Previous SectionIndexHome Page


Mr. Robert Sheldon (Ashton-under-Lyne): Those matters were debated extensively in 1983. The Standing Committee that considered the National Audit Bill spent days and days on the matter because it felt that it was an opportunity for Parliament to reassert itself. That was important, so it looked at the nationalised industries. Unfortunately, the Chief Secretary of the day was persuaded by one or two of the more prominent nationalised industries and he gave in. That was very sad, but, as a result, the debates ranged widely. We are only now re-examining some of the major issues that were looked at then. It is right that we should.

Miss Johnson: I am grateful to my right hon. Friend for expressing his views on that matter, but to some degree I disagree about the 1983 Act because, as I have said, it is not the Government's view that that is the right territory to discuss in the context of the present Bill. Although I am sure that he knows how well it was discussed in 1983 better than I do, it is the case that that opens up an entirely different issue. I am sure that we will have some discussion of these matters. I will perhaps come back, when some right hon. and hon. Members have had a chance to contribute to the debate, to some of the reasons why we believe strongly that it is inappropriate to open up the 1983 Act as well as the audit issues; but, as I have said, the Government expect that, in the review, Lord Sharman will be able to look at the issues relating to the 1983 Act, as well as the audit issues. They are not off territory, but discussion of them is not appropriate in the context of the Bill.

I urge the House to accept the Government motion to disagree with Lords amendments Nos. 5 and 6.

Lords amendment No. 7 would give the Comptroller and Auditor General access to all bodies to which Departments or non-departmental public bodies have or can obtain access. The amendment would, in practice, give the CAG unrestricted access to all taxpayers--including, of course, businesses--to social security recipients and other recipients of Government grants, to many Government contractors and suppliers, and to virtually anyone who has financial dealings with a Department or an NDPB. That means most businesses and many other organisations, and, of course, many individuals. The amendment is therefore potentially intrusive and burdensome. Moreover, the formula "can obtain access" is unclear, and could be a source of dispute between the CAG and individuals, businesses and other organisations.

Lords amendment No. 7, especially in conjunction with Lords amendments Nos. 5 and 6, would give the CAG extensive rights of access, unrelated to the audit of

24 Jul 2000 : Column 833

Departments' accounts, to anyone who has financial dealings with Government. It would confer a right to roam at will--Opposition Front Benchers nod in agreement.

Mr. Letwin: In case those reading the record cannot grasp what has been happening, let me say that I entirely subscribe to the Economic Secretary's description. The only difference relates to value: we consider that right to roam to be invaluable, accurate and proper.

Miss Johnson: We have already supported changes that give the CAG more rights, but we propose to give further help. Such matters can best be discussed through the independent inquiry headed by Lord Sharman, on which the right hon. Member for Haltemprice and Howden (Mr. Davis) is to sit.

The prospect of a right to roam at will is not welcomed by the British Chambers of Commerce or the Federation of Small Businesses, which said earlier this year that additional powers for the CAG could result in additional burdens on business, over-regulation and an overlap of functions. I shall explain the Government's alternative approach to the concerns that gave rise to the amendment; first, however, let me say a little about Lords amendment No. 8.

Lords amendment No. 8 attempts to give a statutory definition of a non-departmental public body. To date, there has been no such definition.

Mr. David Davis (Haltemprice and Howden): I wonder why.

Miss Johnson: NDPBs are a wide and disparate group, and are not at all easy to define.

The amendment defines an NDPB as a body


That definition is descriptive rather than legally prescriptive, and is very wide ranging--wide ranging enough, in fact, for us to envisage the mounting of legal challenges to decisions to include or exclude certain bodies from the operation of clause 8.

The problem appears to be partially recognised in the amendment, which adds a further criterion to the first two--namely, that NDPBs are bodies with accounting officers who have been appointed by a Department. Accounting officers for bodies other than Departments, however, must be appointed under administrative arrangements that may, of course, change over time. The definition therefore rests on an administrative decision made by an individual Department with no central or parliamentary oversight. I do not consider that to be a satisfactory way of defining bodies that are subject to statutory provisions.

Mr. Edward Davey: This is not intended to be a trivial intervention. Does it not worry the Minister that the Government are unable to define their own activities?

7.45 pm

Miss Johnson: We have lived for many years without a definition of NDPBs, although we have no difficulty in defining our own activities in this context. The Lords

24 Jul 2000 : Column 834

amendment could lead to a definition that, for the reasons I have given, would be unworkably wide and subject to dispute, and would introduce aspects of administrative decision making. Such a definition is clearly unacceptable.

The technical deficiencies that I have mentioned illustrate the difficulties involved in devising an acceptable legal definition of NDPBs. To overcome the problems, the Government have in clause 23 taken the power to designate bodies on a case-by-case basis, and to enable the CAG to be appointed auditor of NDPBs where current statute prevents it. I hope that that will satisfy those who propose an alternative. I invite the House to reject Lords amendment No. 8.

Before I say something about the Government's position in the wider sphere, let me remind the House of some key facts. In clause 8, the Government have already given the CAG new rights of access beyond his existing statutory rights. Subsection (2)(b) gives him access to documents, wherever they are held, relating to a Department's financial records. The paragraph deals with one of the major concerns expressed by the CAG and, I believe, by the Public Accounts Committee--namely, the fact that because over the past few years many Departments have contracted out the operation of their accounting and other financial operations, the CAG needs a statutory right of access in such cases to perform his audit of departmental accounts. Subsection (2)(b), added to the Bill on Report, recognises that concern and gives the CAG that new statutory right of access.

Clause 23 gives the CAG the same access for the purpose of his audit of NDPB accounts as is provided by clause 8 for the purpose of his audited departmental accounts. Clause 23 also gives him a new power to be made auditor of NDPBs where current statute prevents that.

The Government accept that the whole issue of audit and accountability needs careful investigation. We recognise that the CAG must have the powers that he needs to do his job on behalf of Parliament, but we think that that must be balanced against equally legitimate fears that additional powers for the CAG could result in additional burdens on business in the form of over-regulation and an overlap of functions, or disincentives to initiative and risk taking. These are wide-ranging and complex issues, and the Government have therefore tabled an amendment on access to replace those made in another place.

Our amendment will enable the CAG's access to documents to be extended, in a considered way, when that is necessary. The procedure would be by draft order, subject to affirmative resolution by both Houses. The Treasury would be required to consult the CAG before making an order. That approach would allow a balance to be struck between the CAG's desire for additional access, and the need to respond to legitimate concerns about burdens on business. The extent to which the CAG needs additional access rights for audit purposes will be one of the issues considered in Lord Sharman's review, and our amendment would provide an opportunity for the implementation of its conclusions.

24 Jul 2000 : Column 835

Our amendment is a reasonable and practical response to concerns expressed about the CAG's access rights, and I urge the House to accept it in place of the Lords amendment.

Mr. David Davis: The Minister started by saying that the Lords amendment involved drafting problems. I believe that this is the third form in which the two Houses have seen it.

Mr. Peter Brooke (Cities of London and Westminster): The fourth.

Mr. Davis: I am told that it is the fourth, but let me deal with the first three.

The first version that the House saw was tabled in Committee and was intended to serve precisely the same purpose as this group of Lords amendments. Subsequently, similar amendments were tabled on Report. Then--this is what my hon. Friend the Member for West Dorset (Mr. Letwin) was referring to--a version was presented in the Moses Room debates. We now have the version that we are debating. Additionally, however, before the Bill was published, the Treasury was provided with a version of this group of Lords amendments, so that it could take the point on board. The Treasury has, however, made no attempt to do that.

The Minister also made a point about the Bill's purpose. She made the same point in Committee. The point that I made to her then was that more than one third of the Bill--seven of 27 clauses--is about audit. The Bill repeals 15 or 16 out of 17 of the key clauses in the Exchequer and audit departments' legislation from 1866 to 1983. If the Bill were intended simply to enable resource accounting, all it would have to do is amend elements of the control and estimates procedures operated by the House. That could have been done in a three-clause Bill. As all of the Bill's audit content is unnecessary to resource accounting, I am a little suspicious about why it has been included.

The Minister also mentioned the Sharman review. Like the right hon. Member for Swansea, West (Mr. Williams), who is one of my colleagues on the Public Accounts Committee, I am a member of the Sharman review. That review was not presented to either of us as an alternative to amendments to the Bill. If it had been, I do not think that either of us would have become a member of the review. The key reason for that is that the Sharman review cannot deliver the necessary statutory vehicle to entrench the House's rights. This Bill is about the House's rights. It is not about technical accounting matters or methods of measurement, but about the rights of this House. This group of Lords amendments is certainly about the rights of this House.

The purpose of the Lords proposed amendment to clause 8 was quite straightforward. It provided:


so far, so good.

24 Jul 2000 : Column 836

We were told about a right to roam. That right would apply to documents that are


That is the limitation--it is not an unfettered right to roam.

The National Audit Office and the Comptroller and Auditor General cannot go to every paperclip supplier to the Government and ask to see the accounts or performance records. They will have to follow the access guidelines that the Government themselves follow. I shall deal with that matter at the end of my speech, when I address the issue of burden.

As our consideration of the Bill will be examined in some detail in the other place, I should like to put on record the Comptroller and Auditor General's views on the issue. The Minister has represented the proposals as a Government concession. However, from the Comptroller and Auditor General's point of view, the order-making power that the Minister described is not only an unsuitable alternative, but a retrograde step. There are four reasons for that.

First, the power provides the Treasury with the right to decide to which bodies the Comptroller and Auditor General can or cannot have access. The Public Accounts Committee--under my chairmanship, and under that of my predecessor--has consistently argued that the CAG's access should never be at the discretion of the Executive. Allowing such a discretion would negate the purpose of the CAG and the original purpose of the PAC. We should not forget that Ministers are accountable to Parliament; it is not the other way round.

Secondly, the proposal does nothing to overcome the problem of the time-consuming negotiations that are currently necessary to secure access. The PAC has commented that such negotiations are administratively burdensome and diminish the CAG's independence in many ways. The Government amendments would make that worse and add additional hoops for the CAG to go through in negotiating access. In a moment, I shall give the House an example of how that process operates.

Thirdly, the provision would also place the CAG's access powers in secondary legislation, rather than in primary legislation. Hon. Members know how easy it is for the Government to amend secondary legislation in a relatively unscrutinised manner. Such an arrangement would in itself be a bad thing.

Finally, the effect of the order-making power is to add to the hotch-potch of arrangements referred to in the Committee's ninth report. It is not a global solution and will allow current anomalies to be handled only on a piecemeal basis. That is in contrast to the Lords amendments in this group, which establish the clear principle that the CAG should have equal access rights to the Government.

Those are the views of the CAG. I have put them on the record because I think that they will be very important to considerations in the other place if, as we expect, the Government press their amendments in this group and the matter returns to the other place.

The purpose of those Lords amendments, and of their House of Commons predecessors, was not to create anything new, but to reinstate Parliament's rights of

24 Jul 2000 : Column 837

oversight, which were established in the Exchequer and Audit Departments Act of 1866, 1921 and 1957. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), my predecessor on the PAC, is in the Chamber. I suspect that he will correct me if I am wrong in my suspicion that, had consideration of the National Audit Act 1983 not been foreshortened by the 1983 general election, the powers would have been dealt with and corrected in that legislation. There was certainly an intention to do so.

Therefore, we are talking about reinstating Parliament's rights. To do that, we shall have to deal with the erosion of those powers that has occurred over many decades. I am not making a political point, as the erosion occurred under Governments of all persuasions, from the Wilson Government onwards. Indeed, it began with the creation of those very bodies that the Minister had such trouble defining--non-departmental public bodies. Subsequently, the erosion continued with companies wholly owned by the Government, with contractors and with other bodies outside the usual purview of the CAG.

All those bodies were created to allow the Government to do their business more efficiently, and there is nothing wrong with that. The side effects, however, have suited Whitehall. I do not think that the erosion has necessarily suited Ministers, and I doubt that most Ministers, in whatever Government, have even thought about it. Over the years, the erosion has suited Whitehall and the Sir Humphreys. It is certainly more a sin of the Sir Humphreys than of Ministers.

As I said, the Lords amendments in this group will not cause public money to be followed wherever it goes, and they do not provide a complete right to roam. The amendments are limited to the issue of governmental access. Therefore, both in the Lords and in this place, we have been trying to stop and reverse the process that started with the creation of companies and agencies and allowed them to escape oversight.

The process is more important now than ever before. The Government themselves have said that they are proposing to use the private finance initiative to provide £75 billion worth of value. Therefore, the process affects a huge tranche of public expenditure. If we are to make those PFIs work, as both sides of the House wish, it is vital that Parliament maintains oversight. The set of modifications in the amendments would not necessarily allow that to happen. They would leave Parliament's ability to maintain oversight entirely at the discretion of the Government of the day.


Next Section

IndexHome Page