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2.29 pm
Maria Eagle (Liverpool, Garston): I am grateful for an opportunity to speak in this debate. I congratulate the right hon. Member for Haltemprice and Howden (Mr. Davis), who has been the Chairman of the Public Accounts Committee for nearly two years, although it probably feels more like 10. When I spoke in this debate last year, I welcomed him to his job and wished him a long and distinguished tenure. I should like to reiterate that. The right hon. Gentleman's predecessor, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), had an extremely long tenure and he remains one of those
Members who is most respected on issues of public accounts, public spending and holding the Executive to account. If the current incumbent continues in his current vigorous form, I hope that in due course, perhaps after 14 years, he will also be as well respected as my right hon. Friend the Member for Ashton-under-Lyne.
I do not wish to insult the right hon. Member for Haltemprice and Howden gratuitously. I also recognise and welcome the vigour that he has shown in all debates in the House on public accounts. He has also been very active in the devolution debate. In his speech today, he made some valid and thoughtful points on the future of the Public Accounts Committee and on the way in which the National Audit Office and the Comptroller and Auditor General will be able to operate in an environment in which public sector and Government institutional and auditing arrangements change fast. Who would dare to say that the Public Accounts Committee is backward-looking or retrospective in all its activities? The right hon. Member has clearly shown that it is not.
I add my voice to that of the right hon. Member for Haltemprice and Howden in congratulating the Comptroller and Auditor General and his staff at the National Audit Office on their year-round work. Without their efforts and dedication, the Committee could not be anywhere near as effective as it has generally been recognised to be. Undoubtedly, our ability to scrutinise the Executive and to examine public spending would be almost completely destroyed were we not able to count on their efforts.
Over the next few years, the CAG and his staff face a massive increase in their work load. However, there are some concerns about diminished access because of changes in constitutional arrangements, the advent of resource accounting and the necessity of meeting other auditing bodies and new public accounts committees to try to keep a grip on public sector auditing. All those changes will massively increase their work load. I wish them well in coping with it. I hope that they will receive the resources that are necessary to continue contributing towards achieving the public sector savings that can be made using their auditing expertise.
I finish my preliminary thanks by saying that the Committee would be much less effective than it is were it not for its Clerk and his staff. I thank them and congratulate them on the work that they did for us in the previous Session.
I support the Chairman's comments on increasing access to information on public money. I know of no reason why Parliament, the National Audit Office and its auditor, the Comptroller and Auditor General, should not be able to follow public money raised by Parliament regardless of where it is spent. Achieving such tracking would be Committee members' nirvana and is our desired end result. I realise that practical considerations and changing institutional arrangements mean that achieving that goal is not possible, but it is our aspiration. I should welcome any suggestions on increasing access. I believe that the Government have been particularly open to such suggestions.
There is nothing like transparency--or a Public Accounts Committee--to make people wonder whether their spending arrangements and spending supervision are in order. I should therefore welcome any further action taken by the Government to increase access. The
Chairman mentioned the Legal Aid Board and the Housing Corporation. There is no reason why such organisations should not be audited by the Comptroller and Auditor General.
I am happy to be participating in my second annual public accounts debate. Earlier today, while considering what to say in the debate, I wondered why our Committee has an annual debate, as not all Select Committees have that privilege. I suppose that our annual debate demonstrates the Committee's seniority and prestige in the House. It demonstrates also the historical importance of Parliament's role of scrutinising public spending and supply. Our annual debate also gives hon. Members, such as the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), an opportunity to make very detailed, prescient comments on matters such as the Skye bridge. It allows us to examine a specific matter closely, which the House is usually unable to do. That is the value of our annual debate, which I hope will continue.
Our annual debate also reflects the prestige of the Committee and of its work. One role of all Back Benchers, regardless of which party they belong to at a particular time, includes asking questions about how well we hold the Executive to account. When I say "the Executive", I do not mean only Ministers. I realise that many of our constituents think of the Executive as the Government and think of Cabinet Ministers, but one should not--especially when one is a member of the PAC--think of the Government in that way. The Committee deals not with Ministers but with accounting officers; we deal with Whitehall, not Downing street. When I think of the Executive, I tend to picture the "permanent" Executive rather than the "transient" Executive, which is the Government--although our current Government will be less transient than most.
We should consider the effect that the PAC can have on Whitehall. Committee members realise that the civil service and Whitehall accounting officers often feel nervous about appearing before the PAC, as we have often been told that they have such feelings. People are often concerned about having to appear at an evidence-taking session. We often receive feedback saying that we have perhaps been tough on Mr. X or Miss Y, who thought that we were a bit unfair. However, Committee members sometimes have to ask themselves a few uncomfortable questions. How well does the Committee perform? How well do we manage to promote the role of all hon. Members in scrutinising public spending? Are we doing well enough? Are there ways in which we can improve our performance?
The CAG and the PAC are very good at dealing with specific issues, such as fraud and propriety in spending--which are the Committee's bread-and-butter tasks. The Chairman mentioned the report on the Amman embassy scandal. It was scandalous that an official wrongly gave the PAC the assurances that we were given. However, the case demonstrated the fact that Whitehall generally resists dealing with the findings in the PAC's reports. I think that such inaction is not a vast conspiracy to ignore Parliament, but arises from Whitehall's culture of the permanent Executive, as opposed to the transient culture of politicians and Governments.
Whitehall accepts the vast majority of the PAC's recommendations. Therefore, why do some Committee members--I am certainly one of them--think that
Whitehall does not always act on our recommendations? The Amman embassy report provides one example of inaction. I should like briefly to consider why that might be. However, I should first apologise to the Ministry of Defence, because I shall be using it as an example.
As I said, there is a culture of permanence in the civil service. Those who staff its senior ranks generally depend for career advancement not on Ministers, who come and go, but on one another, on the Whitehall network and on conventions on seniority. I should not say it depends on Buggins's turn, although I just did. One gets the feeling that senior civil servants' advancement does not depend on Ministers, which is perhaps a good thing and is often regarded as a strength. It is good that civil servants, including senior civil servants, and advisers can give their advice without fear or favour, but it can also be a weakness.
Civil servants must deal with a different culture and think about a different hierarchy. They have a different way of ensuring that they get on in life, which means that they do not always listen to Ministers or act quickly on the instructions of Ministers, who come and go. Whitehall sticks together and resists attacks from outside. The more senior staff become, the more they depend on one another for advancement.
The right hon. Member for Haltemprice and Howden mentioned the Committee's report this Session on a major Ministry of Defence project. Although I realise that the report is not part of today's motion, it revealed--not for the first time in defence procurement--a startling picture of chronic overspending, very poor control of contracts and lengthening delays in bringing contracts to fruition. It is not a new problem, which has been outlined also in previous reports on major projects. The Ministry of Defence is a chronic overspender and shows chronic poor management. The reports that we have had from it during my time on the Committee suggest that it resists criticism from the PAC. It never seems to improve. Our 51st report, on the MOD appropriation accounts, showed poor day-to-day management.
It should be a matter of shame to have to come before the PAC when accounts have been qualified. That should be avoided at all costs by any self-respecting accounting officer, but the MOD regularly comes before the Committee. It has overspent its appropriation accounts in five of the past 10 years. When there are excess votes, they are from the MOD more often than not. It sometimes even overspends its excess votes.
The 51st report highlighted many significant day-to-day issues, illustrating the fact that the Ministry seems not to have a grip on its spending. One increase in spending that should have required Treasury authority--the decontamination of an MOD site at Waltham Abbey--went ahead without the Ministry following the rules to secure that authority. Another reason for the accounts being qualified was that the MOD was unable to account for the day-to-day payment of its military personnel. Suspense accounts had to be closed because they could not be balanced, resulting in £40 million having to be written off. The new account established as a replacement was out of control within weeks and could not be balanced, leading to another write-off of £19.5 million. Almost every time the MOD comes before the Committee, we see its failure to control its spending.
When we question them, representatives of the Ministry do not like to admit that they have done anything wrong. They tend to resist questioning that suggests that they should be fairly humble and should look for a way to improve. The major projects report--which should not be mentioned in the debate, but I am the second person to refer to it--is illustrative. It quotes some of the criticisms that the PAC made 100 years ago. The complaints that have been made over the past few years are in the same vein. The Ministry believes that it is too important to have to worry too much about controlling its expenditure. It is dealing with the defence of the realm, after all. The Committee is not as effective as we would like. We can congratulate ourselves on being effective in some ways, but we have not managed to change the culture of the MOD and make the civil servants and accounting officers understand that appropriation accounts are not targets to be aimed at, but absolute limits to be kept. As I have tried to illustrate, the problems go wider than just appropriation accounts.
We produced a report on the sale of the married quarters dealing with the amazing phenomenon of a Ministry selling houses for vastly less than they were worth--£77 million to £136 million less than a cautious valuation. There was no competition and they were sold in a job lot to one outfit--Annington Homes, as I recall. They were not properly sold, because the Ministry managed to retain liability not only to repair the properties--imagine selling a house and still having to repair it--but to pay rent on the properties that were vacant but not declared surplus. Having sold the properties, the Ministry took long leases back on them. What is the point of doing that? Even in a big project in which a job lot of houses was sold, the Ministry showed itself unable to consider properly the matter of accounting for public money and ensuring that we get value for it.
I do not want just to be unpleasant to the Ministry of Defence. I want to move to another Department to consider whether Departments learn from their mistakes when faced with a value-for-money report from the NAO and scrutiny from the PAC. Is there an identifiable change in their subsequent behaviour? Do they listen to us, learn and make changes? To illustrate that, I shall consider the NHS executive and its information technology procurement.
I am sorry to hear that my right hon. Friend the Member for Swansea, West (Mr. Williams) cannot speak today. He made the analogy of standing up and walking into a brick wall and asked what would be thought if someone picked themselves up and did it again. Would the casual onlooker think that they were mad or drunk? The NHS executive did that three times on IT procurement with the Wessex health authority, then on the hospital information support systems and, perhaps most notorious of all, on the Read codes.
The report on that was particularly interesting. The issue is of great importance to the future of the NHS. The system will enable medical records and records of treatment to be put on computer--preferably on a common system throughout the NHS. One has only to outline that to realise what a vast undertaking it is and what a difficult job it might be. The codes are ways of classifying particular treatments, outcomes or other items
that should be in health records. They have to be common and everyone who might access the system has to understand it and be able to use it.
The Committee's 62nd report, on the purchase of the Read codes by the NHS executive and the management of the NHS centre for coding and classification which deals with them, is damning. Some £32 million has been spent so far on developing a system about which many of us who examined the evidence are dubious. I do not have confidence that Read version 3 will ever work. It has not yet been implemented. To our knowledge, it has been trialled in 12 NHS units. I have no evidence that version 3 has suddenly spread beyond that into general use. If that happened, it would cost many millions of pounds more to implement across the NHS.
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