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Mr. Clifton-Brown: I wonder whether I might put to my hon. Friend a suggestion that will cause ripples
throughout Whitehall. Does he think that an accounting officer who has been in charge of such a gross financial mismanagement ought to be subject to no further preferment?
Mr. Page: I would not want to fire such an Exocet until I was thoroughly satisfied that the situation was completely and utterly in the hands of that particular accounting officer. There may have been the beneficial and guiding hand of a Minister behind him which has prevented certain things from happening. Tempting as my hon. Friend's suggestion might be, I would want to make sure that we were targeting a genuine wrongdoer, rather than someone who has been put into a set of circumstances that may not be completely of his own doing.
There have been times when senior civil servants have admitted that mistakes have been made. The Committee had the classic example this year of a serious case in the British embassy in Amman. Having been reassured by the former permanent under-secretary of state at the Foreign Office that new, tighter proceedings would mean that such a thing could never happen again, within a short time we had a second example of embezzlement, which caused a great many red faces in the Department.
I shall draw my remarks to a close, although the wealth of material is such that one could filibuster about the PAC and its activities for hours on end. However, I wish to touch on the various references to the situation within the EU at the moment, the discussions about fraud and the problem, which is occupying the headlines, of the hundreds of millions of pounds that have been misappropriated. I find it most peculiar that the European Parliament can elect Commissioners one by one, but can sack them only en bloc. That seems to me to be a crazy situation. Surely the Parliament should be able to direct its fire on one or two particular Commissioners if they seem to be failing in their particular tasks.
The Committee Chairman mentioned the need for an EU anti-fraud squad, and I should be more than happy to endorse that. However, it does not go far enough, and more is needed. The European Court of Auditors signs off the accounts and points out if there has been a fraud, but it goes no further. It does not have a value-for-money aspect. Our National Audit Office, and our forms of government accounting, took a step forward in 1983 when we introduced value for money and the examination of the three criteria of economy, effectiveness and efficiency. Since then, we have seen how the Government can spend money in a more effective way, which benefits the taxpayer.
The one slight collusion between myself and my right hon. Friend the Member for Haltemprice and Howden is to ask whether we should recommend that we go over to Brussels and visit the European Court of Auditors to talk to people. That would do two things--first, we could give them some of the benefit of our experiences, and secondly, we could learn about some of their problems, which would help us, in turn, to see that we, as a nation, spend EU money more effectively.
I believe that the Committee has worked hard and diligently through the year, and I have no doubt that it will have plenty to do in the year to come.
3.9 pm
Jane Griffiths (Reading, East):
Thank you, Mr. Deputy Speaker, for allowing me to speak in this first debate on our new Thursdays. I join others in paying tribute to the Chairman of the Committee, the Clerk and all his staff, and pay particular tribute to the Chairman for the way in which he has guided and helped us all over the past year and more.
Yesterday, during a debate initiated by my hon. Friend the Member for Thurrock (Mr. Mackinlay) on Select Committee reform, requests were made for more time for debates on reports of Select Committees on the Floor of the House. A number of speakers emphasised the importance of such debates to scrutiny of the Executive. That makes me all the more pleased to speak in today's debate.
In my short speech, I shall concentrate on two reports: the 61st, "Getting Value for Money in Privatisations", and the 27th, "Measures to Combat Housing Benefit Fraud". My hon. Friend the Member for Liverpool, Garston (Maria Eagle), both here and in the Committee, has used the "banging your head against a wall" analogy, and that is certainly my experience as a member of the Committee. One learns that banging one's head against the wall hurts, and that not doing so does not hurt; the problem is getting others to understand that, and to stop banging their heads--and, inevitably, ours--against the wall.
That brings me to the 61st report, which identified a number of key lessons to be learnt in the selling of public assets. The Government welcomed that in a Treasury minute, and it is to be hoped that we and they learn from past experience when it comes to the sale of shares in the Commonwealth Development Corporation, National Air Traffic Services and Belfast port. Otherwise, the public will lose out.
Billions of pounds of public money were lost as a result of the failure to follow the PAC's recommendations in regard to selling shares in stages. That has already been mentioned today. In 1986 and 1987, the Department of Trade and Industry and the Department of Transport sold British Airways and the British Airports Authority. When the PAC reviewed the sale in 1987-88, it recommended that Departments should consider the phased sale by tranche that was used successfully in the sale of British Aerospace and Associated British Ports. As we have seen, the Government did not learn that lesson. In 1990, the DTI sold the regional electricity companies. Reviewing those sales in 1992-93, the Committee regretted that a phased sale had not been undertaken. I am not discussing the merits or otherwise of privatisation, because that is not the Committee's brief; I am talking about the effects of it.
It seemed that someone had learned that banging one's head against a wall hurts. In 1991, only 60 per cent. of PowerGen and National Power was sold by the DTI. In 1996-97, the report on the sale of the remaining 40 per cent., which had taken place in 1995, revealed that an additional £2.3 billion had been realised because not all the shares had been sold in 1991. Some lessons have been learnt; but a National Audit Office report published on 16 December last year, which the Committee has yet to consider, reveals that the sale of Railtrack in May 1996 would have raised an extra £600 million if 20 per cent. of the shares had been retained and sold later. We all know that the sale of Railtrack was governed by more than the concept of raising
money. It is likely that the taxpayer lost millions if not billions of pounds, because other factors were involved--but perhaps that is more head-banging.
How are Departments to be induced, encouraged or instructed to learn the lessons, and to implement the findings that the PAC worked so hard to obtain? The Treasury minute in response to the 61st report says:
I agree with my Conservative colleagues on the Committee that, all too often, the official appearing before it had nothing to do with the process that is being reviewed. If a checklist were introduced and could be monitored, it would be possible to ensure that guidance had been followed; otherwise, we would want to know the reason why. That should minimise the wasting of public money.
In the 27th report, on measures to combat housing benefit fraud, the issue was examined for the second time in seven years. It was revealed that more than £900 million had been lost as a result of fraud. The Department of Social Security was not even able to show whether fraud was on the increase, and could not provide all the information that was needed about types of fraud, including landlord fraud, and about variations at regional and local level. That essential information simply was not available. The absence of such reliable information should cast doubt on decisions made by the Department to invest in anti-fraud work. If it did not have the information that it needed, how could it be sure that its investment was targeted correctly?
The Government have committed themselves to reducing fraud in public finances. That commitment is intended to produce a welfare state that is fit for the new millennium that we shall enter in less than 12 months. An important part of the fight to reduce poverty and welfare dependency is the battle against fraud, which is founded on three principles. The first is fairness, and the restoration of public confidence in a social security system that ensures that benefits go to those who need them rather than those who seek to profit at the expense of the needy. The second is responsibility: fraud is anti-social, and that is contrary to responsible citizenship. Government assistance to the drive against fraud is the right expression of responsible citizenship. The third is honesty--ensuring public confidence in a social security system that deals effectively with those who act dishonestly.
The PAC has a crucial role to play in all that. Admittedly, it will involve taking a backward look, but the information is there, because of the work of the National Audit Office. The Committee can also seek and receive assurances that past mistakes and bad practice will not be repeated.
What we have not secured, over many years, is a cast-iron guarantee of the implementation of those assurances. Officials come and go, and it seems that, if a
new official does not do what the last one recommended, there are few sanctions, and there is little opportunity for the Government to act.
The Social Security Administration (Fraud) Act 1997 was a big step, perhaps the biggest that any Government have taken in the fight to reduce housing benefit fraud. I am sure that all members of the Committee, and other hon. Members, welcome the strong new powers given to the DSS and local authorities to tackle such fraud. The PAC rightly noted that those who design benefit systems
Like other Committee members, I welcome the establishment of the benefit fraud inspectorate, and its aim to drive up standards in anti-fraud work by inspecting individual local authorities. I am not aware of any local authority that has been inspected that regards the process as anything but helpful. It is right and proper that, following inspectorate action, all local authorities are required to provide the Secretary of State with action plans.
It is also right that, if the Secretary of State considers that a local authority has failed to respond sufficiently to the inspectorate's recommendations, or has failed to carry out its action plan, he or she can decide to issue directions to that authority. If that authority does not respond to the directions, there are powers to impose subsidy sanctions, or, in extreme cases, compulsory outsourcing of benefit delivery services--I think that that is privatisation. In addition, both the inspectorate's sharing of lessons that have been learnt in its inspection with other authorities and the exchange of good practices can only be helpful in the fight against housing benefit fraud.
In October, the Government statistical service published the results from the 1997-98 national housing benefit accuracy review. Although the report was welcome, the results made gloomy reading. The main findings were that, on average, 16 per cent. of housing benefit claimants receive incorrect payments; that includes both under and over-payments. The cost of that to the taxpayer is £840 million a year.
There are several ways in which that £840 million a year is lost--official error, claimant error, mildly suspected fraud, strongly suspected fraud--and that is only the money lost that we know about. Prevention is the key to cutting benefit fraud.
I am pleased to note that 85 local authorities are improving the standard of initial evidence that is gathered at the start of housing benefit claims--it seems self-evident that, if a claim looks dodgy, officers should not go any further with it--through the new verification framework. It is also welcome that £200,000 of Government money is being used to pilot a new initiative where local authorities will, for the first time, I believe, be able to use Department of Social Security solicitors to prosecute housing benefit fraudsters.
The commitment to put in place training from April 1999 to improve the skills of fraud investigators is welcome, but--here is another warning from the Public Accounts Committee:
"The Treasury will ensure that the lessons set out in this report are drawn to the attention of all departments involved in sales and reflected in guidance for departments."
That is good, but how do we ensure that the guidance is followed? I suggest to my hon. Friend the Minister that, as well as guidance for Departments, there should be a checklist outlining the procedure that should be followed when a sale is made, and the issues that should be considered at each stage. That would allow future sales to be audited better. Departments would have to provide evidence that they had considered all relevant matters at each stage, and give reasons for decisions that were made.
"have to strike the right balance between addressing different needs equitably and fairly on the one hand and simplicity and security on the other. However, the present system does not find the right balance."
The Government are undertaking a fundamental review of housing benefit and its relationship to housing policy. I urge Ministers to note document HC 164 1997/98--also called "Measures to Combat Housing Benefit Fraud"--and the subsequent 27th report of the PAC as part of the process.
"Fear of detection can be an effective deterrent against committing fraud, but only if it is backed up by sufficient prosecutions and effective penalties. Yet the level of prosecutions by local authorities is incredibly low, at under 1 per cent. of detected frauds, and suspected fraudsters have a 99 per cent. chance of getting off Scot free."
It is like saying, "Mr. Fraudster, come here. There is a coffer of public money for you. Just take what you want." Can my right hon. Friends on the Treasury Bench assure me that the Government are willing to commit the resources that are necessary to ensure that 99 per cent. of fraudsters do not get off scot free?
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