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Mr. Davis: We all accept the importance of whole of Government accounts, and the Chief Secretary has made a good case for that. Can he explain, therefore, why for the whole of Government accounts the National Audit Office will not have absolute access to all the component parts, in the same way as it would in consolidating a company in the private sector?

Mr. Smith: Some of the bodies that are covered by whole of Government accounts have other auditing arrangements, which are set down in statute. Some are covered by the Companies Act 1989 rather than by public audit arrangements. Under the Bill, any payment that is made from the public purse can be scrutinised and followed as it is at present. As I said earlier, in introducing a reform on the scale of the Bill, we must focus on the main objective, which is to shift from cash to resource accounting. The Bill was never intended to overhaul audit arrangements, but I am happy to discuss with the Public Accounts Committee, or anyone who is interested, serious points of interest that arise on auditing.

Mr. David Davis: I shall not labour the point, but I do not want the Chief Secretary inadvertently to mislead the House. He used the phrase, "scrutinised and followed". In the private sector, a major company's auditor who has to audit the whole company is able to go into any component part. However, the National Audit Office cannot follow public money to any destination. I am sure that we shall debate the point in Committee.

Mr. Smith: Yes, I, too, am sure that we shall debate the matter in Committee. However, the Comptroller and Auditor General will certify that a true and fair record of expenditure has been kept. Accounts that have been audited--we have no reason to believe that they have been improperly--under other arrangements will be overseen. I am happy to discuss that further with the right hon. Gentleman and his colleagues.

Mr. Oliver Letwin (West Dorset): Can the Chief Secretary confirm that the Comptroller and Auditor General will not certify the regularity of the accounts?

Mr. Smith: The Comptroller and Auditor General will certify a true and fair record. That is a step beyond the provisions that were envisaged in a White Paper that the previous Conservative Government published in 1995. The presumption in that White Paper was of a fair basis. We have gone further than that in strengthening the certification ability of the Comptroller and Auditor General.

Mr. Robert Sheldon (Ashton-under-Lyne): I am sorry for the constant interruption, but we are considering important matters that we must clarify now, even though we wish to proceed further. The right hon. Member for

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Haltemprice and Howden (Mr. Davis) made the most important point. It is not enough to certify that the money has been spent; we must ascertain how it is spent. In the interest of parliamentary accountability, the Comptroller and Auditor General needs the power to do that. That is crucial, and the Public Accounts Committee and the Public Accounts Commission are unanimous that that must be understood by everyone.

Mr. Smith: I understand the seriousness with which my right hon. Friend and his colleagues express their anxieties. I stress that the Comptroller and Auditor General and the audit architecture will be just as strong on the resource accounting and budgeting basis to which we are moving as under the current system. The Bill was not intended to overhaul public audit arrangements. I want to be open with the House: proper scrutiny is in the interests of the public and Parliament--Government and Opposition--to ensure value for money, to cut out fraud and to make sure that taxpayers' money is spent wisely and properly. We have a common interest in that, regardless of party affiliation or the issue of the moment. If there are serious grounds for reconsidering some of the audit arrangements, I am happy to discuss them. However, they are not--and were never envisaged to be--the major purpose of the Bill.

Mr. Robert Key (Salisbury): This is a genuine inquiry. Following on from the remarks of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), can the Chief Secretary explain why the national health service receives special treatment? Why, for example, does clause 12 say that

That does not seem transparent.

Mr. Smith: It is absolutely transparent, and that is why the references to the NHS are in the Bill. The finances of health authorities and primary care groups come within the central Government accounts covered by the Bill, whereas the health trusts--which have their own auditing arrangements--and local authorities and public corporations will come in during stage 2, as we move towards whole of Government accounts. It is entirely appropriate that the existing arrangements for central Government bodies, including health authorities and primary care groups, have been covered in the way that the hon. Gentleman describes--they are in the Bill.

I want to progress to the other important provision of the Bill, which paves the way for the establishment of Partnerships UK. That body is central in our drive to modernise key public services. Partnerships UK will provide greater clarity in the way that the Government do business with the private sector and make available to them the key commercial skills needed to deliver better value for money and effective investment in front-line services. It will be a new public-private partnership that will offer a long-term home to the type of deal-making skills that are presently available to the public sector only temporarily in the Treasury taskforce. It will work in the public interest and address the key weaknesses inthe current public-private partnership process so that the public sector becomes a more efficient and effective client.

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Over the past two and a half years, the Government have fundamentally reformed the private finance initiative by prioritising projects, ending universal testing, offering a fairer deal to staff and standardising contracts. We have streamlined the PFI and put it on a more sustainable and successful basis and the next step is to use the new PFI to drive forward our programme to modernise public services across the board. That means expanding the PFI, applying it in sectors where it has not been used extensively before and enabling smaller projects to be bundled together so that the PFI is a cost-effective option for carrying them forward. There will be new relationships with the private sector involving local authorities as part of our public-private partnership programme.

Mr. Howard Flight (Arundel and South Downs): Can the Chief Secretary describe precisely what assets the Government expect the PFI to have within its balance sheet when they talk of anticipating one of about £1 billion in due course?

Mr. Smith: I think I know from where the hon. Gentleman is getting his references to the £1 billion and the idea that the PFI will be some sort of £1 billion bank, but I can assure him that it will not be a bank or a deposit-taking body and it certainly will not start at the scale of £1 billion. We see it working essentially as a co-venturing institution that will bring better facility to the public sector so that it can engage the deal-making skills that are necessary for getting successful PFI projects up and running. It will offer an opportunity to bundle together smaller schemes, which might not be viable on their own under the PFI because of overheads, to enable them to proceed.

Through the partnerships that Partnerships UK will assist, I believe that we will better harness the skills and resources of the private sector. Partnerships UK will enable the public sector to form partnerships with the private sector on more equal terms. As a public-private partnership--in the private sector, but operating in the interests of the public sector--it will be able to offer a long-term home to the skill base required to support the public sector in the execution of public-private partnership deals.

The business plan for Partnerships UK is under development. We have consulted widely throughout to ensure that Partnerships UK generates the greatest benefit for all the stakeholders in PFI, public and private alike. It is clear already that those with an interest in PFI and PPPs see an enormous benefit in an initiative that will make the Government a better partner.

The Bill modernises the public sector and transforms the way in which we plan and account for public spending.

Mr. Campbell-Savours: Will my right hon. Friend give way?

Mr. Smith: My hon. Friend realises that I am making my peroration. I shall happily give way to him.

Mr. Campbell-Savours: I want to clarify a few matters. The Government have established many limited companies over the years, such as the Student Loan

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Company and Remploy. Will the Comptroller and Auditor General have access so as to audit the accounts ofsuch companies, which increasingly carry out the Government's business?

Mr. Smith: As I said, a number of bodies, including those that my hon. Friend mentioned, are covered by provisions on auditing arrangements in the Companies Acts. That has not prevented the National Audit Office and the Public Accounts Committee from investigating them in the past--I believe that there was an inquiry into Remploy. I can but stress that the same powers as are available now will be available to the Comptroller and Auditor General, the National Audit Office and the Public Accounts Committee under the new resource accounting and budgeting arrangements.

I realise that members of the Public Accounts Committee, based I am sure on their experience, will have an appetite for revisiting some of this territory and the rules that are presently in operation. I am prepared to discuss that, but it is not the primary purpose of the Bill. I understand why my hon. Friend raised the issue. I think that I have been as forthcoming and sympathetic as I can be in saying that the Government are open to dialogue on this matter.

The Bill will give Parliament and the public, as well as government, more and better information on how we secure quality public services and value for money for all our people. I commend it to the House.

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