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4.52 pm

Mr. Oliver Letwin (West Dorset): I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:

I declare an interest--which lies in the Register--relating to clauses 15, 16 and 17, which is not connected to the reasoned amendment and about which I shall say precisely nothing.

The Chief Secretary introduced the debate with the utmost reasonableness, for which we are duly grateful, but I fear that, in so doing, he failed to address some of the major issues. Like the poet Ovid, he may later feel that I began better than I ended, because I want to start with some congratulations, proceed to the identification of some shared problems, move on to lament the inadequacy of the solutions in the Bill and end with an indictment.

Mr. David Drew (Stroud): The hon. Gentleman is a good supporter.

Mr. Letwin: Indeed, a good supporter, as the hon. Gentleman says.

First, the congratulations. The Chief Secretary said that the Bill had a noble lineage, and he was absolutely right. The idea of resource accounting was introduced by my

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right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. Friend the Member for North-West Hampshire (Sir G. Young). Its aim is shared on both sides of the House. The Chief Secretary echoed the somewhat overblown statement of the Liberal Democrat spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey), when he said that the Bill had a Gladstonian aspect. It is a splendid aim to give the public sector a proper balance sheet and proper accounts. On that we are at one.

Congratulations are due because people in many Departments have laboured mightily over the past two or three years accumulating a kind of Domesday book of the public sector. That is another fine tradition in the United Kingdom. We must remember that the purpose of the original Domesday book was to maximise the tax take of the then Government. That is something at which the Government have been greatly skilled, so we recognise that they will also have been particularly good at this task. However, in this case the issue is not how much can be taxed, but rather what the taxpayer owns, how it is being used and what is being spent on it. We are agreed that we need better information on that. That need is great: much greater than the Chief Secretary made clear in his remarks.

First, there is the issue of depreciation. There is a massive problem in our public sector: we have never had a proper sense of the resources that we use up, or of the gradual depreciation, or decline, of assets under public sector control. That has obtained on both sides of the House, regardless of which party has been in power. The water industry, under its nationalised aegis, is a classic case. Year after year, Chancellors of the Exchequer in both parties have found it more immediately necessary to spend on social security, or on whatever else has been at the top of the agenda. Consequently, not enough has been spent on investment in the water industry--although billions have now been spent in the private sector--and as a result we have, to this day, an essentially Victorian sewerage system.

There are many other examples. As we all know, much of the public dissatisfaction with our hospitals and schools derives from the fact that for years they, too, were depreciating unnoticed--unnoticed not by their users, of course, but by the Treasury in its discussions with the various Departments. We desperately need a proper set of accounts that properly grasps the depreciation of those public assets. Again, the parties are joined in that desire.

The Chief Secretary said nothing about liability, but I think he will also agree with me--I hope he will--that we are desperately lacking in that regard. We have no proper account of the great and growing liabilities of the public sector in relation to, for example, pensions. I am referring not to the relatively minor, although in itself quite large, problem of the public sector pension schemes which are, to some extent, dealt with in the Bill, but to the public state pension, which represents an enormous and ballooning liability in not just this country but many others. We need clarity in regard to the scope and scale of that liability.

We need to understand far better than we do at present what are the real liabilities that are totted up each time a project is implemented in the private or public-private sector under the private finance initiative, and the public

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sector establishes a contract that effectively enforces a series of payments over a long period that currently do not appear in the public accounts.

All that is allied to the enormous need for much greater clarity of presentation. I draw the House's attention to three important statements made in an article. First:

I think we would all agree with that. Secondly:

    "While it is recognized that financial reports should be readable and intelligible, improved reader understanding is sometimes felt by those who compile them to be a disadvantage."


    "A number of steps can be taken to help the process. For example, the report should . . . minimise jargon . . . Have a logical structure . . . Not be unduly distorted"--

I draw the House's attention to this--

    "by public relations considerations".

The importance of those comments lies in the fact that they were made by none other than the current chief adviser to the Chief Secretary on these matters, Professor Likierman--who also said, in a report written with Vass,

    "Those who wish to find out what is going on are faced with major hurdles".

That is indeed the set of problems that we face in the presentation of public accounts.

I think--I hope; I trust--that, so far, the Chief Secretary and I are on common ground. Members of the Public Accounts Committee who have already spoken have made it clear that they share many of the concerns that I have mentioned, and it appears that the last Government shared them. We have a substantial problem. The next question is, does the Bill address that problem? It is, I am afraid, abundantly clear that the answer is no: it hardly begins to do so.

I shall begin with assets. We are told in paragraph 46 of the helpful notes on clauses prepared by the Chief Secretary's officials--this mirrors the Chief Secretary's own statements:

The Chief Secretary began by lamenting the difficulty of discussing such matters in terms that ordinary people would understand. Let me try to do it for him. He was trying to tell us that the Bill had nothing to say about the accounting of schools, hospitals or roads--the three largest public sector assets.

Mr. Key: Defence.

Mr. Letwin: As my hon. Friend points out from a sedentary position, there are yet other aspects, but I draw attention to three in my modest way. The Bill leaves out the most important.

Hon. Members might think that, as the Chief Secretary had not done particularly well on assets, he would have done something on the liability side. We search in vain in the resource accounting manual and we search even more in vain in the Bill for any reference to the state pension and its liabilities--there is not one. There is not even the suggestion that in due course, or at a later stage, there will

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be any proper accounting of the state's massive liabilities--hundreds of billions of pounds worth--for state pensions.

One might have thought that, as there were going to be clauses about the private finance initiative and the public-private partnerships in the Bill, it would contain something about accounting for the liabilities of the PPP or the PFI. That does not seem an unreasonable request of a so-called resource accounting Bill. Sharing, I trust and hope, the view that something was needed, we might have thought that there would be something in the Bill. There is not--not a word about the liabilities for schools, hospitals or roads that are subject to the PFI.

It is possible that the minuscule, by comparison, number of PFI and PPP projects conducted by central Government Departments will be covered. I say it is possible because my right hon. and hon. Friends and I have asked a series of written questions about the matter. We have received some answers. For the House's edification, I shall read the totality of the text of one of those answers. The Chief Secretary said:

[Interruption.] I am delighted to hear that the House does not want to hear the rest of that fascinating explanation in plain English, which the Chief Secretary recommended to the House, of exactly the answer to the simple question: will PFI contracts for central Government Departments be included or excluded? I do not have the foggiest clue. I doubt that the Minister who signed the answer had the foggiest clue. Certainly, the House will not. It is possible that they are included.

In passing, I should like to mention a noted example of open government. We tried to find out the answer to that question and to others by the simple expedient of trying to talk to the person who actually knows about these things, which, I regret to say, is not ever a Minister in such cases, but his chief adviser. Professor Likierman is one of the world's great experts on public accounting, so one might have thought that one would get an answer from him. I tried to see him. I sent a request and was told that it had been lost. Then I sent a fax request. I was told that it had been received, but that it had to be transported to the Chancellor's private office for reasons that remained obscure. Then I was told that the decision was that I could not see Professor Likierman without a Minister and, unfortunately, no Minister would be available, so I could not see the professor. Therefore, I cannot tell hon. Members whether the answer to the question is yes or no. I am sure that Professor Likierman knows. It would be very nice if, through the Minister at some time, he would tell the House.

I am clear about one thing: when it comes to presentation, there is nothing in the Bill to clarify definitions and to ensure that accounts for the public

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sector are presented like all private sector accounts have been since about 1300, so that ordinary people can understand them.

The position is much worse than that.

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