TREASURY COMMITTEE
(FORMERLY THE TREASURY AND CIVIL SERVICE COMMITTEE) 1992-97
Report by Mr Barry
Legg, Chairman of the Committee
Introduction
1. The Treasury Committee
was nominated in July 1992 with the same terms of reference as
its predecessor Committee, namely to examine the expenditure,
administration and policy of the Treasury and the Office of Public
Service and Science (but excluding the Office of Science and Technology
and the drafting of bills by the Parliamentary Counsel Office),
the Board of Customs and Excise and the Board of the Inland Revenue,
and similar matters within the responsibilities of the Secretary
of State for Northern Ireland. The Committee is one of the four
departmental select committees with power to appoint a sub-committee.
2. The Committee's terms
of reference were subsequently modified first, coinciding with
the appointment of the Northern Ireland Affairs Committee, by
the removal of its responsibilities in relation to Northern Ireland,
and secondly, from the beginning of the 1995-96 Session, by the
transfer of responsibility for matters relating to the Civil Service
to the new Public Service Committee.
3. The staff of the Committee
comprises two Clerks, one of whom is also Clerk of the Sub-Committee,
a Senior Executive Officer, two specialist assistants, a Secretary
and shared support staff. The Committee has also appointed a
substantial body of specialist advisers, who are remunerated on
a per diem and expenses basis, see paragraph 8 below.
Work of the Committee
The main Committee
4. As in previous Parliaments,
the Committee has alternated its regular inquiries into the Budget
and the Autumn, subsequently Summer, Economic Statement[148]
with inquiries into specific subjects. Some of these have been
responses to particular issues such as the UK's withdrawal from
the ERM on Wednesday 16 September 1992[149]
or the collapse of Barings Bank[150];
others have looked at more general subjects such as the Private
Finance Initiative[151]
and the Prognosis for the Implementation of Stage Three of Economic
and Monetary Union.[152]
5. A significant change
in the character of the Committee's work occurred at the beginning
of the Parliament following the transfer of most responsibilities
for financial services regulation from the Department of Trade
and Industry to the Treasury.[153]
This has had a profound effect on the nature of the Committee's
work and on the balance of time devoted to budgetary and non-budgetary
matters respectively. By the start of the 1993-94 Session the
Committee had embarked on a demanding programme of hearings on
different aspects of financial services regulation - both in areas
covered by the 1986 Financial Services Act and those, such as
banking and Lloyd's of London, which were not so covered - subsequently
producing Reports on Retail Financial Services,[154]
the Building Society Sector,[155]
Self-Regulation at Lloyd's of London,[156]
and the Regulation of Financial Services in the U.K.[157]
For perhaps the first time, the Treasury Committee became the
focus of sustained interest-group pressure - particularly from
groups representing the disaffected victims of "mis-selling"
in the mortgage, pensions and insurance industries and the spokesmen
of the Lloyd's Names. As a result the Committee's role has become
more akin to that of other departmental committees, working in
a much wider public framework than hitherto. It is likely that
the regulation of financial services will continue to form a substantial
part of the Committee's work in the future.
The Sub-Committee
6. By convention the Sub-Committee
has always been chaired by a Member of the Opposition. At the
beginning of this Parliament, the Sub-Committee was given the
task of considering the need for further evidence on, and the
Committee's response to, the Bingham Report on the Collapse of
the Bank of Credit and Commerce International (BCCI).[158]
After completion of that inquiry[159]
and the discharge of the Sub-Committee, a new Sub-Committee was
appointed to consider civil and public service matters.[160]
The Sub-Committee conducted a long inquiry which culminated in
the Committee's Fifth Report of 1993-94 on The Role of the Civil
Service.[161]
The Sub-Committee has not met since the transfer to the Public
Service Committee at the beginning of the 1995-96 Session of responsibility
for matters relating to the civil service.
Work-load of the Committee
and use of spcialist advisers
7. The addition of the regulation
of financial services to the Committee's already substantial responsibilities
resulted in a significant increase in its workload. The Committee
and Sub-Committee together held an average of 54 meetings in each
of the first four sessions of the 1992-97 Parliament, compared
with an average of 37 meetings in the first four sessions of the
previous Parliament.
8. Specialist advisers have
continued to play a useful part in the work of the Committee.
A panel of specialist advisers has assisted the Committee on
budgetary matters since it was first set up and has contributed
written and, until the 1996-97 session, oral evidence to each
Budget inquiry. In the present session, however, the Committee
decided to take oral evidence instead from a panel of expert witnesses.
The Committee has also exercised its power to appoint specialist
advisers for specific inquiries. A full list of advisers is published
in the annual Sessional Returns.
Specific Budgetary and accounting
role
9. As noted above, the Committee
takes evidence and reports on every Budget. This places considerable
demands on Members, with five sessions of oral evidence being
taken within a period of ten working days, requiring everyone
concerned to absorb a great deal of information in a very short
time. A Report is produced in time for the Committee's findings
to be used by Members in the debate on the second reading of the
Finance Bill.[162]
The Committee's latest Report on the Budget[163]
graphically illustrated the tight timetable within which the Committee
sometimes has to operate, being agreed on the afternoon of 13
January and published at ten pm that evening in time for the debate
on the Finance Bill the following day.
10. The Committee is also
entrusted, jointly with the Public Accounts Committee, on behalf
of the House, with the task of commenting on and approving substantive
changes in the form of the Estimates.[164]
In 1994 the Committee produced an initial Report on the Government's
proposals for the simplification of the Supply Estimates.[165]
In the light of the Committee's recommendations, the Government
agreed to defer a decision about the introduction of the new-style
Estimates for a year and to use that time to allow detailed consultations
between Departments and committees to take place. In our subsequent
Report on Simplified Estimates and Resource Accounting we acknowledged
the wholly cooperative manner in which the exercise had been conducted
by the Treasury officials concerned.[166]
We were pleased to acknowledge in our latest Report on Resource
Accounting and Budgeting[167]
that this cooperation and process of genuine consultation have
continued.
11. In our Report on the
Simplified Estimates and Resource Accounting we recommended that
"the oversight and approval of accounting standards for central
government should be conducted independently of HM Treasury."[168]
We therefore welcomed the Government's decision to establish
the Financial Reporting Advisory Board (FRAB) as a means of introducing
"an independent element into the process of setting financial
reporting standards for Government."[169]
We also noted the importance of ensuring that Parliament was
kept fully informed of the progress in implementing resource accounting
and budgeting and recommended, as an initial step, that a Member
of Parliament be nominated to attend meetings of the Board as
an observer.[170]
We are pleased to record that the Government accepted that recommendation
and also agreed to take into account our wish that this status
should be extended to full membership at the time of the review
of the operation of the Board.[171]
Attendance of Members as witnesses
and production of confidential papers
12. The Committee has encountered
no difficulties in arranging for witnesses, including Members
of both Houses, to give evidence. With the exception of information
about the Private Finance Initiative in relation to the Treasury
Building, on which negotiations are still in progress, and some
documents whose disclosure would, in the Bank of England's view,
have breached the confidentiality provisions of the Banking Act
1987, no significant problems have been encountered in obtaining
confidential papers. The Sub-Committee, however, did encounter
a difficulty in relation to its wish to commission an attitude
survey of civil servants to be carried out on a confidential basis
by a professional opinion survey organisation. The proposal was
endorsed by the main Committee but the "Government declined
to agree to the proposal". The circumstances were set out
in a Special Report to the House.[172]
No further action was taken.
Debates on Committee Reports
13. On fourteen occasions
Reports or Minutes of Evidence have been tagged as relevant to
debates in the House. Subjects have included the second readings
of various Finance Bills and the Bank of England (Amendment) Bill
and debates on the Civil Service, the Private Finance Initiative
and financial services regulation. Up to seven members of the
Committee spoke in the second reading debates and even in the
debates which were limited to 1½ or 3 hours between two and
six members were called to speak. This illustrates the contribution
which their specialised knowledge enables members of select committees
to make to proceedings in the House.
Government Responses
14. No problems have been
encountered by the Committee in this Parliament with the timing
of Government responses, although not all the responses have been
equally helpful. Following the Government's response to the Report
on Self-Regulation at Lloyd's of London,[173]
which the Committee felt, in some areas, suggested "apparent
complacency", we took additional evidence from the Minister
for Trade and published a further short Report.[174]
15. It has been the Committee's
usual practice to publish Government responses as Special Reports.
One disadvantage of this system, however, is that responses cannot
be published without a prior meeting of the Committee. The publication
of any response received during a recess might thus be delayed.
The practice of publishing Government responses as Special Reports
can also give the impression that a Committee is satisfied with
a response rather than merely making the response public as quickly
as possible. At present Government responses are published in
a variety of ways: it might be for the convenience of the House
if in a future Parliament a system of special House of Commons
printing numbers was to be introduced, allocated in sequence,
for Government responses to Select Committee Reports. The Government
could then lay the response itself, after agreeing the timing
with the Committee concerned.
Other issues
Scrutiny of Supervisory and
Regulatory Bodies
16. The Committee has maintained
its interest in the operation of bodies such as the Bank of England,
the Securities and Investment Board, the Securities and Futures
Authority, the Personal Investment Authority, the Investment Management
Regulatory Organisation, etc, and has taken both written and oral
evidence from them during this Parliament.[175]
17. In its inquiry into
the Role of the Bank of England, the Committee took evidence from
the Governor-designate and Deputy Governor-designate of the Bank.[176]
This was a useful exercise and one which the Committee may wish
to repeat in the future when senior appointments are made to the
bodies in which it has an interest.
Nomination of Committees
18. It was not until some
three months after the 1992 election that the Treasury and other
departmental select committees were nominated. In view of the
continuing responsibilities of committees and the backlog of correspondence
and inquiries which inevitably builds-up while they are awaiting
reappointment, we hope that the delay in setting up departmental
committees after the next election will be kept to an irreducible
minimum.
148 The first Summer Economic Statement was published in June 1994. Before that date, Statements were published in the Autumn. Back
149 First Report, The 1992 Autumn Statement and the Conduct of Economic Policy, HC (1992-93) 201. Back
150 First Report, Barings Bank and International Regulation, HC (Session 1996-97) 65. Back
151 Sixth Report, HC (1995-96) 146. Back
152 Eighth Report, HC (1995-96) 283. Back
153 Transfer of Functions (Financial Services) Order 1992 (SI,1992, No 1315). Back
154 Fourth Report, HC (1993-94) 236. Back
155 Second Report, HC (1994-95) 26. Back
156 Fifth Report, HC (1994-95) 187. Back
157 Sixth Report, HC (1994-95) 332. Back
158 Minutes of Proceedings, HC (1992-93) 976, p 6. Back
159 Second Report, HC (1992-93) 250. Back
160 Minutes of Proceedings, HC (1992-93) 976, p 13. Back
161 HC (1993-94) 27. Back
162 See, for example, HC Debs, 14 January 1997. Back
163 Third Report, HC (1996-97) 129. Back
164 Erskine May (21st Edition), p 696. Back
165 Third Report, The Form of the Estimates, HC (1993-94) 192. Back
166 Fourth Report, HC (1994-95) 212. Back
167 Second Report, HC (1996-97) 186. Back
168 Op. cit., para 32. Back
169 Fifth Report, Resource Accounting and Budgeting in Government: The Financial Reporting Advisory Board, HC (1995-96) 309, para. 14. Back
170 Op. cit., para 23. Back
171 Fifth Special Report, HC (1995-96) 685. Mr Tim Smith MP was appointed to attend the meetings of FRAB as an observer on 21 May 1996.
Back
172 Fourth Special Report, Proposed Attitude Survey of the Civil Service, HC (1993-94) 460. Back
173 Fifth Special Report, HC (Session 1994-95) 745. Back
174 Fourth Report, Financial Services Regulation: Self-Regulation at Lloyd's of London, HC (1995-96) 223, para 2. Back
175 See, eg, Sixth Report, The Regulation of Financial Services in the U.K., HC (1994-95) 332; First Report, Barings Bank and International Regulation, HC (1996-97) 65. Back
176 First Report, HC (1993-94) 98-II, Evidence pp 22-37. Back
