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Mr. Paterson: On open government, my hon. Friend could have quoted a great name in the other place, the Lord Chancellor himself, who, when discussing the CAG's appointment to audit the new Legal Services Commission, said:
- The Government are committed to increasing transparency and openness to Parliament. For that reason, we believe that the auditor of public bodies should be the Comptroller and Auditor General.
The failure to give the CAG appropriate access certainly contradicts the spirit of the Gladstonian tradition, which is at the heart of our discussions. The Government's willingness to extend the CAG's power, at least in principle, to report on whole of Government accounts necessitates an entirely different approach to access. It is disappointing that the Government have been at best timid, and at worst something unparliamentary.
As my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the Chairman of the Public Accounts Committee, said when the matter was discussed in the Standing Committee, this is not an academic matter. The Treasury will inevitably take a rosy view of the state of its own project. The Treasury and the Government will also take a rosy view of the scope of the CAG's powers in respect of access to information.
I am not by nature cynical or suspicious, but I am suspicious about the concentration of political power, and the further the exercise of political power is from the people, who are represented by the House, the more suspicious I become. The Bill makes me very suspicious indeed.
Mr. Rendel:
I want to make a few remarks about amendment No. 17, whole of Government accounts, and what access the CAG needs to perform his duties successfully. Most hon. Members who have talked about amendment No. 17 have concentrated on the fact that if the CAG does not have full access to all the accounts that make up whole of Government accounts, he may have to qualify WAG, which will embarrass the Government.
I want to concentrate on a slightly different aspect of that question. As somebody who did much work in internal audit in Esso, I am aware that an auditor who discovers by looking at high-level accounts that there may be a problem will often be able to discover precisely how that problem arises only by considering in much greater detail the accounts much further down the tree.
It was perhaps instructive that at a meeting not so long ago, the Public Accounts Committee considered a case of fraud in the high commission in Calcutta. From looking at fairly high-level accounts, it was obvious, at least with hindsight, that money was going missing. Some £80,000 went missing over three or four years.
What was not obvious was how the money was going missing. That did not become apparent until the people looking into the matter looked at the lowest level, by inspecting till slips that had been fraudulently altered on the front counter at the high commission. That illustrates the fact that one may have to look a long way down the tree to work out the basis of a problem that has been detected in an account.
If the Comptroller and Auditor General is to examine whole of Government accounts successfully in future, as the Government rightly intend, it is important--not just because he may have to qualify the accounts, but for the purpose of investigating any problems that he may find--that he has access right the way down the tree.
I shall add a further point, by way of a challenge to the Minister who responds to the debate. On the previous group of amendments, I pointed out an interesting sentence in our most recent report, which reads:
Mr. Syms:
I shall make a brief contribution, as I am sure that we are all anxious to make progress. The debate has raised concerns about how the system will operate. As we know, the Bill places on the Comptroller and Auditor General a new duty to audit and report to Parliament on whole of Government accounts. It is vital that he has full access to records.
As the hon. Member for Newbury (Mr. Rendel) and others said, it is extremely important that the new system sets out with confidence and transparency and that there is a culture of proper audit of whole of Government accounts. I have been in business, and I recognise that auditing is not a one-off job. Often, a business man has an on-going relationship with the auditor who inspects the company. Sometimes, information systems are set up and the business is run in accordance with the way in which the auditors intend to perform their task.
If, through new clause 3, we give the CAG the fullest powers to examine whole of Government accounts, we will set up the right culture for the new accounting system. We have heard that many areas will not be covered, and that in some areas the CAG will have to take evidence and audit outside bodies. Unless the fullest power is available to him to double-check where necessary and to go back over the audit trail, I am worried that mistakes will be made because we have not placed our full confidence in the CAG, who, after all, is working on behalf of Parliament.
We hear a great deal about modernisation. A decent audit of whole of Government accounts would be a valuable step in that direction, which hon. Members in all parts of the House would support. As my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) pointed out, that would represent value for money in these times of limited resources.
New clause 3 is a good clause. I believe that it is worthy of support and a step in the right direction. I hope that the Government will accept it. I am sure that their silence
means that they do not disagree with our arguments. If they did, they would doubtless try to contribute to the debate.
In the private sector, the powers of auditors of consolidated accounts are governed by statute. Section 389A(1) of the Companies Act 1985 provides for auditors to have access to the bodies in the consolidation. Unless there is full access to all the companies, bank accounts and information that pertain to consolidated accounts, a true and whole picture cannot be obtained. Ninety per cent. or 95 per cent. is not enough; full access is required.
Generally accepted accounting practice recognises that, in some circumstances, the auditors of consolidated accounts will need access to undertake their tests in the consolidated bodies. New clause 3 provides for that. Accounting standard 510 states that the principal auditors of a consolidated account may decide that supplementary tests of the records or the financial statements of the component parts are necessary. Depending on the circumstances, such tests may be performed by the principal auditors or other auditors.
It is important for the CAG to have full access. He does not necessarily have to audit all the accounts himself, but if the bodies who may undertake the audit know that the Government auditor can gain full access to information and double-check that they are doing their job properly, it will ensure that their work is up to standard. If we do not do that, many bodies, which perhaps pay their staff large salaries, may not have the incentive to do the job as well as they would perform it if they believed that the Government expected accountability for spending Government money.
Mr. Fabricant:
Does my hon. Friend agree that it is intolerable that the Comptroller and Auditor General could not gain access to the Camelot accounts or to the organisation for four years?
Mr. Syms:
I am not sure whether that is intolerable, but it is worth considering. Doubtless there will be many anomalies.
New clause 3 should be supported. It has been tabled by well-respected hon. Members across the political divide. It clearly establishes a regime, which would be more transparent and would mean that the new accounting system began with the right culture, which is vital. Granting the widest possible access to information and organisations to the auditor who is responsible to the Public Accounts Committee and to the House would mean that we could all be proud of the manner of the new system's start.
Mr. Paterson:
It is a great pleasure to follow the sensible contribution of my hon. Friend the Member for Poole (Mr. Syms). I shall not detain the House for too long, but I want to follow up my earlier comments on another group of amendments. Our fundamental duty as Members of Parliament is to hold the Government to account for the way in which they raise money from the public by enforced confiscation through taxation, and to ensure that that money is spent correctly.
We believe in the principle that the Comptroller and Auditor General should have full access to all Government expenditure.
The agreed PAC report states that important principle, which is perhaps even more relevant to this group of amendments. Will the Minister tell us whether the Government also accept that principle?
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