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Mr. Dale Campbell-Savours (Workington): The right hon. Gentleman is dealing with a serious new clause at 11.35 pm. It should have been properly debated earlier. We have spent six hours playing around in the Chamber on nonsense amendments that did not mean anything. Is it not incredible that Parliament has been abused in this way--
Mr. Deputy Speaker: Order. The hon. Gentleman is an experienced Member of Parliament. He knows that we do not play around with amendments that mean nothing.
Mr. Davis: I have a great deal of respect for the hon. Gentleman. I am glad that he recognises that the new clause deals with a serious matter. Unfortunately, I do not choose the time at which my amendments are called. I hope that all hon. Members recognise how serious the issue is. I agree with at least that point that the hon. Gentleman made.
The CAG reports regularly to Parliament on regularity, but commercial auditors are less familiar with the issue. In some cases, they are entirely unfamiliar with it.
We have some examples of that. The examples that I quoted earlier of the serious failures in bodies not audited by the CAG included the Housing Corporation and the Student Loans Company. It is clear that those bodies need to be subject to his audit.
The Minister suggested that the Comptroller and Auditor General might not audit bodies operating in a commercial environment
There are good reasons why the Comptroller and Auditor General should audit bodies that fall within each of the categories. I should like to deal briefly, given the time, with four further matters that the Minister raised in Committee. She said:
Secondly, the Minister may have given the impression that she considered that an appropriate alternative to appointing the CAG by statute might be for him to bid for audits put out to tender. That would not be ideal. The CAG's audit should not be allowed only where the price
is right or at the whim of the Departments and bodies that should be subject to scrutiny. The CAG must audit on behalf of Parliament by statutory right.
Thirdly, the Minister pointed out in the context of one body that
Mr. Jonathan Sayeed (Mid-Bedfordshire):
My right hon. Friend will be aware that one of the dodges used by companies that perpetrate fraud is to change their auditors quite frequently. Is it not important, therefore, that there is consistency of audit? The CAG would provide that consistency.
Mr. Davis:
My hon. Friend is entirely right. However, I do not think that it has been a problem in the public sector. More of a problem has been the varying standard of audit and sometimes too cheap an audit, as occurred in respect of further education colleges where there was significant serial weakness of auditing, which allowed certain problems to arise. I am sure that Treasury Ministers are aware of that, as the Public Accounts Committee reported on the sector. I take my hon. Friend's point that that is a potential risk, but not one that is very material in the public sector.
Mr. Tam Dalyell (Linlithgow):
As one who has served under three Chairmen of the Public Accounts Committee, may I ask the right hon. Gentleman whether, as a fair-minded man, he thinks that at 11.40 pm any of us should be asked to take in his speech, which instinct tells us is extremely consequential and important? Would it not be better that we should at least be allowed to see it in print before making any contributions?
Mr. Davis:
I thank the hon. Gentleman for his implicit compliment, but I have to tell him that I have no such opportunity. The Government must choose the timetable on this matter. It is only for me to present the amendments and I am seeking to make the best argument. However, the Bill was debated at length in Committee and many of my points, although not all of them, have been touched on. The debates are available in the Committee Hansard.
Mr. Rendel:
The right hon. Gentleman may wish to point out that there are now more Labour Members present in the Chamber than there were for the earlier debates. Perhaps this is a rather better time for the debate.
Mr. Davis:
The hon. Gentleman is right, but I shall not pursue his point as I am almost at the end of my speech and I do not want to be accused of filibustering.
Finally, the Minister said:
The alternative is to increase the CAG's regular presence, but that is an avoidable duplication of audit, which the Minister quite properly dislikes. The reliable and best-value solution is to appoint the CAG to audit all executive NDPBs.
Mr. Letwin:
Before I try to amplify some of the points made by my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), I shall respond to the point made by the hon. Member for Linlithgow (Mr. Dalyell). If he thinks that our debates about setting independent standards for the public accounts were footling, his understanding of the relationship between Parliament and the Executive is more lacking than I had thought. It is a matter of the utmost importance. [Interruption.]
as well as auditors who deal regularly with commercial organisations.--[Official Report, Standing Committee A, 20 January 2000; c. 289.]
Leaving aside the fact that the bodies in question do not operate in a commercial environment in the way in which one would normally interpret the expression, the contention that the CAG is not competent to audit them has no substance in fact. As the hon. Member for Newbury put it:
there is little argument to suggest that some special expertise is hidden away in the private sector that is not available to the Comptroller and Auditor General.--[Official Report, Standing Committee A, 20 January 2000; c. 310.]
There are three reasons for that. First, the Comptroller and Auditor General is free to use private sector auditors with specialist expertise if necessary, and he does. Secondly, his staff have undergone the same training process and earned the same qualifications as those in the private sector. Indeed, some of the senior staff are drawn from partners in the major firms. Thirdly, the evidence that we have seen in the PAC shows that private sector auditors are not invulnerable. In some cases, fraud or impropriety have come to light only when the Comptroller and Auditor General has become involved. The examples that I gave earlier show that. I hope that the Minister accepts that the bodies placed in the third quasi- commercial category must be audited by the CAG and that he is perfectly capable of doing that job.
We do not have a one-size-fits-all policy--[Official Report, Standing Committee A, 20 January 2000; c. 288.]
and later added, confusingly:
The Government do not view it as sensible to tackle the issue piecemeal.--[Official Report, Standing Committee A, 20 January 2000; c. 300.]
I think that I understand what the Minister meant and I have developed my new clause in a way that I believe is consistent with her wishes. It is manifestly not piecemeal. It defines a consistent structure under which the CAG would audit every executive non-departmental public body, just as he audits every Department. In recognition of the Minister's concerns, I have included a veto clause that would allow the Government, by order, to specify any body to which they believed that the standard arrangement should not apply. That allows for the possibility of appointing an auditor other than the CAG if the Government identify that such an alternative would be appropriate. The veto addresses the one-size-fits-all issue.
there is already an auditor, who has been appointed for five years.--[Official Report, Standing Committee A, 20 January 2000; c. 299.]
I accept that that circumstance probably applies in respect of a number of other bodies, although with differing numbers of years of appointment remaining. I developed the new clause to allow appointed auditors currently serving to complete their full terms, so no damages or costs would be incurred in that respect, and the CAG could take over after that. I hope that the Minister accepts that there is no longer an issue here in respect of my revised new clause.
if the Comptroller and Auditor General is concerned about what is happening in an NDPB, he can investigate and make a report."--[Official Report, Standing Committee A, 20 January 2000; c. 289.]
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He does indeed have access to all executive NDPBs by virtue of administrative agreement struck only after years of pressure from the Public Accounts Committee. However, access is a poor substitute for audit, for reasons that I touched on in answer to my hon. Friend some moments ago.
The Minister's point also begs the following question: how does the CAG know whether to be concerned if he is not the auditor? It is a matter of information flow and intelligence. Where he is not the auditor he relies on tip-offs from whistleblowers and others and that is an intrinsically haphazard method of gathering information. Surely we cannot rely for the probity of our civil service and our public service on the luck of having a whistleblower in the appropriate organisation.
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