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I have some concerns about the wording of the new clause. I am concerned about the definitions; I always worry about the definitions of non-departmental public bodies and the extent to which it is possible to devise new government structures that still manage to fall outside any definition that is provided. I am indebted to Lord Falconer, who suggested in another place that there was no difference in terms of definition between an NDPB and a taskforce and that it was simply a matter of the temporary nature or otherwise of the body that had been formed. If that is the case, there is a potential problem with taskforces that perform an executive function. I hope that they will be covered by the fact that they are absorbed within the departmental accounts, but it is a potential problem that may need to be better defined under proposed subsection (11). Proposed subsection (8) is over-helpful to the Government in accommodating their objections before they have even been raised in the debate.
This is a very important new clause for Parliament. As the hon. Member for Guildford (Mr. St. Aubyn) said, if the Government choose not to accept the new clause, it is not a case of their resisting the Opposition, because the new clause does not come from the Opposition Benches: it was drafted by those right hon. and hon. Members on both sides of the Chamber who are most intimately acquainted with the need for proper scrutiny--those who serve on the Public Accounts Committee. They have put their finger on a very important issue and it is right that the House should debate it. The Government would be wrong to display obstinacy. They have already yielded the principle in amendments that they have tabled. It is only the matter of form that they are resisting. I believe that the form of our proposal is much more acceptable for Parliament than the alternative, and that the Government would be well advised to accept it.
Mr. Stephen O'Brien (Eddisbury):
Having been only seven months in the House, I am perhaps closest to those outside who have expectations of accountability. It is not a claim that I would seek to advance, but others might suggest it.
In looking at the provisions, I have been particularly concerned about the separation of powers, which, as a principle, should run through this, of all pieces of legislation, between Parliament and the Executive. I have looked in vain and with great disappointment for that principle to be applied with consistency and clarity. It has therefore been of the utmost seriousness for me, fresh from the outside world, to find that hon. Members from all parties represented on the most important of Committees--the Public Accounts Committee--have tabled a new clause to address the perception of accountability, the trust that is implicit in the requirement that the Government be transparent in their stewardship of public money and, above all, the confidence of the public that that is being done with the greatest integrity.
I have looked at the PAC's recommendations and have listened with great care to all the members of that Committee who have spoken this evening, in particular my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the Chairman of the PAC. It seems that the Bill misses the opportunity to remedy the steady erosion of the central role of the Comptroller and Auditor General that has taken place as a result of the introduction of new public spending institutions.
Many examples of that have already been cited this evening, so I shall not try your patience, Mr. Deputy Speaker, by going into as much detail as I had originally intended. There is no provision to give the National Audit Office full access for the examination of new service providers. The number of such providers is increasing--as is the amount of public money involved. They include private contractors who handle Government pay and the management of some prisons. They even handle one of the Government's own flagships--for which the Government want complete accountability and transparency--the new deal training opportunities, even though some of us might regard those opportunities as a smokescreen.
Under the Bill, the detailed auditing of such providers would be off-limits. They should have been included. What are the Government afraid of? Subject to the Minister's comments, which we shall welcome, what makes the Government resist the approach taken by my right hon. Friend, the Chairman of the Public Accounts Committee? He wants to reverse the burden of proof required by the Bill, and to make it a presumption that all such bodies should be open to audit. There should be a requirement that they are audited, rather than that the Treasury determines which ones should be included.
Ever since the Government came into office, they have advanced the principle of inclusivity. That sits ill with the measure, because it does not promote inclusivity. However, new clause 2 would be in line with that principle.
Quangos are another example. The Housing Corporation has been mentioned. It is critical that there is trust in such bodies. People outside this place perceive organisations such as the Housing Corporation to be instruments of Government, so they expect the same
standards of transparency and accountability to be applied to them as to Departments. However, the Housing Corporation is not included.
The situation of limited companies set up by the Government has been extensively and eruditely explained by my hon. Friend the Member for Guildford (Mr. St. Aubyn)--a fellow member of the Select Committee on Education and Employment. My right hon. Friend the Member for Haltemprice and Howden also referred to the matter. Tomorrow, my hon. Friend the Member for Guildford may be somewhat surprised by a reference in the leader column of The Sun to his impressive contribution to the debate. However, I shall not dwell on that matter, Mr. Deputy Speaker, because, even as a recently elected Member, I would strain your patience too far.
As I pick up some of the threads made in contributions this evening--not least that of the hon. Member for Somerton and Frome (Mr. Heath)--I find that I am speaking to a former university colleague, the Financial Secretary to the Treasury. Indeed, he and I shared not only a university but a college. I know him to be a man of great intelligence, and a reasonable man of great integrity. It would not be in his character to resist an eminently reasonable proposition, objectively put. The proposal is not partisan, because of its provenance in the PAC.
Perhaps I am wrong about the Government's resistance to the proposal. Perhaps they will accede to a reasoned and informative debate and will be pleased to accept our fine parliamentary tradition of trying to improve Government proposals. Like many other hon. Members, I have experience of international manufacturing industry in a private enterprise, albeit a public company in the FTSE 100. For many years, I have had responsibility for compiling annual reports and I look behind the Government's proposals to try to understand what motivates them not to want to extend the audit to so many governmental organisations.
Mr. St. Aubyn:
I have listened to my hon. Friend with interest, because I have great respect for his experience of handling the accounts of public companies. Has he considered the words of George Bernard Shaw? He said:
Mr. O'Brien:
My hon. Friend makes an extremely important point through his literary allusion. Of course, when George Bernard Shaw was given a book, he said that he would lose no time in reading it. I shall lose no time taking that intervention any further; it was so ably put.
Anything that is audited in annual reports receives proper and objective treatments that are certified. Accountants, in the case of public companies, and auditors must present their reports fully and make them public. The Government's policies have often been misplaced. The Government have sought to do down our enterprises and public companies by treating all those who may be in the top teams of such companies as fat cats.
Therefore, they would be the first to expect full transparency and accountability, and for a full audit of all aspects of an enterprise to be covered in an annual report.
I hope that I am wrong--I do not think that it is in the Financial Secretary's character to defend something on the ground of pride alone--but I wonder whether the Government are anxious to prejudge the contents of annual reports. Perhaps the raft of organisations that have been identified so ably by so many Members are a little less predictable and would fall a little less out of the Government's direct control, even though they involve the expenditure of taxpayers' money. Therefore, there is the risk that an annual report might not say what the Government predicted or wanted it to say. That may be the true reason for the Government's objection to allowing all organisations to be audited and for them wanting, as my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) pointed out, a veto or the discretion not to allow an audit to be applied. I look forward to the Financial Secretary's reply in the hope that the doubts that I share with the House are proved wrong.
Mr. Michael Fabricant (Lichfield):
I was not going to speak in the debate, but I have listened to the arguments made in the Chamber and beyond the Bar. I am disturbed by several incidents that have been mentioned in the debate. I suspect that we need new clause 2 because there is a feeling in the nation that the Government have contempt for Parliament. Did we not witness that earlier when an hon. Member--I shall not name him--said that he had prepared a detailed argument as to why the new clause should be adopted, but then added that he would not read it? He would not read it because there are 300 or more Labour Members who want to go to sleep. All the arguments that he had prepared to make the Bill better were not expressed. The hon. Gentleman has now left the Chamber, which is why the arguments need to be emphasised and re-emphasised.
My hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) described in considerable detail the history of the Bill, starting with the 1866 Act under William Ewart Gladstone. I argue that its true genesis is November 1993, when my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), then Chancellor of the Exchequer, announced a White Paper on the introduction of this form of accounting. He said:
There is nothing so bad or so good that you will not find Englishmen doing it; but you will never find an Englishman in the wrong.
Does that not encapsulate why we need the new clause and why the Government are not prepared to admit that they need to accept it?
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This will put departments on to a similar accounting basis not only to commercial organisations but to many other parts of the public sector.--[Official Report, 30 November 1993; Vol. 233, c. 931.]
Surely that is the point of new clause 2. Subsection (4) states:
The Comptroller and Auditor General shall examine accounts sent to him under this section with a view to satisfying himself--
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(a) that the accounts present a true and fair view, and
(b) that any public money provided to the agency has been expended for the purposes intended by the body by which the money was paid.
As my hon. Friend the Member for Eddisbury (Mr. O'Brien) eloquently said, that is a mirror of what happens in commercial organisations when they are audited by chartered and certified accountants. It is important to audit not only the funds flow but--as my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out--the difference between expenditure on capital amounts and revenue amounts, because investments in capital amounts accrue value and are not amortised. If one confuses the two, it is all too easy to confuse the general public in persuading them that the state of the economy is better or worse than it is.
Many of my hon. Friends and Government Members have said that it is a question of trust and accountability. Why have auditors in the commercial sector? They are there to safeguard shareholders and the broader public interest, to ensure that taxes are paid to the benefit of society. It is right that the Executive should accept auditing of all its aspects. It is extraordinary that the Executive should be able to say, "We shall choose what will be audited and what will not." That is like a large public corporation or conglomerate--I will not name an example but one can use one's imagination--saying "We will not have our ice cream side audited, but we don't mind having our soap powder side audited.
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