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Mr. Letwin: When I saw my hon. Friend's name on the Annunciator, I swallowed my meal with great haste and came into the Chamber. I am glad that I did so. Is not what he is saying an assertion of parliamentary sovereignty that would have far wider implications than this Bill, and would be welcome on both fronts?
Mr. Winterton: I hope that it would, and I believe that I am making this request of the Government with a great deal of cross-party support. The Government have stated time and again that they are in favour of pre-legislative scrutiny. Here is an opportunity for them to show whether they mean it.
Mr. Campbell-Savours: If the Opposition had not sought to divide the House this evening, we may have been nearer to securing that objective. If I remember rightly, when the National Audit Act went through the House in 1983, we did not have any Divisions because the House saw it as a House issue. I cannot understand why the Opposition have decided to turn this issue into a political football. I am not making a political point--I am being serious. Why have they done it? It is quite unnecessary. If they had not done so, they might have secured a more sympathetic hearing from Ministers.
Mr. Winterton: I am speaking as the Chairman of the Procedure Committee, and I am not seeking to be party political in any way. I am seeking to represent the interests of this House. That is why I have made this request, although I have done so at 7.22 pm, when there is a vote at 10 pm. Despite that, I hope that the Government will give serious consideration to it.
Mr. Key: I think that I am right in saying that I am the only Member tonight, on either side of the House, who
has served on such a Committee--on the quinquennial Armed Forces Bill. I can vouch for the value of that procedure, which is a huge improvement on most of the legislative steps we take in this House. I hope that the Government will take up my hon. Friend's suggestion.
Mr. Winterton: I am grateful for my hon. Friend's support for my proposal.
Above all, reference to a Special Standing Committee would do something to make amends for the Government's failure to consult at the drafting stage. I give full credit to them--they have apologised for that. It would enable the Committee to give balanced consideration to some of the major issues that the Bill raises.
One of those issues is whether the Bill, as drafted, gives too much unfettered discretion to the Treasury to regulate the operation of resource accounting. This was referred to by the right hon. Member for Ashton-under-Lyne, a past Chairman of the Public Accounts Committee; my right hon. Friend the Member for Haltemprice and Howden, the current Chairman of the PAC; the right hon. Member for Swansea, West; and the hon. Member for Kingston and Surbiton. Clearly, it does raise some concerns.
Mr. Alan Williams:
I see that the shadow deputy Leader of the House, the hon. Member for South Staffordshire (Sir P. Cormack), is in his place. This has been virtually a unanimous debate so far, and has been listened to seriously by Ministers because, clearly, it is a House of Commons debate, as my hon. Friend the Member for Workington (Mr. Campbell-Savours) said. Can I appeal to the hon. Member for South Staffordshire? I know that there is limited time, so perhaps the hon. Member for Macclesfield (Mr. Winterton) will endorse this suggestion. Between now and 10 o'clock, would the hon. Member for South Staffordshire take party politics out of this matter, in the hope that we can get a meaningful and positive reply from the Government?
Mr. Winterton:
I am grateful to the right hon. Gentleman for that constructive and rational proposal, which I hope was heard by my hon. Friends.
Mr. Winterton:
My right hon. Friend agrees. Clearly, there is a great deal of common ground across the House.
The creation of the financial reporting advisory body is a welcome development, but there is a strong argument for augmenting the board's independence from the Treasury by putting it on a statutory basis and giving it its own independent secretariat. That would increase the public credibility of the RAB process.
I hope that the Minister can enlighten us on the trigger points outlined in the Treasury's 1998 memorandum. The Treasury stated that these were intended
I wish to refer to the Procedure Committee's report on parliamentary scrutiny of the Government's expenditure plans. In the Committee's view, there is a clear link between the proposed introduction of resource accounting and the need to reform the current arrangements for such scrutiny. The report stated that
Mr. Drew:
I apologise to the hon. Member for Macclesfield (Mr. Winterton) for missing the start of his speech, but I am glad that he made that point. Does he agree that the key to parliamentary scrutiny is how we encourage Select Committees to take up the proper examination through the new methodology?
Mr. Winterton:
The hon. Gentleman is right, and he has picked up a matter that was raised with great emphasis by the right hon. Member for Ashton-under-Lyne. Clearly, it is important that Select Committees should find time to look at the estimates, and I have indicated that they should be able to amend the estimates. That would give them a real job to do in dealing with a particular Department, and would make the reports more meaningful. I hope that, with the advent of sittings in Westminster Hall, there will be greater opportunity for debating Select Committee reports.
Mr. Bill Rammell (Harlow):
My right hon. Friend the Chief Secretary said that the Bill is the biggest reform since the era of Gladstone. The need for reform is underlined by the fact that the legislation with which we are dealing dates back to 1866 and 1921. When we consider how the world, and especially Government expenditure and programmes, have changed since then, it is clear that the accounting rules by which we operate need to change too.
There is cross-party consensus on the issue. The right hon. and learned Member for Rushcliffe (Mr. Clarke), introducing his 1993 Budget, said that Government accounting for public spending had become archaic, and that the time had come to move to a system of accounting that identified more clearly the costs of resources. The Government are implementing that. I hazard a guess that, had the Conservative party won the 1997 general election, a broadly similar Bill would eventually have been introduced.
The case for change is very strong. The changes to resource accounting will mean that Departments produce accounts in a form broadly consistent with United Kingdom commercial practice. That has not been emphasised so far, but it is welcome. There is a consensus that the private sector should be involved in developing public services, so it does not make sense to have a different set of accounting procedures across the sectors, especially if we want to transfer staffing and experience between them. We do not want to encourage people with financial or strategic experience to spend their whole working lives in only one sector.
I have never understood the treatment of capital expenditure in Government accounts. When one spends money on a capital asset, the benefit that accrues from that asset clearly lasts for a significant period, and certainly longer than one year, so it is entirely right for capital expenditure to be spread over the depreciation period. As long as an eye is kept on the balance sheet and the cash flow to ensure that the overall level of activity is financeable, that proposition in the Bill makes sense.
I was attracted by what the hon. Member for West Dorset (Mr. Letwin) said about the change making clear to the Treasury the degree to which public assets are depreciating. Under the current system, that is not always the case. The change should also lead to more informed decision making on capital expenditure. The hon. Member for Kingston and Surbiton (Mr. Davey) highlighted the fact that there is a significant bias against capital spending in the current rules, with all the costs hitting the income and expenditure account in full in the first year of acquisition.
Hon. Members might respond to that by asking whether it makes a difference. I have been struck over the years by the fact that the public sector in its spending decisions does not appear to have as much understanding as the private sector of the need for capital investment. It cannot be denied that the current construction of the rules has an influence on that.
"to provide Parliament with reassurance during the transitional period leading to full implementation of RAB that satisfactory progress is being made."
6 Dec 1999 : Column 620
This matter has been raised during the debate. Trigger point 3 was the audit by the NAO of Departments' dry-run 1998-99 resource accounts. That was due to be completed during the autumn of this year. The Treasury has described trigger point 3 as
It would be helpful if the Economic Secretary could report to the House this evening on the progress on this trigger point. Have all Departments submitted their dry-run resource accounts to the NAO? If not, which Departments have failed to do so? Has the Government had any preliminary feedback from the NAO on the quality of the dry-run accounts?
"the final, and most important phase of the process of implementing resource accounting, since it will determine whether all departments are on track to implement RAB successfully".
"resource accounting and budgeting should result in more, and better, information being presented in Estimates and annual reports".
The Leader of the House has said that all will be much more transparent to Members of Parliament in assessing the decisions which the Government are making, and that can only be a good thing. We concluded that our proposals for reform of expenditure scrutiny
"are a logical extension of the Government's policies"
on resource accounting. There are no party politics here. We are seeking to improve the information coming to this House to enable it to debate and consider these matters more sensibly.
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