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11.18 am

Sir Terence Higgins (Worthing): This is an important, if somewhat esoteric, debate for both the House of Commons and the public at large. I am sure that it is right for the Liaison Committee to use one of its scarce slots on Wednesday mornings to provide the House with the opportunity to debate the issues to which the hon. Member for North Durham (Mr. Radice) referred.

I congratulate the hon. Gentleman on the work of his Committee. He served a long and distinguished apprenticeship as Chairman of the Sub-Committee of the Treasury and Civil Service Select Committee. I agree with him that the new Committee, which he chairs, is making an important contribution. I congratulate also the Minister responsible for public service--also an alumnus of the Select Committee on the Treasury and Civil Service--on the response that the Government have given to the various recommendations in the Committee's reports. I wholeheartedly agree with the hon. Member for North Durham that the resolution that he proposes should be passed during the current Parliament. We should seek to resolve the matter now rather than waiting until the next Parliament, when not all of us will necessarily be here.

This is a difficult subject to "mug up". It has an enormous history, which I shall say something about before taking up one or two of the points made by the hon. Member for North Durham about the Liaison Committee, which I have the honour of chairing. The history to which I refer is largely lost in the mists of time, but the matter came to public attention way back in 1954, on 20 July, when statements were made by the then Home Secretary about the famous Crichel Down case.

The myth grew up that a Minister had resigned--as Ministers ought in such cases--because something had gone wrong in his Department. Although the Minister had known nothing about it, because not he but his officials had been involved, it was nevertheless right for him to resign. As Professor Griffiths and others have amply demonstrated, however, this was a myth: the Minister in fact resigned for an entirely different reason--the fact that he had been involved in a row in the Conservative party's 1922 Committee. When I first arrived in the House, the myth was pretty widespread--and, in some ways, a rather good myth, as it endorsed the idea that Ministers should resign regardless of whether they knew about things if they had a responsibility to know about them.

None the less, the myth was a myth. It was very much to the fore again in 1985-86, when the Treasury and Civil Service Committee decided to look into the question of ministerial accountability. Rather to the Committee's surprise, it had hardly become involved in the issue when the Westland affair developed, and we were inundated with a spate of Committee reports. The Treasury Committee's seventh report, published at the beginning of

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the affair in 1985-86, was followed by a Defence Committee report; there was then a report from the Liaison Committee--the only one, I believe, to deal with a specific subject--and another Treasury Committee report. During all that there were innumerable Government responses, none of them very satisfactory. Important distinctions were made, relating to both ministerial accountability and responsibility and the position of officials--the distinction between officials' conduct and their actions.

Much of the report to which the hon. Member for North Durham referred is concerned not only with ministerial accountability and responsibility but with the position of officials. I believe that, following what I can only describe as the negotiations that have taken place between the Public Service Committee and the Minister, we have reached something of a modus vivendi with regard to officials. One question has been largely resolved: if the conduct of an official is in question, the Government, as employer, are responsible for their employees and for ensuring that they too are accountable to the House, through the Minister. I am glad about that, because the issue is not easy. I believe that the distinction that has been made is now perfectly workable.

The Public Service Committee recently published a report, which was followed by a Government response and then a response to that from the Committee. While that was going on, the new Osmotherly rules were published, which was something of an advance in that the position was rationalised. Paragraph 18 of the Public Service Committee's first report deals with accountability in Select Committees, a subject that concerns me as Chairman of the Liaison Committee. It recommends that the Liaison Committee should

a point on which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) may wish to comment--and adds:

    "Although the Liaison Committee may be unable to undertake a full-scale inquiry in the little time that remains before the dissolution, we welcome the steps it has taken to assemble information".

I do not wish to breach Select Committee confidentiality, but it is well known that normally--although not invariably--the Liaison Committee produces an end-of-Parliament report, and I hope that it will be able to do so on this occasion.

I am a little doubtful about the Public Service Committee's broad recommendation that we should look into the operation of the whole Select Committee system. It is true that there was an inquiry by the Procedure Committee back in 1990, but an appraisal of how clever we have been may lead to a feeling that we are judge and jury in our own cause, and such an investigation should probably be carried out by someone else. I hope, however, that we can take up the issues raised by the Public Service Committee, and that--although I must not prejudge what will happen--the individual reports that normally form an appendix to the Liaison Committee's report will provide a firmer basis for an examination of the way in which the Select Committee system can be improved. I hope that that will be done before the end of the current Parliament, and will provide a guide for the future development of the Select Committee in the next one.

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There is always a problem of continuity, not least because we have no mechanism to ensure that Select Committees are established without the delays that we have seen in the last three Parliaments. As I shall not be able to perform such a role, I hope that a group of existing Chairmen, returning in the next Parliament, will press strongly for such a development. I also hope that a system can be devised to deal with each of the issues raised by the Public Service Committee--for instance, the question of the NAO and the accountability of agencies.

These are deep waters. It is difficult to discuss such issues on one's feet, rather than writing about them in a report. I congratulate the hon. Member for North Durham on the way in which he has spelt them out. I believe that, although more work remains to be done, we have made considerable progress on the question of officials' accountability and, to a greater extent, that of ministerial accountability.

I look forward to hearing the Minister's response. I hope that, despite the divisions that may exist between, say, the Liberal party and other parties on the precise content of the resolution, it will be tabled before the House rises for the general election. We want to get it out of the way and firmly on the record, so that, whatever the result of the election, the House will have made real progress on an important matter.

Select Committees now play a fundamental role in the responsibility of Ministers to the House. As we all know, in party debates across the Floor of the House it is very difficult to pin down a Minister; at Question time the subject changes from moment to moment, and there are very few supplementary questions. That is not the same ball game as appearing before a Select Committee on an all-party basis, a process that can go on for two hours or more. It is important for us to get the whole of that side of it right, and I believe that the progress made in the succession of Select Committee reports and Government responses gives us hope that matters will be improved in the future.

11.28 am

Mr. Robert Sheldon (Ashton-under-Lyne): It is a great privilege to follow the right hon. Member for Worthing (Sir. T. Higgins). His tenure as Chairman of the Liaison Committee provides a model for his successors, and we look forward to his principles being copied throughout the next Parliament. I am concerned with the notions of ministerial accountability, and I am delighted that my hon. Friend the Member for North Durham (Mr. Radice) has introduced this matter, because it needs to be settled, at least to some degree, before the end of this Parliament.

Accounting officers, usually the permanent secretaries, come before us in the Public Accounts Committee. Sometimes they provide notes of dissent to the PAC. We had a notable case in the Pergau dam affair. The permanent secretary put in his note of dissent--I believe that it is called a letter of direction now--saying that he disagreed with the expenditure of public money. A total of £234 million was spent on the basis of a two-day visit to Malaysia to see the dam site. That was clearly inadequate. It was discovered by the PAC only because the National Audit Office had investigated the matter. If it had not, it would not have been discovered.

When I gave evidence to the Nolan committee, I said that I had requested that all notes of dissent should come to the PAC. That was finally agreed only days before

12 Feb 1997 : Column 280

I gave evidence to the Nolan committee, so now I get those notes of dissent via the NAO and receiving them is of great importance. Quite a few have come to my attention.

My hon. Friend the Member for North Durham dealt with the relationship between the Department and agencies. That relationship varies widely. We have one extreme example. Sir Michael Partridge, the permanent secretary to the Department of Social Security, came before the PAC on a number of occasions to deal with the Benefits Agency, whose head was Michael Bichard, a person of great standing and great ability; yet Sir Michael Partridge dealt with all the questions--it was as though it had not become an executive agency.

The Committee was happy with Sir Michael doing that, because he obviously knew exactly what he was talking about. He had all the details at his finger tips. That is the normal position, although one would not expect it to be, so there are variations between the relationship between such executive agencies and the Department. I am not against a certain amount of flexibility, but perhaps it would be better, as my hon. Friend the Member for North Durham rightly points out, if some of this were set out.

There are serious gaps in accountability, particularly in non-departmental public bodies, and I pay tribute to my right hon. Friend the Member for Bishop Auckland (Mr. Foster) for the way in which he has reacted, which follows on from the arguments that some of us have been putting forward. He spelled it out in much greater detail, which I welcome. Non-departmental public bodies, or quangos as they are generally called, now spend about £17 billion of public funds each year. The Comptroller and Auditor General audits only half of the 300 quangos which fall into that category. The rest are audited by private firms appointed by Secretaries of State and include bodies with substantial sums of money, such as the Housing Corporation and the Legal Aid Board, which each spend more than £1 billion a year.

Where the CAG audits such bodies, there is obviously open accountability because reports are produced, which come before the PAC. The CAG reports to Parliament. We know that his independence is guaranteed. By contrast, private firms are appointed by Departments and report primarily to them. It is a matter for the Department whether the audit covers matters that are of particular interest to Parliament and the PAC, such as propriety in particular and the proper conduct of public business, which has concerned the PAC for a long time.

I and the right hon. Member for Horsham(Sir P. Hordern), the Chairman of Public Accounts Commission, recommended that the CAG should audit such bodies and we produced a memorandum to that effect. Up to now, the Government have not agreed to that recommendation. We need to have the general principle accepted that important national public bodies should be audited by the CAG. That could be done by his appointment to all new quangos, as well as to existing ones, whenever their statutes come up for renewal. We therefore hope that there can be a move in that direction, as my right hon. Friend the Member for Bishop Auckland has suggested.

As for other bodies, accountability systems of housing associations, grant-maintained schools as well as training and enterprise councils have developed piecemeal without proper scrutiny of public funds and something needs to

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be done to ensure that there is proper accountability there in the way that we wish. Lord Nolan saw great merit in the CAG being granted inspection rights over all public expenditure. As I have said, in a memorandum to the Government, the right hon. Member for Horsham and I recommended that that could best be provided by attaching conditions to any public funding.

Up to now, the Government have not agreed to that recommendation. They consider that the independent status of bodies such as housing associations is important. In the past, however, Parliament has recognised the need for the CAG to have access to independent bodies and legislation does provide for him to have access to grant-maintained schools, universities and institutions of further and higher education. The NAO's work in the education sector is supported by the Public Accounts Committee, but we need greater assurance that bodies within such sectors spend public funds entrusted to them efficiently and properly.

On contractors--people who undertake work for Government Departments and other bodies--we need to provide Parliament with an assurance that Government Department business in private hands has been conducted with probity and proper care of public money. The NAO needs to be able to scrutinise records held by private contractors. There is nothing revolutionary in that, because at present the European Court of Auditors has such rights of access. Where European money is involved, it can go to those contractors and see the records, but the NAO, acting on our behalf, does not have the same right. That is absurd, and the right hon. Member for Horsham and I put the memorandum to Government asking for the NAO to have that right.

I look forward to hearing the response to my right hon. Friend the Member for Bishop Auckland, who I know agrees with many of my arguments. I hope that, following the next election, we shall see a move in this direction, to the benefit of accountability in government generally.

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