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9.21 pm

Mr. Howard Flight (Arundel and South Downs): This has been an important and valuable debate--essentially more parliamentary than party political. We hope that our proposal not to vote against the Bill and to see a Special Standing Committee investigate issues raised on both sides of the House will be accepted by the Government, as everyone saw that it was made spontaneously.

Gladstone has been much cited. He would be turning in his grave if he were here and realised the extent to which his intentions for full accountability for Government expenditure to Parliament had gone off the rails. No one is objecting to resource accounting. Indeed, it is amazing that we are at the end of the 20th century and the Government still have cash accounts. Perhaps that is a comment on our processes, and on some of the things that are wrong with this country.

There is consensus that the Bill needs changing. My hon. Friend the Member for Bexhill and Battle (Mr. Wardle) referred to it as half-baked. I would have said simply that Sir Humphrey had had a heavy hand in the drafting of the Bill. There has been consensus that

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there is a problem, in that the NAO and the Comptroller and Auditor General cannot follow public money wherever it goes. Under the Bill, the CAG will not be certifying the regularity of accounts. He will be merely certifying that expenditure has been spent--not how it has been spent.

On the PFI and Partnerships UK proposals, I congratulate the Treasury taskforce, which has done an excellent job in accelerating the number of PFI deals. The taskforce appears to have cut through a lot of the bureaucratic problems that stood in the way in the past. The proposals for Partnerships UK are, in essence, to say that a talented and skilled team should be put into a majority private sector-owned body and paid commercial salaries. I have grave reservations about whether that will work.

It seems that the taskforce is doing essentially a public sector job. I suggest that it might be better to have a permanent taskforce whose members are paid private sector salaries within the Treasury. There is no real reason why that is not do-able. I note that the CAG staff earn private sector salaries.

How is the £1 billion balance sheet going to arise? Ministers have said that they expect one third of PFI projects to be handled under this scheme. Partnerships UK is to put up seedcorn money to local authority projects to finance feasibility studies. It will become impossible to avoid getting caught up in financing syndicates, or even in organising the syndicates that tender for sub-contracted contracts.

If that happens, there will be an impossible conflict of interests, with a private sector body having privileged access to public sector business. The industry is concerned and the Government have not said as clearly as they might what Partnerships UK's territory will be.

Mr. Love: Is it not appropriate that the body that deals with public-private partnerships should itself be a public-private partnership?

Mr. Flight: With respect, the hon. Gentleman misunderstands its role. The Treasury taskforce has been effective in sorting out the public side of the proposals and then going to the marketplace for people to put together the syndicates, make tenders and find the finance. It has a specific role, working with the Departments, local authorities--if relevant--and the Treasury. One of my concerns is that the team will lose the good will of the Treasury and the Departments when it moves to the private sector.

We certainly do not object in any way to resource accounting--we started it--but there are considerable problems and a lot is missing. Hospitals, schools, roads and defence are excluded on the assets side, and pension and PFI liabilities on the liabilities side. Nothing in the Bill clarifies definitions to make it a little easier for the citizen to understand what is going on.

Key clauses clearly give the Treasury the power to define whatever it sees fit and produce accounts as it sees fit. There is no independent body to verify that accounts are true and fair. The Bill is a triumph of presentation over substance in that area, as my hon. Friend the Member for West Dorset (Mr. Letwin) said.

I pay tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for his contribution. He spoke with many years' experience of the fundamental

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issues and was the first to assert the relevancetoday of the principles of Gladstonian parliamentary accountability. He made the point that Parliament has less rights than the European Court of Auditors to scrutinise expenditure and that less than half of non-departmental expenditure of Government moneys is scrutinised by the Comptroller and Auditor General. He pointed out the fact that there is no provision in the Bill for the Housing Corporation or the Environment Agency.

Dr. Palmer: Does the hon. Gentleman believe that as long as those various areas are not included, resource accounting should not be introduced?

Mr. Flight: Others have given the answer. The Bill as it stands raises a host of issues that it would be better for the Public Accounts Committee to consider before legislation is rushed through. If it is deemed appropriate to start with certain areas, the Bill itself should make it clear to which areas it is intended to extend the provisions and should address the issue of providing proper parliamentary accountability in relation to all expenditure.

Perhaps the major speech was made by my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), who pointed out that at its heart the Bill is about the constitutional relationship between Parliament and Whitehall and that the proper process is for Departments to supply proper accounting to Parliament and for the Public Accounts Committee to scrutinise that accounting.

My right hon. Friend the Member for Haltemprice and Howden also pointed out that the Public Accounts Committee had not been consulted on the legislation and that it meddled with some sound aspects of the current procedures for parliamentary accountability, as well as locking in place some of its weaker aspects. He also appeared to offer, on behalf of the PAC, to take evidence from Treasury Ministers about their intent and to provide a method for scrutinising the proposed legislation. My right hon. Friend also made the important point that no EU problems were associated with extending the powers of the Auditor General and the NAO to cover all areas of Government expenditure.

Mr. Geraint Davies (Croydon, Central): Does the hon. Gentleman believe that it would be worth delaying resource accounting, and all its benefits, for years so that we could provide a broader remit for the Comptroller and Auditor General, or does he accept that it is better to move forward and consider later, bit by bit, the brief for the NAO?

Mr. Flight: With respect, that question has already been answered. The Opposition have offered the sensible proposal of a Special Standing Committee to address all the problems. The Bill as it stands would introduce resource accounting, but would cause more problems than it solved. That point has been made by almost every right hon. and hon. Member who contributed to the debate.

The hon. Member for Kingston and Surbiton (Mr. Davey) broadly supported the main themes, but seemed to suggest that individual Members of Parliament should have rights to propose spending increases. The right hon. Member for Swansea, West (Mr. Williams) best expressed the overall view of the House from his

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considerable experience. He supported the argument of my right hon. Friend the Member for Haltemprice and Howden that there were no EU problems in limiting the powers of the NAO to all areas of Government expenditure.

The hon. Member for Workington (Mr. Campbell- Savours) pointed out that a key apprenticeship for anyone seeking Government office should be membership of the PAC. He also made the point that the NAO believes that the Bill threatens to weaken the independence of the Comptroller and Auditor General and his accountability to Parliament. My hon. Friend the Member for Macclesfield (Mr. Winterton) will, I hope, make constitutional history in proposing the Special Standing Committee and, importantly, proposing that the Financial Reporting Advisory Board, which is at present a creature of the Treasury, should be put on to an independent statutory basis.

My hon. Friend the Member for Salisbury (Mr. Key) illustrated how effective the Bill has been in meeting the objective of bypassing difficult areas, including some£22 billion of defence expenditure and problems caused by intellectual rights and sophisticated weaponry. The hon. Member for Brent, North (Mr. Gardiner) supported the proposal for a Special Standing Committee, and my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) gave a valuable survey of the benefits and case for resource accounting, but stressed that it would be risky to proceed with the Bill without adequate consultation and dialogue with the PAC and the Auditor General.

My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) highlighted the fact that there is no valid reason for excluding NHS trusts, although there are sound arguments for excluding schools. The hon. Member for Broxtowe (Dr. Palmer) suggested that the power of the National Audit Office should be extended on a voluntary basis rather than on a statutory basis.

I conclude by repeating and stressing the bona fide commitment, given by my hon. Friend the Member for West Dorset, that the Conservative party will put in place an accounts commission to establish statements of national accounting practice for the public sector that will parallel those in the private sector. That commission, to be led by Sir Bryan Carsberg, will be implemented when the next Conservative Government are formed.

Finally, the Bill seems to smack of "Animal Farm". It is full of good intentions, but goes somewhere else. To misquote the novel, legs are good, but four legs are, apparently, bad.

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