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Mr. Tyrie: I certainly think that there would be theoretical grounds for judicial review, but I would not be happy to leave that to the courts and drop the new clause. I would rather include it in the Bill.
Mr. Cash: Under the new clause, my point--which takes us back to the point made by the hon. Member for Stoke-on-Trent, South (Mr. Stevenson)--also applies. The independent body's activities could be subject to judicial review. I am not certain, but I believe that the superior jurisdiction--which could give rise to an action in the High Court initially and subsequently in the European Court of Justice--may apply, given that those provisions fall in the general remit of economic and monetary union.
Mr. Deputy Speaker: Order. The hon. Gentleman's intervention is far too long.
9.45 pm
Mr. Tyrie: Again, I could not possibly answer the question, but it is well asked because the possibility of judicial review of the independent body itself could have significant implications.
My hon. Friend mentioned the EU budget in his speech. It had not crossed my mind until this evening that the Bill's scope might stretch as wide as the EU budget. Does the Bill's scope in any way influence the requirements for scrutiny of EU spending in the UK? That is an interesting question, and I should be grateful for an answer from the Minister.
My hon. Friend asked whether accounting fiddles that might take place in the absence of new clause 1 could be used to meet the terms of the Maastricht treaty. The answer must be no, because the European central bank, in conjunction with the Commission, sets its own definitions and accounting standards for meeting the terms of the treaty. I cannot think of any circumstances in which those standards would not apply, and meeting the terms of Maastricht will therefore be dependent on those, and not on resource accounting standards.
Miss Kirkbride:
Will my hon. Friend give way?
It is true, however--I shall not dwell on this point--that Italy and Germany in particular managed to fiddle their terms of entry. Whether or not the terms of the Bill applied would be scarcely relevant in trying to work out what damage could be done in respect of the Maastricht treaty.
Miss Kirkbride:
My hon. Friend has made the point that I was about to make. Why does he suggest that the EU would impose standards that could not be contravened when we know that when countries were seeking to meet their Maastricht convergence criteria, they fiddled their books? What gives him confidence that everything will be all right?
Mr. Tyrie:
The answer is simply that Governments will have to satisfy not only their accounting standards but the standards of the ECB, so whatever their domestic arrangements are, those standards will not, at least in principle, be relevant. However, I shall not dwell on that point.
Mr. Deputy Speaker:
Order. I am pleased to hear that the hon. Gentleman will not dwell on that--he read my thoughts.
Mr. Tyrie:
I should like to pick up on one point--
Mr. Cash:
Will my hon. Friend give way?
Mr. Tyrie:
I think that I had better not.
Mr. Cash:
My hon. Friend has mentioned a number of points that I made.
Mr. Tyrie:
Well, in that case, I will give way.
Mr. Cash:
In the context of new clause 1 and the argument that my hon. Friend has just been making, for independent body, read also Court of Auditors.
Mr. Tyrie:
I shall not pursue that intervention because I foresee all sorts of trouble if I do so.
I shall move on to an equally interesting point made by the hon. Member for Stoke-on-Trent, South (Mr. Stevenson). He asked whether the independent body would be able to move the goalposts without any political scrutiny. That is a concern about new clause 1 which had not crossed my mind. The hon. Member for Kingston and Surbiton (Mr. Davey) did not give the hon. Gentleman a full answer on that point. There are two possible answers. One is that it would be possible for the Government to include a clause in the Bill to enable the Treasury, with a good deal of public scrutiny, to override the independent body.
Mr. Stevenson:
In view of the hon. Gentleman's reputation and expertise, his last remarks are significant. Is he saying that the independent body would have to have some override from the Treasury to ensure that it acted in the public interest on all occasions?
Mr. Tyrie:
There is an override clause in the Bank of England Act 1998, for example. I am not sure whether it is a good idea, but no one is suggesting now, after some
I do not, however, favour the override route. An alternative route would be to make the independent body accountable to a Committee of the House--probably the Public Accounts Committee--and for the PAC to scrutinise an annual report from the independent body on its work.
Mr. Letwin:
I assure my hon. Friend, and, through him, the Minister, that if the Government introduced either of those possibilities, provided that in the first case that the override was sufficiently transparent and difficult to achieve, and that in the second case the scrutiny was properly conducted, it would be entirely acceptable to the Opposition.
Mr. Tyrie:
I am glad that, while sitting in the Chamber, I have been able to think of two answers to what I thought was an interesting point from the hon. Member for Stoke-on-Trent, South.
I want to get on with my speech, rather than dealing with interventions. The first point with which I said I would deal was the relationship between getting good numbers and making sure that the public were aware that they were good and that there was public confidence in the numbers. That is the main purpose of new clause 1.
I am not sure that resource accounting is worth having without new clause 1 or a similar measure. The benefits of resource accounting include better information about what is going on. We have heard from several speakers how difficult it is to find out what is going on in government, and I agree with them on the basis of my experience. We will get more information as a result of the Bill.
However, if that does not inspire public confidence--indeed, if it erodes public confidence--that will be worse than the present situation. It is worth having resource accounting only if it is accompanied by an increase in the transparency of the numbers. Both the hon. Member for Kingston and Surbiton and my hon. Friend the Member for West Dorset (Mr. Letwin) made that point.
The main reason why we need transparency is straightforward. If one does not get good numbers in the private sector, the penalty for failure or for misinterpreting them is business death--bankruptcy. The reward for success is higher profits.
In the public sector, there is no such direct reward or penalty mechanism. Unless there is powerful scrutiny and transparency, the gains theoretically available from the better numbers are unlikely to materialise. That is because the incentives for the Government to reap them will almost certainly not be strong enough.
It is often said that the price of freedom is eternal vigilance. The price of avoiding growing public sector waste is also public vigilance about where the Government's money is going.
Mr. David Heath (Somerton and Frome):
Has the hon. Gentleman considered the inadequate provisions of the
Mr. Deputy Speaker:
Order. We are dealing with a narrow amendment.
Mr. Tyrie:
Resource accounting will work only if we get better numbers and they are better scrutinised. That is the nub of my first point. That is why, as has been said, the Bill is about the relationship between the Executive and Parliament. It is our job to exercise that scrutiny. If we are unable to do that because we do not have sufficient confidence in the numbers that we are given, we weaken the relationship between the Executive and Parliament and erode a fundamental part of our democracy.
Mr. David Heath:
I shall try again. The Treasury would be exempted from providing information whereas the independent body would not. That is a problem with the class exemptions that have been suggested. The new clause is important because it provides the transparency that the hon. Gentleman seeks.
Mr. Tyrie:
The hon. Gentleman is probably right. He also made a point about the relationship between new clause 1 and other means by which to obtain much of the information. So much information is technical and requires judgment and a great deal of expertise to analyse it that, even with an effective Freedom of Information Act, which we do not have, or powerful judicial review, I am not convinced that we would get the benefits that new clause 1 would provide.
In the absence of new clause 1, it is relevant to ask how much confidence we can have in the numbers that we are given. I worry that, as matters stand, we cannot rely on the National Audit Office alone to do the scrutiny job. Clause 11 grants a great deal of power of scrutiny to the NAO. It sounds good. Clause 11 states:
The nub of the need for new clause 1 can be found in clause 5(2) and (3), which state:
The Treasury shall send accounts . . . to the Comptroller and Auditor General.
The problem is that the Treasury controls the standards and definitions that lie behind that auditing process.
The Comptroller and Auditor General shall examine accounts sent to him under this section with a view to satisfying himself that they present a true and fair view.
Resource accounts shall be prepared in accordance with directions issued by the Treasury.
In other words, the Treasury can do more or less what it likes. We have only assurances to protect us from the Treasury's exercise of almost arbitrary power.
The Treasury shall exercise the power to issue directions under subsection (2) with a view to ensuring that resource accounts conform to generally accepted accounting practice subject to such adaptations as are necessary in the context of departmental accounts.
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