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Mr. Geraint Davies (Croydon, Central): Does the right hon. Gentleman believe that the work of the Audit Commission should be accountable to a Select Committee

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of this House, be it the Public Accounts Committee or the Environment Sub-Committee, in the way that the NAO answers to the PAC?

Mr. Davis: That is not what I am getting at, although it would be a worthwhile reform. I would not want to make the Audit Commission accountable to the Public Accounts Committee, unless the hon. Gentleman wants to turn up to 100 meetings a year rather than 50, as we have now, but it would be valuable to have a second PAC to deal with the output from the Audit Commission and hold the Government to account on it. I hope that the hon. Gentleman pursues that worthwhile idea, but it is not the point that I was making.

Mr. Dalyell: I do not want to interrupt the flow of the right hon. Gentleman's interesting and informative speech. Has the Committee had any difficulty with bodies in Scotland and the Scottish Executive?

Mr. Davis: The hon. Gentleman tempts me enormously.

Mr. Dalyell: Succumb to the temptation.

Mr. Davis: I try never to succumb to temptation. The purpose of my Committee is to prevent people from doing that. Like the hon. Gentleman, I am concerned about that large tranche of money--£14 billion, or however much it is--that is spent on grant from this Parliament to Scotland. We have attempted to create an audit committee in Scotland that is equivalent to the PAC. I am attempting to make sure that it is able to learn from our experience. However, that does not deal with the hon. Gentleman's point, which is that accountability to this Parliament for that £14 billion has been sheared off and dislocated as a result of last year's devolution legislation, but that was a decision of this House. He and I both have to live with it, whether we like it or not.

My final point, on which I shall talk only briefly, is incredibly important. The Government have not addressed the audit of performance measures.

Sir Robert Smith (West Aberdeenshire and Kincardine): A small amount of the Scottish block is spent by the Secretary of State for Scotland. Is the use to which that money is put still accountable to the right hon. Gentleman's Committee?

Mr. Davis: The permanent secretary to the Scottish Office is responsible for the entire £14 billion. It is possible to summon him to account for the use of all of it, but the difficulty is that the National Audit Office is unable to penetrate behind that £14 billion to inform the Committee about its use. One of the virtues of the Public Accounts Committee is that it is non-partisan in its findings. One reason why it can be so non-partisan is that it has a strong factual basis for every decision or recommendation. It is hard to dispute party points when the facts of misdemeanour, waste, misuse, inefficiency or lack of service delivery are staring people in the face. That is what we lack for the Scottish money. We can still summon the permanent secretary, but we do not have the vital weapon that we have with every other aspect of public accounting in this country.

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As I said, the Government have not addressed the audit of performance measures. The Government's proposed resource accounting reforms will require the annual preparation of statements of performance. They may well be the most important component of the reforms. Despite a long campaign by the Public Accounts Committee, the Government have not yet decided whether they will be independently audited. The Select Committee on the Treasury reported in July this year on the need for external validation of performance measures and concluded that the National Audit Office would be the best body to do that. The Government's response is disappointing. Performance measurement has tremendous potential to serve as a lever to improve the delivery of public services and to increase the openness and transparency to Parliament and to the citizen of what the Government have done on their behalf. However, all Governments will have to resist the temptation to manipulate performance information. That temptation applies to every Minister in every Department in every Government of whom I have had experience. Independent validation is an essential protection in that respect.

The Government must accept that there is a stark parallel. Local government is properly being subjected to a rigorous, independently audited performance measurement regime--the so-called best value regime. We are told that poor performers will be named and shamed and publicly exposed. The Government are rightly spending millions of pounds on equipping the Audit Commission to carry out that role, yet the same strictures are deemed inappropriate for central Government. Why? The Government's failure to allow the NAO to carry out for central Government the role that its counterparts will carry out for local government is beyond comprehension. Hard facts and truthful data are the currency of debate in any democracy. It is vital that they are not debased in any way.

There have been controversies in recent months over the treatment of a wide variety of information, from tax burdens to waiting lists. I shall not get involved in those controversies today, but I want to prevent them from happening. It is vital that the public have absolute confidence in Government information, be it on hospital waiting lists, tax burdens or any other matter.

The Comptroller and Auditor General and his staff have been developing methods for validating performance measures. The Bill that the Government will shortly introduce should allow the House to benefit from that expertise through routine reporting on performance measurement as part of the examination of public accounts. That would be consistent with the National Audit Act 1983, which deals with efficiency and effectiveness in the delivery of public services.

As we enter the next century, the Government should recognise that they have a unique opportunity to emulate one of the greatest successes of the last century. I have no compunction as a Conservative in recognising that it was a success brought about by a great Liberal Prime Minister. It might seem rash, but a Government truly seized by reforming zeal would update not just the process of government, but the public accountability system that is its cornerstone. Gladstone's contemporaries 130 years ago might have thought him mad to establish an auditor that the Government could not sack, to put the whole of

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the Government, as they were then, within his remit and--maddest of all, dare I say--to create a Public Accounts Committee chaired by an Opposition Member. What might have been seen as madness at the time has been seen subsequently as his most visionary action. The Government must be equally visionary this year.

I fully understand that what I am proposing would not yield short-term political profit for the Government. If they set out to modernise rather than marginalise Parliament, they will make their own political job a little harder. However, if they grasp the opportunity and have the courage to recognise that strong democracy generates good government, we shall all have reason to applaud their actions.

3.10 pm

Mr. Alan Williams (Swansea, West): At the start of his speech, the right hon. Member for Haltemprice and Howden (Mr. Davis) said that the House was packed. Look around and see what he has done. I greatly respect his chairmanship, but he should have learned a lesson from the fact that two previous Financial Secretaries could not stand coming here again.

I shall echo the right hon. Gentleman's approach, in that rather than giving a nut-and-bolt, step-by-step resume of the year, I shall try to put our activities in a broader perspective because this is a singularly appropriate time to do so. In a recent, equally well attended debate on Select Committee leaks, I noted that Britain prides itself on its democracy but is under an enormous illusion inthat belief. The ordinary citizens' participation in parliamentary democracy, if they lived to 80, would be a mere 20 votes. What is democracy and where do we find it? In a representative democracy, the answer must be here in this building or not at all. It is to be found here in this Chamber, but even more in our Committees. Although much of what we do is pedestrian by nature, it does not alter the fact that it is fundamental to the preservation of a working, meaningful democracy. If the Executive are not made continuously accountable, democracy will cease to exist.

The year before last, a retiring permanent secretary said that the Public Accounts Committee should not be confrontational or about blame. From his perspective, I understand that that might be an uncomfortable scenario, but his statement showed a lack of understanding of the Committee's role and nature. As its Chairman said, it was set up 130 years ago at a time of corruption, sleaze and waste. That may prompt some to ask whether was it worth it, but it is not appropriate to ask so facile a question. We should recognise that waste, inefficiency and impropriety are not to be fought as individual battles but as part of an on-going campaign to suppress and restrain them. Human nature being what it is, we cannot get rid of them but only try to contain them.

The sheer scale of what our one Committee is trying to do is rarely understood in its democratic context outside the House. Fifteen of us try to monitor more than £300 billion of public expenditure. When we were set up 130 years ago, there were only a couple of Departments to monitor, so a small Committee was appropriate. Now more than 4,000 accounting units spend the £300 billion. We meet only 50 times a year. Hon. Members will confirm that meeting twice a week, as we do when Parliament is sitting, with each report being different and

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consisting of 70 pages of briefing, is quite an onerous responsibility. However diligent the 15 of us may like to think we are, the PAC can only scratch the surface.

Returning to the permanent secretary who thought that the Committee was confrontational and involved with blame, I ask anyone to consider, with 4,000 subjects of possible examination, whether we should take them in turn or try to prioritise them. If we are to prioritise them, should we not pick those where there are lessons to learn? It may not be a matter of blame. The more innovative the subject being considered, the more essential its scrutiny so that any problems are rooted out as early as possible.

Sometimes our work is frustrating. We revealed the problems of computerisation, but they continue to appear. We deal with the dangers involved in varying costs and the problems of conflicts of interest. However, we could do those things in only the most token way if it were not for the National Audit Office. I do not say that to pander to the NAO, whose work we all respect. It has some shortcomings, but also enormous achievements.A Committee of 15 hon. Members, with constituents to look after and responsibilities imposed by the Whips, cannot pretend to monitor at all effectively what the Government are doing without the work of the NAO. There is nothing like a spell in opposition to make one understand the value of such monitoring. It is a measure of the scale of the task synthesised for us that it takes 750 staff to enable the NAO to do the monitoring that it undertakes on our behalf and to prepare reports. I emphasise to the Minister, because the whole Committee will return to this, that the NAO can do its work only if it has, and continues to have, appropriate access to each of the 4,000 units.

The NAO and the Comptroller and Auditor General must remain independent. In fairness, in recent years they have been made increasingly independent. However, their accountability and reports must be to Parliament and our Committee and not, as has been mooted in some quarters, to the Treasury. It would be ludicrous to have the monitor of the Executive reporting to the Executive. They do that sort of thing in Moscow, and we have seen the results there.

I am not opposed to change. Indeed, I have been a great advocate of changes. As a Committee member, I am concerned only that when they happen, we are prepared to deal with the consequences. The whole House, and Ministers in particular, have a responsibility there. There have been changes in the structure of Government that make accountability more elusive. I mentioned fragmentation and the 4,000 units that we try to monitor. Yesterday, the report of the Select Committee on Public Administration noted that there were more than 1,000 non-departmental Government bodies and various task forces. We are now told that the NHS Executive will be divided into more than 600 different accounting units. We are in a dynamic stage, with experimentation in the structure of government and in the way in which we deal with the people who are deemed to be appropriate to make up the Executive. I am not making any value judgments about the desirability of those developments. They have happened and I am observing the consequences.

Civil servants have increasingly had to become accustomed to short-term contracts. Such contracts, by their very nature, have the potential to diminish the loyalty of civil servants, and they certainly diminish their

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experience, and the ethical and financial codes that apply in the civil service. If that is the way in which things are to go, so be it, but we should monitor the consequences.

As for entrepreneurial activity in government, I was a Minister in the Department of Industry way back in the 1970s, and in the Department of Economic Affairs in the 1960s. We always sought cross-fertilisation of ideas between the civil service and private industry to get the best for the public service. People find it frustrating if they come into the civil service and are given chief executive positions but have no background in the public ethic and no experience of the public approach to taxpayers' money.

One lunch hour, I sat in the cafeteria with a Minister--I would never dream of revealing his name or which party he was in, but I have been back on the Committee since 1990, so he could have been in either Administration. He told me, "I hope you realise that your Committee is costing my Department money. We are spending good money to employ business men, and they are telling us that they are afraid to do things in the way that they want to because they are afraid of the Public Accounts Committee." They have reason to be afraid only if they do not observe the rules. Business men have incredible freedom to ignore their shareholders, but the taxpayer cannot be ignored. Parliament cannot afford to allow the taxpayer to be ignored.

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