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12 midnight
The person and the body who know about regularity are the Comptroller and Auditor General and the National
Audit Office. When they employ private sector auditors--we pointed out in Committee that they often do--they give the auditors a specific remit to investigate not just the propriety of the accounts, but their regularity. Therefore, we have another reason for the presumption that the CAG should have a universal remit. Again I ask the question: why do the Government want to reverse the burden of proof? Why do they not want to accept the most basic presumption that in all but the most exceptional cases the CAG should have a universal remit?
My right hon. Friend the Member for Haltemprice and Howden went through and demolished a series of arguments that were made in Committee. I do not want to bore the House by reiterating them in detail, but he demolished the arguments on levies, on competition and on commercialism. Without wishing to cast aspersions on his speech, those arguments were already demolished in Committee. He had already torn them limb from limb and anything that remained that remotely resembled a body was torn apart by the right hon. Member for Swansea, West (Mr. Williams), who is also a member of the Public Accounts Committee. If any shreds of the body remained, the hon. Member for Newbury (Mr. Rendel)--the Liberal Democrats' representative on the PAC--finished the game off.
There is not even the beginning of an argument to suppose that we should not have the CAG as the presumed auditor of the public sector. Why are we having this debate? Why did the Government not accede immediately to the perfectly sensible--perhaps even too reasonable--new clause tabled by my right hon. Friend the Member for Haltemprice and Howden?
I understand why the Government resisted the strong arguments that many of us made, and that will be made in the other place, for an independent body to set the standards for accounts. I accept that new clause 1 dealt with a centrepiece of government--the ability or inability of the Treasury to present things in a way that is convenient to Ministers of the day. I do not applaud that; in fact, I decry it. I understand that view, but I genuinely do not understand why the Government should resist this new clause. I cannot see why, in the short, medium or long terms, Ministers or their officials have any interest in excluding the CAG. In fact, the Government do not think that they have an interest in excluding the CAG. If they thought that they had that interest, they would not have tabled their own amendment.
I fear that we must be dealing with the Government's pride. They do not want to be seen to be conceding to my right hon. Friend's new clause. They want to be seen doing something of their own making that is a bit different. When the Financial Secretary speaks, he may persuade me and the House that I am wrong, and I am more than willing to change my analysis if it does not fit the facts. However, if he has no good arguments and we are dealing with pride, I should have thought that there must be some means by which the Government's face can be saved. Somebody who is sufficiently close to the Government to make them comfortable could table in the other place a new clause that has exactly the same effect.
Conservative Members would have no objection to such a manoeuvre; we do not want to rub the Government's nose in it or cause unnecessary embarrassment. At the end of the Bill's progress, we want a result that will go along with what I am certain will be the institution of an independent body to set standards.
Together with that reform and the rest of the resource accounting process, it will offer the prospect of a robust, sustainable, transparent and decent set of accounts--and an accounting system that will last as long as the Gladstonian system.
Mr. Sayeed:
Perhaps I can suggest a face-saving formula that the Government may care to adopt. I have read six press releases from the Government in the past week about value for money. Commercial auditors are good at auditing but not at determining value for money. The CAG is well practised at doing so over many years. Perhaps the Government would adopt my right hon. Friend's new clause on the basis that it will save taxpayers' money and make it go further.
Mr. Letwin:
My hon. Friend is absolutely right. Private sector auditors are not particularly experienced in value-for-money audits. They do not need to be because in the competitive private sector, value for money is forced on companies by the marketplace. The auditor merely needs to check that shareholders are given an accurate representation of the company's responses to market pressures and challenges.
The people experienced in value-for-money audit are the Audit Commission, which deals with it in local government, and the National Audit Office and CAG, who deal with it in central Government. When private sector auditors have become familiar with the concept and have applied it, that is because they have been employed by those bodies to act on their behalf sometimes, but not immensely regularly.
The problem with the public sector is that it has neither a marketplace nor the pressures that force value for money. As the relative inefficiencies of public sectors worldwide have shown, auditors are an inefficient and incomplete replacement for the marketplace. Nevertheless, they are the best we have. Whatever ought to be done by the public sector needs to be done at best value. The only people who will make best value--or a failure to achieve it--come to light are auditors. The CAG is the best body in central Government, so my hon. Friend's argument is robust.
I accept the further implication that the Government could build on that thesis a face-saving device. They could argue that taking everything together and having considered my right hon. Friend's amendment, together with any technical changes they may wish to introduce, the proposal presents such an opportunity for value for money that it makes sense to adopt it. If the Government want to adopt that rhetoric or any other rhetoric or device--here or in the other place--to achieve that result, we will gladly conspire in it.
I doubt that anyone is listening. Notwithstanding the remarks made about the nation by my hon. Friend the Member for Arundel and South Downs (Mr. Flight), I doubt that anyone in the nation has the slightest idea that we are doing this or ever will. The Government can rest easy that this is a pleasant and secretive process, well publicised in Hansard, and that nobody will embarrass them for acceding to so reasonable a request from my right hon. Friend.
There is at stake here something far beyond party politicking and embarrassing governments.
Mr. Brady:
Does my hon. Friend agree that if the public were aware that the Government had acceded to a reasonable new clause, they would be impressed by the Government's good sense and honesty in accepting greater openness in public accounting?
Mr. Letwin:
My hon. Friend is right. To add to the Christmas stocking that we can offer Ministers, my right hon. Friend the Member for Haltemprice and Howden and other members of the PAC will congratulate the Government in the media without accusing them of having dragged their feet. It is no part of our purpose to make trouble. We want to achieve the right result. We need to do so because we all have an interest in the result being right. We all have an interest in having a set of accounts that have been audited in the best way possible and presented most responsibly to the House of Commons and the Department. That will be achieved by extending the remit of the CAG universally in government, which is the point at which all the anomalies will cease to exist and the clarity will set in.
As long as the accounting standards against which the CAG audits have been independently set, we shall have true, fair and regular accounts that genuinely represent the position as best human beings can represent it. That is the goal and I hope that the Financial Secretary, however he wants to do it, will tell us that he has been persuaded at last that he needs to come round and agree to my right hon. Friend's eminently sensible proposition.
Mr. Nick St. Aubyn (Guildford):
I hope that I may be the living proof that the hon. Member for Workington (Mr. Campbell-Savours) was wrong to suggest that this is the wrong hour at which to debate this important issue. Had the new clause been considered earlier, I might not have been present.
At this important hour in our proceedings, I was drawn to the Chamber--I notice that several of my hon. Friends have also been so drawn--and the hon. Gentleman would do well to scurry round the various corners of this place, find perhaps hundreds of his colleagues who are lurking in the recesses of Parliament and encourage them to come here to listen to the vital words of wisdom on the new clause. I am much persuaded by my hon. Friends that we have come to the kernel of the argument. I might admit that I have followed the case from a distance but with great keenness because, as a member of the Education and Employment Committee, I have been aware of the arguments about resource accounting from the moment at which this Parliament was elected.
Mr. Campbell-Savours:
This is not the new clause.
Mr. St. Aubyn:
Indeed, but I shall come on to why it is not and why resource accounting is so important. It affects education as much as anything else.
In Committee, my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), who moved the new clause, said:
The Chief Secretary to the Treasury said to the Public Accounts Committee that he was willing to examine the question of amending the legislation to enable the Comptroller and Auditor General to audit those limited companies within the Government's purview.--[Official Report, Standing Committee A, 20 January 2000; c. 301.]
29 Feb 2000 : Column 285
It is a matter of regret to me--and, I suspect, to many others who will consider this--that the Student Loans Company and the accounting for student loans are not within the purview of the new clause. Were I tempted to vote against it, I should do so because it is not all-encompassing and does not include the provision of student loans. I shall explain in due course why they are so important, but we must acknowledge that after passing the Bill it would be open to the Government to decide that it would be to their convenience that student loans, instead of being governed by a loan company, should be returned to the Department's remit. Nothing in the Bill would stop them doing so and, without the new clause, there would be nothing to deter them from doing so.
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