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Mr. David Davis: I do not want to detain the Minister for long. When I was nodding earlier, I was indicating that I was not nodding off, rather than encouraging her. At this time in the morning, that is an important communication to make sometimes.

The general issues that she is going through are all technical issues that are in dispute between us. The dispute is about whether her interpretation is correct. Frankly, if that, rather than the matter of principle, were the issue, as I said earlier, I would be happy to hear her say that she would bring the measure back corrected later on. The intention is not to allow the CAG to pursue money wherever it goes. It is to give him powers that match those that exist, where that is necessary.

The Minister mentioned the lottery. As she knows, throughout the debate and Committee stage, I have never sought to attribute blame on a political basis one way or the other. Frankly, that does not stand up. The Government were able to do something about the matter because they had available to them a piece of primary legislation, but that is the problem. If we are depending on a passing piece of primary legislation on which to latch a right or condition, it would not be a satisfactory arrangement to ensure Parliament's fundamental rights of access.

4.15 am

Miss Johnson: I am grateful to the right hon. Gentleman for his remarks. However, we disagree with him not only on the force of new clause 3, but on how extensive the arrangements for access should be. It is not only a matter of legal or other interpretations of the new clause.

I accept that the Public Accounts Committee has identified various cases in which it claimed that there are gaps or anomalies in the CAG's statutory rights of access. The Committee and hon. Members speaking in today's debate have given as examples bodies such as training and enterprise councils, registered social landlords, the Chessington Computer Centre, privately run and managed prisons, and contractors in the new deal initiative. However, arrangements have been for NAO access in all those cases. Usually, the arrangements involve clauses in contracts. I have already mentioned access to registered social landlords, who are also subject to an agreement with the Department of the Environment, Transport and the Regions.

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I realise that some people are keen that the NAO should have access particularly to the books and records of private finance contractors. The NAO has, of course, already reported on a considerable number of private finance schemes. Therefore, in practice, there does not seem to be a problem with access. Moreover, last July, the Treasury issued guidance on the standardisation of private finance contracts that makes it clear that contract clauses should be included in PFI contracts to allow appropriate NAO access.

Nevertheless, I should like to give four reasons why, if we allowed NAO access through contracts, we would not be prepared to give the NAO a statutory right of access.

First, we have to recognise that giving the NAO a statutory right of access to recipients of public money would impose a regulatory burden on the firms concerned, which they would rather not have. Both the British Chambers of Commerce and the Federation of Small Businesses have said that enhancing NAO access in the manner proposed by the Public Accounts Committee would only increase the burden of red tape on small and medium-sized enterprises.

Secondly, giving the NAO a right of access could lead to increasing layers of audit. The right hon. Gentleman perhaps felt that he had dispelled that concern, but a residue of it remains. Contractors could be subject to layers of audits and visits by inspectors.

Thirdly, there is a concern that giving the NAO statutory rights of access could encourage them to duplicate the work of regulators. One reason why giving the NAO access to registered social landlords was so long a bone of contention is that there was a worry that the NAO would use such access to duplicate the work of the Housing Corporation, which has been given by Parliament the job of regulating that sector of the economy.

Fourthly, there are similar concerns about whether the NAO might use a statutory right of access to duplicate the work of competition authorities. Clearly, the NAO should not do work that is properly the responsibility, for example, of the Office of Fair Trading.

Mr. David Davis: There are two points. First, one of the problems at the Housing Corporation was the weaknesses in its own financial control systems. The second and general point is that, at this time of the morning, I shall not press either new clause 3 or amendment No. 17 to a vote, because I should like to make some progress and do want to waste 15 minutes. However, I do not accept the Minister's arguments. We still disagree on those matters, as she will appreciate.

Miss Johnson: I am grateful to the right hon. Gentleman for making those points, and appreciate that he still does not agree on those points. Our point is that the access issue should not be addressed in isolation. My right hon. Friend the Chief Secretary has said, as we discussed earlier in the debate, that he would like to undertake a study of those issues. I very much hope that the right hon. Gentleman will accept my right hon. Friend's invitation to join the steering group for the study.

For all those reasons, I invite hon. Members to reject new clause 3 and to accept the Government amendment.

Question put and negatived.

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New Clause 4

Performance statements

' .--(1) This section applies to any government department which is required to prepare resource accounts under section 5, unless otherwise provided by an order made under subsection (6).

(2) A department to which this section applies in any financial year shall prepare a performance statement in respect of that year analysing the performance of the department in using the resources to which the accounts relate in achieving its objectives for that financial year.
(3) A department shall send its performance statement to the Comptroller and Auditor General with the resource accounts sent to him under section 5, or at such other time as the Comptroller and Auditor General may specify in respect of that statement.
(4) The Comptroller and Auditor General may examine any performance statement which he receives from a department under subsection (2) and may report on it to the House of Commons.
(5) Subsection (4) shall not entitle the Comptroller and Auditor General to question the merits of the policy objectives of a department to which the performance statement relates.
(6) The Treasury may by order designate a department as one to which this section does not apply or as regards which the operation of this section is modified to the extent specified in the order, and such order may be expressed to apply to all financial years or to any specified financial year.
(7) An order under subsection (6) shall be made by statutory instrument, and shall not be made unless a draft of the instrument has been laid before and approved by resolution of the House of Commons.'.--[Mr. David Davis.]

Brought up, and read the First time.

Mr. David Davis: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 18 to 20 and 35.

Mr. Davis: Hon. Members will be happy to know that this will be my last outing, other than a brief comment on Third Reading.

The new clause is about performance reporting--a matter on which the Bill is silent, but which was supposed to be the most revolutionary element of resource accounting as originally envisaged. The clause is developed from amendments that I tabled in Committee on behalf of the Public Accounts Committee. It would require Departments to prepare performance reports, which would have to be independently validated. It would give the Government flexibility in determining the content of reports and allow for further developments in validation techniques. As hon. Members noted in Committee, it is a remarkably mild provision.

We should be clear about what performance reporting and independent validation will mean in practice. The recent report of the Public Accounts Committee on the Bill said:

The Government have set the Department of Social Security a target to reduce by 30 per cent. benefit losses from fraud and errors in income support and jobseeker's allowance by March 2007, with at least a 10 per cent. reduction by March 2002. In this case the Government have set the target. The Department and Benefits Agency will collect the relevant information and report on the extent to which they have achieved their target. The role of independent validation would be to check the Department's systems for collecting information, the veracity of the conclusions they have drawn and whether the outcome had been represented fairly, and to report the findings to Parliament.

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During the passage of the Bill, the Government have set out their objections to the proposals. As before, I shall address each of them. I shall start with the area of common ground. The Chief Secretary told the Committee that he thought that performance reports should be credible, should enjoy widespread legitimacy and should be as objective as possible. I agree with him on all those points. It has long been established that the way to ensure credibility, legitimacy and objectivity in financial accounts is to have them independently audited. The same principle applies to performance reports. An independent report on performance will instil public confidence in the measures and provide Parliament with the assurance that it needs as it considers the Government's spending plans.

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