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Mr. David Davis: I did not say that because of concern for the right hon. Gentleman's career prospects.

Mr. Williams: I live in hope--not a great deal. I tell everyone that I do not think my career has peaked yet.

The Chief Secretary said that the Bill reinforces the powers that were given in 1886. That is partially correct. It reinforces those powers in relation to an organisation that exists only in part. In that respect, the powers are the same, with one exception, with which I shall deal in a moment. However, the Bill does not reflect the spirit and the principle of 1866--the principle, as my right hon. Friend

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said, that all public money should be subject to detailed scrutiny by Parliament's own audit body and by Parliament itself.

Indeed, the danger of the Bill, and the reason why many of us see it as a mandarin's Bill, is that what is needed could probably have been achieved by a couple of amendments. Other than the changes relating to the PFI, the changes relating to resource accounting did not need an entire Bill. I must be of an unduly suspicious disposition, but I have the feeling that in the Treasury, eyes glistened when they saw the opportunity. Here was the chance to write in tablets of stone the restrictions that have grown by accident of restructuring over the past quarter of a century.

It is important that we do not pass the Bill in its present form. The Minister knows how difficult it is to get parliamentary time for alterations, once legislation is passed.

Mr. Letwin: I am grateful to the right hon. Gentleman, who is making an interesting point. Partly to correct the record, does he agree that there is another motive at work--the Treasury asserting itself against the spending Ministries? The Treasury sees the spending Ministries as dangerous loci of mis-spending and has given itself huge powers in relation to them. Our problem is that it has not given Parliament powers vis-a-vis the Treasury.

Mr. Williams: It is dangerous to follow that track. The hon. Gentleman starts me off again. Way back in history, in 1967, I joined a Department called DEA--the Department of Economic Affairs, which was set up to keep an eye on that lot--the unmentionable, to whom we are not allowed to refer, who sit in a little Box at the end of the Chamber.

The purpose of the DEA was to second-think Treasury. I well remember what went on there. As a mere Parliamentary Secretary, I remember clashes within Government and the attempts of Treasury to get rid of the DEA, which were successful, but that owes more to me, if I may say so, than to anything else. I seem to be a disaster in any Department. I have been in four Departments, and not one has survived my time there.

In the Bill, we lose some power. I know that that was not the Minister's intention, and perhaps he did not realise it. The existing Treasury PFI taskforce is subject to NAO scrutiny, but Partnerships UK will not be, so the powers of access that we still have will cease to exist with the passage of the Bill.

Transparency is a current buzzword, and that is what we are asking for. We get rid of incompetence, inefficiency, fraud and corruption only if we have clear access to the information that enables us to discover its existence. That is why I said on a point of order before our discussion on the measure that the scope of the Bill's long title is wide. It states that the Bill's purpose is:

If that does not cover auditing, what on earth does?

My right hon. Friend the Chief Secretary should take advantage of the inadvertent generosity of those in the Treasury who advised the draftsmen, and double his claim to a role in history by being not only the Minister who introduced resource accounting and transformed the

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method of public sector accounting, but the person who restored to Parliament the rights that it had in 1866 but that were subsequently taken away.

6.21 pm

Mr. Edward Davey (Kingston and Surbiton): On the last day of our debate on the Loyal Address, I said that I considered the Bill to be one of the most important measures of the Session. That caused comment and amusement on Conservative Benches, but I still believe that I am right. As the right hon. Member for Haltemprice and Howden (Mr. Davis) said, the reform for which the Bill provides is in the tradition of Gladstone. Some senior Members have made important speeches to point out some of the flaws in the Bill, and I hope that the Government are listening closely.

Perhaps Parliament's most important function is to hold the Government to account for the way in which they spend our taxes. If the sovereignty of Parliament means anything in the days of global capital markets, it should mean the power of the House to control Government tax and spend. However, the House has not discharged that duty well, if at all. For decades, it has acted like a eunuch towards taxpayers' cash: it has shrieked a lot--its shrill voice has often been heard--but it has not acted. That appalling legacy of parliamentary failure to examine Government accounts in the past 80 years has left those of us who support more investment in our public services with a difficult task: to persuade hard-pressed taxpayers that we will spend their cash much more wisely in future. We can do that, and the Bill goes a short way towards helping the House to achieve that aim. Therefore, we shall support the Bill in the Lobby tonight: it deserves a Second Reading.

However, Liberal Democrat Members believe that the Bill is timid and that it should constitute simply a first step towards re-empowering the House to do its constitutional job properly. We agree with many of the criticisms of the Bill made by the hon. Member for West Dorset (Mr. Letwin). However, we are more critical, and support greater reform, than the Conservatives. We shall table far-reaching amendments to the Bill in Committee and we expect the Government to take them seriously. We shall demonstrate that those amendments are not only sensible but completely in line with the principles of fiscal prudence and transparency in which the Government claim to believe.

Earlier, I made what some hon. Members may consider to be an extravagant claim. I said that the House had not done its constitutional duty on Government expenditure for more than 80 years. I shall substantiate that claim. The House has not voted down a Government expenditure proposal for 80 years. Parliament last rejected an estimate that the Executive proposed in 1919. At that time, the House reduced the royal palaces Vote and deleted the provision for an additional bathroom for the Lord Chancellor in the Houses of Parliament. That may appear to be a small matter but, given the shrill voices that were raised early in the Parliament against the current Lord Chancellor's expenditure on wallpaper, we would perhaps have expected a repetition of the 1919 vote. That did not happen. We have indeed allowed ourselves to be castrated.

Nowadays, a vote to reduce an estimate is viewed as a vote of no confidence in the Government. The last such vote on an estimate that I could find was in 1992, on a

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motion to reduce class XX, vote 1--contributions to the European Community. That was debated as a motion of no confidence. Worse, the House has not even granted itself the procedures that would allow it to scrutinise properly the Government's budget ex ante. As a Member of the Procedure Committee, I was involved in the recent inquiry into the House's financial procedures. I was genuinely shocked to learn the limited nature of the House's procedures to alter Government spending plans. We have allowed the Crown to keep the initiative in all financial matters. I refer hon. Members to Standing Order No. 48, whereby we formally surrender our scrutiny potency to be cut off by the ministerial knife.

I hope that you will not rule me out of order, Mr. Deputy Speaker, if I relate the House's financial impotence to Europe. Many hon. Members, especially on the Conservative Benches, say a lot about the sovereignty of Parliament, especially in the context of the debate on the euro. Most of their comments on that issue are misinformed, and many are simply wrong. Their criticisms would be more powerful if they had allowed the House to exercise its sovereignty properly during their last overlong stay in power. The previous Government did precious little to restore the House to the centre of the debate and decision making about public expenditure. A notable exception was Lord St. John of Fawsley who, as a Member of the House, promoted a private Member's Bill, which led to the National Audit Act 1983.

The Bill has a lot to do with the excellent proposal that was first mooted by the right hon. and learned Member for Rushcliffe (Mr. Clarke) when he was Chancellor. I want to put on record a comment that I made to him privately. History may regard the reforms that he first proposed on resource accounting and budgeting as placing his Chancellorship on a par with that of Gladstone, because he started the modernisation of the country's public finances. However, it was only a start.

That the proposals have taken so long to be introduced and that they remain so far from restoring parliamentary power over the purse show the forces that the House is up against. In assessing the Bill, we must return to first principles. We must reconsider the role that we want Parliament to take in budget setting and in scrutinising taxpayers' money.

We need to consider a simple model of the way in which Parliament can exercise its sovereignty properly and fully. There are three essential requirements for that. First, Parliament needs information about the Government's spending intentions and about the amount that they have spent. It needs a detailed and comprehensible set of spending proposals and a decent set of accounts. The Bill goes some way towards fulfilling the latter requirement.

Secondly, Parliament needs the capacity and skills to analyse the information. We need to be able to understand the proposals and the accounts that are laid before us. Can any hon. Members say, hand on heart, that they understand the appropriation accounts? Will we have the resources and training to understand the resource accounts?

There is a third condition, to which I have already alluded, if the House is to regain some control over the public purse. We need the procedures, practices and power to alter the spending proposals that are put before us and to ensure that heads roll when the reports onthe spending proposals--the accounts--show that Parliament's will has not been properly done.

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Three missing elements would allow proper parliamentary scrutiny: information, resources and procedure. First, I shall deal with information, the lack of which the Bill starts to rectify. The Bill contains nothing that will radically reform the way in which we vote money. The Government have adopted their predecessors' minimalist plans for involving Parliament ex ante in budget setting. The Bill tries to change the current legislative framework, which dates back to 1866, in the most modest imaginable way. Under the Bill, appropriations will be made much as they were previously.

The Government could have put the existing non-statutory supply process on a statutory footing. The Bill could have set out proposals for the way in which the Government's spending plans should be put before Parliament, for what they should include and what they should tell the House. That has been done elsewhere, when other Governments have opted for resource accounting techniques.

Hon. Members will know that New Zealand has led the way in implementing accruals accounting and its Public Finance Act 1989 included a detailed list of the types of appropriation that a Government would have to set before Parliament every year. The New Zealand Parliament receives information on seven types of appropriation--for example, detail on what the money Parliament votes for is intended to achieve, or the output classes of appropriation, as they are called--and the Government's objective for a given sum of money is made transparent. There are other types of appropriation, including that for borrowing expenses and repayment of debt, but the House has no say on Government borrowings--none at all--and will receive none under the Bill.

Right at the start of the budgeting process, the information given to the House is partial and inadequate for us to see what the Government intend to achieve. The Bill will not change that, and I urge Ministers to consider that seriously. If we want better value for money and if we want to force Whitehall to open its books--not only to Parliament, but to Ministers themselves--why do not the Government force our great Departments of state to set out to Parliament their appropriation requests in far more detail? Resource budgeting means that Ministers and Whitehall will have better information on which to make their decisions. That is fantastic--it is a major benefit of the process--but failure to give Parliament a role at the start of the process will mean that the potential benefits will not be maximised.

To emphasise that point, I refer Ministers back to the lessons that we can learn from that great reforming Chancellor, William Gladstone. He aimed to improve the social condition of the country, but was reluctant for that to be done at the cost of a much-increased tax burden or a big increase in expenditure, so he devised his reforms over the control of public expenditure to try to square that circle. Much of what we have today in respect of overseeing and auditing expenditure--from the Public Accounts Committee to the Comptroller and Auditor General--goes back to Gladstone. Taxation and expenditure were kept under control during his periods of office, but national income increased enormously--by20 per cent. between 1853 and 1861. If our prudent Chancellor wants radical efficiency gains in respect of the way in which the public sector uses its resources to meet

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ambitious social and economic objectives, I recommend that he put his trust in the House to assist that drive by giving Parliament the information on spending plans early on.

The Bill is strong in the provision of more and better information after the event--the financial reporting that will take place as a result of the resource accounting initiative. There will be a quantum leap, and I unreservedly welcome that. In particular, the removal of the bias against capital investment in the public spending process is long overdue, although there are concerns. Members of Parliament and Select Committees will have to get used to a new set of information and learn a new accounting language. We will need much more help than we have had in the past to interpret the extra information that we shall receive. We shall need to check that the extra information that is generated is not simply used for Whitehall's benefit as it goes about its managerial role but helps Parliament in its democratic role as well. The Public Accounts Committee and other Select Committees will have to be extravagant in demanding the information in a format that helps parliamentarians hold the Executive to account. That is the challenge of resource accounting, and we shall have to rise to it.

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