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4.44 pm

Mr. Richard Page (South-West Hertfordshire): I begin by expressing my regret at the departure from the Public Accounts Committee of the hon. Member for Liverpool, Garston (Maria Eagle). Her notional 15 minutes have shown why she will be sadly missed, and we wish her every success in the greener pastures to which she is migrating.

I have had the privilege of being on the PAC since 1987, with three years off, either for good behaviour or for bad; I am not sure which. I am firmly of the opinion that it is the most important and influential of the Select Committees. It achieves that because we have the invaluable support of Sir John Bourn and his staff.

In addition, we have reports that are agreed with the accounting officer, which enables us to cross-examine the witnesses without the constant party political bickering back and forth that characterises so much of our general parliamentary activity. That gives the Committee strength.

The party political divide is crossed on the Committee, and hon. Members on both sides of it clearly understand the concept of accountability and the need for correct financial management. That is fundamental to our work, and I am worried that the Bill that will come up before us in a week or two--the Government Resources and Accounts Bill--may weaken the work of the National Audit Office and the PAC. I hope to touch on that idea later.

First, however, I come back to the idea of crossing the political divide. It is one of the Committee's endearing virtues that we have succeeded, without recourse to a vote, in reaching agreed conclusions on every report on every subject since I have been a member of it. That achievement is greatly to the credit of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the present Chairman, and his predecessor, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I praise both of them, as I do in my speech on this subject every year, so that I might get called early for the taking of evidence--but so far that has not worked, and next year I may have to embark on a different tack if it does not work this year either.

I strongly supported the Committee's initiative earlier this year in arranging two "awaydays" to examine the arrangements for controlling European Union finances in Brussels, Luxembourg and Strasbourg. Unfortunately, as our Chairman and others have said, we found serious and unacceptable problems in the EU's institutions. There was a definite lack of clarity about who was accountable for spending, as well as an unwillingness to consider how policies should be implemented once they had been devised.

Almost all the financial auditing and reporting procedures were inadequate, and the measures available to combat fraud were conspicuous by their absence. It is extraordinary that members of the European Commission should be reluctant to accept any personal responsibility for the Commission's actions and for those of their own directorates. That is a little like a company chief executive not wanting to take responsibility for the actions of his staff.

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We need to know whether the new commissioners, headed by Mr. Prodi, and the individual directors general, will be made directly accountable, inside the Commission and to the European Parliament, for their responsibilities. We must demand to know the progress that has been made towards clarifying the duties of the Commission and member states in the operation of some 1,500 structural fund programmes.

It is equally worrying that the Commission has been able to develop policies without considering fully the risks and the resource implications involved, and the financial controls needed to ensure that those policies succeed. At present, Commission programmes are like fire-and-forget missiles: they are devised and fired, but we have no idea where they will end up, or what their cost and efficiency will be.

The European Union spends about £54 billion a year, but is run like one of our ancient universities, where the dons leave the bursars to carry out the schemes that they have approved. It is no wonder that the number of small schemes supported by the Commission has grown so rapidly, nor that there have been so many instances of error and fraud.

The House debated these matters earlier this year, and I will resist the temptation to repeat what was said then, even though it well bears repetition. So far, the Government's response has been inadequate. They need to take a much tougher line to ensure that Britain's public money is not wasted in the Commission.

I could spend until 7 o'clock, when the plug will be pulled on this debate, listing all the schemes that have gone wrong, but I shall limit myself to a couple of examples. They have emerged thanks to the persistent efforts of a whistleblower, who tried for years to get matters put right through official channels. Eventually, a committee of independent experts was called in to investigate.

In its March report, that committee states that it found that one small item in the humanitarian programme had led to four fictitious contracts being issued, to a total value of £1.6 million. Part of that sum had been spent on employing 11 staff to implement the programme. Similarly, a programme to support tourism was begun in 1989. By last spring, 76 organisations or individuals had been the subject of criminal prosecutions or inquiries in the European Union. The head of the supervising unit was found to be engaged in "unauthorised external activities" that gave rise to "embezzlement, corruption and favouritism."

Members of the Public Accounts Committee will know what a sacrifice it is for me to restrict myself to two such cases, and to resist going into detail about the cochineal beetle scam, which is a story in itself.

Perhaps, given such examples, we should not be surprised that the former Commissioners and directors general did not want to take personal responsibility for such matters. As has been mentioned already, that neglect was made worse by the fact that internal promotions inside the Commission were strongly influenced by attempts to maintain a balance between member state nationals. People have been promoted not according to ability and skill, but according to their distribution on a nationalist basis.

That is not the way to ensure that taxpayers' money is correctly controlled and spent. The PAC report earlier this year showed that the opportunities for error and fraud had

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increased. There is no doubt that successive European Commissions have failed to respond adequately to the concerns expressed by the European Court of Auditors and by the European Parliament's Committee on Budgetary Control.

For all practical purposes, until now no Commissioner or member of staff--however incompetent or useless they may be--has been liable for dismissal. I am prepared to say that Brussels needs a strong infusion of the principles and practices governing accountability for public funds that operate in the United Kingdom. Everything that I have heard, in April and since, reinforces that contention.

To put the matter bluntly, the European Parliament must grasp the nettle and insist on the introduction of proper accountability. We should let Sir John Bourn examine the Commission's activities and say what its members should be doing. At the same time, the European Parliament should set up a PAC of its own, with the authority and power to call directors general before it, so that they can be held responsible for the money that they dish out to projects so casually.

I shall not continue in this vein except to say that the Committee's Chairman has been delicate and gentle in his treatment of the matter, and I hope that I can stiffen his resolve to be even firmer in the future to ensure that Europe spends our taxpayers' money in the most effective and efficient fashion.

My comments should not blind us to our responsibility to make sure that we note the continual challenges facing Departments and agencies. One recurring theme, which the Chairman touched on when summing up the Committee's activities this year, is the failure of public bodies to get right their provision of new information technology programmes. Time and again, we see a catalogue of doom and disaster. I shall not repeat the comments about the fiasco of the replacement system for national insurance contributions--I imagine from my postbag that the show still has some way to run.

The arrangements for privately held handguns, referred to by my hon. Friend the Member for Bexhill and Battle (Mr. Wardle), gave another opportunity for confusion and delay. A number of my constituents waited much longer than a year for compensation. Their letters and queries did not receive the effective and efficient response expected of a Department. As my hon. Friend said, the Department thought that it could handle 4,000 cases a week, but the figure eventually reduced to 415 a week, adding to my constituents' confusion and frustrations.

The lessons of this and other problems in designing and operating new technology do not appear to have been learned elsewhere. I am always conscious, when speaking this late in a debate, that some examples have already been given. However, I should like to give the example of the immigration and nationality directorate and the Home Office's lack of flexibility. The plan to reduce staff numbers as a new computer system started operating was not realistic because, as we know, the system did not work properly, and it took longer and longer to process applications. However, the reduction of staff proceeded apace, leading to a double whammy. The computer was not working well, but, even so, staff numbers were being reduced. The number of applicants waiting ballooned until reality eventually dawned. The directorate had to reverse its staff reduction policy and take on people to try to reduce the number of people waiting for their applications to be considered.

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I would be very surprised if any hon. Member has not been touched, through a constituency case, by that delay. There are striking parallels with the more recent problems in the Passport Agency. I must not pre-empt the PAC's findings, but there is no doubt that some passport offices came very close to a meltdown. I know for a fact that one of my hon. Friends and his secretary had to deal with some 300 cases during that difficult period. I suppose that historians of trivia will have a field day, given the number of umbrellas that the Passport Agency had to buy to keep the long and frustrated queue dry in wet weather.

The Financial Secretary to the Treasury would be wise to bear in mind the comments of our Chairman on aspects of the Government Resources and Accounts Bill. I favour resource accounting, which will bring us into the real world by paralleling what is already accepted practice in the private sector. However, I am not surprised that there are problems. The National Audit Office was shown a first draft of the Bill on 22 October. To hit such a responsible and respected organisation with a Bill less than 30 days before its presentation and First Reading is not good enough.

I am worried by the suggestion that the NAO will not be clearly accountable to Parliament. The Bill is ambivalent and may be interpreted as meaning that the NAO could report to the Treasury. I hope that that interpretation is wrong. If not, that would be the same as allowing the auditors of a private company to report to the directors, not the shareholders. That would undermine the work of the NAO and the PAC. The Bill gives us an opportunity to improve our accountancy practices and operations. However, I fear that it may have the opposite effect.

The PAC must never lose sight of its responsibility to learn from the problems that arise in our Departments and agencies. We must try to apply the lessons across the board. That is our duty to the country and to the taxpayer.

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