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Column 736That inflated payment to GM schools is made at the direct expense of other schools in the LEA. That is robbing Peter to pay Paul. In Tower Hamlets and Lambeth, two regions of high deprivation in London, state schools were badly affected by that double funding. The PAC has called straightforwardly for
"the central services element of annual maintenance grant . . . to reflect accurately local education authorities' delegation of central services to schools."
We are pleased to note that the Government have taken that on board. Clearly, earlier action would have allowed authorities in Lambeth, Tower Hamlets and elsewhere to have the right level of funding available for schools remaining with the local education authority.
If we have a state system of education, it is essential that all schools in that system are treated fairly, and that all pupils receive a fair amount of grant per head in each school. The example that the PAC has identified has been reluctantly taken on board by the Government and we hope that within the next two years the practice will have been removed. We are assured that new schools coming into the GM sector will not benefit from such double funding. One of the other problems with grant-maintained schools is the lack of declarations of pecuniary interest by governing bodies. In 22 of the 70 schools visited by the National Audit Office, there was either no register of pecuniary interest or the register had not been kept up to date. The Public Accounts Committee is charged with ensuring probity in the expenditure of public finances. One of the best ways of doing that, where school governing bodies are involved, is to ensure that each individual member declares a pecuniary interest, so that when a governing body awards a contract there is no conflict of interest and no question mark over the probity of those schools' actions.
I have been told that a number of hon. Members are lining up to participate in the debate and to ensure that my remarks are succinct and to the point. To go back to pecuniary interest--
Mr. Hall: I am sure that that echo of encouragement will reflect on the points about pecuniary interest. Wherever contracts are awarded, whether it be in state schools under the local education authority or in grant-maintained schools, it is essential that a register of pecuniary interest should be maintained so that people who could be involved in the contract do not take part in decisions to award contracts to companies for which they work.
Clearly, we are concerned about some aspects of that matter in the incorporated and further education sectors. That approach is recommended by the PAC and its adoption by the Government would be a positive step. I look forward to hearing an assurance from the Financial Secretary that under the regulations of non-departmental public bodies it is a requirement to establish a register of pecuniary interest to ensure probity in the administration of public affairs.
Another example to which the Public Accounts Committee drew attention in relation to grant-maintained schools was their ability--or, currently, their lack of ability or legal power--to borrow money. We are assured that, where money has been borrowed or leased, its
Column 737legality may be questionable and that the Government are examining the matter. In evidence, the PAC has been told that when GM schools are given permission to borrow money, so long as the governing body has acted properly, within the scope of its functions and procedures, with honesty and without ulterior motive, and it has reasonably carried out its business in a commonsense way, it will be protected from the risk to its assets. That is straightforward. If the governing bodies have done it properly, there will be nothing for them to worry about.
I am still concerned about what will be used as security for the loans that GM school governing bodies may take out. Will it be the school buildings? Will it be some other form of security? If a loan is not paid back but defaulted on, what will happen next? We want some assurances from the Government that they have followed that aspect through. If GM schools start to take out large loans on school buildings, the value of the school playing fields or some other asset, and then default on their loans, we shall start to experience problems with the delivery of education. We want to be sure that that will not be the case. I do not want to be a member of the PAC in the future, to be asked to sit in judgment and to find out that loans have been defaulted on and that the Treasury has underwritten them and paid them off.
Another aspect of grant-maintained school funding that is of great concern involves evidence given to the PAC by the chief executive of the Funding Agency for Schools. Under cross-examination, he conceded that if they opted out of the national pay scheme head teachers and deputy head teachers in GM schools would be entitled to have what is commonly known as a company car and private medical health insurance as part of their remuneration.
Having spent a lifetime in education before coming to this place, I think-- and I cannot be faulted for believing--that if money is available for company cars and private health care for heads and deputy heads, the money involved would be better spent directly on education provision. It is not the state's role to provide private health care for head teachers in the state sector. That is a totally inappropriate use of public funds. I look forward to the Financial Secretary saying some words about that when he responds to the debate.
Clearly, we want confirmation that double funding has now ended, that the annual maintenance grant is calculated accurately in relation to the LEA's expenditure on central services and takes into account how much money it delegates to its schools, and that schools which remain within LEAs are not disadvantaged by preferential finance going to schools in the GM sector. It is a straightforward view that schools in the state sector should all be equally and adequately funded.
The 40th report of the PAC has already been mentioned by my right hon. Friend the Member for Ashton-under-Lyne. It deals with the suspension of Dr. Bridget O'Connell and it is a woeful tale of inadequacy. The sums involved are quite substantial, given that one individual is involved. The final settlement will have cost the taxpayer just short of £600,000--a total of £593,409, which includes £439,259 in pay for doing nothing for more than 12 years, £105,000 in settlement of the legal case out of court, and £11,000 in legal expenses and enhanced superannuation benefits assuming that Dr. O'Connell will live to the age of 75.
Column 738Dr. O'Connell was suspended in 1982 by North East Thames regional health authority because she did not get on with the staff in the paediatric unit where she worked and in the hospital generally. It took 12 years to resolve that personal difference in the hospital. It is astonishing that things could get so far and that the chief executive of the national health service management executive, Mr. Langlands, had to settle out of court. Clearly, the NHS management executive did not have a leg to stand on.
In my cross-examination of Mr. Langlands, I suggested that he "sued for peace". He did not agree with my analysis of what had happened, but said that he thought that the settlement was the best value that could be gained for the taxpayer after the case had gone on for so long. The case should have been resolved a great deal earlier. The other extraordinary aspect of the case is that the evidence from Sir Duncan Nichol, the former chief executive, and from Mr. Langlands himself shows that the NHS does not like gagging clauses in severance contracts. However, under examination Mr. Langlands confirmed that there was a gagging clause in Dr. O'Connell's contract. He said that he did not like it, but that he was not too concerned about it because he knew that the case would hit the headlines. He was certainly right about that. In all fairness, it was not the NHS executive that asked for the gagging clause, but Dr. O'Connell's solicitor. It would have been better if the NHS executive had resisted that request and published the details in full. It would have saved the Public Accounts Committee a great deal of time and effort.
I hope that the case will prove to be an isolated one. We have received an assurance from Mr. Langlands that he has trawled the NHS to ensure that there are no other examples of people receiving full pay for 12 years and enjoying the full benefits of pay increases year after year without turning a tap for the health service. There has been poor management and weak procedures. We want an assurance that the weak procedures have been sufficiently strengthened to ensure that nothing like this case could ever happen again at the expense of the taxpayer.
I wish to refer next to a report that I have mentioned previously in the House, entitled "Merseyside Development Corporation: Grand Regatta Columbus and Fanfare for a New World Concert"--the third in this series of PAC reports. I am extremely disturbed by the report and astonished at the amount of taxpayers' money that has been lost through the incompetence of the MDC. The concert and the regatta were the brainchild of the chairman, Sir Desmond Pitcher, who is coincidentally also chairman of North West Water.
As the PAC Chairman has already said, the two events cost the taxpayer and private business £1.1 million. They actually exceeded the permission on expenditure granted by the Department of the Environment. A letter from the Merseyside task force dated 3 March 1992 stated:
"Further to my letter of 23 January, my Headquarters have now agreed to MDC's proposals as set out in your letter of 20 December. However, they do not consider MDC to be underwriting expenditure but rather estimating a potential financial contribution."
There is then the key sentence:
"My colleagues have been reassured by your having estimated the maximum possible contribution in a worst case scenario, by your recognition that MDC expenditure will have to be met from within the EFL, and by the scope that exists for MDC to prune costs if necessary."
Column 739The cost referred to was about £200,000. The letter then said that if the MDC expected to spend any further money on the regatta, approval from the Department of the Environment should be sought first.
That was a clear instruction about the maximum that the DOE expected the MDC to spend or lose. The letter clearly said that if further contributions were required, approval should first be sought. The warning was clear even before approval was sought because the MDC had spent money on the regatta and the concert before it wrote to the DOE seeking permission.
On 12 July 1992, in an estimate of what the two events would cost, the MDC in a handwritten memorandum estimated the loss for the concert to be £187,840. The MDC knew that the event would lose money, yet it proceeded with the concert. It did not cancel it, nor were strict measures taken to mitigate the losses. The MDC carried on with the concert, but in a rather peculiar way. Four days before the concert took place it signed a deal with a private shell company, with a share value of £2, to take over the whole of the financial responsibility for the concert and the regatta.
With the stroke of a pen, the MDC transferred the losses from the public purse to the private purse. That was deplorable. It knew that the events would lose money, so it moved the debt from the public to the private sector. Private business on Merseyside was left £375,819 out of pocket. That is a phenomenal amount of money which the MDC wrote off with the stroke of a pen for an event that was the brainchild of its chairman.
Questions must be asked about the clear lack of supervision by the Department of the Environment. Questions must also be asked about the role of the Merseyside development corporation, which has played fast and loose with public money. From the response by the Treasury to date, it appears that nothing is to be done.
In addition to those losses, the MDC gave away £100,000 worth of tickets. Hospitality was overspent and the whole thing was a complete shambles. However, three and a half years later, not one member of the board has been removed from office and the chairman is still in place. The time has come for action. First, the private sector should have its losses reimbursed. Secondly, disciplinary action should be taken within the MDC so that future activities will be kept within the terms of its charter to oversee the economic regeneration of Merseyside, rather than fall in blindly with the wishes and whims of its chairman to produce glossy brochures about fanfares which prove to be a heavy cost on the taxpayer.
I end with the report entitled, "The Proper Conduct of Public Business", the eighth report of the 1993-94 Session, which draws attention dramatically to the failures identified by the PAC. It states:
"In recent years we have seen and reported on a number of serious failures in administrative and financial systems and controls within departments and other public bodies, which have led to money being wasted or otherwise improperly spent. These failings represent a departure from the standards of public conduct which have mainly been established during the past 140 years. This was the period following the publication of the Northcote and Trevelyan Report".
The PAC has considered 51 reports this year and it is obvious that there are still serious problems with the proper conduct of public business. However, it is not the final tale of the PAC's work over the past 12 months because a number of reports are yet to come before the House. There are to be reports on fraud in the
Column 740Metropolitan police, the royal palaces, the Mount Vernon sale, the sale of county hall and the incompetencies of the Child Support Agency. Those are five major reports that we can look forward to debating in 12 months' time. I hope that there will then be a far better picture of the proper conduct of public business within the United Kingdom.
Mr. Chris Davies (Littleborough and Saddleworth): Thank you, Mr. Deputy Speaker, for giving me this early opportunity to complete the last of the three key initiation rites required to become a fully fledged Member of Parliament. It is almost three months since I passed the first and most important test, when the people of Littleborough and Saddleworth elected me to represent them. I want to begin my speech with a few words about my predecessor, Mr. Geoffrey Dickens. In a parliamentary career spanning 16 years, he became a familiar figure on the Conservative Benches. For 10 of those years, I was his political opponent locally, and, in truth, found that our views rarely coincided--but I always knew that he was not a man to underestimate.
From the moment of his election, Mr. Dickens made his home in the constituency. His total commitment to the area that he represented was never in doubt, and he will long be remembered locally as a Member of Parliament who served his constituents well and as an individual who had the ability to mix comfortably with people from all walks of life and all backgrounds.
Mr. Dickens was literally a larger than life figure. His opinions made him a popular speaker at Conservative party conferences, although they were perhaps not always welcomed by some hon. Members. I understand that, from time to time, the views that he expressed here were heard with amusement, but Geoffrey Dickens possessed a most important virtue--that of being able to tell a joke against himself. It was a characteristic of the man's humanity which was much to be admired.
We should not forget that Mr. Dickens also became known as a leading parliamentary campaigner against the sexual abuse of children, helping to bring the issue to public attention more than a decade ago. His campaign gained support across party lines, and his efforts deserve full and proper public acknowledgement. For seven months, he fought cancer with cheerfulness and courage, and his death robbed his family of a much-loved husband and father, and the House of one of its real characters.
A hard-fought by-election projects a constituency into the spotlight. I am sure that most of my constituents will have been pleased about the way in which their local area was portrayed, as visiting journalists found that their impressions of Oldham and Rochdale, which were perhaps perceived as grim, dark and oppressive places, were proved false, and that the towns and villages of Littleborough and Wardle, Milnrow and New Hey, Shaw and Crompton and Lees and Saddleworth, all proved to have a distinctive character. Far from being dark, grim and oppressive, those places proved cheerful. Journalists discovered that, from a doorstep in almost every part of the constituency, one can see over the rooftops to the south Pennine hills.
My constituency is indeed an attractive area. That fact was brought to the fore by television coverage of the by-election. I admit to nursing a desire to see its further
Column 741enhancement by the removal of the electricity pylons which mutilate some of its finer views and the replacement of the barbed wire fences with restored stone walls, but with up to 10 million people living within an hour's travelling distance of the constituency, and especially the south Pennines, the countryside is fragile and under constant threat from those who seek to use it for commercial advantage.
Activities that were once acceptable when the area was part of the cradle of the industrial revolution are no longer acceptable when the population grows and the open countryside recedes. Those activities must now be curbed.
I cite, for example, the problem of the planned recommencement of quarrying in New Hey, which I strongly believe is no longer an appropriate activity now that traffic density is so much greater and lorries are so much larger. I seek greater protection for the countryside from such developments, and in particular, for our sites of special scientific interest, a topic partly dealt with by the Public Accounts Committee in its 11th report, on which I shall comment later.
Our hills and moorland are beautiful and precious and deserve special protection, but they are bereft of people, and it was the people of Littleborough and Saddleworth who elected me. During the by-election campaign, I spoke out strongly for change, for investment in public services--especially education--for those in politics to be more honest about the problems we face as a society, and for all hon. Members to look more to the long-term needs of our country--and, indeed, of our planet.
The House provides opportunities--many opportunities, perhaps--for individual Members to raise matters of concern on behalf of their constituents. I certainly intend to use those opportunities to the full, but I have long nursed the gravest doubts about whether the institution itself is capable of performing the essential functions that my constituents and others have the right to expect from their legislative assembly.
Parliament should ensure that legislation is sensibly considered and emerges clear and effective, but few of my constituents believe that the chaos of rail privatisation demonstrates for a moment that it succeeds in doing that. Parliament should ensure that it provides real challenges to the policies and practices of public and private sector organisations when that is needed.
Although I greatly admire the work of the PAC and the Select Committees, I fear that they are exposed as toothless tigers in the face of even the slightest Government resistance. Parliament should be able to challenge the Government when Executive power is abused, but that will never be the case so long as the whipping system prevails in the larger parties, and there is no proper separation of powers. My first few days in this place have done nothing to dispel these concerns.
To walk into the inner sanctum of the Members' Dining Room and look up at the pictures of Gladstone and Disraeli is to be reminded that so much of the present House of Commons was moulded in their day; but that day was 120 years ago. Those Prime Ministers in their time were reformers who worked to broaden the franchise. I wonder whether they would be pleased to know that in the last years of the 20th century, the people of Britain still do not possess votes of equal value, and that our democratic system is so flawed that, for 16 years, it has
Column 742kept in place a Government opposed by 57 per cent. of the voters, and denies millions of Liberal Democrat, Green and even true socialist supporters the representation in the House to which their votes should entitle them.
I found from the Library that I am the 68th--only the 68th--person to be elected as a Liberal or Liberal Democrat Member of Parliament since the end of the second world war, yet the votes that my party won at the previous general election alone would have entitled it to more than 100 Members of Parliament under any system that genuinely purported to be democratic. It means, I fear, that the very basis of representation in the House is a sham and a disgrace.
The House of Commons may be a cosy club for those who are here, but radical reform is needed if it is once again to do the job for which it is intended, and to wipe away some of the cynicism with which it is now regarded by the majority of people in this country. As we have heard, however, there is much to admire in the work of the PAC. I am pleased that it has turned its attention to matters such as the protection of sites of special scientific interest. Of the almost 3,800 such sites in England, just four are in Oldham, and one, I understand, in Rochdale, covering the south Pennine moors. They represent the basic minimum area of habitat that needs to be conserved if the range and distribution of plants and animals in this country is to be maintained. It must therefore be a matter of great concern that nearly a quarter of these exceptional areas have been damaged in the past seven years alone. That is on the basis of English Nature's figures, which I think are generally accepted to be an underestimate of the true situation.
Within its limited remit, the PAC report makes some reasonable suggestions. Although I have some doubts about recommendations that, for example, English Nature should be finding ways to reduce the average payment made in return for a management agreement, I generally endorse them. However, surely more consideration should be given to the promotion of positive conservation measures within such agreements, rather than simply paying owners not to cause damage in the first place. I commend to the House the ideas for the protection of SSSIs in the draft wildlife Bill being prepared by Friends of the Earth.
The PAC's 42nd report deals with renewable energy research. The PAC is absolutely right to ask rigorous questions about the way in which public money is being spent, even though the £20 million a year spent on such research is tiny in comparison with the money poured into nuclear research and subsidy for many decades. I fear, however, that the Committee's narrow remit prevents it from taking the wider and longer-term view which should be so essential in energy matters. The basis of our economy continues to rest on the exploitation of finite resources laid down over millions of years. We continue to use that precious asset as though it were infinite, with no attempt in our national accounts to make allowances for depreciation. The present exploitation of our limited gas reserves demonstrates that short-term approach only too well.
The potential for energy conservation in this country is still said to be immense: sufficient to reduce energy consumption by 50 per cent., I am told. Such a programme would conserve the country's resources, generate employment and reduce energy costs. But so long as our finite energy resources continue to be treated
Column 743as infinite, market forces alone will never encourage such investment and energy conservation measures to take place. In recognition of the fact that the protection of our environment and the earth's resources is a duty for all of us in elected positions, many enlightened local authorities are now including environmental impact statements in reports, so that councillors may take account of the full long-term consequences of their actions, which so often fall outside the narrow scope of a local authority's balance sheet. The metropolitan borough of Rochdale is one authority which now conventionally makes use of environmental impact statements. Indeed, the metropolitan borough of Oldham, of which I am still a member, is starting to do the same.
I would feel happier about the PAC's recommendations if its conclusions took account of environmental impact in the same way. I hope that the Committee will consider such a course in future. It would be a step which might well influence its future judgments, and would deserve a warm welcome.
Mr. Alan Williams (Swansea, West): I congratulate the hon. Member for Littleborough and Saddleworth (Mr. Davies) on surviving the ordeal of the maiden speech. Everyone who comes to this House says that it does not matter how experienced one is in public speaking or in broadcasting, making one's first speech in the House is a very intimidating experience. The hon. Gentleman spoke with great clarity and strength of feeling. There is a tradition that one is non-controversial in maiden speeches--and he almost managed it--although I think that it is observed more in comment than in practice.
I congratulate the hon. Member for Littleborough and Saddleworth on the graciousness of his comments about his predecessor, for whom there was great affection in the House. His predecessor was one of the personalities and characters of the House. All of us, especially those of us who are a little longer in the parliamentary tooth than others, would say that it is one of the sadnesses of Parliament that there are fewer personalities today than the history books lead us to believe--perhaps--that there were in the past.
I remember when I had to make my maiden speech--it is relevant to the party of the hon. Member for Littleborough and Saddleworth because I was sitting in its corner of the Chamber--on the first motion of censure of the 1964 Wilson Government. I go back that far, so there is hope yet for the hon. Gentleman since I too won a marginal seat.
The Speaker got in touch with me in the morning, with the kindness that Speakers and Deputy Speakers always show to hon. Members who are about to make their maiden speeches, and said, "I just thought that I would let you know, you will be speaking fourth this afternoon." I said, "Oh really. It is a motion of censure. What does that mean?" I was told that Alec Douglas- Home would open, Harold Wilson would speak second, Jo Grimond would be third and I was fourth. I immediately volunteered to make my maiden speech the following week. However the Speaker of the day was rather adamant about such things, and as I had put in to make my maiden speech, I had to make it.
Column 744In the end I need not have worried. That is not meant in any derogatory way. I sat there listening to the first vicious attack by Alec Douglas-Home on the Wilson Government, followed by Harold Wilson making a rather humorous reply, and became increasingly depressed. But when the Speaker stood up as Harold sat down and called Mr. Jo Grimond, I am sorry to tell the hon. Member for Littleborough and Saddleworth that about 600 Members stood up and walked out. That happened not because there was not great affection for Jo Grimond--there was--and it was not due to lack of respect for him. He was a good questioner and a delightful colleague, but he was not noted for making the most stirring of speeches. So I congratulate the hon. Member for Littleborough and Saddleworth on commanding an audience approximately four times the size that I was able to command on that particular day.
The hon. Member for Littleborough and Saddleworth made an important point when he referred to the need for us to have regard to finite resources and not to treat energy sources as though they are infinite. History will show that the great tragedy of this century, and the great opportunity of the post-war era, was the period of energy plentifulness in the 1980s, which was sadly squandered. Energy cannot be made infinite, but we could have reinvested the surpluses, the profits, the returns to the Exchequer from the North sea, which could have given the country further earning power through a second industrial revolution. None the less, I congratulate the hon. Gentleman and wish him well. I hope that he has many more years in the House and I look forward to hearing him when he is in a more confrontational mood, when I shall remember not to sit too near. I want to make only a couple of main points--I am sorry to depress my hon. Friend the Member for Bristol, South (Ms Primarolo). The hon. Member for Littleborough and Saddleworth referred to Select Committees as being toothless tigers. Most of us would recognise a great deal of truth in that. That is not to underestimate what they have achieved. The innovation of the Select Committee system, based on shadowing individual Departments, is probably one of the most important innovations of the past quarter of a century. They have done a great deal of good work, but the problem for Parliament and members of the Committee is shown by today's debate.
Here we are, with a massed audience in the House and an even fuller Gallery --I am talking of course about the Press Gallery [Laughter.] We are trying to discuss 51 reports in one day. Yet in doing that, we are privileged because the other Select Committees have great difficulty in finding any time in which to consider their reports. The Government are only too happy to put the reports on a shelf and leave them there. So the hon. Member for Littleborough and Saddleworth is quite correct in saying that if parliamentary accountability means anything, we have to consider the next stage for Select Committees to ensure that they have more bite and more power. For the PAC and the House--if I may return to a particular hobby horse: the process of parliamentary accountability--regardless of the rights and wrongs of the development of agencies and trusts, such bodies present a problem in accountability, in that they create increasing numbers of accounting units. There has been a proliferation of accounting units which have to be monitored and audited, on which the NAO may need to
Column 745report, and on which we as members of the PAC have to deliberate. I know that the following viewpoint commands support from just one member of the Committee at this stage--myself. We shall have to consider whether, at some stage, we go down the route of some of the other Select Committees and break down into a Sub-Committee system because inevitably, the Public Accounts Committee is the bottleneck in the whole system. Any Government can create extra accounting units as they wish. The National Audit Office can expand, given the manpower which, in fairness, it has had and the resources it has had, to accommodate those extra accounting units. What cannot expand under the present format is the capacity of the Public Accounts Committee. Hon. Members who have served on the Committee and anyone who has been acquainted with the Committee will confirm that it is extremely hard working. One of the difficulties and joys of the Public Accounts Committee is that unlike other Select Committees which consider the same subject week after week, pursuing it in great depth, we have the problem that on a Monday, we consider something to do with the Department of Health and then on Wednesday, we consider major capital projects in the Ministry of Defence. Sitting as a whole, as we do at the moment, we could not accommodate a larger work load from the National Audit Office. I return, therefore, to my suggestion to my right hon. and hon. Friends that at some time, we must consider whether a Sub- Committee system would be appropriate.
I join in congratulating our Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), on the diplomatic and assiduous way in which he manages to keep the Committee together and to keep the consensus which marks the Committee. That does not mean that we do not have different viewpoints. It does mean that when we produce reports, they are unanimous simply because individuals have made concessions--I am talking about all Committee members--when they disagree with various points and because they regard getting the main report out as the most important objective.
My right hon. Friend the Member for Ashton-under-Lyne has carried out his work in a way that has won admiration from hon. Members on both sides. I also pay tribute to the National Audit Office and to the Clerk--I should say Clerks--of our Committee. I use the plural because we have had several Clerks. The Committee is a good training ground for hon. Members. Indeed, for Opposition Members, it seems to have become almost an essential part of progress towards Front-Bench service. The Public Accounts Committee has become for us what the Whips Office has been, for many years, for the Conservative party. I notice a smirk of pleasure on the face of the hon. Member for Croydon, South (Mr. Ottaway), the Government Whip, in anticipation of the logical consequence of what I have just said about the Conservative Whips Office. The Opposition treat the Public Accounts Committee as somewhere where one can get good experience of how Governments work, how Departments work and how the Committee system works.
One of the most interesting of our reports this year--I shall not deal with it in great depth--is the report on the Trident base. The project was important not only because it was the biggest civil engineering programme, second only to the channel tunnel, in this country, but
Column 746because it was fascinating as a case study of how not to go about managing a capital project. One could hardly find a more perfect example of many errors bundled together.
There was an £800 million overrun on the Trident base. We must be fair to the Ministry of Defence. I am not saying that an overrun is the same as being wasteful and I am not saying that money was squandered or used improperly. The overrun happened because despite the scale of the project, it was devised as it was being built, day by day. Some 7,200 variations were introduced in the design of a ship lift alone. There were as many as 10 variations a day throughout the life of the project. Anyone who has experience of a major construction will know that that is a contractors' paradise because every variation means a renegotiation. In effect, the Ministry of Defence completely lost financial control of the project, and it is worth mentioning for just that reason.
I understand the strategic reasons and we well understand that the Government said that a policy decision was being taken which had to be implemented as quickly as possible. Nevertheless, although the errors may have been made as a result of a desirable objective from the Government's point of view, as they may concede, it is important that we as a House of Commons do not overlook the lessons that, clearly, should be learnt.
With some regret, I now turn to matters Celtic. I am glad to say that despite a rather bad press at times for some of the Welsh quangos, the reality is that almost all the organisations at which we look in the Public Accounts Committee and which have problems are London based rather than based in Wales or in Scotland. We must be careful not to get one or two instances that relate to Wales, to Scotland or to Northern Ireland out of proportion. However, that does not alter the fact that one cannot condone what happened at the Welsh Development Agency.
It is a matter of sadness to anyone who cares for the future of Wales that an agency on which we depend for inward investment and for the strategic development of our economy fell into the hands of people who did not understand the public ethic and who did not necessarily share the civil service attitude towards probity and standards of conduct. We had a fly-by- night period at the Welsh Development Agency and, I am sad to say, one particular individual who was responsible for appointments, from outside politics, made appointments in his own likeness.
Unfortunately, the cutting of corners, which may or may not have been well intentioned, led to the first report on the WDA. Again, we had the gagging clauses, the free cars for private use as well as for business use, redundancy schemes that had never had Treasury approval and did not conform to Treasury rules and, above all, the case of the operation known as Wizard. A group of senior members of the WDA connived at using public funds, through three consultancies, to try to devise a package for management buy-outs--that is really what it was all about--of the most lucrative parts of the WDA. So that the Treasury and the Welsh Office would not know what was going on, the three consultancy projects were spread into different parts of the budget. It was hoped that no one would realise that an attempt was being made to undermine the standing of the WDA.
Column 747Again, it is salutary to realise--we have referred to this before--that even the National Audit Office, for which we all have enormous respect, did not discover Wizard, so well was it buried. We came to know about Wizard only because we were contacted by a couple of whistle-blowers within the Welsh Development Agency who were appalled at what they saw and came to meet three members of the Committee in one of the small Committee Rooms next to the Great Hall to tell us what was going on. The Chairman of the Committee could confirm that, for the first time in a PAC report, we praised people for leaking, and we stated in the report that had it not been for those whistle-blowers, we would not have been aware of what was going on.
I say to the hon. Member for Littleborough and Saddleworth that, while I am aware of the courtesies of the House, he may want to make comments to the press and--I mean this nicely--I do not want him to feel that he has to sit through my tedious speech as a courtesy. The hon. Gentleman should by all means feel free to leave the Chamber, because most of what I shall be talking about will not be familiar to him.
I am sad to say that the Welsh Development Agency reappeared on the scene in another matter when its conduct was utterly unacceptable, as the Treasury itself indicated. There was a virtual conspiracy between one senior member of the Welsh Development Agency and other parties in a joint venture set up with local authorities to promote a property deal in the Aberdare area, and to deliberately try to sink an existing project that was being developed by others in which a great deal of money had been invested.
Prior to the joint venture with the Welsh Development Agency, Tesco had been in discussion with another company called Landare relating to a site elsewhere in the valley. Landare had not only achieved planning permission for the development from the local authority, but had reached an agreement on planning gain in which the council would receive a sports hall and transport facilities as part of the project. But the project needed one more thing. The two councils that owned the property had agreed to sell a narrow strip of land which blocked the access from the site to the main road, as this was crucial to the project.
The joint venture between the Welsh Development Agency and the councils was chaired by a director of the WDA, and the WDA board decided that Tesco would not be allowed to bid for the site which the WDA was developing as part of that joint venture. A deadline was set, and tenders were invited. The tenders were received, and the councils and the joint venture team decided to have further discussions on the final details of the proposals with the bidders. Then, out of the blue, Tesco--which, we understood, had been banned from bidding in the contest--came in with a bid after the final date for bids which, lo and behold, proved to be the highest.
Understandably, the Committee was deeply concerned, and the Chairman pinpointed the fact that Tesco had two representatives on the board of the Welsh Development Agency--the then chairman of the agency, Dr. Jones, was a director of Tesco, while another member of the board still is a director of the company. After the bids had been opened, and when one would have thought that the last financial offer had been received, in came Tesco whose bid won the day. There were delays to allow Tesco to get its bid in, and meetings were postponed to ensure that the company could make its bid.
Column 748We received assurances from Mr. Scholar, the permanent secretary--who, in fairness, was not the permanent secretary at the time this happened--that the two directors of Tesco had declared their interests and had taken no part in the making the decision. But the crucial point was made by the Chairman, who said that although the two gentlemen may have taken no part in the decision-making process, who can say what information was passed from them to other people? The Committee felt, and this was a point with which the Treasury agreed, that such conduct was utterly unacceptable and way below the standards we would expect from a public body.
Having received the bid from Tesco, the parties involved then set out calculatedly to sabotage the other side. In questioning Mr. Scholar, I quoted a minute of a meeting of the joint venture in which a letter from Chestertons, the agents and advisers for the sale of the site, to the Welsh Development Agency was read. The letter said that Chestertons was "facing untimely competition" from an alternative site, and went on to say:
"The scenario outlined above is of great concern as it may prejudice or even possibly prevent the successful disposal of the Gadlys site . . . The answer to this potential problem is to minimise any opportunity for an operator to swap sides. In this particular case . . . this is possible, given that the Joint Venture partners control the access to . . . the alternative site".
The parties involved then tried to ensure that the councils--which had offered to sell to Landare land that was crucial for access--withdrew their offer, which would completely blight that site. The site would then cease to be an attraction to the retailer Landare had in mind, or to anyone else. I am sure that Conservative Members who have not been involved in this matter would admit that if they were being treated in such a manner by a governmental body, they would feel that that body was stepping way beyond its powers. I received at my house one Sunday a copy of a report by Vernon Pugh QC. He said in the report that the Welsh Development Agency was guilty of half truths and untruths, had acted ultra vires and was guilty of serious omissions.
The report by the QC had been delivered to the Welsh Office, but the Welsh Office did not deliver it to the office of my right hon. Friend the Member for Ashton-under-Lyne so that he was aware of it before our hearings. So, with the hearing on Wednesday, there was a ring on the bell at my home in Swansea and, to my surprise, on the doorstep was my predecessor as Member of Parliament for Swansea, West. A Conservative represented the seat until 1964. He was acting for Landare in a professional capacity. He brought me a copy of the QC's document. It was devastating.
What followed was even worse. Not only did the report show that there had been conduct by the WDA which was unacceptable by any standards, but the way in which it was subsequently ignored revealed that there was a wish to pretend that it did not exist. There was a wish to bury it. In fairness, Mr. Hugh Rees, who was a Government Whip from 1959 to 1964 during the Conservative Administration and a former director of the WDA, did not try to embarrass his party. Instead of making a public fuss about the matter, he started writing letters to try to get things dealt with on the basis of sensible discussion.
Mr. Rees wrote to the then permanent secretary at the Welsh Office. The permanent secretary did not write back to him directly, but telephoned and suggested that Mr.
Column 749Rees might see someone from the WDA rather than himself. This Mr. Rees agreed to do. He also wrote to various Ministers, including the then Minister of State, Welsh Office, the right hon. Member for Conwy (Sir W. Roberts), and the then Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood). He also wrote to the Deputy Prime Minister, who was originally a Swansea man. No one really wanted to know. Indeed, the sort of answer that Mr. Rees received was summed up by the brief letter from the Minister of State, which said:
"As you know, the new Chairman of the Welsh Development Agency has looked into the Agency's involvement in the Tir Founder Fields case very carefully. His conclusion is that, while he believes matters might have been handled more tactfully, the complaints made against the Agency are in the main unjustified."
Anyone who read the Pugh report would find it impossible to say that the complaints were unjustified. No Minister has made the slightest attempt to respond to the points that were made in that report. For that reason, I believe that my ex-opponent and his commercial colleagues have a legitimate grievance to air against the Government. I believe that Ministers should answer to the House for the way in which they, rather than behaved, have failed to behave. The last report with which I wish to deal is on the occupied royal palaces. It was inevitable that I would refer to it in view of my special interest in the subject, but I shall be brief. The report is important because it is the first time that Parliament has examined in detail any of the money that is spent on the royal household. I must admit that I could not carry my colleagues on the Committee with me. I wanted to examine the whole £50 million that is spent by the various Departments. I could get agreement to examine only the £25 million that was then being spent on the occupied royal palaces. Even more worthy of examination would be the £20 million that is spent on royal travel. I have had to do a great deal of the work on that myself, through parliamentary questions. The occasion was interesting because Parliament is incredibly sycophantic about matters royal. I do not understand for the life of me why we should apologise for asking why a family which has two palaces of its own needs five palaces of ours. It seems legitimate for me to ask that question. It is appropriate to seek answers as to why five palaces are needed.
It emerged that the palaces were not needed to house the royal family. I question whether we have a duty to house the wider royal family. The palaces were needed for 280 grace-and-favour apartments. We would not quibble about some of the apartments. They are for people working on the estate--the equivalent of a tied cottage. No one begrudges someone such accommodation. However, it is a different matter when it comes to lavish accommodation in Kensington palace and so on, occupied by people who, as I see it--I recognise that this is not the way the Committee necessarily sees it--are protected by the aura of the Crown and the deference which is shown in the House to anything royal. They have escaped for many years the sort of attention that should be paid to the benefits that they enjoy at the taxpayer's expense. I am referring now to the royal civil service--the royal household.
Column 750The Committee called as a witness Mr. Peat, formerly of Peat Marwick. He put up a spirited defence of the grace and favour system. Towards the end of the hearing, the impact of that defence was somewhat diminished when my hon. Friend the Member for Warrington, South (Mr. Hall) was discourteous enough to ask him whether he had a grace- and-favour house. He said that he did not, but he hoped to move into one in a few months.
Mr. Williams: Indeed, he has now moved in. It strikes me as incredible that we should sanguinely accept that more than £250,000 was spent on furnishing, fixtures, fittings and decoration for that one apartment so that someone who already had a house in Battersea could live in Kensington palace. In order to be near his work in Buckingham palace, he had to be housed in Kensington palace. It is the most nonsensical case I have ever heard.
I must be careful not to go into too much detail because we are producing a second report on the matter. What worries me is the obstruction that one comes up against from the Department and from the palace when one simply tries to obtain information. For example, 46 of the senior members of the royal household--not the royal family, but the royal civil service--enjoy lavish accommodation because, or so we were told, it is necessary to facilitate their work and increase their efficiency in carrying out their work for the palace. I ask two simple questions. May we know whether those 46 staff work part time or full time--not exactly a dangerous question--and may we have a job description for each of them? I have been told no--that Parliament is not entitled to that information because those people are paid from the civil list.
We cannot ask even general questions about the civil list, as I know that a Clerk of the House would confirm--such as whether, in the most general sense, the civil list has been exceeded--so we cannot ask detailed questions. The royal household continues to refuse to provide the information that I have asked for about the work that those people do and whether it is full time or part time. Yet there is a flaw in the argument of the royal household, and it should be important to the House. We were told that part of those people's salary is the accommodation. We were told that they cannot be offered the salaries that they might command elsewhere. In evidence we were told that therefore the accommodation makes the job more attractive to them. However, that accommodation is not paid for from the civil list; it is paid for from grant in aid. If it was paid for from grant in aid from the Department of National Heritage, I am entitled-- Parliament is entitled--to know what work those people do and whether they work full time or part time, in order to judge whether the public receive good value for money in allowing them to have that accommodation in addition to the salaries, whatever they may be, that they receive from the civil list.
To the best of my knowledge, unless the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Ashton-under-Lyne, has heard anything since I last discussed the subject, as yet we have had no firm decision as to whether that information will be forthcoming.
In the same way, I found out that, during the five years before the £0.25 million was spent on Mr. Peat's accommodation, the six directors of the royal household
Column 751had £325,000 spent on decorations and furnishing. I am now trying to find out how much they have had since the provision of furnishing and decoration and so on started in 1982. Every obstacle is being placed in the way.
As a member of the Public Accounts Committee, I am horrified at that lack of transparency about matters relating to taxpayers' money. Some of my constituents survive on housing benefit; some must sign away their homes to obtain care in old age. Yet I am not allowed to obtain the information that I need about people who live in the grandest housing benefit scheme that anyone has ever devised. The royal household is not willing to provide us with the information that I want.
I apologise for going on for so long. I apologise especially to the Whip, my hon. Friend the Member for Leeds, East (Mr. Mudie), who I know is deeply concerned that my comments should be as succinct as possible. I hope that, if I voluntarily sit down now, I shall have done my share to facilitate a 10 o'clock Division.