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Mr. Davies: Yes; I am a very old hand.
I have certainly enjoyed the opportunity of applying business disciplines to public expenditure, and think that we have recently made rapid progress. When I was elected to the House, however, I was surprised to learn how backward the accounting system was in relation to resource accounting. Nevertheless, the European Union could learn much from the United Kingdom.
Mr. Quentin Davies (Grantham and Stamford):
It is a pleasure once again to find myself opposite the Financial Secretary to the Treasury, albeit in a different departmental capacity, and I take this opportunity to congratulate him very sincerely on his appointment.
This is a very special parliamentary occasion. The fundamental--the primordial role--of Parliament, ever since we were established back in the 13th century, has been to vote Supply to the Executive branch, to authorise the raising of taxes, and then to keep close tabs on the Executive branch in its expenditure of that money. The Public Accounts Committee acts in effect as the ears, eyes and arm of the House of Commons in that essential constitutional role.
We have a sense of gratitude to colleagues who serve on the Committee and do such an excellent job. That is why the Committee and the NAO system has justifiable international prestige at present. I want to pay tribute to my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), and to all colleagues on both sides of the House who have given up their time to produce 40 reports--a considerable achievement.
All the speeches today have been thoughtful, and no one has come into the Chamber to mouth slogans. Many who have spoken are members of the Committee, but others who are not have been motivated enough to sit through a long debate to make carefully considered points.
My right hon. Friend the Member for Haltemprice and Howden set out his achievements, and referred to the 40 reports and £356 million in savings--a concrete
achievement on behalf of the taxpayer. He referred to a number of interesting inquiries that the Committee had undertaken. He was harsh in his comments about the EU, and I will return to that matter. He referred to the Halton college affair. I thought that it was quite a regrettable achievement for one small further education college to succeed in malversating £6 million without anybody noticing.
My right hon. Friend referred to the challenges and problems that the Committee faced and would be likely to face in future. He said that the Government appear so far to have refused the NAO access to Oflot's records in the vetting of candidates for the national lottery. It must be of concern to us all if the Committee and NAO find difficulty in carrying out their task because of obstruction from the Executive branch. I hope that the Minister will address that.
My right hon. Friend said that 50 agencies were not covered by the NAO or the Audit Commission. Since these intermediate agencies are growing in importance in the Executive, it is worrying that so many should not be covered. Parliament deserves an explanation, and I hope that we will get an assurance from the Minister that they soon will be covered.
My right hon. Friend said that it was essential that the performance measures which were to be agreed between the Government and various Departments should themselves be subject to audit. That is extremely important, and I hope that the Government will respond favourably.
My right hon. Friend made a serious charge which should not be forgotten. The Chancellor, in his pre-Budget statement the other day, said that the assumptions and projections behind his statement had been audited by the NAO. My right hon. Friend pointed out that that was not the case for all of them. Frankly, the selective auditing of assumptions--without making it clear to Parliament which had been subject to audit and which had not--is in some ways worse than no audit at all, as it gives an entirely spurious credibility to the vital figures which appear in such statements.
The right hon. Member for Swansea, West (Mr. Williams), who has long experience in the House on both Front and Back Benches, spoke with considerable authority. He made the point that giving short-term contracts to civil servants and introducing commercial incentives into the civil services increases, to some extent, temptations and difficulties that otherwise would not have arisen. He said that that may be a threat to the culture of the civil service, and while I do not know how much of a problem that is likely to be in practice, we must be alive to the possibility. The right hon. Gentleman made some useful points.
The hon. Member for Newbury (Mr. Rendel) dealt with the NIRS2 computer fiasco. The Liberal Democrats are normally so sycophantic towards the Government, but he made it clear that he regarded the matter as being their fault, not--as the Government often try to pretend--that of the previous Administration.
The hon. Member for City of Durham (Mr. Steinberg) alleged serious miscalculations by the Treasury in managing several major privatisations, including nuclear power and Railtrack. I did not always find his financial
logic easy to follow, but I hope that he and the Government would agree that it is important that investment or divestment decisions are taken entirely on the basis of marginal costs or marginal return, and not sunk cost. For a moment, I thought that the hon. Gentleman was suggesting the latter, but that would be a serious error that would cause great economic damage to this country. When comparing marginal costs, one must compare the potential return keeping an asset in the public sector to the return that would be obtained by selling it, which would constitute a capitalisation and a lump sum. It is no use saying that a privatisation should not be carried out because the return for the private organisation that takes over the activity will be much higher. Of course it will, and that is why the private sector bid for it. The efficiencies resulting from the privatisation are reflected in the price.
My hon. Friend the Member for Bexhill and Battle (Mr. Wardle) dealt with national savings, which are important to many small savers. He also made the original suggestion that agencies should think about setting up in-house IT units instead of contracting out or buying in that service. The proposal would need much thought, but those with responsibilities in that area should think very carefully about it.
The hon. Member for Liverpool, Garston (Maria Eagle), who is leaving the Committee, gave us an elegant swan-song in which she coined a couple of useful phrases. She said that the Committee and the National Audit Office should have a "financial right to roam", and I agree. That right should not be constrained, although my right hon. Friend the Member for Haltemprice and Howden claimed that that is what is happening. That is worrying. The hon. Lady also said that if taxpayers' money is involved, the Committee should be allowed to pursue it. That principle could not have been better expressed.
My hon. Friend the Member for South-West Hertfordshire (Mr. Page) dealt with two matters. He was severe about the European Union and the Commission, and he also made several important points about the relationship between the Government Resources and Accounts Bill, the National Audit Office and the Committee.
The hon. Member for Brent, North (Mr. Gardiner) mentioned cervical screening, which was the subject of an important report. He reminded us that the issue involved not just money, but life and death. I think that he said that cervical cancer causes 1,300 deaths a year, although I cannot confirm that figure. If that is so, one would hope that that number could be brought down rapidly, because the assumption must be that if earlier diagnoses were possible the great majority, if not all, of those women could be saved.
When I read the report I was also struck by the Committee's strong strictures about the local management of Kent and Canterbury hospital. Page viii of the sixty-ninth report of the 1997-98 Session says:
The hon. Member for Hazel Grove (Mr. Stunell) dealt with the twelfth report, on energy efficiency, and very properly criticised the Government for the inefficiency of the handgun compensation scheme.
The hon. Member for Linlithgow (Mr. Dalyell), who is still internationally known as the hon. Member for West Lothian, made a passionate speech about the danger of drug abuse and the problems of controlling international money laundering. That is relevant to our debate because those problems were touched on in the fifteenth report.
The hon. Member for Edmonton (Mr. Love) made several telling points about the private finance initiative. He rightly said that the PFI can all too easily become a way of disguising reality and cooking the books rather than a way of providing economic benefits for the nation. PFI is an important and positive development in itself, but a degree of healthy scepticism about it is appropriate.
The hon. Member for Croydon, Central (Mr. Davies), who knows quite a lot about business and IT, said that some of the mistakes that had been made in the IT-related schemes had involved the specifications rather than errors by the contractors, who had had to take over projects on the basis of the specifications. That is interesting, because the hon. Gentleman normally defends Ministers, and if when computer systems go awry the fundamental errors are in the specification, clearly it is the Government rather than the contractors who are largely to blame.
The hon. Gentleman also said that when contractors have learned things at the expense of the British taxpayer by pioneering a new system--they may not have done it well, but they will have come away with valuable know-how--the Government should share the benefit. That is a good idea. The Government have missed another opportunity in failing to grasp that idea and include it in contracts where possible. There could be a provision for a royalty or other payment when know-how acquired as a result of carrying out a particular contract is subsequently sold on by the contractor to customers elsewhere in the world.
It would be wrong for me to finish speaking without saying on behalf of the Opposition what conclusions we draw from the debate. As I have said that the debate is important and the subjects pertinent, and that they have been dealt with in a serious fashion by the Committee, if I did not now give our point of view it would be something of an abdication on our part.
Reading the reports, which was necessary homework for the debate, is a salutary if somewhat depressing exercise. It is clear that things are not quite as well conducted in our administration as most of us would like to think.
I was struck by the criticism of the European Commission from both sides of the House, and by the strong language in the Committee's report on that subject. The House knows me well enough to realise that I am not one of those who simply gloats over any and every criticism of the Commission--on the contrary. None the less, the criticisms must be taken seriously. If one believes that the Commission is a vital body, and in many ways has a fine record as a bureaucracy, it is even more worrying that there should be such substantial flaws in what we might call the "back office"--the aspects concerned with administration, implementation and financial control. I think that we all look to Commissioner Kinnock to bring about some real changes. All hon. Members know him and sincerely wish him well, even though opinions about him differ. As Commission
Vice-President with responsibility for administration, Mr. Kinnock is the senior British Commissioner. He has a vital job and faces a great challenge. I hope that the Committee will go back to Luxembourg, Strasbourg and especially to Brussels before it reports on the Commission again in a couple of years or so. It is extremely important that some real improvements are evident.
I turn now to the NIRS computer system. It is clear that a bad mistake was made in August last year, when the system was accepted. The Public Accounts Committee is never party political, but paragraph 4 of the report on NIRS published in June states:
Another theme that emerges from the Committee's analyses of failures and problems has to do with the Home Office. It cannot be a coincidence that nothing that the Home Office does goes right. We have had the disaster with handguns, and the shambles in the immigration department. The Committee has not yet had a chance to examine the shambles in the Passport Agency, but I hope that a National Audit Office report on that matter will be available to the House fairly soon. The Home Office seems incapable of running anything with even a modicum of efficiency.
Finally, the Government Resources and Accounts Bill, which will be given its Second Reading on Monday week, was referred to several times. The Bill gives the Government a wonderful opportunity to enhance the transparency and the reality of the figures presented to the electorate. It is also a wonderful opportunity for the Government to increase the rationality and efficiency of their operations, so that better decisions in resource management are taken.
The Bill is a superb initiative and we have welcomed it, in principle, from the beginning. However, it contains some enormous lacunae. Vast areas of Government revenue and expenditure are not covered, and some of the most important areas of liability--including the national insurance system, and pensions liabilities that must amount to some £200 billion at least--are simply omitted.
"They deserve the severest censure for doing nothing about those problems and for bottling them up within the Trust".
Something should have been done about that, and it sounds to me as though several people who had been exercising executive functions in the trust ought not to be exercising them today. I hope that they are not.
"Fifteen months after we first took evidence from the Contributions Agency the situation is much worse. The system is still not fully operational."
That was bad, but far worse was the complacency of the Government's response to the crisis, of which the House should be much less forgiving. Only last autumn, the Secretary of State for Social Security said that the matter would be resolved in a few weeks. Either he did not know what he was talking about, or he was trying to pull the wool over the eyes of hon. Members about a very serious matter. That was insouciance bordering on recklessness, and the House deserves an apology.
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