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Mr. Letwin: After the hors d'oeuvre of the previous debate, we now come to the main meal, the central feature of all our arguments over the Bill so far. New clause 1 has been moved, in the irenic spirit of compromise, to make the Government change their mind. We have been joined in that endeavour by Liberal Democrat Members. I hope that we shall garner support also from those members of the Public Accounts Committee who are present. If the Government do not accept the new clause, I am confident that, in due course, we shall garner support from many in another place, from all parties.
When the Economic Secretary studies new clause 1, she will see that it has gone a long way to accommodate the valid points that she made in Committee. I hope that she will accept it. If she does not, I fear that the Government will be in the bizarre position of having to employ the Parliament Acts to force through a measure to achieve stable and transparent Government accounting that should be based on consensus.
The new clause has attracted cross-party support in both Houses of Parliament. All hon. Members, of all parties, agree that transparent resource accounting should be implemented as quickly as possible, so it would be extraordinary if the Government had to railroad through the Bill as drafted because they were unwilling to accept an amendment that has commanded such cross-party support.
Conservative Members, in conjunction with Liberal Democrat Members and members of the Public Accounts Committee, first signalled our concern about the matter addressed by new clause 1 on Second Reading. The Economic Secretary will know that we made very clear our unease that the Bill provides that the Treasury, rather than some independent body, should determine the definitions governing all the accounts set up by the Bill.
Our attempt to draw attention to that matter on Second Reading can be found at column 581 of Hansard of 6 December. In repeated debates, we tried to draw the attention of the Standing Committee to the need for an independent body. At that time, we suggested a particular form for that body, to which we remain marginally attached. It is the form of independent body specified in new clause 1(2)(c), to which I shall turn in a moment.
However, our main purpose in all the debates on this matter, on Second Reading and in Committee, was not to establish some deep-seated preference for the form of independent body that we were recommending--an independently formed national accounts commission. Our purpose, rather, was to bring to Ministers' attention the inherent conflict of interest in the public policy sense between a Government who are seeking, inevitably, to satisfy an electorate and are bound to present themselves, quite legitimately, in the best light possible, and their need under the Bill as drafted--without new clause 1--to be the monitor of the accounting standards against which their performance as a Government will, in part, be judged. We argued with irrefutable logic that there was a public policy conflict of interest for the Government to set the standards, accounting for themselves, according to their own standards, when they had the proper, democratic incentive to present themselves in the most favourable light.
I say that our logic was irrefutable because I had the opportunity, in preparation for this stage of our debate, to read the Committee proceedings in which that point came up day after day. I do not think that the Economic Secretary can deny that there was an occasion on which she even took that argument head on. She said many things; she said some true things. Yet she never said anything that suggested that she had an argument against the fundamental proposition--shared, as I repeat, between my right hon. and hon. Friends, Liberal Democrat Members and members of the Public Accounts Committee--that there was a conflict of interest.
Perhaps tonight we will, for the first time, hear a genuinely reasoned argument from the hon. Lady that refutes our fundamental proposition. Perhaps we will hear why the conflict of interest that we see does not exist, but I doubt it. I do not think that such an argument can exist, because our fundamental proposition is unambiguously true. However, I am prepared to be proved wrong on that point.
If there is no argument against that proposition, and if there is a conflict of interest, how is it best addressed and will addressing it carry a penalty greater than any benefit to be derived? The Economic Secretary did not make that argument in Committee either. She did not say that she accepted that there was a conflict of interest and that that was a problem about working in a democracy. She did not say that she accepted that there was a deficiency in the proposals, whose cost in public policy terms would outweigh the advantage of addressing the conflict of interest. That would have been a reasonable structure for an argument. I do not feel so confident that we could have defeated it as I do that we could defeat any argument purporting to show that there was no conflict of interest. However, as I say, the Economic Secretary never put that argument either. I do not know what her argument would be; perhaps we will hear it tonight. I hope that if she refuses to accept new clause 1 tonight, we will hear her reasons. It would be by far the most powerful way in which she could justify such an attitude.
I doubt whether we will hear that argument tonight, because if it can be heard tonight, it could have been heard in Committee. If there is an identified cost in public policy terms to addressing this conflict of interest, it surely would have been identified in the many months that have passed while the Government have been considering these matters.
Resource accounting is not, after all, a newborn babe. It was first conceived four or five years ago. My right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) knows better than I when the previous Government first began to discuss it.
Mr. Letwin:
My right hon. Friend says six years, from a sedentary position. I should have thought that in six years, whatever the public policy cost of addressing this conflict of interest, it would have been identified. If it had been identified, given the merciless grilling that, to my shame, we gave the Economic Secretary in Committee, I think that she would have told us what that cost was and would have put her argument in those terms.
I think that the Economic Secretary will probably not tell us this evening that there is no conflict of interest of the kind that we assert, or that there is one but the cost of addressing it is too great. I do not think that we shall hear either argument. What, then, could be the hon. Lady's argument for not addressing the problem addressed in new clause 1?
Mr. Edward Davey:
May I caution the hon. Gentleman not to be too hard on the Minister? She said in Committee to the right hon. Member for Swansea, West (Mr. Williams):
Mr. Letwin:
The hon. Gentleman has spotted something which, in my perusal of the Committee proceedings, I overlooked. I am delighted that he did not. As the Minister promised to think about this, I may well be proved wrong and she will have thought sufficiently either to accept the compromise or to come up with one of the two arguments that I described. I remain slightly sceptical about the latter possibility. I attach my hopes to the former possibility--that the Minister has thought sufficiently to accept the compromise in new clause 1.
We discovered in Committee that it is profitable to eliminate arguments in advance--at least, those that are not good. Therefore, I want to eliminate a third argument that the Economic Secretary might be tempted to bring up this evening if she intended to refuse to accept new clause 1. She might argue what she half began to argue, I now see, in Committee--that somehow or other it is impossibly inflexible for the Government if there is to be an external setter of the standards and definitions in the accounts. I say that she half began to argue that because what she argued in Committee was that by and large the Government were going to apply the standards set up by the accounting standards body. She pointed on several occasions to the long lists that had been prepared by the Treasury on her behalf, indicating the particular reporting standards that were going to be applied that had derived from the accounting standards body.
The hon. Lady's line of argument was that those would be applied and there would be a few exceptional cases in which it would be necessary--she talked of necessity rather than desirability--to adapt the accounting standards of the accounting standards body, derived as they are for the private sector, when applying them to the public sector. I hope that I am not travestying her remarks by saying that that was the only argument that she used for supposing that it was not necessary or desirable to have an independent body set the standards. Taken at face value, that is no argument at all. The fact that there are only a few occasions on which it may be necessary to depart from the accounting standards body's reporting standards does not imply that it is not worth having an independent body deciding on which occasions it is necessary to depart from the accounting standards and on which it is neither necessary nor desirable to depart from them. There is no implication from one to the other. So the Economic Secretary's sole argument was no argument at all.
To be generous to the hon. Lady, as I have tried to be, I think that she was trying to get at the idea that it would be insufficiently flexible for the Government if the Treasury was not in a position to determine for itself these few occasions on which it was necessary to depart from the accounting standards body's standards.
I am promising to continue to think about the matter. . .--[Official Report, Standing Committee A, 11 January 2000; c. 65.]
Perhaps the hon. Gentleman will reflect on that. Does he think that the Minister, having promised to continue to think about the matter, is in a position not to advance arguments against new clause 1 but to accept it?
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