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3.23 pm
Mr. Charles Wardle (Bexhill and Battle): It is clear from what has been said in the debate that there is agreement among hon. Members on both sides of the House that both the volume and incisive quality of the National Audit Office case load that is served up to the Committee by its excellent Committee Clerk are formidable. So is the chairmanship of the Committee by my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). Not one of us on the Committee failed to find himself on the receiving end of a little yellow piece of paper when we were in danger of over-running our allotted time. On that paper were the words, "One minute", so it was fun this afternoon to return the compliment in kind to the Chairman.
It would be worth drawing the House's attention to a wide range of subjects, but I should like to make some general comments first and then to focus on a few specific reports.
My first comment has already been headlined by the Committee Chairman and others, and I make no apology for repeating it for emphasis. There is a continuing pressing requirement for an extension of the Comptroller and Auditor General's remit to allow him access for audit purposes to sectors of public expenditure that he cannot currently examine.
If he is to be fully effective in his responsibilities and to present a complete picture of how taxpayers' money is being spent, the CAG needs not only access to non-departmental public bodies that are audited by private firms which are appointed by the relevant Secretary of State, but access, without hindrance or hassle, to private companies that take on work that is contracted out by central Government and paid for by the taxpayer.
The CAG should be able to pursue his investigations in local spending bodies, public sector companies, recipients of Government and EU grants, housing associations and many other such organisations. It should be a standard condition of all Government contracts that the CAG has the right to inspect the contractor's books where he considers it necessary.
My second observation is about the ability of the Public Accounts Committee to question consultants or professional advisers, along with the relevant accounting officer, when taking evidence. I believe that several Committee colleagues would agree that we could have done a better job probing where the use of public funds may have gone awry if we had been able to question such consultants.
I understand that merchant bank advisers or consultants may appear before the Committee in the near future. I hope that the Minister, whom I congratulate on her appointment to the Treasury, will agree that it could improve accountability if we could vet some of the consultants and advisers.
My third general observation is a small, but, I hope, constructive criticism about appropriation accounts. All too often, the format of those accounts is anything but user friendly to anyone but professional accountants and a few officials in the know. As they are public documents, it would be helpful if the accounts were presented in a less obscure fashion.
My fourth observation is a word of praise for the chief accountancy adviser to the Treasury and his resource accounting team. That has been touched on by the Chairman and others today, but it is worth emphasising.
The Committee's 67th report provides detailed evidence from the chief accountancy adviser of the basis on which financial management in Whitehall can be modernised. I hope that the House will keep in mind the key advantages that the Treasury plans to deliver when Whitehall switches to resource accounting. I am delighted that the Government are continuing the work on resource accounting that was begun by the previous Government.
There should be better management information about costs and assets, greater scope to control working capital and cash flow, a chance to focus on outputs as well as inputs and a more switched-on approach to financial control systems. That should empower middle-management ranks in the civil service as well as senior officials if it is used properly.
The hon. Member for Liverpool, Garston (Maria Eagle) spoke about Whitehall culture being difficult to change. If there is one initiative that will bring about welcome changes in the Whitehall management culture, it is resource accounting. It will enable the Government of the day to allocate resources in the public expenditure round more rationally if they so choose.
It is sometimes said that some members of the Committee, myself included, are readier to criticise witnesses than to praise them. I hope that my praise for the resource accounting team shows that credit is given where credit is due. I am sure that colleagues would agree that there have been other instances during the previous Session when witnesses have been warmly commended. Her Majesty's Coastguard is one example that comes to mind. However, it has to be said that the preponderance of NAO reports that are considered by the Committee draw attention to cock-ups, confusion, inaction and inefficiency. It is right that we should give vent to our criticism where it is intended to be constructive.
The Committee report that leaps out for attention and is highly topical, bearing in mind this week's debate in Strasbourg, is the 35th report, which is on the 1996 annual report of the European Court of Auditors. I could not find a Treasury minute responding to that report, but this
week's protests from Members of the European Parliament, although they proved to be in vain today, rightly put Jacques Santer and his commissioners in the dock for many of the same reasons that prompted the Committee to condemn the EC's hopelessly inept and corrupt financial performance in the previous year. For several years, the Court of Auditors has been unable to provide a positive assurance on the legality and regularity of Community payments. The Public Accounts Committee endorsed the damning verdict from the Comptroller and Auditor General that the European Commission still has a long way to go before it attains the quality of financial reporting expected as the norm for Government accounts in this country.
The Committee expressed concern about, among other things, the high level of unnecessary expenditure resulting from the failure of common agriculture policy regulations to take account of movements in world market prices. It was also worried that the systems for ensuring that recovery of customs duties payable to the European Commission did not operate effectively, and about the high level of errors and delays in structural fund payments.
In short, the Committee drew attention to a complete shambles at the Commission. Although total expenditure in 1996 was a relatively modest £57 billion, the House cannot ignore the Commission's transparent ambition, following hard on the introduction of the single currency and European monetary union, first to harmonise EU taxation and then to ensure that the greater part of taxation is raised at the federal centre rather than within member states. Therefore, it is fundamentally important that we make known such criticisms of the administration in Brussels.
Sometimes the European sickness of chronic maladministration, highlighted this week in Strasbourg, affects the United Kingdom directly. The Committee's 52nd report revealed that the Intervention Board Agency, which accounts to Parliament for the £4.2 billion gross cost of implementing CAP measures in this country, could not reconcile transactions of £30 million on its accounts, and that it had spent almost £11 million--a figure that beggars belief--on consultants in a failed attempt to balance its books. However, no one at the agency felt the need to resign to atone for those shortcomings.
The 33rd report, into the Crown Prosecution Service, revealed a similar determination on the part of its then director to shrug off responsibility for the failure to establish a computer system to keep track of cases across the service. In spite of a virtuoso performance of self-advocacy before the Committee, the director lost her job shortly afterwards. I do not think that that was down to the Committee directly, but at least there was some action in that case.
No such fate befell the permanent secretary at the Foreign Office or his director of resources, who feature in the 34th report. Unfortunately for them, as we heard earlier, they had to explain away a horror story involving a false payments scam at the British embassy in Amman, Jordan. That was barely a year after the permanent secretary's predecessor had blandly assured the Committee that financial controls in Amman were all hunky-dory, even though the embassy had been taken for an embarrassing ride in connection with bogus pension payments. I do not think that anyone ever got to the bottom of that scam.
The Committee hearing with the accounting officer from the Foreign and Commonwealth Office, Sir John Kerr, attracted some defensive letters to the press from old FCO hands, but those letters made their authors sound fearfully old fashioned. I am pleased to say that a video of the session in which the Committee took evidence from the permanent secretary--I nearly said of its interrogation of him--is now used as a case study by the Civil Service College.
I should add that, to his credit, Sir John Kerr--for whom I have the highest personal regard--has sought to rid the Foreign Office of its previous rather haughty indifference to the need for professional financial management by appointing a squad of qualified accountants and young executive types with masters degrees in business administration. They have replaced the amateur generalists who, after two weeks' training, were traditionally put in charge of the books. I am sure that those changes are to be welcomed. They will help remind our diplomats that, although they do an absolutely excellent job for the United Kingdom abroad, they incur an expense for taxpayers whenever they represent our country.
The 43rd report showed that the taxpayer was treated much more shabbily, both in the scale of the rip-off and in terms of barefaced greed, by the privatisation of Belfast international airport. In a management buy-out, a team of civil servants were able to pay £32.7 million for the airport. Just two years later, they sold it at a profit of £74 million, with no clawback for the taxpayer. As I said in Committee at the time, I am all for people getting rich through hard work, but the group gained more than £3 million a month during its brief ownership of the airport. That was a cynical exercise in profiteering, over which there were scarcely any checks. Given the rather terse official response to the Committee's criticisms of that case, I am sorry to say that it was difficult to judge whether lessons essential to the taxpayer's future wellbeing had been learned.
Finally, I turn to the 37th report on contingent liabilities in the dependent territories. The Foreign Office's responsibilities for governance, disaster preparedness, risk management and financial controls are diverse, and it cannot be easy to maintain improvements. However, the most pressing concern is drug trafficking. The Committee was told that 30 per cent. of the cocaine reaching the UK comes via the Caribbean. The United Nations estimates that 400 tonnes of cocaine destined for the United States and Europe transits the Caribbean.
The Foreign Office, with the help of the National Criminal Intelligence Service, and two Royal Navy frigates, is helping the five Caribbean dependent territories to resist drug trafficking but, ominously, Sir John Kerr told the Committee that the fight against drugs is taken less seriously in some independent Caribbean countries than in the dependent territories.
Among the former British colonies and protectorates in the Caribbean, Belize--formerly British Honduras--became especially vulnerable to drugs transhipment after the British defence forces withdrew in 1994. As other countries in the region have begun to tighten their efforts against narcotics, there is no doubt that traffickers exploit
Belize, which is a convenient back door to the cocaine route to the United States via Mexico, Jamaica or the Cayman Islands.
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