important aspect. We have heard about manuals not being adhered to and checklists not being kept and the absence of proper notification. In another spectacular example, cyclical meetings were not held. When that happens, one may suspect that something improper is afoot. I have been passing the British library site for several years, wondering what was happening. Which Ministry was involved? I would not have thought that such a project could be undertaken without a lead Department being involved. Which Select Committee had that project in its range? When I served on the Foreign Affairs Select Committee, we examined, albeit hastily, the question of computerisation. Select Committees are empowered to review estimates and I should have thought that, during the construction of the new British library building, one Select Committee or another would have scrutinised the estimates and the amounts paid out, year by year. The ambulance service was dealt with in the 17th report of the 1990-91 Session, and was referred to in the Comptroller and Auditor General's report on patient transport services, published on 20 July 1990 ; the Government's reply was contained in the Treasury minute, Cmd. 1617, published in August.

In the same way as we ensure that our homes have proper roofs and foundations, the ambulance service comes within the category of demand-led expenditure. It is one of the few instances where substantial sums of money collectively must be spent, related to demand. The health service itself is not necessarily in the same category, because even if we were to spend a great deal more on it than we do, it would still be a matter of judgment as to what was necessary and desirable expenditure.

The broadening base of technology in medicine provides us with a problem, but when it comes to transporting persons who are involved in accidents, taken ill at home, in hospital or in some other place of succour, or who need to be taken to and from centres of treatment such as psychiatric day centres--there must be suitable facilities. No one to whom I have spoken denies that such a service falls within the category of demand-led public expenditure.

In the past, it has, unhappily, been a matter of cash limits. That technique has extended to the ambulance service and has on occasions been badly employed, as I will demonstrate. In any event, I wish to demonstrate the Donnington effect--if I might christen a phenomenon

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after the name of the ordnance depot that went up in flames--whereby, for the want of a little more expenditure, care and imaginative and effective scrutiny of administration, something that is fine and good stands to be put at risk.

The reports make it clear that today, as distinct from the origins of the ambulance service, 85 per cent. of ambulance passengers are not carried in emergency circumstances. They are people being taken to out-patient departments, clinics, or day centres. It will be within the knowledge of all right hon. and hon. Members from experience of their surgeries that with the "efficiency" of hospitals today, the number of people who are sent home to recover, subject to proper visits to their doctor or consultant, is increasing. We know that that is so, irrespective of whether it is right.

The importance of such visits to the patient--who may be suffering a terminal illness--and to the healers is greater than it used to be. Therefore, the non-emergency services which in London are called patient transport services--are by no means unimportant. Their importance relates not only to the location of hospitals, but to the conditions under which patients are transported to and from skilled medical supervision.

The National Audit Office has traditionally been concerned with value for money and expenditure as such. Its 1990 report on patient transport stated :

"National Health Service patients who are medically unfit to travel by other means are entitled to National Health Service transport, free of charge. In deciding eligibility for patient transport the doctor, dentist or midwife, as appropriate, may take account of the availability of local transport."

The judgment of the clinician as defined is important, for he or she sets the level of demand. In the clinician's place, any of us would probably err on the safe side, so someone scrutinising the figures unfavourably could point to 20 per cent. or 30 per cent. overuse of the transport service. As a taxpayer, I would not mind that at all, because it is surely better to have slight overuse than to cause distress of the kind that is now evident.

Before I remark further on that aspect, I refer to a matter that was specifically dealt with in the Committee's report and in the Treasury minute. The PAC concluded, in paragraph x :

"We expect the Management Executive to establish a timetable to implement consultants' recommendations on vehicle procurement and maintenance so that potential savings (estimated at £400,000 a year) can be realized."

That is £400,000 a year for the whole country.

The Government replied in paragraph 24 of the Treasury minute : "Since the C & AG's report proposals have been received from the European Comite Europe en de Normalisation (CEN) standards body for producing new European standards for ambulance vehicles and equipment which will need to be taken into account in developing national ambulance procurement. This is inevitably delaying implementation of centralised procurement. However, progress has been made in agreeing a cardinal points specification within the ambulance service, and the National Purchasing Unit team is in discussion with vehicle manufacturers, to investigate the savings achievable through bulk centralised procurement."

It is coincidental that the minute refers to a European standard. I am not sure whether the Commission has got round to considering one, or whether a single market specification could be applicable to the United Kingdom, let alone to a wider field.

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