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5.15 pm

Mr. Robert Sheldon (Ashton-under-Lyne): The hon. Member for West Dorset (Mr. Letwin) drew attention to clause 11(2) on the restrictions on the work of the Comptroller and Auditor General, and I shall deal with that point, but my right hon. Friend the Chief Secretary was right to introduce the Bill because it is an important measure that has been acclaimed by the Public Accounts Committee and various Select Committees.

Much of my time as Chairman of the Liaison Committee has been spent trying to get Select Committees to examine the expenditure for which they have some responsibility. They have not been able to do it because, frankly, the accounts are impenetrable to the ordinary person. My right hon. Friend is to be congratulated on trying to open up this important area.

The Public Accounts Committee is very much in the shadow of Gladstone. For 14 years, I faced the one word over the door of Room 6A, which the right hon. Member for Haltemprice and Howden (Mr. Davis) now has the privilege of using: in lettering that is very difficult to decipher, because it was devised by Pugin, it says "Assiduity". That is the Committee's and Parliament's task in examining the accounts.

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For 23 years--14 as Chairman--I have been a member of the Public Accounts Committee, whose origins go back to the Exchequer and Audit Departments Acts of 1866 and 1921. I took some part in the National Audit Act 1983, which arose from Norman St. John-Stevas's Private Member's Bill, predicated on the understanding that he wanted to be able to follow public money wherever it went.

The idea came from John Garrett, the Member for Norwich, South from 1974 to 1983 and from 1987 to 1992. I worked with him closely on the Fulton committee on the civil service; he was a management consultantand I was a member of the committee. Norman St. John-Stevas called him the grandfather of the Bill, which looked back to what Gladstone had in mind and to all that he was able to achieve because of the enormous power and influence that he had.

What was Gladstone's vision? He set up a Public Accounts Committee, chaired by a member of the Opposition, who was to examine the details--not just the broad area--of all Departments' spending. Rarely or never could that power have been given to an Opposition Member under subsequent Administrations. To commit an Opposition Chairman to examining such spending details would have been unthinkable.

Gladstone's intention was followed up by the 1866 Act. The intentions of that Act are very relevant today, because we live in that shadow and we are trying to retain the kind of parliamentary accountability that was devised by Gladstone and led to the very high standards of public service that we have come to regard as normal. That is what happened then and is still happening.

What the 1866 Act achieved was begun by the report of the Select Committee on Public Moneys in 1857. There was a huge step forward with the establishment of the Committee of Public Accounts in 1861 and the passing of the 1866 Act, which established the post of Comptroller and Auditor General.

The key driving principle was the belief that the audit of all the money spent by central Government Departments should be done on behalf of Parliament, and from 1866, that was to be done by the Comptroller and Auditor General. The long title of the 1866 Act noted that its purpose was

In 1866, the idea was to bring Government spending--public moneys--under the scrutiny of Parliament, at a time when central government was virtually the only vehicle for public spending. In 1999, when we have a plethora of public service providers, it cannot be argued that public moneys are properly accountable for to Parliament in the way that they were for so long.

It was necessary for the Comptroller and Auditor General to have access to Departments. When the Public Accounts Committee considered the Exchequer and all the Departments back in 1866, the issue of what constituted public moneys was a matter of concern to several members of that Committee, and they were assured that all aspects of revenue and expenditure were covered. That is not the case today. The Select Committee, in the report that led to the changes made in 1866, said:

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    That has manifestly not been the case.

Many new securities have been devised for spending public moneys, but those have not been matched by a commensurate extension of the rights of Parliament properly to scrutinise that expenditure. That is the difference that we have seen over the years. Gladstone's achievements have been whittled away, as was exposed by John Garrett in a massive amount of research, for which proper tribute should be paid to him. It provided the background for Norman St. John-Stevas's National Audit Office Act 1983. Because of that research, he was fully aware of what had happened over the years, and he wanted to replace that with the original intention.

I was a member of the Standing Committee that scrutinised the 1983 Act. Leon Brittan was the Chief Secretary to the Treasury and I was the shadow Chief Secretary. In spring 1983, Leon Brittan introduced in Committee several new clauses and deleted others. With a general election imminent, we reluctantly agreed to those amendments. Before the Bill's consideration had been completed, the general election was called. On the last day of that Parliament, when nearly all the outstanding legislation was lost, my role was to go round the Chamber to inform my parliamentary colleagues on the Opposition Benches not to shout, "Object." I told them that the legislation was important, because we must try to regain parliamentary accountability. Even my hon. Friend the Member for Bolsover (Mr. Skinner) kept silent on that occasion.

The National Audit Office Act 1983 did not achieve all that we wanted, and we hoped for subsequent renewal of the original intentions. As so often happens, what was temporary became permanent and stayed in place for 16 years. Meanwhile, I became Chairman of the Public Accounts Committee, which was what I wanted, as I wished to see the new Act implemented and the position of the National Audit Office established.

During my 15 years in that post, I tried to pursue the need for greater powers of investigation for the National Audit Office. One occasion on which I received some encouragement was the meeting in October 1994 with the right hon. and learned Member for Rushcliffe (Mr. Clarke), who was then Chancellor of the Exchequer. With Sir Peter Hordern, the then Member of Parliament for Horsham and Chairman of the Public Accounts Commission, I pointed out that the National Audit Office did not have the same statutory rights of access as did the European Court of Auditors or the Audit Commission. That is unacceptable. I pointed out to the then Chancellor that I understood the Government's reluctance to concede such rights in the 1983 Act, given the extensive new powers being brought in. However, the standing of the National Audit Office, and the way in which it carries out its work, is an important aspect of the case for extending its powers to something like their original scope, before the Treasury whittled them away over 16 years.

The right hon. and learned Member for Rushcliffe on that occasion said that he recognised many of the arguments for increased access. He accepted that the issues needed to be re-examined. The discussion was very useful, and some improvements were made. However, although I wanted all non-departmental public bodies to be audited by the National Audit Office, only half of them are so audited.

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In that regard, I must pay tribute to my right hon. Friend the Chief Secretary to the Treasury. This Government have ensured that all 15 of the new non-departmental bodies are audited by the National Audit Office. That does not mean that private sector auditors are not included in the process, as the NAO makes use of them all the time. The private sector is very valuable, and work is given to accountancy firms with the appropriate expertise. That provides a useful exchange of views about how such matter should be audited.

Mr. David Davis: The right hon. Gentleman said that all 15 new non-departmental bodies have been opened up to the National Audit Office. Given that the Legal Services Commission and the body that looks after the royal palaces have also been opened up to the NAO, the Government have a very good record in that respect.

Mr. Sheldon: I pay tribute in turn to the right hon. Gentleman, who is a successor of mine as Chairman of the Public Accounts Committee. I am pleased that he is present today, and I look forward to many more reports from him in the years to come.

Even when accounts are audited by the private sector, responsibility lies with the National Audit Office. Let me refer now to what the Bill contains, and what it omits.

The Bill makes no provision for the Comptroller and Auditor General to be the auditor of all Executive non-departmental public bodies. I pay tribute to my right hon. Friend the Chief Secretary for what the Bill covers, but it does not cover what is now called the register of social landlords. It does not cover either the Housing Corporation, the Environment Agency, student loans, or Remploy.

Although I accept that the NAO can ask for the accounts of those bodies, I had to use a bit of muscle to make sure that it could inspect the accounts of the register of social landlords, as there seemed to be some reluctance about that. Auditors should not have to plead for access. When it comes to the auditing of public money, access ought to be a right.

The Bill does not make provision for the Comptroller and Auditor General to be appointed the auditor of limited companies established by central Government. It makes no provision for the Comptroller and Auditor General to have any access at all to Partnerships UK. I have some nice things to say about Partnerships UK, but I do not like the fact that there is no provision for access to its accounts, even though it will receive public sector funds and will advise on even larger amounts of public expenditure. Clearly, that cannot be right. I hope that that is an oversight that will be corrected in Committee.

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