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The Financial Secretary to the Treasury (Mr. Stephen Timms): As always, it is a pleasure to follow the hon. Member for Grantham and Stamford(Mr. Davies), and I thank him for his kind words.

I have listened with great interest to this debate, in which many valuable points have been raised. I hope that, unlike my predecessors, I will be able to listen to the debate when it comes around again in a year's time. First, though, I want to thank the Public Accounts Committee for its hard work over the past year. The Committee's Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), said that it had produced 40 reports in that time. I look forward to the opportunity of attending a meeting of the Committee as a member before too long. I thank the Chairman and other members of the Committee for their welcome.

Since the last debate of this kind in January, the Committee has continued to work with its customary diligence. In an excellent and elegant speech, my hon. Friend the Member for Brent, North (Mr. Gardiner) illustrated well how the reports have great influence for good in individual localities such as his constituency as well nationally.

One of the main reasons why the Committee continues to have such an impact is that it is extremely well served by its Chairman. He exhibits not only great energy and enthusiasm, but real concern about standards of behaviour and value for money in Government. That is a powerful combination, for which we are indebted to him.

I should also like to thank other members of the Committee, who have worked very hard, particularly my right hon. Friend the Member for Swansea, West(Mr. Williams), the senior member of the Committee. When I was first elected to the House, a member of my local constituency party advised me that if I wanted to be effective, I should emulate my right hon. Friend, particularly with regard to his work on the Committee. I have watched his contributions since then with the greatest interest, and concluded that that tribute was well deserved.

I thank the Comptroller and Auditor General, Sir John Bourn, the head of the Northern Ireland Audit Office, Mr. John Dowdall, and their staff, for all the valuable work that they have done over the past year. We are indeed very fortunate to be served by such excellent auditors.

One of the main ways in which the Government are seeking to improve the quality of our public services is through the modernising government initiative. The National Audit Office has an important part to play in making the initiative a success, not least by carrying out studies in the relevant areas. The Government would welcome, for example, studies of cross-cutting initiatives and how to make better use of new technologies. We do not claim to have all the answers, and are keen to expose those areas to effective scrutiny.

Fear of how auditors will react to new ways of doing things is often cited as a reason for sticking to time-honoured ways of working. But Departments need to adapt if they are to exploit all the opportunities that are opening up. That is why I particularly welcome the statement by the Public Audit Forum in the White Paper "Modernising Government" that auditors will support well thought through risk-taking and experimentation. The

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Committee Chairman said that today, and my right hon. Friend the Member for Swansea, West also spoke about the importance of innovation. I hope that officials at all levels will take note.

We are grateful to the Public Audit Forum for a number of things, as well as its statement in the White Paper on modernising Government. I welcome that initiative as well as the co-operation between our national audit agencies, which is demonstrated by the forum's work, and the determination of auditors to think positively about the major issues facing the Government, and how they can contribute to achieving worthwhile change.

The Government also aim to secure better service delivery through involving private partners. I welcome the Committee's work on getting better value for money from the private finance initiative and the thoughtful remarks of my hon. Friend the Member for Edmonton (Mr. Love). Since the election, we have signed more than 140 deals involving capital investment by the private sector of nearly £5 billion to deliver better services over a wide range of activities. But there is still undoubtedly scope for doing more. Following the recommendations of Sir Malcolm Bates, we announced in July the creation of a new private sector-led body, Partnerships UK, a private company with a public mission. That is a practical response to the key lessons outlined by the Committee in its 23rd report.

A number of hon. Members have spoken about the Committee's work on privatisations. My hon. Friends the Members for Liverpool, Garston (Maria Eagle)--whom I congratulate on her well deserved appointment--and for City of Durham (Mr. Steinberg) made some telling points about the way in which privatisations were handled, particularly Railtrack and British Energy. The Committee drew important conclusions about that. Both those firms were affected by the windfall tax, which offered comfort to some hon. Members. The Railways Act 1993 required that Railtrack should be sold as soon as was practicable, and that was the source of some subsequent difficulties.

Several hon. Members have talked about the Government Resources and Accounts Bill, which I agree is the most important change in central Government financial accountability since the initiative of Mr. Gladstone of which we heard earlier. The Bill will enhance the quality of financial information available to the House and will enable Departments to manage resources more effectively. I am glad that that move has been welcomed and that it is not contentious.

Implementation is well under way and progress is being monitored, assessed and reported. The hon. Member for Hazel Grove (Mr. Stunell) asked for chapter and verse on progress. I can tell him that Departments are submitting dry-run resource accounts to the NAO for audit, with a view to meeting trigger point three. The next trigger point will come when Select Committees receive dry-run resource-based estimates from Departments for the coming financial year. Further reports on progress and policy will come before the House, and the Bill provides for the preparation of whole-of-government accounts, allowing the expansion of the principles of resource accounting to accounts for all public sector spending.

Mr. Stunell: Will the Minister give way?

Mr. Timms: I apologise, but I cannot.

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The right hon. Member for Haltemprice and Howden suggested that the Bill should extend the NAO's rights of access in several areas. I am not persuaded of the need for that, but the matter will be fully discussed in the coming debates on the Bill. The right hon. Gentleman suggested that the NAO should audit all non-departmental public bodies, but it was agreed some time ago that the NAO should have inspection rights for all those bodies, so it already has the access it requires if it is to follow up points of concern.

As it happens, the NAO has been asked to audit all bodies established since the general election. However, each case should be considered on its merits rather than our imposing a one-size-fits-all policy on such bodies. I do not rule out the possibility of extending rights of access by administrative means in agreement with relevant Departments, where it may be necessary to provide effective audit or to help to promote well thought through innovation and risk-taking. I look forward to discussing such matters with the Comptroller and Auditor General.

The right hon. Member for Haltemprice and Howden and the hon. Member for Grantham and Stamford asked about NAO access to Oflot. I am sorry that the Committee has not yet had a response to its request for access to Oflot's books. The request raised difficult legal issues, which have taken some time to resolve. Matters are progressing, and I hope that the Government will be able to give the Committee a response soon.

The hon. Member for South-West Hertfordshire (Mr. Page) suggested that the Bill would curtail access currently available to the NAO. I can assure the House categorically that Ministers have no intention of curtailing existing access. The Government also categorically intend that the Comptroller and Auditor General will continue to report to Parliament, and not to the Treasury or anyone else.

The right hon. Member for Haltemprice and Howden asked about NAO audit of performance information. Reliable systems should be in place for measuring and monitoring performance, but I am not sure that mandatory external validation by the NAO is necessarily the best way forward. Several issues will have to be considered further as performance reporting policy develops. We shall keep the point under review, and I am aware of the excellent work of the Audit Commission among local authorities, which was mentioned by my hon. Friend the Member for Croydon, Central (Mr. Davies).

I was asked about audit of the assumptions for the Budget. The Comptroller and Auditor General conducts those audits on the principles set out in the Finance Act 1998. The role of the NAO is formalised in the code for fiscal stability. I remind the House that this Government and this Chancellor have gone much further than any other in opening up their assumptions on public finances to public scrutiny. I am sure that the Committee has welcomed that development.

European Union reform was mentioned by a number of hon. Members. Those issues were discussed in the Committee's 29th report. We agree wholeheartedly that fundamental reform is needed. The Prime Minister himself called for root-and-branch reform. The new Commission has taken action, which is encouraging. Neil Kinnock chairs a group of commissioners to push forward the reform process and they will be setting out detailed reform proposals next February. He has also published a

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route map for reform, to set out milestones up to next February, including a new whistleblower's charter. I am glad that the right hon. Member for Haltemprice and Howden has been in discussion with him. I welcome the Committee's continuing interest in the matter.

I thank my hon. Friend the Member for Linlithgow (Mr. Dalyell) for his courtesy in letting me know that he wanted to raise issues associated with the fifteenth report. I will ensure that, as he requested, he receives a copy of the response to it, setting out our arguments in detail. He was right to identify the drugs problem as one of huge importance and one that has a high priority for the Government.

Of course, unnumbered bank accounts are prohibited within the United Kingdom. In the case of the overseas territories, including the Cayman Islands, we have instituted a new independent review of the system of financial regulation that is in place to plug any gaps between it and international best practice. In that way, I hope that we will be able to deal with any difficulties that remain there.

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