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Mr. Davey: The hon. Gentleman ought to examine how local authorities and the NHS deal with capital assets, as such organisations are already moving towards using similar procedures in their balance sheets. I am looking forward to the debate on the Bill even more than before. If the hon. Gentleman does not understand public accounts, he should not be a member of the Opposition Front-Bench economy team.
Mr. Letwin: I am doubly grateful to the hon. Gentleman, who is completely right: I have not understood the public accounts, and I wonder whether any living human being could. The Government Resources and Accounts Bill will not bring any greater clarity to those accounts, which would now defeat any mortal.
Mr. Davey: I completely disagree with the hon. Gentleman. I am surprised at his intervention, as I was about to say that the Bill, and the processes in the Department and in Whitehall leading up to its publication, show the House at its best. The proposals on which the Bill is based were put forward by the right hon. and learned Member for Rushcliffe (Mr. Clarke), the Chancellor in the previous Conservative Government. They have been studied by the Public Accounts Committee, by the Select Committee on the Treasury and by the Select Committee on Procedure. As a former member of the Procedure Committee, I am now, as a current member of the Select Committee on the Treasury, looking forward to scrutinising the Bill.
Until the hon. Member for West Dorset (Mr. Letwin) decided to intervene, I had thought that the Bill had the general support of the House.
Mr. Letwin:
I am triply grateful to the hon. Gentleman. I absolutely agree with him that the motive behind the
Mr. Davey:
I advise the hon. Gentleman to stop digging. The Bill will replace the Acts of 1861 and 1921 that brought in appropriation accounting. The Bill will provide the legislative procedures to ensure that the House will be able to hold the Government to account on resource estimates.
I shall scrutinise the Bill to make certain that it does its job properly, but I am very surprised at the Conservatives' apparent opposition to it, especially as the earlier remarks of the right hon. Member for Horsham (Mr. Maude) seemed to contain some support for it. Sadly, however, he went on to be grudging about the Bill and to make some unsubstantiated allegations that it was to do with creative accounting. That appeared to relate to the amendment, which states that the Gracious Speech
I shall dwell for a couple of minutes on the benefits that the Bill will bring. We applaud the Government on its introduction. The Bill will improve the way in which Whitehall and Government Departments account for capital spending. In the past, there has been a bias against capital spending in the public expenditure survey rounds.
The Bill will mean that Ministers and public sector managers have better information. That will improve the decisions that they make, and ensure that the bias against capital spending no longer exists. As a result, our capital assets, which play a key role in underpinning the strength of our economy, will be properly maintained and will receive proper investment. The capital wealth of our nation must not be forgotten when scarce resources are allocated.
The hon. Member for Sevenoaks (Mr. Fallon) mentioned the national assets register, which is connected with resource accounting and budgeting. The Government have not taken the opportunity provided by the register to try to allocate our capital resources more effectively before the Bill is introduced. They could have disposed of more assets and reinvested the proceeds into our public sector stock. It is a shame that they have not done so.
A second major advantage of resource accounting and budgeting is that it will link the spending authorised by the House to objectives, outcomes and outputs. That is a major and highly welcome change, at the cutting edge of the reform of public sector finances. The question is one of sensible, rather than dishonest, accounting processes.
Most importantly, the Bill will improve the House's ability to hold the Executive to account. For a long time, the House has lacked the information necessary to scrutinise departmental budgets. The Bill will provide four additional schedules of information, so that the House will be able to inspect a proper balance sheet, and a proper statement of profit and loss.
Conservative Members shake their heads and deny that that is so, but that is not good enough. If they had introduced the same proposals on a fast track when they were in power, we would by now be able to have decent debates about the public accounts. I am sure that a close inspection of the accounts of the Tory Government would have revealed not only dishonest, but some incredibly creative, accounting practices.
I said in my opening remarks that this was a timid Queen's Speech, particularly with regard to spending and aspects of public service reform and investment, apart from the accounting side. The Government have a huge majority; they have a huge lead in the opinion polls; they have a massive amount of money in the Exchequer, and they have huge surpluses. Yet, with all their political, economic and financial strength, they are still extremely cautious. They have not provided a vision for investing in our public services.
The Chancellor seems to take great pride in prudence, but it is not a big step from Miss Prudence to Scrooge. The sort of prudence that leaves our public sector under-invested is actually financial irresponsibility, which stores up social, environmental and political costs for the future.
Previous Labour Chancellors have frequently not had enough money in the coffers. In the 1970s, for example, Lord Healey had to ask the International Monetary Fund for help in sorting out the Government's finances. Some Chancellors have looked desperately for ways in which to cut public expenditure. The Government have £9.5 billion in surpluses in this financial year; they will have £11 billion in the next financial year and £13 billion in the financial year after that. On current figures, there is clearly enough money in the kitty, and that does not even take into account the huge contingency reserves that are, quite rightly, included in the accounts.
Various City commentators believe that the current surpluses are based on very cautious projections of growth. The chief economist of CCF-Charterhouse, Richard Jeffrey, was quoted in the Financial Times as saying:
The Chancellor has a huge war chest at his disposal. The question is, when should he spend some of it? Should it be in this financial year or in the next financial year, or should he leave it until the Budget before the general election? Thinking about timing makes me think about the needs that I see across the country, in the capital and in my constituency. Many people believe that Kingston, the London borough that I represent, is very affluent. While some areas may be, it is not homogenously affluent--we have pockets of severe deprivation. More importantly, from the Government's perspective, Kingston's hospitals, schools and police force are in great need.
London's housing price boom, which has been mentioned by several hon. Members, presents real problems for people working in the public services in the capital, because it is pricing them out of working in the public sector. They have been expensively trained to work in the public sector; they have been to university,
gaining detailed qualifications at the taxpayers' expense over a number of years, but they can no longer afford to work in the public services, particularly in London.
The chief executive of Kingston hospital was having such problems recruiting nurses that he had to spend a special team to the Philippines to recruit nurses there. The Government say that they are against recruiting nurses from abroad, but if they do not tackle the problems of public sector pay in London and in my constituency, the chief executive of Kingston hospital will have to repeat that process to plug the gaps in his nursing staff.
The nurses from the Philippines are well qualified; they have been integrated into Kingston hospital, and are very caring, but they are on two-year contracts and will, at the end of their term, return to the Philippines, to be replaced by other recruits from the Philippines or from somewhere else. That is not a sustainable way to run a health service.
When I knock on doors in my constituency, I meet ladies and gentleman who were trained to work as nurses--indeed, as senior nurses. They would like to work in the health service, but can earn more working in offices and supermarkets. That is ludicrous.
Under the previous Government, the number of police officers in Kingston was reduced by more than 40 and, under this Government, it has been reduced by more than 20. The Commissioner of Police of the Metropolis is having real problems recruiting officers. He says that the youngest constables have to survive on housing benefit because of the high rents and house prices in London. That is not sustainable.
"does nothing to ensure that the public accounts are honest and open".
For all its other failings, the Queen's Speech contains proposals for a Bill to deal with the public accounts that will ensure that Parliament has the information that it has lacked for decades. The Conservative amendment is therefore especially inappropriate.
"Undoubtedly for political reasons, the probable budget surpluses over the next 2 years have been underestimated by at least £5 billion a year".
If we had proper forecasts based on realistic forecasts of growth, the surpluses would be even larger.
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