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Mr. Letwin: My right hon. Friend is making an important point. Is he seconding the Treasury Committee's conclusion that


Mr. Davis: In the last minute of my speech, my hon. Friend raises a crucial point. To answer him, I am 80 per cent. seconding it, but let me draw the dividing line.

It strikes me as perfectly reasonable for the Government broadly to make a public decision on performance measures. After all, that is what manifestos are about. That is a decision proper to Ministers, not one that can be made by some independent body. However, the Minister having decided the measure, it is vital that those who validate it are entirely independent. The National Audit Office in respect of public service agreements and the director of national statistics, or his equivalent, should be equally independent.

All that would add up to a truly Gladstonian measure. The Chief Secretary said that the Bill was one of the biggest reforms since Gladstone. If the Government want to be remembered in 100 years as having passed a measure of Gladstonian impact, one of the key tests will be whether they had the courage to say, "Certain matters will be decided by someone other than ourselves." That would be a brave, but correct, decision and it would be in the public interest to make it.

I regard mine as non-partisan, parliamentary points. I doubt that any member of the PAC would disagree with a word that I have said--I am sure that they will say so later if that is not the case. I understand that, although not long, the Bill is technically complex and that the Economic Secretary will not be able to give me answers today. However, I want an undertaking that the Government will take these points on board and try to incorporate them in the Bill. In so doing, they would make their own reform--which is perhaps one of the most worthwhile reforms in the Treasury's approach in recent years--more than merely worth while; they would make it historic.

5.59 pm

Mr. Alan Williams (Swansea, West): I speak as a member of the Public Accounts Committee and also as someone who is on the Public Accounts Commission, but I do not speak because of those facts. I speak because, like my right hon. Friend the Member for Ashton-under-Lyne(Mr. Sheldon), who is chairman of the commission, I have spent more than 35 years in the House, 22 of them on the Labour Front Bench and too many of them in opposition. I spent nine enjoyable years in government.

It is becoming increasingly clear to me--I say this to my hon. Friend the Member for Broxtowe (Dr. Palmer), who has been intervening with points that have the fascinating ring of Whitehall concerns--that the longer I spend in the House the more convinced I am that the rights and powers of this place must be protected and must remain supreme.

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I am sorry, Mr. Deputy Speaker, that twice you have had to endure a hobbyhorse of mine during the past three weeks, but it is a reality that living and working as we do within a representative democracy, we live in a token democracy unless there is continuous parliamentary scrutiny of the Executive. We become so used to working within the machine that we fail to see the entire picture. However, without scrutiny we will have tokenism and Executive government. That is why I am speaking in the debate. I am desperately concerned that we may be enshrining certain losses of powers in legislation, which I know my right hon. Friend the Chief Secretary to the Treasury would not wish to see happen over the years. I also feel that we are missing an opportunity to make two strides forward in our accounting procedure.

Every member of the PAC supports resource accounting in the areas where the Government are trying to advance it in the Bill. However, we are more concerned that we should restore what Gladstone thought he had given to the House in 1866--the power of the House to examine and scrutinise all public money for probity, for waste and for accuracy. We on the PAC can only scratch the surface, examining 50 accounts and issues a year.

The role of the House in scrutinising the Executive is meaningful only while the National Audit Office has the fullest possible access to Government expenditure in all its forms. Back in 1866, it was simple. It was easy to ensure that all cash trails were followed. None of us on the PAC is opposed to structural changes in government. When we talk about such changes we are talking about the effect that they will have on the House, and the need, therefore, to adapt the powers of the House and those of the NAO to match them.

As my right hon. Friend and the right hon. Member for Haltemprice and Howden (Mr. Davis), the Chairman of the Public Accounts Committee, have intimated, over the years, changes have taken place but the powers of the PAC and the NAO have not altered accordingly. We find that we have eroded the democratic duty of the House to scrutinise the Executive, especially on the financial front. It is not only the growing sums of money that are moving outside the net of NAO scrutiny with the altering of the structure of government, with agencies and so on. It is not only the volume but the percentage. There is a progressive decline in the proportion of scrutiny which remains with the House. I say to my right hon. Friend, as did the right hon. Member for Haltemprice and Howden, that we are delighted that each of the small Executive non- departmental public bodies set up under the Government has been subjected to full NAO scrutiny. Unfortunately, that has not been the case in many other instances.

We find that £3 billion that previously would havebeen subject to NAO, PAC and, therefore, detailed parliamentary scrutiny is now spent through 80 NDPBs. They are outside the scrutiny of the PAC and the NAO. This trend is increasing, and more so in the second category, although the level of expenditure has not quite been reached. It is about £2 billion. This is happening in the form of the companies which the Government set up or help to set up, such as the Student Loans Company.

My right hon. Friend the Chief Secretary cited Remploy. Yes, the NAO can go in and carry out value-for-money exercises and then report, but it can do so only occasionally because it has limited resources. It is

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not the same thing as having permanent as-of-right access to various organisations when it wants it, and that is what we are asking for.

Dr. Palmer: First, I would like to reassure my right hon. Friend that my interventions are not on behalf of anybody in Whitehall but purely on my own behalf. I ask my right hon. Friend the same question that I put to the chair of the PAC. Let us take the example of Remploy. What type of information does he envisage the Comptroller and Auditor General could obtain by direct access that he could not obtain under clause 11(5)? Would he require a massive reinforcement of the staff and resources of the NAO if he were in practice, as opposed to theory, to intervene to the extent that would be needed to detect new information?

Mr. Williams: I tell my hon. Friend what he was told before. Until we have been in there, we do not know what might be there. I am not talking in general terms. Recently, if I remember correctly, we directed our attention to the Halton college of further education, to which the outside auditors had given a clean bill of health. I started with my own further education college in Swansea and then Southampton. I referred them to the NAO because I was concerned about information that I was receiving. Halton came on the scene from another source. In each case the NAO went in and carried out its audits. It found things that were missed completely or ignored by the independent auditors, possibly because they did not understand the requirements of the public sector attitude towards monitoring taxpayers' moneys.

There was one example which was ludicrous, but true. It arose as a result of an NAO auditor observing a display of affection between a chief executive and someone in that executive's outer office. On inquiry it was discovered that the person being so greeted was a close friend of the chief executive and the recipient of contracts in conflict of interest from that executive. That was an accident. Those matters would not have come to light if the NAO auditor had not been present. In the same way, we would not have found out about Halton if the NAO had not been there.

We would not have found out what was happening in the Swansea college and in Southampton if the NAO had not gone in to look. If the NAO had been there as of right all along, those problems might have been discovered earlier, things might not have got out of hand, money might not have been lost and jobs might have been saved. If my right hon. Friend would like us to prepare a reading list for him of PAC reports that demonstrate the point--I am sure that he is in pursuit of genuine education--we will gladly do it for him.

Mr. Campbell-Savours: May I point to another case that is of great interest to the House? I refer to what happened in connection with the MI5 and MI6 buildings--a horrible story. Many hon. Members are asking why it was allowed to happen, why money was spent in that way and why we did not find out sooner. Over the years, the PAC has provided many examples of what my right hon. Friend is describing.

Mr. Williams: My hon. Friend and I have worked together on various investigations of individual cases over the years. I will not bore him with them, but I will gladly tell him in private where he can find the information.

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The NAO's powers to follow cash, as has been stated, are peculiarly limited. One can understand, perhaps, and regret that the powers of the NAO to follow cash is not equal to that of the Court of Auditors of the European Union, and we all know how deplorable recent events have been in the EU. One is bound to wonder at the duality of standards reflected in the fact that the Audit Commission, which looks into local government, has powers of investigation and inquiry which the NAO is denied.

I am told that in the erudite discussions in the corridors of the Treasury, the EU eighth directive on company law is quoted as inhibiting the freedom of the Minister to do what he would love to do and I am sure will do in the end, when he has listened to all the arguments. I can reassure him, as the Chairman of the PAC did.

We have a list of nine European countries whose equivalent to the NAO can carry out inquiries in relation to companies, but our NAO is debarred--not by EU law, but by ours. Our company law is drawn up in a particularly restrictive way, which prevents the national Parliament's auditor going in and auditing companies. The law could easily be amended, possibly in the course of the Bill.

We understood that there was to have been a draft Bill. I understand that my right hon. Friend is in an even worse position than we are, because the PAC probably saw the Bill before he did. That is the joy of going to a new Department--if a Minister is lucky, he picks up the plums that someone else has prepared, but there is also the danger of picking up what the Chairman of our Committee described as a ticking package.

Had we had the draft Bill, as we were promised, we could have carried out our own pre-legislative inquiry, as was suggested by one of my hon. Friends in an intervention. We could have gone through it in considerable detail and made our recommendations objectively. If our report was not unanimous--the Committee has never divided politically in its reports; that is a unique record--my right hon. Friend could have chosen to ignore it, but I believe that we would have come to a unanimous conclusion. We still might.

I am sure that the Chairman will give me a dispensation from parliamentary privilege if I say that I have already proposed to the Committee what was suggested in an intervention--that we should consider running, in tandem with the Bill, our own investigation into the Bill, as we would have carried it out, had we had the Bill in advance. I hope that the Committee may feel able to do that.


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