Column 912We later found out the reasons. We said that
"we share the Administration's astonishment that the contract price should have been increased from £316 million to £397 million, ie by over 25 per cent only two weeks after the agreement between the two Prime Ministers had been reached."
It appears that the ODA was not fully informed, but it should have been and it should have discovered how the valuation and the cost was moving along. We added:
"It is also unacceptable that this information was not available before the Government entered into what they regarded as a politically binding agreement."
That is the important issue which should concern any accounting officer who appears before the PAC. We went on:
"In cases where Ministers over-rule officials on matters involving propriety and regularity, the papers are automatically sent to the Comptroller and Auditor General and such over-ruling would then be disclosed to this Committee."--
that is right--
"Where such over-ruling concerns prudent and economical administration, efficiency and effectiveness, the Accounting Officer is not obliged to send the papers to the Comptroller and Auditor General, and the National Audit Office is made aware of the Ministerial direction only if it is conducting a relevant inquiry." We continued:
"We were concerned that the Committee of Public Accounts should always be in a position to know when, and in what terms, Ministers overruled their Accounting Officers on matters of prudent and economical administration."
There may be very good political reasons, but we should know, so that we are able to distinguish between political reasons that do not involve us, and on which we should not comment, and other considerations on which we might want to comment.
The Committee concluded:
"We think it was right and in accordance with his
responsibilities that the Accounting Officer advised Ministers that he would require a direction before spending money on this project. We accept that Ministers were given clear advice from their officials in February 1991 about the economics of the Pergau project; and were told that to support it would not be an effective use of the aid budget . . . We note that Ministers decided to provide aid because they did not wish to renege on an earlier commitment given by the Government at the highest level".
We noted that the matter went from the Minister for Overseas Development to the Secretary of State for Foreign and Commonwealth Affairs and then to the Prime Minister. Our inquiries came to an end because political considerations that did not concern us were involved. The matter was then dealt with by the Select Committee on Foreign Affairs. We had carried out our task. Once an issue becomes a matter of policy, we leave it to others to involve themselves, if they so wish.
The 23rd report, "Development Board for Rural Wales: allocation and sale of housing and car leasing scheme", concerns the sort of subject that everyone can understand because many people have experience of it. The report states that, under the Development of Rural Wales Act 1976, the board has
"a stock of 1,000 houses . . . The provision, letting and sale of houses in their . . . area . . . is currently a major function of the Board, yielding an annual income of around £2 million."
The board is required to publish a summary of its rules for determining priority between applicants in the allocation of housing accommodation-- like local authorities.
Column 913The report continues that the housing Acts
"also require the Board to maintain a set of detailed rules which they have laid down to govern the procedures to be followed in allocating their houses. The Board must make these rules available for inspection by the public at their principal office".
That is a normal and standard safeguard. We added:
"The Board published their rules for allocating houses in 1981 in response to the requirements of the Housing Act 1980."
The board also had a secret list, however. One of the public rules was that people allocated houses had employment in or close to the town concerned. In a sample, the National Audit Office found that 22 per cent. of the people who were allocated houses did not meet the criteria in the published rules. They obtained their houses from the secret list. The National Audit Office estimates that 238 of the board's tenancies were allocated under the unpublished rules. Time and again, things seem to have gone wrong. Once matters are in the open, people will do things right and that is very important. Once they are in the open, no one can defend the unjustifiable. Only when they are kept secret can things go wrong on such a scale. There is no excuse.
In the 13 years that the secret list existed, not one member of the board's staff raised its failure to comply with the housing Acts. It was clearly wrong to have a secret list for such a long period. Paragraph 12 of the report states:
"Following his enquiries into a complaint by a member of the public into housing allocations made by the Board, the Ombudsman concluded that there had been gross maladministration by the Board in the allocation of housing. He also reported that the Board's Housing Officer had allocated a house to himself when he was not eligible for housing under the published rules"--
he did so under the secret rules--
"and had allocated his ex-wife a house to which she was not entitled according to those rules."
Mr. Jonathan Evans (Brecon and Radnor): I endorse the right hon. Gentleman's assertions throughout his speech that matters should be put out in the open. One thing concerns me about the report, however. The right hon. Gentleman said that the housing officer allocated a house to his wife. He will see from the report that it was noted that "no reference required" was marked on the wife's file. The right hon. Gentleman's Committee asked for further and better particulars. There is a note to that effect at the back of the report. Why did it not elicit the information that the wife was a prominent county councillor and the Liberal Democrat constituency secretary for the area?
Mr. Sheldon: Party political matters are not for the Public Accounts Committee. We are interested in the presence of a secret list and the fact that 22 per cent. of house allocations did not meet the published rules. We found not only that the housing officer had been allocated a house and subsequently had been allowed to transfer to a different property without submitting an application form under the board's rules, but that allocated tenants could insist on purchasing houses at a large discount. That is fairly normal, but 55 tenants who obtained houses under the secret list were given the advantage of being able to buy houses at large discounts-- some of those involved were not even tenants at the time--amounting in total to £718,000. The Committee thought that that was clearly wrong.
Column 914We dealt with the question of essential cars. In view of the question from the hon. Member for Billericay, I shall say something about the discipline that was involved. The Welsh Office decided that the discipline of the staff of the board was a matter for the board itself, but the Committee expressed its surprise that, given the nature and the scale of the maladministration, neither review of the matter concluded that disciplinary action was warranted.
On the question of leasing, the arrangement was that essential users of cars contributed two sevenths of the cost of running of that car--a fairly standard practice--for private motoring. We noted that "without the approval of the Welsh Office the Board amended the scheme to reduce to one- seventh the contribution from their staff and to allow free motoring for three Directors."
The civil service rules, which are set down for every Government Department, should have been followed, and we pointed out the weakness in financial control.
More recently, we had a report on the Welsh Office generally and we found out that only £180 million out of £480 million of road expenditure had a clear audit certificate--a terribly low proportion. I now come to the situation at Huddersfield university, which I mention only to show how the Committee acted fairly quickly. We had one meeting and decided that an attempt to pay the vice-chancellor of Huddersfield university about £500,000 in a severance package went outside the standards that were set out. We said that the package appeared to be excessive and we agreed that the university may have exceeded its powers.
We took particular exception to a request by the university that the information on the matter should not be published "unless absolutely necessary." The Committee believes that it is absolutely necessary to disclose the matter. I was pleased that the university council reconsidered the matter; that shows that things can be put right if people know what is happening. The Universities Funding Council knew what was happening, as a result of the work of the National Audit Office, and took action to see that it was put right. That is the message from our reports. Nobody in the House wants to see any sign of fraud or corruption, which diminishes all of us and diminishes us as a country. We want to see that matters are put right and to make sure that they do not happen again.
I now come to a rather happier situation, because I shall talk about what the Government have done. The initial reaction from the Treasury was not promising, but the Departments have been very good and have responded through the Treasury minute. However, we all know that the Treasury minute is not quite the same as a report being addressed to the Treasury itself.
We have seen that some major changes have taken place. First, the Treasury wrote to all Departments--the Committee was pleased that action was taken-- drawing attention to the proper conduct of public business. It stressed that Departments should ensure that appropriate steps were taken to avoid similar problems arising in the future, and it used a checklist provided in the report by the Public Accounts Committee as the basis for writing to all Departments.
Guidance has been given on non-departmental public bodies, and the Treasury issued a new memorandum for accounting officers in March this year--soon after the Committee reported--which was designed to clarify the
Column 915specific responsibilities of the accounting officers of those bodies, and their relationships with the sponsored Departments. We received a copy of the memorandum from the Treasury.
In addition, the Treasury issued to principal finance officers detailed guidance on a code of best practice for members of non-departmental public bodies, and the Committee had no disagreement on that. That advice included guidance on the responsibilities of board members, the accountability of public funds and the declaration of financial interests by board members. The Treasury intends that the document be used as a model which public bodies should implement, with any modifications which may be necessary.
In response to the original Committee report on the Development Board for Rural Wales, the Welsh Office commissioned a full compliance review of all non-departmental public bodies, and there were a few that we were very unhappy about. The review evaluated the extent to which bodies were to comply with their financial memoranda and other regulations issued by the Treasury and the Welsh Office, and the Welsh Office is considering further notes of guidance. The Department of Health produced new guidance on corporate governance in the national health service, which includes a code of conduct and a code of accountability. The Secretary of State for Health acknowledged in a letter to me on 11 April this year that those codes go some way towards addressing the concerns raised in recent reports on the West Midlands and Wessex health authorities. There have been some substantial changes. The Civil Service College has introduced a course for newly appointed chief executives of agencies and board members of non- departmental bodies on the subject of public accountability, and that is very important. The college's programme includes the handling of public money, all aspects of public business, and so on. I welcome that and if our report did nothing else but promote such consultation on matters, I would be pleased.
We heard the Prime Minister yesterday going further and introducing a standing committee on those matters and others in an area much wider than that which the Public Accounts Committee was able to deal with. We must hope that the standing committee proceeds effectively; if the members of the Public Accounts Committee are asked to give evidence, we will do so.
I hope that we now may be able to put behind us some of the things that have gone wrong and I hope that we have learnt lessons from them. If we do that, the Committee can deal with the standard fare with which we are rightly used to dealing.
We must always take account of the fact that the proper conduct of public business comes first, but we must always insist that that proper conduct is there. I hope that matters such as I have mentioned do not come before us again.
Mr. Michael Shersby (Uxbridge): This annual debate represents the mechanism whereby the Public Accounts Committee draws to the attention of the House matters that it considers to be of special importance and whereby, as a result of the Treasury giving consideration to our
Column 916recommendations, changes are made of the kind to which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) has just referred. Such changes can lead to our avoiding the mistakes of the past and to improving the economy and efficiency of the public service in future.
In answer to an intervention from my hon. Friend the Member for Brecon and Radnor (Mr. Evans), the right hon. Member for Ashton-under-Lyne made the point that it is the custom of the Public Accounts Committee to be non- political. I think that that is one of our strengths. The Committee comprises 15 hon. Members, including the Financial Secretary, who comes to the Committee once only, at the beginning of his term of office. The other 14 members work as a team in examining the evidence that is placed before us by the Comptroller and Auditor General and the National Audit Office. We deal with facts, not with opinions. We investigate those facts and try to unravel where things have gone wrong. Then we report to the House. Today, about 50 reports are before the House, and I doubt whether any hon. Member, except perhaps members of the Committee, has read all 50. It would certainly be a monumental task.
In this debate I want to concentrate on only one or two reports, and especially on the one to which our Chairman referred--that concerning the proper conduct of public business. The report was published on 17 January and attracted considerable attention in the media. It has also aroused a good deal of interest in the civil service.
The report is about a number of failures by officials in the public service and in non-departmental public bodies--in other words, by the civil servants whose job is to operate administrative and financial systems in Departments and other public bodies. Their failures have led to money being wasted or being otherwise improperly spent. I believe, however, that the report must be seen in the perspective of total public expenditure of about £270 billion. In the vast majority of cases, the administrative and financial systems that are in place have assured proper control over the spending of public funds. That should always be remembered when we talk about failures. In the past, as the report states, the Committee has dealt with a number of serious failures in the administrative and financial control systems in Departments and other bodies--failures that have led to a waste of taxpayers' money. This report was of special significance because it drew attention to the fact that there have recently been fundamental changes in the way in which Government Departments and public bodies such as the national health service carry out their work.
The Committee has pointed out that the growth in the number of non- departmental public bodies is intended to improve the provision of public services, by greater delegation of responsibility, by streamlining and by a more entrepreneurial approach to the work. Still, at a time of change like this, the PAC took the view that it is important to ensure that proper standards are maintained in the conduct of public business.
Mr. Sheerman: Were not the remarks by the Chairman of the PAC directed to the fact that many of the people on these bodies seem to be spending taxpayers' money as though it were their own? If that represents the
Column 917entrepreneurial culture to which the hon. Gentleman refers, is it not another step down the slippery slope that leads to lower standards and a lack of accountability?
Mr. Shersby: If most Departments and non-departmental public bodies were doing that, the hon. Gentleman would certainly be right. My point was that the failures reported by the PAC must be seen against the whole background of public administration in this country.
We have drawn attention to the view expressed by some people that the drive for efficiency and economy must be held back to some extent because of the need to take care with public money. Others have argued that if economy and efficiency are to be pursued vigorously, traditional standards must be relaxed. But the PAC has firmly rejected both claims--that will be of interest to the hon. Member for Huddersfield (Mr. Sheerman). The Committee takes the view that the first approach is often urged by those who do not want to accept the challenge of securing beneficial change; and the second is advanced by those who do not want to be bothered to observe the right standards of public stewardship. I hope that the hon. Member for Huddersfield feels reassured by that.
The Committee has stated unequivocally that any failure to respect or care for public money would be a most important cause of decline in the efficiency of public business. The Committee goes on to inform the House that, in future, it will pay particular attention to the examination of accounts and the implementation of programmes, and to a successful combination of the proper conduct of public business with the energetic pursuit of value for money. The hon. Member for Huddersfield will agree that those objectives are exactly right. So why, from time to time, are there worrying failures, resulting from inadequate financial controls, by officials in the public service? The PAC has identified a number of key issues that provide some good answers to that question. First, inadequate internal accounting systems and controls lead to waste and a risk of fraud and theft. That is exemplified in the case of the British Council, which the Chairman described. Government Departments and public bodies must ensure from the outset that proper financial systems are in place and are properly applied.
The failure to ensure that financial procedures and controls are adapted in line with major changes in the organisation of business is the second key element. There can be no doubt that procedures need revising from time to time to ensure their continuing relevance and reliability, especially at times of major change.
Another extremely important point identified by the Committee is the fact that the use of inexperienced staff who lack financial training and expertise can result in a failure to secure adequate controls, particularly at a time of change. The Committee believes it vital that care be taken to provide staff with the requisite financial skills, to ensure that those responsible for securing big changes in accounting systems are suitably experienced.
A regular complaint of the PAC has been that poor monitoring of expenditure on capital projects leads to overspend and waste. Any hon. Member who has served on the Committee knows that to be a continuing worry. Again and again over the years the Committee has drawn attention in our annual debates to the need for attention to be paid to major capital projects, and to the need for
Column 918those concerned with them to have specific financial and project management skills and experience. It is simply not possible for officials to deal with huge projects involving large sums of money unless they have both the skills and the training necessary to use them. We have emphasised that projects should not be embarked on unless such skills are available and used.
The report draws attention, too, to some fairly elementary requirements, including the need to check bills before they are paid. That sounds pretty basic, but it is necessary to check whether goods and services have been provided before bills are paid. In some public departments, that has not always happened, and the problem has gone on for a long time.
A failure to pursue money that is owed is another worrying feature that shows up in the public service. The House will agree that there must be adequate arrangements to ensure that moneys owed are properly monitored and pursued.
The payment of grants on the basis of insufficient evidence of entitlement has also concerned the PAC in the past year. We think that that is a worrying trend, and that proper procedures must be put in place and applied so that entitlement to grant aid is clearly established and documented before any payment is made.
As the Chairman said in his wide-ranging speech, in the past few years the Committee has become increasingly concerned about incidents involving the provision of redundancy benefits. In several cases, the delegated powers given to public bodies have been exceeded. The hon. Member for Huddersfield was temporarily out of the Chamber when the Chairman referred to the very disturbing case of Huddersfield university. There, I think, is a good example, in which the legal powers that that university has may have been exceeded. We stress in our report that such powers should not be exceeded in making provision for redundancy and other benefits.
Mr. Sheerman: I thank the hon. Gentleman for his remarks and apologise to the House for the fact that I had to slip out of the Chamber for a few moments and miss the remarks of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), particularly on Huddersfield university. Is not the real problem exemplified by the crisis in my constituency that it was not a case of fraud and theft--and no one is alleging that it was--but a case of people using public money as though it were their own and of a public institution severing contracts using a secrecy clause, about which I agree with my right hon. Friend, to make people clam up and limit their ability to speak openly and say that there is a problem?
As a former member of the Committee, I hope that it will tackle the problem of so many public institutions with public money. Some of those institutions ensure the secrecy of the people who leave by an extra payment. That is at the heart of the problem at Huddersfield and also of many of the problems to which the Chairman drew our attention.
Mr. Shersby: The hon. Gentleman will, of course, know the details of what happened in Huddersfield--as, indeed, do I. I agree that the so-called "secrecy clause" is not a feature of public life that we should support. But there are many universities around the country in which the governing bodies have acted with the utmost propriety and probity, and I do not think that one should conclude
Column 919from the Huddersfield case that such things are going on all around the country because obviously they are not. As the hon. Gentleman will readily agree, the whole question of ex gratia payments is difficult. It calls for the judgment of those concerned to be absolutely right. But it also means that they must act within the legal powers delegated to them, which are clear and which, I believe, are observed in the vast majority of cases.
So often in our debates we spend a great deal of our time re-telling the detail of the individual cases that have caused us concern. The Chairman dealt with a number of those very effectively. Despite those particular cases, I believe that there can be no doubt whatever that the British civil service is still the envy of the world and that the high standards set by dedicated accounting officers deserve the thanks and congratulations of the House and of all the members of the PAC.
As a Member of that Committee I have the greatest possible admiration for the work of people such as, for example--I stress "for example"--Sir Michael Partridge, the permanent under-secretary at the Department of Social Security, who is dealing with highly complex matters. He and his colleagues have demonstrated to the Committee how well they are doing their job. We have been also been impressed by Mrs. Valerie Strachan, who now heads Her Majesty's Customs and Excise. I think that she is the first woman ever to have headed that department, and she does so with considerable distinction. Then there is the infinite courtesy and expertise deployed by Sir Anthony Battishill, chairman of the board of the Inland Revenue, in answering our questions and making it clear to the PAC that the Inland Revenue is moving with the times in the quality of service that it hopes to provide to individual taxpayers. I am sure that I speak on behalf of every hon. Member when I say that we hope that that quality service becomes a fact very quickly indeed. There are many other distinguished public officials to whom we have every reason to be grateful for the work that they do but who are too numerous to mention by name in the debate.
I am told that the report on the proper conduct of public business has had a great impact on the civil service. I am glad to know that, because the Committee has been obliged to refer to some of the failures--all of them serious--in that and in other reports. I believe that it is for the permanent under-secretaries, who are the accounting officers of the great Departments of State, to ensure that the lessons are learnt from the mistakes and failures referred to in the report, and that arrangements for all levels of delegated authority are tightened up and a higher standard secured. Ministers must be informed at the earliest possible time when it is discovered that things are going wrong so that corrective action can be taken in good time. I believe that that is very important and that that message should go out to those who, quite rightly and properly, are concerned with ensuring that high standards are retained in the public service.
I refer now to the 58th report of the Public Accounts Committee, dealing with the Department of Social Security and the Benefits Agency, entitled "Combating Organised Fraud". The report describes attempts by groups of criminals to defraud the benefits system. That is a serious problem and is estimated to cost at least
Column 920£1 billion. The value of payments under investigation in September 1992 was £61.4 million. That fraud was both individual and organised. Methods used by criminals engaged in organised fraud included making multiple claims for benefit; using false or stolen identity documents; stealing order books, payable orders and girocheques; counterfeiting and altering such payable instruments; and buying order books from legitimate beneficiaries, subsequently encashing the orders as they fall due for payment.
What a litany of criminal activity that is. Criminal elements are being attracted to the huge sums of money that are paid out as a result of the very generous social security system that this country has, whatever individual views we might hold about the merits of one benefit or another. Amounts recovered have increased from £100 million five years ago to a current total of £500 million. That is encouraging. It is very good indeed and the Department deserves to be complimented for the action that it has taken.
I do believe, however, that the time may now have come to consider the possibility of introducing an identity card bearing a photograph to enable the Department to fight that large-scale criminal activity. If benefits were paid only where the beneficiary's fingerprint matched that held on the national social security computer, it is possible that fraudulent claims could be virtually eliminated. Although many people who are interested in civil liberties--many hon. Members may have reservations about the introduction of such a system, which are quite understandable--we must look at the waste and the criminal activity that results in the fraudulent loss of £1 billion. I believe that the technology is available. If it were to be used, the social security budget would be much better able to meet the claims of the people who desperately need help. That is, after all, one of our principal concerns as Members of the House.
The report on the proper conduct of public business has in some ways been the flagship of the Committee's deliberations this year. Looking at the matter in perspective, one must recognise that, although there have been some serious failures, we still have a very fine public service. We have very fine accounting officers, people who are totally dedicated to their job. I saw that yesterday when, with the Chairman and two other members of Committee, I visited the Northern Ireland Audit Office and spoke with the Comptroller and Auditor General and his staff. We were all deeply impressed with the high standards that are operating in Northern Ireland, and I take this opportunity to record that and say how much we appreciate what it is doing to ensure high standards in the conduct of public business in the Province.
Mr. Robert Maclennan (Caithness and Sutherland): It is a pleasure to follow the hon. Member for Uxbridge (Mr. Shersby). I rather appreciated the innovation of his commending certain accounting officers who impressed the Committee; although the levels that those officers have reached have been publicly recognised in the honours system and their degree and rank is the same, we--as members of the Committee--know very well that some are more equal than others. That has been especially true in the period that we are discussing.
Column 921I think it fair to say that no period during the 14 years for which I have been a member of the PAC has been more disturbing than the one that we are considering. I think that my fellow members share my feeling, and that, in large part, that feeling moved us to issue the unprecedented eighth report. Like both the Committee's Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), and the hon. Member for Uxbridge (Mr. Shersby), I want to focus principally on that report. Because of the welcome comprehensiveness of the Chairman's speech, in which he described a number of the relevant reports in detail, I shall not need to speak at length.
I read the comments of Simon Jenkins in The Times today with a mixture of amusement and dismay. He suggested that the House of Commons was to be largely ignored in our constitutional processes, describing it as an "appendix" of the system which grumbled occasionally, and he argued that the House of Lords had more clout. He may have been seeking more to amuse than to analyse, but the Committee does not simply amuse itself in considering issues and responding to them; nor are our findings generally ignored. I believe that the response of the public sector is also evident-- that efforts are made to tighten up procedures, that our exhortations do not fall on deaf ears and that practices are modified and adapted according to our recommendations. I commend our Committee's work to Simon Jenkins, and submit that, in some modest measure, his comments undermine the institution of the House of Commons, which--for all its shortcomings, to which I am never slow to draw attention--is the basis of our democracy.
As I have said, the period that we are discussing is a disturbing one, and I find the Government's reply to the eighth report particularly disquieting. The Chairman expressed a belief that the Government might take more action than is suggested by their Treasury minute in response to our findings; but the Government's reply itself suggests a degree of complacency--indeed, almost a rejection of the report's findings--that I do not consider worthy of the Treasury. I do not imagine that the incumbent Minister had anything to do with the wording of that response, and I hope that--notwithstanding the inevitability of Ministers' defending the language of government collectively--he will not feel it necessary to embrace its wording too closely. In the atmosphere of this of all weeks, it would not be suitable for the findings of a serious and unprecedented report to be disregarded so cavalierly.
I acknowledge the truth of what Ministers, including the Prime Minister, have said this week--that Britain's ethics in public life are the envy of the world. President Mitterrand of France and President Berlusconi of Italy would doubtless marvel at the tumultuous reaction of our press and other media to the issues of "cash for questions" and corrupt quangocrats that have been displayed this week: we can almost hear them saying, "How we wish that our problems were of the same order of magnitude." The Government, however, cannot offer that as an excuse for the seriousness--in both cash terms and moral terms--of the intromissions of behaviour uncovered in the Committee's reports. Standards are indeed slipping, and I am afraid that they are slipping because the Government
Column 922have not been sufficiently strong in defending them. That is why it is important for the Minister to disavow the Treasury minute. Most startling of all, in my view, was paragraph 90 of the Government's response to the eighth report. It states:
"The Government rejects the inference which has been drawn from the report that the failings identified are in some way the result of the changes in the way in which departments and public bodies carry out their work."
The Committee did not draw such an inference; it was not an inference at all, but was stated as a finding. Let me quote a number of sentences in different paragraphs of the report, which make it quite clear what we were doing.
We stated that the failings to which we referred, and to which the report bore eloquent testimony,
"represent a departure from the standards of public conduct which have mainly been established during the past 140 years."
In the next paragraph, we said:
"There have recently been fundamental changes in the way in which government departments and public bodies such as those in the NHS carry out their work."
We went on to say:
"But at a time of change it is important to ensure that proper standards are maintained in the conduct of public business." In paragraph 6, we stated:
"At such a time it is even more essential to maintain honesty in the spending of public money and to ensure that traditional public sector values are not neglected in the effort to maximise economy and efficiency."
I do not think that any member of the Committee was in any doubt about what had been happening: we were dealing with a new situation, the very novelty of which made it imperative for us to collate the findings of a number of reports and to present general conclusions and recommendations, going to the length of drawing up particular advices. I am pleased to learn that they have been circulated to all Departments.
Let it not rest as a canard on the record that the Committee merely "drew an inference"; that conclusion was the core of our recommendation. I think it quite likely that we shall see similar cases in the future, but I hope that our report will lessen their number and seriousness.
Let me remind the Minister briefly of another report that has not been specified in the debate or the motion, although it is covered by the group that we are considering. The sale of the Scottish Bus Group was influenced by the fact that confused lines of accountability and responsibility existed between the group and the Scottish Office. The Government acknowledge that fact in their reply to the 21st report. Wessex regional health authority wasted tens of thousands of pounds on a computer system that did not work because the systems for checking expenditure between the authority, the national health service executive and the Department of Health were inadequate. The Government appear to accept that finding in their reply to the 63rd report.
The Development Board for Rural Wales, a quango working under the Welsh Office, was able to amend the details of its car leasing scheme without the knowledge or approval of the Welsh Office and in a manner which violated the agreement between them. Under the amended scheme, cars were leased as perks rather than as necessities. In their reply to the 23rd report, the Government accept that that represented a failure of accountability and management.
Column 923In effect, the Government's response is a denial that the failings that Committee Members have identified in the reports represent a trend of declining standards. That response is astonishing. These are not isolated incidents. Time and again, we have discovered serious failings in management and accounting procedures which appear to flow directly from changes in organisation brought about by Government policy. They cannot be excused as the effects of change, because change is constant; nor are they merely teething problems because few were accidental, occurred in a short period or were isolated in time.
The problems are not acute, but chronic. If we are to avoid institutionalised corruption, the Government must accept a new public ethic and that ethic must reflect standards which many hon. Members have taken for granted as being characteristic of British administration. An Opposition Member intervened earlier to express the view--and I agree with it--that the atmosphere in some non-departmental public bodies suggests that a new "get what you can, do what you want" culture exists. Perhaps it is too strong, although I think not, to describe it as the venality of Departments, which are fearful of challenging the new agencies or, at least, insensitive to the problem lest they might appear disloyal to the programme of reform.
No progress will be made until the Government at least recognise that there is something wrong and that these are more than just a few little local difficulties. Paragraph 90 of the response to the eighth report contains even more nonsense. It states:
"the cases which have been identified have to be looked at against a background of progressive improvement in the efficiency with which public services are being delivered."
Are the Government saying that it is acceptable to sacrifice the highest ethical standards in the interests of efficiency? I think not, but viewed by itself paragraph 90 could be seen as a nod and a wink to the people in the quangos. It could be said that the Government are whispering, "It's all right, boys--do what you want, so long as you get results." That sort of logic produced Watergate in the United States of America, allows the French system of administration to crumble and undermines democracy in Italy. We are nowhere near those positions and I began my speech by making that clear, but insensitivity, reflected in that sort of logic, could lead us in that direction. That is why we take this issue so seriously.
The eighth report states clearly that
"there is no reason why a proper concern for the sensible conduct of public business and care for the honest handling of public money should not be combined with effective programmes for promoting economy and efficiency."
That issue crosses party lines and can be generally accepted as the basis of public life.
Public services are run with public money in the public interest. Public interest demands both efficiency in the delivery of the service and the proper use of the money which funds those services, but one cannot have efficiency of service if directors use the money for their own benefit, as occurred in the case of the Welsh Development Agency, or, unchecked by the Government, as hobby horses for their grandiose plans, as was the case with the Wessex health authority.