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Mr. Davey: As we argued in the Standing Committee that established the independence of the Bank of England, the great advantage of an independent body is that its moves are transparent and public. Through that transparency and openness, accountability is improved. The problem that we seek to resolve by establishing an independent body is that the Treasury is often not accountable for its actions on matters such as setting accounts, because it is opaque: it does not report properly to Parliament about what it does. One finds out years down the line, if at all.
Accountability can be exercised in a meaningful way only if those who make the decisions are forced to publish their decisions. Because the independent body would be a separate body, and would have to publish its recommendations and make it clear to Parliament and to the public what it wanted the Government to do, accountability would be increased.
Mr. Stevenson:
I am grateful to the hon. Gentleman for giving way again. Even with his assistance, I am a little more confused than when I asked the question. Is not his response to my intervention a criticism of the procedures of the House, rather than an exposition of the principle of which he and the hon. Member for West Dorset (Mr. Letwin) have been trying to convince the House? Is it not more important for us to consider the procedures of the House to achieve accountability, rather than setting up a separate body that is not accountable at all?
Mr. Davey:
I am grateful to the hon. Gentleman for his comments. The cause of reforming the procedures of the House is dear to my heart. My hon. Friends and I tabled an amendment which unfortunately was not selected--for good reasons, no doubt--to set up what we called a resource estimates commission to report on the procedures of the House when it considered the Budget and to make recommendations for improving those procedures.
The Select Committee on Procedure, of which I used to be a member, made recommendations along those lines. It proposed an estimates office to provide hon. Members
with the information that they would need to scrutinise the Budget properly. I entirely agree with the hon. Gentleman on that point.
My criticism was not of the procedures of the House, but of the way in which Whitehall works. Often Whitehall is not open and does not tell Parliament what it is doing in the people's name and with the people's money. Unless we can be reassured about the accounting standards and the framework to which it must adhere and on which it must report to the independent National Audit Office, there will always be a suspicion in the minds of hon. Members and of the public that some skulduggery has occurred. It is that perception that is the problem.
Mr. Cash:
The amendment refers to the functions assigned to the body by the Bill. Those are not specified in subsequent amendments--perhaps the relevant amendments were not selected. That could be redressed in the other place if the matter is taken forward. Accountability and its relation to the functions of the independent body is another matter. Perhaps the body would be similar to the Audit Commission. To a certain extent, I share the view of the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) that the matter could be refined in future debates.
Mr. Davey:
I would be worried if it were refined in the way in which the hon. Member for Stoke-on-Trent, South suggests. As I said earlier, the hon. Gentleman and his colleagues rightly gave the Bank of England independence to set interest rates. He supported that. That step improved accountability for monetary policy because it set a clear, publicly set goal for the independent Bank of England to undertake monetary operations on a daily basis and to try to hit the inflation target.
The Monetary Policy Committee's actions are recorded in minutes. The Governor of the Bank of England appeared before the Treasury Committee today. My colleagues and I asked the Governor, the Deputy Governor and other members of the Monetary Policy Committee questions that held them to account. That structure has massively improved accountability in the way in which monetary policy is made. A similar framework for setting accounting standards would likewise improve accountability. There has never been accountability for setting standards for Government accounts. To my knowledge, there has never been a debate in the House about the directions that the Treasury gives Departments.
Mr. Stevenson:
I do not wish to be a nuisance, but I am sure that the hon. Gentleman wants to help me to solve my dilemma. He refers to the Monetary Policy Committee, but I am not sure whether we are comparing like with like. The House sets the terms of reference for the Monetary Policy Committee. If I understand the arguments for the independent body correctly, however, it will change the accounting principles if it believes that that is right, and will be accountable to no one. Surely there is a big difference.
Mr. Davey:
I do not accept the hon. Gentleman's view. The House is considering a Bill that would establish the framework for the independent body, which will therefore always remain accountable to the House and be subject to the Select Committee procedure. Just as the Monetary
Mr. Flight:
There is a close analogy between the independence of the Bank of England in setting interest rates and the subject of our debate. The Government acknowledged the impossible conflict of interest that arises when Governments fix interest rates, and weighed the short-term advantage of elections against the long-term advantage. The Chancellor made his decision to escape that conflict of interest, which is analogous to that which exists when Governments determine their accounting policies.
Mr. Davey:
The hon. Gentleman is right. When we debated the matter in Committee, I made that comparison. I also made an analogy with the BBC. There is cross-party consensus that politicians should not have their fingers on the BBC's broadcasting policies and approach. It would be improper. The Government's approach must be at arm's length.
Some public policy functions, for example, public broadcasting, setting interest rates, and setting accountancy standards for the public sector are so important that we must be reassured that they are removed from the party political debate.
The amendment gives the Government a wide choice of bodies that they could select to be the independent body. In Standing Committee, the Minister seemed to go down the route of preferring the Accounting Standards Board. She said that the Government
The ASB already has a sub-committee, the public sector and not-for-profit committee, which looks at many of these issues. Its remit is not as wide as would be required by the sort of body we are talking about in the new clause, but its existence shows that the Accounting Standards Board has already considered some of these issues, and has some expertise and skills in this area. Members of the ASB have sat on the Financial Reporting
Advisory Board. If the Minister believes that we need a single standard-setting body, the ASB is probably the sensible one to choose.
Other opinions have been expressed, both here and outside. The Chartered Institute of Public Finance and Accountancy, in a report entitled "Setting Accounting Standards for the Public Services" a few years ago, thought that the sub-committee of the ASB was still too narrow, and favoured a totally new body, which it called the Public Services Accounting Advisory Board. However, it was not quite advisory in the way the name suggests, as CIPFA proposed that there should be a requirement on statutory bodies to follow the board's recommendations. Therefore, I believe that "advisory board" was an inappropriate title for CIPFA's suggested model.
The point is that there are many views about the sorts of bodies that could take on this role, both natural evolutions from the ASB and other bodies that already exist, such as the Financial Reporting Advisory Board. Therefore, the Government have plenty of bodies that they could turn to. They have to give us good reasons, as the hon. Member for West Dorset argued, for not going down this road. They failed to do so in Committee, which was a shame.
do not believe that a separate standard-setting body is needed, not least if it implies a body that will be in competition with the Accounting Standards Board. The Government are content to follow the standards issued or approved by the ASB, which already apply to all private and many public sector bodies.--[Official Report, Standing Committee A, 11 January 2000; c. 60.]
The Minister was right. I wish she would be prepared to extend the remit of the ASB and give it the independence for which we are arguing in the new clause, which is a vehicle that would enable her to do that.
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