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Mr. Letwin: We are dealing here with one of the most important issues in the Bill. As my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) pointed out, it was dealt with at length in Committee. New clause 4 is substantially modified in comparison with my right hon. Friend's earlier efforts and those of his colleagues on the Public Accounts Committee, in order to accommodate a number of points that were made.
We may, to our ineffable delight, hear from the Economic Secretary in a few minutes that the Government will accept the new clause or something like it. If so, I hope that she will pass over in silence the remarks that I am about to make on her previous arguments on the matter, that she will let bygones be bygones and celebrate the day.
Lest the Economic Secretary should be tempted to argue against new clause 4, despite the substantial changes made by my right hon. Friend, I want to go through the pattern of argument that she used in Committee. Since then, we have had the opportunity to reflect that that argument is incoherent to the point where the Economic Secretary herself may feel that she does not want to continue it.
When my right hon. Friend first proposed the admirable idea of trying to use the Bill as a way of instituting transparent outcome measures, or performance standards, his ambitions were already modest--as were those of his colleagues on the PAC. Indeed, they were too modest. My right hon. Friend omitted to include in his Committee amendments, and also in new clause 4, any reference to the defining of standards that intermediate between policy objectives, which are the proper concern of the Government and the electors, and enforcement and validation, which he has tried to strengthen, in new clause 4 and previous amendments, through the CAG.
However, betwixt policy, which is the Government's prerogative, and validation, which falls to the CAG in any rational system, lies the question of the definition of standards. The Government might have a particular policy--for example, to re-employ all unemployed people aged between 18 and 21 would be a rational policy objective; indeed, it may be similar to part of the new deal. It would then fall to someone to decide the measure for whether the Government had achieved that policy.
I regret that in my right hon. Friend's earlier efforts and in new clause 4 there is no such intermediation of an independent body--which could of course be the very body that was rejected in our previous discussions of new clause 1. There is no intermediation of any body that could ensure that the standards which measure performance are sufficiently robust for them to be validated by the CAG. That is a lacuna.
The reason that we have not tabled further new clauses or amendments is because we want to cross the first bridge first. Unless the Government are willing to accept the principle of validation, there is not much point in trying to insert independent standards. To take the analogy of the national accounts--the whole of Government accounts and the resource accounts for each Department--if the Government had taken the position that no one should audit them, we should hardly have bothered to propose an independent body to set up the standards against which the audit should occur.
It is because we have been able to assume that an auditor--whether the CAG or private auditors--will validate in all cases that we have been able to argue for the next step, which is to try to secure an independent definition. Alas, unless new clause 4 or something similar is accepted, we shall not be able to have the argument that we want--as I am sure, do our noble Friends in another place--about independent standard setting.
Having explained my right hon. Friend's lacuna, which no doubt occurred because he too wanted to establish a bridgehead, I shall explain the Economic Secretary's valiant attempt--no doubt at the behest of her Department--to defend the proposition that the PAC's assertion that there should be some form of validation of the performance measures was inappropriate.
The Economic Secretary asked:
As my right hon. Friend mentioned, the Economic Secretary then said:
Under Administrations of both colours, it has been the record that the CAG and the Audit Commission--notwithstanding their deep involvement in value for money audits, and hence their subjective judgments--have constantly been regarded as entirely impartial by all parties inside and outside the House. Therefore, I do not accept for a moment the direction of thought that suggests that there is a problem of politicising the CAG. However, where there is such a problem, my right hon. Friend has taken specific steps to deal with it in the new clause. We need not attach much importance to the assertion that the problem with nurseries and their lack of welcome for the intrusions is a problem of the CAG's descent into the political arena.
What is the real problem with the intrusion? I take it as a matter of fact that the Economic Secretary did not mean that nursery teachers would be a little upset when they saw the CAG arriving. It is possible that that is what she had in mind, but I doubt whether she seriously entertained that proposition.
We do not have to look far to see the problem with the way in which the Economic Secretary and her Department thought about the matter. On the same day and in the next column, she went on to provide one of the classic expositions of the bureaucratic mind in Parliament. She said:
Let us reflect on those comments and on what they mean for the nurseries that would not welcome intrusions. If internal auditors make systematic checks of data quality, presumably--to quote the Economic Secretary--they
It is almost inconceivable that the Economic Secretary remembered her remarks at column 147 when she said what she did at column 148. I suspect that those two passages were written by separate officials--one of whom was given the difficult task of explaining why the CAG should not be let in, and one of whom, in a separate Department, was told to describe all the wonderful arrangements already in place that made it needless for the CAG to have access. We have an assembly of arguments thrown together blindfold, rather like a chap who gets up in the morning after a rough night--as many of us will have had--does his buttons up wrong and looks rather odd as a result. Those remarks are certainly not an example of the Minister's thinking, which is much too acute for anything of that kind.
We have the same problem here that has repeatedly confronted us in our debates on the Bill. We have the arguments but not the reasons. We do not know from detailed discussion in Committee why the Economic Secretary and the Government are resisting the eminently reasonable, rephrased and accommodating new clause proposed by my right hon. Friend and other members of the PAC.
We have to speculate on why the Government are trying to prevent their performance measurements being independently validated by anyone. The Government would not have a reason if their internal audit procedures were perfect and transparent. They could simply relabel internal auditors "CAG" and all would be well. The reason can only be that the collective Whitehall mentality resists the idea of somebody else measuring its performance--the reason my right hon. Friend is so keen that somebody else should measure performance.
We have reached the same point as when debating new clause 1 and the CAG's having access and audit rights in relation to accounting itself. Accounting and performance are two sides of the same coin. It is of no interest to man or beast how much Government spend unless we also know what Government do with the money that they spend. If we could be certain that Government spend £370 billion but we had no idea whether all that money was wasted, we would get absolutely nowhere. The purpose of resource accounts is to perform half the task that we need to impose upon ourselves in Parliament and Government to have a functioning democracy; the other half is to understand the way that the money is used and how effectively.
How straightforward a matter is that?
She was referring to the checking of systems for collecting information--the veracity of conclusions and whether the outcome was fairly represented.
The CAG would need to be able to go into local authority, and even private sector, nurseries and form a judgment about how many nursery places each could reasonably be expected to provide. I do not believe that nurseries would welcome such intrusions.
The killer blow to the entire project of having performance standards validated in this country so that we have outcome measures included as part of resource accounts, as has been done for years in New Zealand, was that she did not believe that nurseries would welcome the intrusions. She added:
That highlights the difficulties that would take the Comptroller and Auditor General away from auditing and matters of fact into a political arena which he has always rightly avoided.
29 Feb 2000 : Column 351
My right hon. Friend has pointed out that the new clause specifically tries to exempt the CAG from any accusation that he is involved in politics. It was pointed out at length in Committee that the CAG, the Audit Commission and anyone else who does anything that could remotely be described as value for money auditing clearly has to make subjective judgments about value for money. Inevitably, those judgments are to a degree representable by people so inclined as political judgments. Therefore, we cannot envisage ever wholly removing such people from the political arena. On the contrary, we must hope that their immersion in the political arena does not in any way vitiate their complete impartiality.
Quality assurance checks are already in place.
Let us note that her first defence for the lack of need to allow the CAG in was that somebody else was already doing the job. All was well; the checks were already in place. She added:
Information from many measures is needed by local line management to make day-to-day decisions and set priorities. It is often--
note the tone of reasonableness--
in the interests of people near the coal-face to ensure that the data that they return to the centre is of high quality. Departments have analytical services and internal auditors who make systematic checks of data quality and advise on methodology and technical matters.
That is practically the sort of thing that one would expect to see in a brochure for the internal audit service.
would need to be able to go into local authority, and even private sector, nurseries and form a judgment about how many nursery places each could reasonably be expected to provide.--[Official Report, Standing Committee A, 18 January 2000; c. 147-48.]
I cannot see how internal auditors could make the systematic checks that the Economic Secretary thinks the CAG would have to make and be as systematic as he would have to be without having to do exactly the same things that she thinks he would have to do. Her proposition is remarkable--it is that nurseries welcome intrusions from internal auditors, who already exist, but would not welcome intrusions from the CAG.
4.45 am
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