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Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman well knows that this is a Second Reading debate. He is stretching beyond the scope of the debate.

Mr. Davey: I am grateful for your remarks, Mr. Deputy Speaker. I am about to relate my points to the Bill.

Mr. Deputy Speaker: Order. I was not so much making remarks: it was more of an instruction.

Mr. Davey: I am grateful for that instruction, Mr. Deputy Speaker.

Liberal Democrats believe that such a body would be able to apply the information from resource accounting and budgeting to ensure that the new accounts can be used effectively for the scrutiny of public money. An estimates office could be staffed by experienced accountants and economists, could assist individual MPs and Committees to trawl through the estimates and resource accounts, could model alternative spending proposals, and advise on the practicality of switching expenditures. Such bodies exist in other countries--for example, the Congressional Budget Office in the USA. When the Government get round to replying to the report of the Procedure Committee and to answering questions in the Standing Committee, I hope that they will agree to establishing such a body and ensuring that it is well resourced.

However, resources alone will not be sufficient to enable the House to use the new resource accounts. We will have to encourage Committees to utilise those new resources. Above all, we will need to change the procedures to enable amendments to be tabled to estimates so that debate can be real.

The Procedure Committee rightly proposes that it should be a requirement imposed on all departmental Select Committees to report back to the main House, under a set timetable, on the estimates and accounts submitted by their Department. That report should come to the House before the estimates are voted on and the accounts are signed off. It should be able to contain proposals to change the proposed estimates--for example, to switch resources from one area to another. Such a new freedom would encourage Select Committees to scrutinise spending proposals in much greater detail.

The Procedure Committee made a number of new proposals on how the House could amend or table motions about particular estimates. I should have liked the Committee to go further. It shied away from challenging the principle of the financial initiative of the Crown. It did not seek the right of the House to recommend increases in

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the estimates, and it did not consider some aspects of resource accounting. I understood why colleagues balked at that idea, but I think that we should have been braver.

Since our report was published, I have been studying the relatively new procedures for resource accounting adopted in the New Zealand Parliament.

The new procedures give Members an increased role in setting budgets, and provide a control for the Executive when new spending proposals could undermine prudent financial control. As a result of resource accounting, and under new standing orders that have operated since 1996, Members of the New Zealand Parliament can proposenot only changes to Votes--including increases--but spending increases in regard to Bills. Individual Members can even propose spending increases by means of an amendment to a Bill, or a motion which, if passed, would become law. That constitutes direct parliamentary involvement, ex ante, in the public-expenditure process.

Financial anarchy, however, is avoided through a new device called the financial veto certificate. If the New Zealand Government believe that a spending proposal would have more than a minor impact on the Crown's finances, they can veto that proposal, and the veto cannot be voted on or overturned.

I think that that procedure strikes the right balance between the legislature and the Executive. If adoptedhere, it would give Members and departmental Select Committees a real incentive to involve themselves in an ex ante scrutiny of the budget, and would re-establish the House's role in public expenditure for the first time for 80 years, ensuring that we could use resource accounting and budgeting to the full extent.

That major change would then impact on the House's ex-post analysis of the budget when it examined the accounts. I believe that the PAC does a good job at present. I know that its Chairman, the right hon. Member for Haltemprice and Howden, is highly regarded by parties on both sides of the House, and I am delighted that he will be helped in future by my hon. Friend the Member for Newbury (Mr. Rendel), but they have an almost impossible task, and resource accounting will, if anything, set the Committee an even tougher challenge. If more Members became actively involved in analysis of spending plans, and if more resources were generally available to Members through an estimates office, the knock-on effect for the PAC would be significant.

The National Audit Office serves the PAC well, but I hope that future requests for money made by the Public Accounts Commission will be far more ambitious. Given the many new developments in public sector accounting, the NAO needs extra resources to enable it to help the PAC and departmental Select Committees to scrutinise the audit far more effectively.

The Bill has several other aspects on which I would have liked to comment at length--for instance, the clauses relating to the Welsh Assembly and the national health service, and the proposal to establish Partnerships UK. Why, for example, is relatively little still known aboutthe proposal to take on the PFI and public-private partnerships? Is it because, as some commentators have suggested, there is a potential conflict of interests? I hope that the Minister will reassure us that, before the Standing Committee deals with clauses 15 to 17, we shall have a much fuller and more detailed report on a proposal that currently strikes many of us as half-baked.

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The Chief Secretary said that the Bill was intended only to transfer current financial and procedural arrangements to a resource accounting framework. He said that it was not intended to reform other aspects of the House's financial procedures, or to reform the auditing process, including the powers and jurisdiction of the NAO. That may be true, but I believe that it is the will of the House and its most senior Committees to use the Bill to tackle just those issues. I urge the right hon. Gentleman, between Second Reading and the Committee stage, to consider all the points that have been raised, and to consider how the Bill's ambitions can be raised to a much higher plain.

6.54 pm

Mr. Dale Campbell-Savours (Workington): I shall speak briefly, because many of my points have already been made. I shall concentrate on a fairly narrow area. If I make the odd error, it is because many years have passed since I was a member of the Public Accounts Committee--I think that I left in 1991--and much of what I shall say will be based on my experience during 11 interesting years.

After leaving the PAC, I reached the view that anyone who wished to become a Minister should serve an apprenticeship on that Committee. In my opinion, no parliamentary process is more enriching in providing those who want to be Ministers with the information that they need, not only on public accounting, but on how to deal with civil servants--and, indeed, how to understand the way in which civil servants are motivated.

I may be speaking out of turn, but I asked the National Audit Office for a brief, because I felt that the issue was important. I apologise to the NAO if I am not supposed to quote from the brief directly, but I shall do so because some aspects have caused me concern. Paragraph 17 states:


That stark statement represents a lost opportunity to bring the powers of the Comptroller and Auditor General up to date, and to ensure that he can continue to provide Parliament with effective scrutiny of public expenditure under modern government.

All this is, of course, in the name of an Officer of Parliament. It is like the Parliamentary Commissioner for Standards, through her little department, writing a report for Parliament attacking a Government recommendation: in my view, it has the same status. We all forget that the Comptroller and Auditor General is an Officer of Parliament, which is why what is said in the briefing is so important.

I was somewhat reassured, however, by my right hon. Friend's responses from the Dispatch Box. I hope that the NAO will pore over them. Its representatives, who are present, ought to speak to my right hon. Friend the Member for Swansea, West (Mr. Williams) about the responses that we have received from a Treasury Minister. We discussed the extent to which those responses met the concerns expressed in the NAO brief. I was satisfied by the Minister's statement that he was prepared to discuss these matters with the Committee. He also said that there would be no change in the nature of access under the new arrangement, in relation to the present position. Although he did not respond on the issue of evidence being taken by the PAC on the new arrangements, I thought I saw him

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nod for a moment. I hope that that is an indication to the Treasury that he, too, would like Treasury officials to give evidence to the PAC on the arrangements that are being made.

I want to refer specifically to the NAO's power to go in and look for the truth. On a number of occasions when I was a member of the PAC--and, indeed, after I left--I asked the NAO to carry out an investigation. It involved a training company. It went in and did what I can describe only as a bloomin' good job. In many ways, it was acting very much in the public interest. The investigation led, in all cases, to a good deal of publicity--not about me as a Member of Parliament, but about the NAO and the work that it had been doing to establish the truth.

I go pretty well all over the world nowadays to lecture on constitutional matters--not only matters involving the British constitution--and I always include a section on financial accountability and public accounting. I believe that the NAO's work is critical to the democratic arrangement that exists in the United Kingdom. Paragraph 15 of the NAO briefing states:


I find it unimaginable that, although those contractors may well be private limited companies, we do not have the statutory right--given that they are handling Government money--to check their operations to ensure that they are handling that money in the way in which it should be handled.

The briefing also states that private contractors manage six prisons, including Doncaster and the Wolds. Why should we not have statutory access? Taxpayers' money is being used. In every case, we should have access. The briefing says that those contractors spend


taxpayers' money--


    "providing New Deal training opportunities".

How interesting. The Chief Secretary was the Minister responsible for setting up the new deal, which has been very successful. I would have thought that he would be the first to secure access not by way of a nod and a wink--but a statutory right of access to pursue the last penny, wherever it is used in delivering the new deal arrangement, whether it be a private company offering training facilities in Workington, or whatever. The NAO should have a statutory right to go in at every level to check how that resource is used.

The briefing says that voluntary sector registered social landlords receive


Again, I cannot see why a statutory right of access should not be enshrined in legislation. The anger almost in the NAO briefing is over the fact that the Bill does not provide for such access.

The briefing states that the Bill has


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    £3 billion annually from Parliamentary grant--these include the Housing Corporation which spends almost a billion and the Environment Agency which spends £150 million)".

I know that we have a level of access. I know that there is access through VFM--value for money--but I am talking about a statutory right of access with no resistance, no questions. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) had to plead for access to the Housing Corporation. He had to plead for access to a number of organisations. There should be no question of pleading; it should be a statutory right.

The briefing states that the Bill contains


That is only the beginning. We all know that, increasingly, public administration is being turned over to such private companies. Early on, some of us resisted that move, but benefits have arisen from the shift. If that is the way that public administration is going, with private companies increasingly having a role, surely we must have the right to follow the last copper into the coffers of those companies to ensure that money is spent properly.

My hon. Friend the Member for Broxtowe (Dr. Palmer) intervened to ask the Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), to give examples of what was meant by


particularly where the body that was the subject of NAO scrutiny was subcontracting work and where possibly that money was not fully accounted for. I jotted down a few examples.

I am sure that every hon. Member here would agree that, if the Department for Education and Employment gives money to the Further Education Funding Council, that should be subject to NAO access--a statutory right of access. If the council gives it to a college in my constituency, the NAO should have a statutory right of access to that college as well. I go even further. If the college then hires a catering company to do work within the college in my constituency of Workington, in theory, if it is taxpayers' money, even the catering company potentially should be subject to the NAO's statutory right of access, if such scrutiny were necessary. I am advocating not that the NAO should necessarily exercise that statutory right of access, but that it should have that right to pursue public money wherever it wants.

I have referred to the new deal. I remember a particularly famous case where I called for a series of inquiries into training companies.


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