House of Commons Hansard Debates for 25 Oct 1993

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and most of them are supposed to be scheduled. The scheduling work began in 1882. By 1984, the succeeding section, for which the accounting officer is still responsible, had managed to schedule 13, 000. That figure must be seen against the background figure of 60, 000. Between 1984 and 1992, another 800 were scheduled.

When the accounting officer was asked a direct question by the Chairman of the PAC about when he expected to finish the job, he said that he thought that 70 to 80 per cent. would be scheduled by 2003. [Laughter.] I hear one or two of my hon. Friends snorting at that estimate. They should not underestimate the pace at which the Department of National Heritage is now going to get on with the job. The figure of 70 to 80 per cent. out of a total of 60,000 works out at about 42,000. That means that there are still about 30,000 ancient monuments to be scheduled over 10 years, and that means 3,000 a year. When we put that figure to the permanent secretary in Committee, he was not able to disagree with it.

In a subsequent memorandum, the permanent secretary said that the numbers would be slightly lower. We asked him how he intended to increase the figure to 3,000 a year when previously the figure had been only 80 a year. He said that he was not really sure and that it depended on resources, but that he was sure that he would get there. He did not really have a clue. He did not have a plan or a programme, and he could not tell us how many monuments would be scheduled this year, next year or the year after. The figures had all the appearance of having been plucked out of the air. Fortuitously, the target date of 2003 is a year after the permanent secretary is due to retire. We have since had a supplementary memorandum giving us his programme over the next few years before his retirement. The Committee will want to return to that matter before he leaves his employment in the civil service.

We must not be too unfair to the permanent secretary to the Department of National Heritage. The permanent secretary to the Ministry of Agriculture, Fisheries and Food was not exactly clear about his programme when he came before us to discuss coastal defences in England. We pointed out that he had received a report to the effect that 16 per cent. of coastal defence works needed to be replaced over five years. We asked him--I felt that it was a fair question--how much it would cost to replace that 16 per cent. of coastal defence works so that we should then know how much we should ask the Government to spend over five years. Unfortunately, that was beyond the permanent secretary, although the Ministry has responsibility, in one guise or another, for defences against the sea. It has had that responsibility almost as long as the Department of National Heritage and its predecessors have had responsibility for scheduling ancient monuments.

We pointed out that the National Audit Office report showed that two years ago a survey said that various proportions of the National Rivers Authority defences, of local authority defences and of private or corporate owners' defences needed "significant work" which should be carried out as soon as possible. The survey came out two years ago, so it seemed reasonable to ask the permanent secretary how many miles or kilometres of sea defences were involved. He did not know that either. We asked him whether, in that case, he knew that the work had all been done, because that would have been a good reason for not knowing the figures ; they would have been an unnecessary detail. He did not know whether any of the work had been done in the previous two years.

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We were talking about coastal defences that needed significant work if they were to stop flooding. As we all know, flooding can cause people to lose their lives. It was a serious matter, yet the permanent secretary did not know what was involved. I did not have much confidence in his competence to protect us against the sea. The hon. Member for Caithness and Sutherland has already referred to the permanent secretary to the Lord Chancellor's Department. The Department, apart from anything else, sets the criteria to be used in granting legal aid. It decides the criteria and gives them to the Legal Aid Board. Yet when the permanent secretary was asked how much income and how much in savings one had to have to become ineligible for legal aid, he did not know. That was during questioning about legal aid.

If we had been discussing something else--the administration of justice generally or something to do with the courts--that might have been reasonable, but we were there to talk about legal aid and he did not have the foggiest idea of how much money one had to earn or receive or how much one needed to have in savings to lose all eligibility for legal aid. We were not asking detailed questions about the table, just what was the limit at which one forfeited all legal aid. He had no idea.

Then there is the Home Office. The hon. Member for Hertfordshire, West referred to the way in which the Hertfordshire police authority was "ripping off"--I think it was his expression--public money by charging excessive bills for accommodating prisoners in police cells. The criticisms were justified. We had to ask, why was that happening anyway? How did it happen that prisoners were kept in police cells instead of in prison? Why were we using police officers instead of prison officers to look after prisoners? The answer was that there were not enough places in the prisons. We all know that.

It emerged through questioning that there were 45,000 prisoners at the peak in 1990-91. We were considering the next year. The peak in the next year was 48,000 people, so the number of prisoners increased by 3,000. The permanent secretary told us that that exceeded the forecast. By how much did it exceed the forecast? The forecast was originally 44,000. The Home Office projected a reduction in the number of prisoners and then, to be fair to it, revised the forecast back to the level of the previous year. There was an increase, however, so the forecast was very inaccurate.

We can understand all that, but I found it difficult to accept it when the permanent secretary to the Home Office said that he did not know why the increase had taken place. It is one thing to make an estimate and get the forecast wrong, but it is quite another not to have any theories as to why the actual figures exceeded the predicted figures. That seemed to me to be incompetent.

There were two possible theories : either the courts were sending proportionately more offenders to prison or more people were being brought before the courts and the courts were sentencing the same, or a smaller, proportion of people to prison. The permanent secretary at the Home Office had no idea. He did not know the cause. Unless one knows why increases occur, one will not be good at predicting the future. That is obvious.

The chairman of Customs and Excise came before us to talk about VAT avoidance. A report from the National Audit Office described nine cases in which allegations of VAT avoidance had appeared before the High Court. The chairman agreed that all nine cases were typical. Of those

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nine cases, one was still sub judice so he could not discuss it. Of the other eight, Customs and Excise won one and lost seven : one to Customs and Excise, seven to the avoiders. The only case that Customs and Excise won was a case involving a publican's wife serving sandwiches. That was worth £1,200 a year. My hon. Friends will not be surprised to know that every case that Customs and Excise lost involved sums many times that amount, running into millions of pounds a year. It seemed to me that the conclusion to draw from that was that Customs and Excise is good at dealing with publicans' wives but not at dealing with big companies and banks. It is not in the same league as the banks and big corporations of this country. The chairman said that those cases were not typical examples anyway--having previously agreed that they were typical. He gave us figures to prove that he was right and that the record of the Customs and Excise was much better. When we examined the figures that he gave us, we found another classic exercise in wool-pulling. He told us that 49 cases were lodged with the High Court during the year in question. Of the cases that were heard by the High Court during the year, Customs and Excise won seven and lost four.

On the face of it, that left 38 others, but just a minute--those that were heard were unlikely to be those that were lodged, because a hearing takes a long time in the High Court. There was a clear opportunity, in the supplementary memorandum, for us all to read about an attempt by the chairman of Customs and Excise--he has now gone, and we shall not see him again--to pull the wool over our eyes. He promised to provide those figures to justify his assertion that the report gave a misleading impression.

That was not the only occasion. We found out, when talking to the chairman of Customs and Excise about the failure to clear arrears of VAT, that Customs and Excise does not produce an age profile of VAT arrears. That is an elementary management tool. Customs and Excise must be the only business -type organisation in the country that does not produce an age profile of its debts to know whether it is collecting them efficiently ; that is essential. Instead, Customs and Excise does a special exercise every couple of years. When we asked the chairman by how much the arrears had decreased, we found that they had increased. In the two years that we were considering, what are called remissions increased by a quarter--no less than £115 million.

In the very month in which we were discussing the inability of Customs and Excise to recover £115 million in VAT arrears, the newspapers were full of stories about how the Benefits Agency had failed to recover £21 million in loans to the poorest people in society from the social fund. It appears that more than five times that amount went in remissions. We asked, "Are you sure?" and "How much of that was written off and how much was collected?" But the Chairman did not know. We know, however, that more and more people enjoyed those remissions, and I do not think that they were publicans' wives.

My biggest criticism is that too often, when considering the affairs that have come before us during the past few years, we have observed a gradual shading of the role of the civil servant. Accounting officers and permanent secretaries are the same thing--some of the accounting officers are the heads of non-governmental public bodies. Increasingly, they appear before us in the role of politicians, rather than that of civil servants. Imperceptibly, the civil service is being politicised.

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Perhaps the clearest example during the past year came from the Benefits Agency. It was mentioned by my right hon. Friend the Member for Ashton-under-Lyne--the example of the way in which the introduction of disability living allowance was rushed. There was a flood of publicity up until, but not after, the general election of 1992. When we asked why it was rushed, it became clear that it happened so that the Conservatives could boast in the pre-election period about what they were doing for people with disabilities. The resources to cope with that "surge of claims"--the phrase used by those civil servants--were not put in place.

When we asked why the resources were not provided to cope with those claims from people with disabilities, and why people were not employed so that those claimants could have the benefits to which most of them were entitled, we could not get the facts, because people were acting more politically than as civil servants before the Public Accounts Committee.

Mr. Morgan : Was that the Government equivalent of the Hoover free flights offer? In good public relations terms, one can provide what is called "feel good" advertising, followed by a "feel suicidal" performance by the agency that makes the offer to the public, in the hope that there are so many obstacles to getting the benefits that are advertised as available that people will not follow through and make a fuss about it. The agency gets the public relations credit for having made it seem that milk and honey and free offers are available, although they are not, but it does not intend to put the staff in to respond in a reasonable time to the demands that will result from the advertising campaign.

Mr. Davis : I thought that it was closer to the case of the Central Office of Information, which came before the Public Accounts Committee a few years ago, when we considered its expenditure. The variations were remarkable and there were clearly peaks and troughs. If I remind the House that expenditure on so-called information--much of which is television advertising--peaked in 1982, followed by a trough in 1984, and that it bumped alone in 1985 and again peaked in 1986, only to decline in 1988, I think that hon. Members will understand the significance of those dates.

Mr. Ron Davies (Caerphilly) : No, tell us.

Mr. Davis : The shadow Secretary of State for Wales wants to be told. I do not think that he is that naive, but the accounting officer for the COI needed to be told. Although his job is to give out information and to explain the facts of political life here to people in other countries, he did not know the dates of general elections during the past decade. We all realise what that expenditure was about and most Opposition Members recognise that the advertising for disability living allowance was in the same category.

Although I may be wrong, I think that the hon. Member for Uxbridge said that more people should attend these debates. I do not think that we need more debates on the work of the Public Accounts Committee, but the debates need to be more focused.

One of the problems in holding a debate like this at fairly short notice-- we only knew about it last Thursday--is that a pile of 50 PAC reports is indigestible. It is

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imxpect people to take part in these debates at such short notice. As we believe that the work of the PAC is important, it would be easier to get greater participation and to have a better debate if we focused on a few reports only, perhaps those affecting linked Departments. For example, we could debate reports affecting the Inland Revenue, Customs and Excise and other tax-related Departments, or the Home Office and Environment. The details could be worked out through the usual channels, but we ought to be able to have more focused, sharper and better debates. That is important.

I think that the hon. Member for Mid-Kent (Mr. Rowe) said that there should be more liaison with other Select Committees ; I agree, but the way to achieve it is by involving members of other Committees in debates on PAC reports on such subjects as the Chelsea and Westminster hospital, which has been mentioned so often this evening. On that constructive note, I conclude my remarks.

7.32 pm

Mr. Cynog Dafis (Ceredigion and Pembroke, North) : I shall speak briefly about the Public Accounts Committee report on the Welsh Development Agency. I welcome the fact that the irregularities in that agency's behaviour have been brought to light by the report, and I warmly congratulate those hon. Members who have been instrumental in bringing that about, especially members of the Committee. The hon. Member for Cardiff, West (Mr. Morgan) also deserves a special mention. The fact that his finger was pointing in the wrong direction when he spoke about the irregularities does not minimise the importance of his contribution to the revelations about the WDA's misdemeanours.

I entirely concur with the strength of condemnation that we have heard tonight. Having said that, however, I also agree with the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) that what happened must not be used as an excuse for damaging the work that the agency can and must continue to do for Wales. An all-Wales agency, capable of taking an overview of our economy, of developing strategies to create a prosperous and sustainable Wales, and of marshalling resources to support those strategies, is essential, and would be essential, even within the framework of a democratic, self-governing Wales of the type that we want to be established. The strategies pursued by the agency have been criticised and it has been suggested that there has perhaps been an over-emphasis on providing factory space and physical infrastructure, important though they are. I am told that in recent years, Mr. Philip Head, the chief executive, has been influential in bringing about the new and welcome emphasis on encouraging existing enterprises within Wales, through the business services and skills development sections of the agency. New attention has been paid to local, small and medium-sized enterprises and the promotion of the use of new technology among them.

The hon. Member for Merthyr Tydfil and Rhymney mentioned Source Wales--an initiative centring on the creation of linkages between large multinationals and local

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suppliers, strengthening the multiplier effect of inward investment. Such development of the indigenous industrial sector is vital. Its results are likely to be more long-term, less dramatically visible and not as easy to trumpet as Welsh Office successes as are other results, and perhaps not so amenable to photo-opportunities and statements at meetings of the Welsh Grand Committee. In many ways, however, that is the way forward as a strategy for industrial development in Wales.

The WDA has been able to develop that more subtle and complex strategy--a strategy which, in many ways, is more in tune with the social and cultural needs of the Welsh community as well its purely economic needs--because it has had the freedom to do so. It is essential for the agency to be able to retain the power of initiative in that way and it is essential that its budget be sufficient to enable it to use that power effectively.

The fact that there has been improper conduct in financial matters-- travelling expenses, redundancy payments and so forth--is no reason for eroding the power of independent decision making on strategy, policy development and entrepreneurial initiative. Secondly, I must refer to the recommendations of Sir John Caines's inquiry, which was set up by Mr. Rowe Beddoes, the new chairman. I shall read three of the recommendations, as reported in the Western Mail, which, put together, cause me some concern. The first is : "Board members should disclose all interests in contracts", which should go without saying. The fact that it needs to be said at all seems serious. The second recommendation is :

"Conflict of interest rules should be tightened to cover employees' families and close friends".

The rules should have encompassed that in the first place. The third recommendation, taken together with the first two, worries me considerably, as it states :

"Greater efforts should be made to find board members from outside Wales, even if it means diluting the proportion of Welsh men and women."

I ask you, Madam Deputy Speaker! That is a recommendation of breathtaking impertinence. I can just imagine what the Secretary of State for Social Security would say if it were suggested that irregularities or corruption in England should be dealt with by importing people from France, Spain or Italy to deal with them. If one puts those three recommendations together-- they are juxtaposed in the report--one begins to get the picture. They portray an image of an inbred province, riddled with corruption, which has to be rescued from itself by the intervention of impeccably rigorously ethical representatives of the metropolitan power. That is what it seems to be saying to me. It is the voice of the English colonial mentality in its glory--whatever is to be done about Wales and the situation there, it certainly cannot be left to the natives. To say that I find that offensive would be the understatement of the year. To avoid any misunderstanding, I may say that I recognise entirely--as do all sensible, enlightened and progressive people--the contribution that English people make to the life of Wales. They have done so in the past and will do so in future. Not just English people are capable of showing an understanding of our national life, culture and aspirations and of making an important contribution. However, it requires empathy, research and dialogue to gain an understanding of what kind of place Wales is--and it is a complex place.

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The Welsh Development Agency's deficiencies spring not from the fact that it is too Welsh but that it does not properly reflect the whole spectrum of Welsh life. Neither is it directly accountable to the people of Wales--and that is true of many other non- departmental bodies. I recommend the analysis made by Sir John Caines from which I quoted earlier.

The WDA's problem is that its members are determined according to their acceptability to the Secretary of State for Wales. The agency needs not more colonialism but democracy, accountability and development policies that enhance the distinctive social and cultural traditions of Wales. We will only get that package together when Wales stops being a province, stops allowing itself to be treated as a province, and has the democratic Parliament that more and more people in Wales acknowledge as a fundamental necessity.

7.41 pm

Mr. Alan Williams (Swansea, West) : I join the congratulations to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), Chairman of the Public Accounts Committee. He is in the difficult position of chairing a Committee that, after a long period of one Government in office, is inevitably looking at problems that have arisen during the life of that Government. It is to my right hon. Friend's credit that he has created a consensus within the Committee that enables it to present unanimous reports and to enjoy an identity of interest in the way that it approaches problems.

My right hon. Friend is a man of singularly generous disposition, so criticism from him usually means being close to a situation that would cause others of us to explode. In the absence of my right hon. Friend, I may say that I do not go along entirely with his belief that there has been no lowering of standards in public life. Last week, a newspaper reported that a former permanent secretary in the Home Office is running courses for civil servants on how to deal with the Public Accounts Committee. I found that amusing, but wondered why such courses are necessary. What is their purpose? If a civil servant is only appearing before the Committee to answer questions about a report agreed with his Department, why does he need coaching?

I believe that there has been a lowering of standards in public life in terms of propriety, honesty and attitude. As my right hon. Friend said, when we see such changes it angers us that rarely does a witness come before us who is actually responsible for the situation that he is there to defend--and rarely do we hear of anyone, no matter how grave their misjudgment, suffering any punishment or disadvantage.

Two elements are contributing to that decline. One is the proliferation of quangos, which inevitably--especially in the Welsh context--consist of ministerial placemen. Immunity is created because in criticising an appointee, a Minister would be criticising himself for making that appointment. When one considers the political background of the chairmen of the West Midlands and Wessex regional health authorities, and of those appointed to quangos in Wales, one can understand why they feel secure and enjoy a form of political protection.

An insidious, if unintended, consequence of the proliferation of quangos, which one would be foolish to ignore, is an unplanned and undesirable change in the

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nature of the next steps agency, which is viewed by virtually everyone within it as the first step to privatisation. That produces a perhaps intentional awareness of the profit motive, but also the sublimation of a sense of public service. A consequence of that philosophical adjustment is an awareness of the opportunities of the new situation in which the management find themselves.

It is significant that the management buy-out is a major element in the privatisation that follows from quangos. I hoped to demonstrate that the advantages enjoyed by the in-house team may be an element in one appalling case. The in-house people know the warts, what is hidden, what is wrong, what fat can be cut away, and what could be a realistic bid. They have an incentive to conceal reality from those who might counter-bid.

In the West Midlands regional health authority case, the software function was being hived off and the chairman said, "We told them that if they got the contract and were successful in becoming privatised, they could have a £1.9 million annual contract for the next three years to give a soft landing to the people who worked there." Strangely enough, the two other bidders were not successful. They were not told about the £1.9 million contract. The chairman could not see that there was something unacceptable about telling one bidder in a privatisation process that it had a contract for £2 million in its pocket and not letting the other bidders know. Intrinsic to the privatisation-via-agency route is the temptation to make the megabuck very quickly. It is the one chance that someone working in the public sector has to make it financially big-- [Interruption.] That matter is, of course, of great lack of interest to members of the Treasury Bench. The Financial Secretary to the Treasury cannot be bothered to listen, and the Whip is too busy engaged in conversation with him to allow him to listen. On the one day of the year that we have such a debate, we should at least be able to expect that the Treasury Minister present would have the courtesy to put up with those of us who attended every meeting of the PAC throughout the year to produce reports--which then receive disdainful replies in the form of Treasury minutes, as I hope to demonstrate.

There is an increasing reluctance to recognise the importance of accountability to the House. Such reluctance goes back, philosophically and politically, to one particular lady, whose contempt for the House dominated political thinking for over a decade. That contempt for the House is now implicit in Ministers who have never been in opposition.

There are Opposition Members who have never been in government, and there are Conservative Members who have never been in opposition. I know that the Government Chief Whip will not be reassured, but one advantage of being in opposition is that one learns how dangerous it is to allow a Government to become arrogant and to think that they can treat the House as they wish. The arrogance at the top has spread down through the political middle, and has now begun to feed into the executive machine.

There are people in the civil service who, for the past 14 years, have served one political philosophy. I am not making a party political point-- the same would apply if we had been in government for the past 14 years-- but, in a

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way, the swinging to and fro of Governments in the past helped to sustain the impartiality implicit within the civil service. Those of us who have served in government have made friends with civil servants while working with them. We knew that while they were briefing us at the Dispatch Box, they were aware that within a short period they might be working for Members on the other side of the House.

The result of the past 14 years has been that those in the quangos feel immune because Ministers and the Government have been there for so long. Those in the civil service have become attuned to the philosophy that has prevailed in the Government for so long, and have begun to adjust to it. We are seeing a lowering of standards, which was not intended, but is inevitable. A corruption of attitude has also taken place, starting from the top and working down. We in the Public Accounts Committee must consider whether we should call not only the present accounting officer, but the person who held office at the time when the issues that we are discussing took place. It is no good officials thinking that all they have to do is switch jobs or take an early retirement when their misdemeanours are being discussed by the Public Accounts Committee. They should not think that they can shrug, draw their earnings-related pension, take an outside job with companies with whom they dealt while in government, and earn more money with their combined pension and outside job than they earned as civil servants.

The Welsh Development Agency is an organisation in which people felt that they were protected by the Minister because they were protected by the Minister. Operation Wizard referred to a covert privatisation operation. In a written answer to my hon. Friend the Member for Alyn and Deeside (Mr. Jones), the then Secretary of State, now Lord Walker, denied that there were any plans to privatise, while at the same time, according to the evidence given to the Committee, the operation was going on with the express approval of that Secretary of State.

After the National Audit Office report was issued, and after we had had that appalling hearing in February--anyone who watched it must have been embarrassed for the witnesses because of what came out--Lord Walker's successor, the present Secretary of State for Employment, promptly reappointed the chairman. Indeed, he appointed him head of S4C, which carries with it automatic governorship of the BBC.

Mr. Morgan : It is the other way round.

Mr. Williams : Whatever way round it is, he has got both jobs. One of the worrying features about the WDA is that, good as the work of the National Audit Office was, it did not discover what was going on at the WDA. It found out about the cars and the pensions, but it was whistle- blowers who contacted my hon. Friend the Member for Cardiff, West (Mr. Morgan), who put them in touch with my hon. Friend the Member for Pontypridd (Dr. Howells) and myself as members of the Public Accounts Committee. People within the WDA were so incensed at the dishonesty, concealment and arrogance of the people now in control of this important quango that they felt they had to talk to us and tell us what was going on, even at the risk of losing their jobs.

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Even the massive machine of the National Audit Office and the prestige of the Comprtoller and Auditor General was not enough to squeeze out of this protected semi-political operation what was going on in that quango--and what was going on was endorsed by a senior Minister.

I take exception to the reply from the Treasury in its minute. The sole reference to Wizard is to say that the Comptroller and Auditor General did not complain that it was improper in accounting terms. That is to miss the whole point. Yes, the money was there, it was accounted for--the £320,000 was not put in pockets and run away with--but nowhere was the word "Wizard" used ; nowhere was anyone told that Wizard existed ; even the board, when it took reports, did not minute the report on Wizard.

The money was deliberately spread between accounts so that the three operations would not be related in any outsider's mind, and to ensure that the House, the Comptroller and Auditor General and the National Audit Office never discovered that, at the heart of the WDA, was a group of men conspiring to distort its role to enable them to take over the profits from its property and its consultancy work. Yet those men were and are protected. As I have said, we had the evidence in February, but only last week did we have a statement from the Government. As has been pointed out, nowhere has there been any criticism of the board or Ministers--that goes without saying. Instead, we were told that the previous chief executive, Mr. Waterstone--who was very much involved--and various other people have gone scot free. The members of the board are appointees of the Minister, and he could dismiss them immediately should he wish to do so, but they are still there--and some of them are on a number of Welsh quangos--and still holding those posts, despite what has been revealed in relation to the WDA.

We had as chairman of the Welsh Development Agency a man who had to have his arm twisted for the major part of a year before he could be persuaded to pay back the grants that he had received under the rural conversion scheme for a property in north Wales. As chairman, we had a man who benefited from the private car usage scheme, and who flew by Concorde and by helicopter so he could more quickly make the appointment with the wrong man in the United States. That wrong man eventually walked off with the funds for furniture and office equipment which had been left in the office petty cash.

No one checked the references of the chairman. The fact that he had a million was enough to impress the Lord Walker. We understand why Lord Walker was impressed, but no one asked why ICL asked the chairman to leave. No one asked why the company to which he sold his business to make his millions almost immediately went into desperate financial difficulties when it tried to use what it bought. No one asked those questions. He is still there, waving to us from the top of a hill in the sunset, and enjoying his governorship of the BBC. He should be banned from public office.

A similar situation exists with Forward Catering, the company referred to by the hon. Member for Uxbridge (Mr. Shersby). The company has been demoralised by the fact that it has been expecting privatisation for so long, and the privatisation has been deferred and deferred. The situation in this case is that a chief executive has set up a private company incorporating the name "Forward" in the names of his wife and his deputy, who is his daughter.

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Forward Catering did not cook the books, but literally burned the books, although I do not blame the chief executive for that. The accounts were destroyed on four occasions, and ghost workers were employed. One section of the Treasury--Forward Catering--was defrauding the Inland Revenue and the Department of Social Security. Hon. Members can imagine what would happen if one of our constituents had defrauded the Department of Social Security of even £5. The full force of the law would come into play in that instance.

But what have we had here? There has been virtually no punishment for anyone. One little girl who, in fairness, deserved to be dismissed was summarily dismissed. I believe that one regional director was downgraded and one official was reprimanded. However, that is all the punishment that has resulted from an attempt to defraud the Inland Revenue and the Department of over one third of a million pounds, and from the loss of £400,000 of stock. That is £8, 000 of stock a week that just walked. Recommendations--made as far back as 1983--that a proper accounting system be set up were ignored, yet the Treasury has still done virtually nothing.

Switching to a different level, it is not surprising to see the effect of Government cuts on people's thinking. My right hon. Friend the Member for Ashton-under-Lyne referred to fire prevention reports. Here again was a staggering situation, although staggering for different reasons. The situation shows the danger of combining the imposition of cuts with the protection of Crown immunity. The people responsible for 8,000 Government buildings should have had an inspectorate of 38 to ensure that the buildings were adequately protected against fire. Instead, only two of the anticipated 38 were employed. The two who were employed spent half their time dealing with administrative work, and so were able to carry out virtually no inspections.

Successive Governments in their wisdom have decided that they will not insure public buildings, but will recognise that what they save on insurance will be used to meet the costs when a building gets burned. In the case of Hampton Court, £5 million of fire damage was done six years ago, but still no fire certificate exists for the building. In the case of Windsor, people were beginning to get a bit nervous about the system, and there was a public appeal to provide the money for repairs. The money that has been saved over the previous years from not insuring buildings has not been used in those cases.

The fact that buildings are not insured presents disciplinary problems, and I use discipline in the intellectual sense. As all hon. Members will know from insuring their homes, if one wants to insure a building one must meet certain standards which are laid down by the insurers. One of the problems of not insuring Government buildings is there is no outside monitoring pressure to apply standards in the Government sector that would apply elsewhere.

For example, the administrative wing of a hospital needs a fire certificate, but the area for the poor patients does not. Her Majesty's prisons--where people are locked in--need no fire certificates at all. Those are some of the matters that the Committee has come across in its deliberations this year.

One of the worst of those matters, and one which was referred to by my right hon. Friend the Member for Ashton-under-Lyne earlier, was the privatisation of the 12 regional electricity companies.

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I will not take long, and I will conclude with these comments. In this case, the public have been robbed twice. First, £16 billion of public assets--that was their replacement value- -were sold off, not for the £8 billion which the Government claimed to have received, but for £5 billion from the shareholders. Secondly, the other £3 billion which the Government said that they had obtained from privatising electricity did not come from the shareholders at all. It came in the form of a notionally created and non-existent debt which was imposed on the day of privatisation. The money came from the people from whom the electricity industry was taken. The debt had to be paid back, but no one ever had any money for it. The money came from the consumers, and that became clear in the evidence that the Committee received. Some £1.8 billion of the £2.8 billion has been paid by consumers. For example, in London the average consumer has already paid £141 for the privilege of someone else owning what had been his or her electricity industry. In the midlands, the figure is £24. In the northern area, it is £69, and in the southern area, it is £49. Those prices have been already paid by consumers towards what the Government call the receipts from the privatisation of the electricity industry.

Interestingly, at a time when there is a public outcry about the possible imposition of VAT on fuel, the public do not realise that they are already paying a privatisation tax on electricity. [ Hon. Members :-- "Why is the Minister laughing?"] That is what I called the arrogance of continuous government.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell) : I do not wish the right hon. Gentleman to conclude that I am arrogant. Will he simply explain to the House by how much the real price of electricity has fallen to the consumer since privatisation?

Mr. Williams : If the Financial Secretary cares to look back, he will discover that his Government bumped up electricity prices before privatisation. Before he says anything about gas, may I remind him that, for three years running, his Government imposed a 10 per cent. price increase--over and above VAT--on the gas industry, adding 33 per cent. to the price of gas, and now turn round and say, "Ah yes, but gas prices have not increased as rapidly since privatisation." They fatten industries up and after they have fattened them up they privatise them. Then they turn round and say, "There we are. Things are looking much better now than they were before."

Mr. Morgan : I am sure that what the Financial Secretary really wants my right hon. Friend to tell the House is that, in the five years from the commencement of the privatisation process--the publication of the White Paper by Lord Parkinson, the then Secretary of State for Energy, in February 1988--the price of electricity to domestic consumers in the United Kingdom rose by an average of 44 per cent., whereas in most European countries, it rose by between nil and 10 per cent. In other words, the cost of privatisation to the United Kingdom domestic consumer from the beginning of the process to the end was very high indeed.

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Mr. Williams : I thank my hon. Friend. That was just the point that I intended to make and he has explained the position far more clearly than I could have done.

I conclude with my one regret--which I am sure the Chairman of the Committee will share. The Committee has suffered a great loss : in the coming Session, we shall no longer see the man whom I call the Sylvester Stallone of Whitehall because he has appeared before us so often. We shall no longer have as a witness Duncan Nichol, the head of the National Health Service Management Executive, who is now moving into the academic world. Let me offer a word of advice to his future employers : by all means take full advantage of the experience that he brings, but please, please, please do not let him buy a computer.

8.11 pm

Dr. Kim Howells (Pontypridd) : I, too, congratulate the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who has conducted the affairs of the Public Accounts Committee in a terrific fashion throughout. The consensus that has emerged has been most important. I also thank Sir John Bourn, the Comptroller and Auditor General, and his magnificent staff. I was lucky enough to be invited to the newly consecrated Cardiff office. I was given a tour of the place and an explanation of how it works. I must say that the staff there are the very antithesis of many of those whom they are paid to investigate. The office is about as far away from the Athenaeum as it is possible to get. There is none of that imperial air about them which has unfortunately cursed those occupying some key positions in this great civil service of ours--some of whom are still there, although that is another matter.

There are some worrying trends in public administration--some of them mentioned tonight--which are likely to accumulate rather than decrease. They are the result not only of privatisations and of the creation of next steps agencies but of the growth of hospital trusts and opted-out schools. All those bodies will require proper auditing, accounting and monitoring. I know from my private conversations with those in the Comptroller and Auditor General's office and other agencies that there are great worries that there will not be the staff to carry out such audits. I am afraid that in some cases there will be almost a typescript for corruption.

We must be very careful. It has already been stated tonight that our civil service--warts and all--is one of our national treasures, and the service's lack of corruption has been one of its greatest virtues. I am lucky enough to have travelled quite extensively in Italy and the last thing that I should want to see is a slide towards what one might call the Italian mode of public administration. It seems to me that that is all too possible, given the new scenario. We must construct new ways of ensuring that there is proper accountability. In that respect, I hope that the rumours that we heard a couple of years ago to the effect that the office of the CAG was to be split among the other Select Committees and its power diluted were not true and will not re-emerge. I know that the Chairman of the Committee fought tooth and nail to prevent any such slide. It is vital that the PAC should retain its historic role and that, in seeking ammunition, it should have the full armoury of the CAG's office at its disposal.

Mr. Allan Rogers (Rhondda) : Does my hon. Friend accept that it is important to get the structures right not

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merely in terms of parliamentary and civil service accountability but in terms of the accountability of the Ministers who run the Departments and who are ultimately responsible? Does my hon. Friend agree that the present Secretary of State for Wales has washed his hands absolutely of what is going on in an agency for which he is directly responsible? Nor have such occurrences been restricted to recent times. The Chairman of the PAC will recall that, some seven or eight years ago, when I was a member of the Committee, millions of pounds that went to the Parrott Corporation were never properly accounted for. There has been a history of non-accountability among politicians.

At one time Ministers would resign if something went wrong in their Department, as happened in the case of the Crichel Down episode, but the present Secretary of State for Wales does not want to know : he claims all the credit but never the blame when things go wrong.

Dr. Howells : My hon. Friend has made an important point and one which leads me neatly to the argument that I was about to advance. I have said some hard things about the Welsh Office in the past few weeks. I think that my criticisms are deserved and that there is a real problem with the Welsh Office. For whatever reason, the Welsh Office has not been properly managed and has not fulfilled the functions that are central to its existence, which include the monitoring and proper management of quangos that run and administer Wales from day to day.

I agree with my hon. Friend the Member for Rhondda (Mr. Rogers) that there is only one person who carries the can for the administration of the Welsh Office, and that is the Secretary of State for Wales. It ill becomes the previous Secretary of State to sit smugly through the statement that the present Secretary of State made on the de ba cle of the Welsh Development Agency as though it had nothing to do with him.

It ill becomes the Treasury, too, to try to pretend that it knew all along what was going on within Operation Wizard. That is one part of the Treasury minute that really irks us. It is somehow assumed that it is all right if money is secreted away in another vote or category--if it works, that is fine, and if it does not the experiment has failed but no one will really carry the blame for it. We had a taste of that attitude during the extraordinary period of legal aid for the former Chancellor, who ran into some personal difficulty which he had to resolve rather quickly on a Saturday night and hired London's most expensive lawyer to help him out. We discovered that little anomaly only as a result of a whistleblower, not as a result of acute and observant administration by the permanent secretary's office. It is a real shame that in such cases we have to depend on whistleblowers, which reinforces my earlier point that the Comptroller and Auditor General's department must be strengthened rather than weakened as we head further into this new era of administration.

We came across the most extraordinary examples of desperate incompetence. Under the chairmanship of Sir James Ackers, we have seen perhaps £10 million or £15 million of the West Midlands health authority's money go down the drain ; under the chairmanship of Sir Robert Buchanan, we have seen perhaps £50 million or £60 million of the Wessex health authority's money go down the drain, which is the price of a district general hospital. That money has gone as a result of some sweetheart

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management buy-out in an IT department that failed miserably and continues to fail miserably. Are those responsible being punished? My right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out one case where an employee on the shop floor was disciplined for serious wrongdoing. In the case of Wessex health authority, Sir Robert Buchanan, who was its chairman, is now the deputy director of supplies for the whole of the NHS. We look at that with a degree of incomprehension. It makes no sense whatever. We heard about Dr. Gwyn Jones, the former chairman of the Welsh Development Agency. One wonders what on earth the Welsh Office thinks it is up to in that respect.

The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis), argued that English administrators have no place in Wales, which seems a particularly extraordinary and arrogant thing to say. I should hate to think that we from Wales could have no part to play in the administration of England or any other part of Great Britain. Albeit reluctantly and with great reservations, I voted for Maastricht.

Mr. John Maxton (Glasgow, Cathcart) : Shame.

Dr. Howells : Some people may shout, "Shame."

One of the things that it meant was that, if somebody showed talent, whether he be German, Italian, French or Belgian, he would play a part in reconstructing the life of Europe.

Such awful parochialism is a poison that infects Parliaments when they are overridden with nationalist nonsense. We must be careful about that. After all, it was Welsh administrators--even Welsh-speaking administrators--who created the chaos at the WDA through their incompetence and questionable objectives. With precious public funds, what counts is talent, honesty and flair. I do not care where the people come from so long as they know the proper way to deal with precious public funds.

My hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) referred in his wonderful summing up to the almost farcical hearing that we had when we discussed coastal defences. I was hoping that he would make the next point, but he did not, so I shall make it now. We saw in many of those hearings that the permanent secretary sometimes arrived with the chief executive and a dozen or 15--I once counted 18--advisers from the Department. One wonders who ran the Department when the public accounts hearing was on.

When my hon. Friend asked the permanent secretary to tell us where exactly the sea defences were likely to collapse and land be flooded, the permanent secretary turned to his helpers on the seats behind, and not one of them could name a single mile of coastline where that danger existed. There was a feverish searching through of books. Nobody could name a single stretch of coast. It did not give me a great deal of confidence in the competence of those officials during that hearing.

It has already been stated--with a degree of frivolity--that courses are now held, or mock runs, before officials come before the Public Accounts Committee. They are told, "This is how you are likely to be questioned." They did not do much of a job on the Ministry of Agriculture, Fisheries and Food. It was absolutely appalling. Another important problem that has not been mentioned so far this evening is language--almost semantics. With the next steps agencies we get a different language. I know

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that we have got used to calling patients in hospitals "customers". Even taxpayers are customers now, although they are sometimes called punters--usually if they are about to go to gaol.

Another problem is the curse of the consultants. We are constantly being told that matters got out of hand because bad advice was received from consultants. There is a curse of consultants so far as quangos, next steps agencies and the Welsh Ofice are concerned. I remember we had a case during the hearing that was as dramatic a scandal as that surrounding the WDA. It concerned the Development Board for Rural Wales. My right hon. Friend the Member for Swansea, West, as though he were skinning an onion, peeled down to the extraordinary truth behind Mr. Ian Skewis's redundancy package. We were told that the outgoing chief executive, Mr. Skewis, had been promised guaranteed consultancy work as part of his redundancy package. It was worth a large amount of money. When we asked what the consultancy work was, no one could tell us. We were told, "We'll make up some consultancy work for him." The permanent secretary said that it would be about rural affairs. We pressed him on that and asked whether it would be about milking cows. "Possibly," he said, "but it would have been about rural affairs".

It is like a sick joke. One does not know what consultancies are going to be about. They are about keeping people on board, protecting old friends and ensuring that the bump is not too hard when one hits the ground. I fear that one of the reasons why the Secretary of State for Wales has not had the courage to take action over the former chairman of the WDA is precisely because the chairman was appointed by a Secretary of State for Wales and defended by his successor as part of the great spirit of Thatcherism which was transforming the Welsh economy. To admit that that guy had made a mess and should be taken off such an important body is far too much for them to do. They should get off their high horses and act on behalf of the people of Wales.

Finally, before I forget, I meant to say from the start that, in gracing our first session almost a year ago, the Minister did the Committee a great service. He sat patiently throughout. We appreciated that. One sometimes gets the feeling that the departmental officials are sent along to carry the can, so it was nice to see the Minister play an active role in the deliberations of the Committee.

I draw the Minister's attention to something of which I am sure he is all too well aware, because it has such a vast budget. Our 46th report deals with the administration of legal aid. For those who are not aware of it, I will spell out how big the budget is. This year, it is no less than £1.1 billion of public expenditure, and by 1995-96, even after the changes in the administration of legal aid, it will be £1.5 billion. There is no question but that those are huge sums of money. I understand that in 1993-94, 120,000 fewer civil legal aid certificates will be issued than would have been issued if the changes outlined in the report had not been instigated.

I hope that the Treasury understands that the Committee feels strongly about the disgraceful lack of information during our hearings on that investigation. The Department should have been ashamed of itself. The Lord Chancellor's Department had worked with the Bar Council and the Law Society, but representatives of both those bodies made it

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