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6.34 pm

Mr. David Davis (Haltemprice and Howden): I, too, praise the agencies that the ISC oversees. They have done a great deal in the past to defend the country's freedoms and civil rights, and, no doubt, will have to do the same job equally effectively in the future.

I did not intend to comment specifically on the committee's work, but I want to respond to what was said by the Chairman of the Home Affairs Committee. I have considerable respect for him, but in this instance I think that he is wrong. I was one of the Ministers who brought the committee into being when the Bill that became the 1994 Act was going through its stages, I have been a customer of the agencies in the past, as a Minister, and--somewhat unusually--I have even appeared before the Committee. I can testify that it was not a comfortable or an easy process, but a process that demonstrated that the Committee was after the truth, and, in the widest sense, concerned with the country's interests.

I am very much in favour of what has happened so far. I compliment the Committee on its operations and, in particular, the effectiveness of its Chairman, my right hon.

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Friend the Member for Bridgwater (Mr. King), during its first four years. I support the arguments put by my right hon. Friend and the Committee's members, including the right hon. Member for Berwick-upon-Tweed (Mr. Beith), recommending the committee's development through its investigative capability. I feel that such progress would have no down side and a considerable up side, and would add to a public confidence that is already well established.

What I want to say is narrow in scope. It relates principally to points raised about the National Audit Office and its actions in support of the Committee. As such, it will be dull in comparison with the Hollywood, not to say James Bond, references of the Foreign Secretary--although, by the standards of the auditing profession, it will be unbearably exciting.

On page 10 of its report, in paragraph 21, the Committee says:

That, although accurate, gives a slightly unfair impression. The financial audit of what are, effectively, the public accounts of the agencies dates back only to 1995, and it is the financial audit that often provides the understanding, insight and, indeed, intelligence to make a good value-for-money exercise possible. It takes a little while for that to develop. There is also a problem of limitations on capacity to which I shall return shortly.

On page 11, in paragraph 23, the Committee says--and I wholeheartedly agree--that

the National Audit Office--

    "of material items of expenditure";

and that

    "the arrangements for the disclosure of information by SIS, approved by the Foreign and Commonwealth Secretary, should be brought as far as possible into line with those of the Security Service, specifically in providing for the C&AG to be given the reasons for any refusal to provide him with information".

I consider that a wise proposal. Although it is pretty technical at this stage, because there has been no such occurrence, it will be useful in the future.

In the same paragraph, the committee states that

The Government accepted that, and I agree entirely with their proposal. As my right hon. Friend the Member for Bridgwater has said, we have had informal discussions on the matter.

We should not, however, have too high expectations of value-for-money studies. In intelligence and security matters, value for money is no magic wand. Normally, it depends on a determination of whether the maximum value has been obtained for the minimum cost. That means that we have to assess the value of what is produced. The "value" half of the equation is difficult to assess with intelligence and security. It is rather like research and development. Once, when I worked in that sector, I was told that some hits justify a lot of misses. The same rule applies here.

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What is more, the value of the information, even with a hit, is difficult to assess--even more difficult than in commerce. Take the example even of the apparently hard technical data that the agencies sometimes bring up. We know--certainly my right hon. Friend the Member for Bridgwater will know from previous experience--that, on occasion, we can demonstrate the saving of hundreds, even thousands, of lives in wars in living memory; so clearly value has been obtained there, value beyond price, but with narrow exceptions, even that sort of technical data depends on information about intentions or deployment.

I pose a hypothetical example to demonstrate my case. Let us imagine that the agencies find that a foreign power has a nuclear, biological or chemical missile system that is capable of attacking a British city. If we determine that there is an intention to use or to deploy it as a threat, that information is invaluable--again, valuable beyond price because it will save thousands or millions of lives--but if there is no intention to deploy or no clash of interest, it is interesting to us, but of little national value.

In these days of military stretch, decisions on soft data are necessary. We cannot make decisions that take into account every possible risk; we know that already. Also, in these days of international uncertainty, those decisions are, by definition, difficult and it may be impossible to demonstrate whether they are right for several decades afterwards.

Today, we could probably make a decent assessment of the intelligence gathered in the 1970s through to the early 1980s. I am not sure that we could make a proper assessment now of intelligence that was gathered between, let us say, 1985 and 1995, so it is difficult to assess the value of the information that we get. It is even more problematic in those areas--this happens quite commonly with the agencies--where soft data are used in judgments in conjunction with much other public data, or much other data obtained by normal means. That means that, for the National Audit Office's actions to help the Committee, value-for-money studies will tend to focus on cost control, on coming to the conclusion that we have obtained whatever it was that we wanted at the minimum possible cost, with no wastage; the very point that the Chairman of the Home Affairs Committee has made.

I have discussed this with the Comptroller and Auditor General. There are appropriate value-for-money studies that might deliver some useful information for the Committee--the House will understand if I do not elaborate on them--but I say as an aside that my right hon. Friend the Member for Bridgwater pointed out some of the problems that some agencies in other countries have had with excessive bureaucracy: a sort of sclerosis of the agencies involved. I would be wary of trying to second-guess absolutely everything that is done because we might then destroy the flair of the agencies.

Mr. Campbell-Savours: The right hon. Gentleman has an important role in these matters. It may be that a productive intelligence can be secured at a fraction of the cost simply by looking at open sources. The question that we have to ask ourselves is: how can we be absolutely

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sure that, in securing that intelligence, the cheapest means of securing it has been used? That is very much a matter for the National Audit Office.

Mr. Davis: I absolutely agree; that was my point about obtaining the intelligence at minimum cost. It is what I refer as to as the Mossad rule. The previous head of Mossad once commented that he was not going to spend Israeli taxpayers' money or risk the lives of his agents on obtaining things that were on the front page of Al-Ahram, the Arab newspaper. It is a well-taken point, but my point is that that is not strictly a value-for money exercise; it is a cost-effectiveness exercise.

There is one other area of value for money that might deliver significantly more than what I have discussed already: comparison with other allied services abroad. That would require international agreement, but I could think of three or four other services that might be interested. However, such an idea, if it were possible--and I do not know whether it is--would require a separately financed exercise.

I say that because it is not the entire National Audit Office that is engaged in this process. By definition, this is a process that uses a small cadre of the NAO--those who are cleared to the level necessary. To extend that cadre would be expensive and would need funding.

In this assessment process, the tasking of the agencies is important. Crisp, clear tasking leads to sharp and effective operational management and facilitates after-the-event evaluation. Soft or tardy tasking makes it harder, and occasionally impossible, for the agencies to act.

The Liberal Democrat spokesman referred to the Falkland Islands war. I refer the House to paragraph 311 of the Franks report, which points out only too clearly that late tasking created problems for the intelligence assessment there--as it turned out, the tasking change was too late because it was only six months before the operation.

Effective and clear tasking allows good management. It also makes it possible to devise and measure cost-effective delivery--the very point that the hon. Member for Workington (Mr. Campbell-Savours) raised--in which process the NAO will play its part in helping the agencies and the Committee to do their job: to protect this nation and defeat the enemies of the realm.

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