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3.59 pm

Mr. James Clappison (Hertsmere): This has been a relatively short but important debate on a significant occasion in the life of the House. I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) and all the members of the Public Accounts Committee on their prodigious hard work in producing the 43 reports. Their work is of a very high quality. I associate myself with the tribute paid by my right hon. Friend to his long-serving predecessor, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who made such an important contribution to the Committee's work.

The Committee fulfils an important and historic role on behalf of the House. Among the many other tasks that it performs, it defends Parliament's rights in scrutinising how money is spent. That is plainly evidenced by the conclusions of the Committee which we have heard about today, including those on the millennium dome, and what my right hon. Friend the Member for Haltemprice and Howden described in that instance as a

The Committee also defends a vital public interest as regards the quality of public services and the quality of life. One needs only to consider the 42nd report on the control of hospital-acquired infections to see just how important that work can be.

Governments of any political description need to respond properly to the Committee's conclusions in all its reports. Untimely dismissals or rebuttals of its work are not only a discourtesy to the Committee but work against the public interest by prejudicing the future detailed and careful consideration of its work that is called for on the part of the Government. They need to take the time to learn the lessons arising from the Committee's work. I agree with my right hon. Friend's remarks to that effect.

I congratulate my right hon. Friend on his authoritative opening speech. He gave more than a hint of the diligence and toughness that lie behind his approach to the Committee and the important work that he carries out.

The right hon. Member for Swansea, West (Mr. Williams) made a thoughtful speech, most of which was devoted to the important subject of the private finance initiative. He was right to draw attention to the significance of PFI--there are now over £17 billion worth of contracts. He went on to analyse the benefits and problems of PFI. He recognised that there could be a benefit to taxpayers in passing on risk, but there could also be problems. He was right to bring his experience to bear in analysing those problems, in particular the need carefully to study the terms of PFI contracts and to have

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robust terms on the public side to ensure that when problems arise, costs and inconvenience are not borne by the taxpayer and members of the public.

The right hon. Gentleman also mentioned clawback facilities, and drew attention to the absence of such facilities in a number of contracts entered into by certain Departments. There are lessons to be learned, and I suspect that the subject may well feature in the future deliberations of the Public Accounts Committee. I am sure that the Minister will want to respond to the right hon. Gentleman's points about particular Departments and the disparity in departmental practices as regards clawback facilities, as well as about the accountability of quangos.

The hon. Member for Newbury (Mr. Rendel) mentioned several of the Committee's reports. I hope that he will not mind if I do not follow him down every avenue of thought. He mentioned what he described as the danger of extra rainfall. As a junior Minister in the Department of the Environment who had to deal with the drought during the previous Government, I find that the danger of extra rainfall has not always been entirely self-evident. I hope that the same quarters who under the previous Government were complaining of too little rainfall are not now going to complain of too much rainfall. [Interruption.] I heard the word "inevitably" suggested. I do not know about that, but the hon. Gentleman's remarks certainly brought back some memories.

Mr. Rendel: The hon. Gentleman may conceivably agree that perhaps the lack of rainfall that we experienced in the past and the surplus of rainfall from which we are now suffering arise from the same basic cause, which is that we are doing terrible things to our environment as a result of the over-use of petrol.

Mr. Clappison: The hon. Gentleman advanced his views at some length in his speech, and I hope that he will not mind if I do not pursue that argument. I hope that he is not going to stand on the manifesto of having just the right amount of rainfall in just the right places-- I think that I have heard that one before.

The hon. Member for Edmonton (Mr. Love) made what he described as a brief contribution, on government technology. He modestly said that he did not have a great deal of expertise in that field, but if that is the case, he has clearly done a lot of hard work because he made well-informed and interesting comments on the quality of procurement in information technology contracts.

The hon. Gentleman also mentioned the immigration and nationality directorate casework programme, and drew attention to the fact that not only has it involved a substantial waste of public money, but there is an important human dimension to the matter because it has caused anguish to genuine asylum seekers who are in the queue caused by the backlog, waiting for their cases to be dealt with. The hon. Gentleman mentioned constituency cases; I have had similar cases, and I am sure that other hon. Members have too.

I want to deal with two general points arising out of the debate. I cannot tackle all the subjects covered by the Committee, although they are all important in their own way. My right hon. Friend the Member for Haltemprice and Howden did the House a service at the outset by seeking to draw together some of the Committee's work and the lessons that the Government need to learn. He is

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right when he says that that is an important part of the Committee's work. Recently the Committee has turned its attention to the importance of improving the delivery of Government IT projects, drawing on published reports and taking an overall view on the subject.

As the Committee made clear, the successful implementation of IT projects can bring many benefits to Governments and citizens. There are also risks involved in that implementation, and all too often those risks have been realised. It is implicit in the Committee's conclusions that more needs to be done to avoid the problems that have arisen in all too many cases. The Government need to be aware of the undesirable consequences of IT failure, including, not least, as the Committee points out, the waste of enormous sums of public money and the cost in terms of inconvenience or hardship because of disruption to public services.

A prime example, which has been mentioned several times, is the Passport Agency. My right hon. Friend used the word "fiasco" to describe that example. The worst feature of the fiasco was that so many members of the public bore the brunt of the consequences. The Committee has performed a singular service to the Government in drawing together those lessons in its report, and we must all hope that the Government will seek to learn them.

Finally, I turn to a subject that almost every Member who has spoken in the debate has mentioned. It is a proper subject for the Committee's consideration. I refer to the 45th report on the acceptance of the Chinook helicopter. The Committee's approach was justified, and it was certainly not straying beyond its remit; it was acting well within its historic role and in the public interest. During its work, the Committee came to consider the tragic case of the crash of Chinook ZD-576 on the Mull of Kintyre.

The conclusions of the Committee, reached after a clearly careful and painstaking inquiry, have important implications for the Royal Air Force board of inquiry findings in respect of the crash. I have not had the advantage of participating in the inquiry or of hearing the witnesses, but I take careful note of the Committee's conclusions, in particular:

and the broader conclusion:

In the light of the Committee's findings about the specific board of inquiry into the crash and the conclusions of the Scottish courts and others, which are reinforced by comments made by right hon. and hon. Members today and on other occasions, one can say only that matters cannot be left as they stand.

The Government have yet to respond formally to the Committee's report, but their early--if not premature--public comments suggested that they were minded to continue to support the findings of the board of inquiry. I understand that it might be difficult for the Financial Secretary to the Treasury to deal fully with the matter today, but the Government more generally need to think again. The Committee's report and everything else we have heard mean that their current position is untenable. The interests of justice must come first. That tragic case must be revisited.

4.11 pm

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The Financial Secretary to the Treasury (Mr. Stephen Timms): In last year's Public Accounts Committee debate, I expressed the hope that, unlike my recent predecessors, I would be able to listen to the following year's debate when it came around. I am happy that my wish has been fulfilled.

I begin by echoing others' words of appreciation for the Committee and its Chairman, the right hon. Member for Haltemprice and Howden (Mr. Davis), and their indefatigable efforts in the past year. In last year's debate, I paid tribute to the right hon. Gentleman's energy, allied to

and he has continued to display those characteristics since then. I also endorse his generous and entirely warranted tribute to his predecessor, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), which has been echoed by others, including the hon. Member for Hertsmere (Mr. Clappison). The right hon. Member for Haltemprice and Howden is right to say that his predecessor deserves much of the credit for the Committee's current status and reputation. My right hon. Friend will be missed when he retires from the House at the next election.

Those of us who have sometimes been on the receiving end of lobbying by the PAC will know that the Committee's Chairman does not work alone. He is amply supported by other members of the Committee, especially my right hon. Friend the Member for Swansea, West (Mr. Williams), whom I thank for his kind remarks, and the hon. Member for Newbury (Mr. Rendel). I am pleased that all three now serve on the steering group in respect of the Sharman report, which will look into issues that we have debated in the past, in the Committee on the Bill that became the Government Resources and Accounts Act 2000 and elsewhere.

As in last year's debate, there are 40 or so reports before the House. The right hon. Member for Haltemprice and Howden says that the PAC has been less prolific in the past year than in previous years, but I believe that there is roughly the same number of reports on the Order Paper this year as last. It must be in recent months that the Committee's prolific production of reports has abated somewhat. Of course, some of the reports mentioned are not on the Order Paper, because the Treasury response to them has not yet been published.

I am sure that the Committee must be the best informed in Parliament on the workings of Government. I certainly understand why the hon. Member for Newbury says that PAC members pick up fascinating insights into those workings and how they affect the lives of ordinary citizens and taxpayers. The Committee is ably assisted in its work by the diligence of the Comptroller and Auditor General, Sir John Bourn, and his staff at the National Audit Office, and by the Comptroller and Auditor-General for Northern Ireland, Mr. John Dowdall, and his staff at the Northern Ireland Audit Office, to whom I am pleased to pay tribute.

The past year has witnessed the most significant development in Government accounting since Gladstone--he always seems to be the cornerstone of such superlatives. The whole basis on which Parliament provides funds to the Executive and on which the Executive account to Parliament for the use of those funds

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will be fundamentally changed by the introduction of resource accounting. The Government Resources and Accounts Act 2000 represents the culmination of many years' work on the change by the current Administration and previous ones. I pay tribute to the conscientious work of the NAO and the Chairman and members of the PAC in scrutinising that Bill. The advice of the NAO, the hearings the Committee held, their reports and the contributions made by Members of Parliament in the House were influential in significantly improving the Bill. I am pleased that the Government were able to take on board so many of the suggestions made.

The Act also gives the Treasury powers to incur expenditure to establish Partnerships UK, which is the successor to the Treasury private finance initiative taskforce. Partnerships UK was launched in the summer and has already started work on a number of important public-private partnership projects. It will help to ensure that those partnerships are better structured and more efficiently procured, and that they deliver better value for money to the taxpayer. Last week in South Africa, I was pleased to be able to announce that Partnerships UK is to provide support to the South African Government in the establishment of PPPs to improve public services in that country.

Shortly, we shall make a commencement order to bring into force the majority of the provisions of the Act. Those include the provisions required to replace appropriation accounts and cash-based supply with resource accounts and resource-based supply from 2001-02 onwards, and certain powers relating to the production of whole- of-Government accounts and other powers to improve the way in which Government accounts are prepared and produced.

As well as that Act receiving Royal Assent, this year has seen significant milestones along the road to the full implementation of resource accounting and budgeting. Departments have made significant progress in the preparation of resource accounts and resource-based estimates; Parliament, through the PAC and other Committees, approved the Government's timetable for the introduction of resource accounting and budgeting; and the spending review 2000, which set out spending plans for 2001-02 to 2003-04, was conducted on the basis of resource budgeting.

From the outset, the PAC endorsed the more commercial approach brought about by resource accounting and budgeting. The Committee acknowledges that it should improve the clarity and the quality of the financial information that is available to Parliament and that it will assist departmental management. I am confident that the change to resource accounting and budgeting will bring significant benefits to the overall management of public expenditure and the management of individual departments. With others, I look forward to those benefits being realised.

We plan to introduce consolidated accounts for the central Government sector from 2003-04 and full whole-of-Government accounts covering the full scope of the public sector from 2005-06. Whole-of-Government accounts will provide better quality, more transparent data for the planning of fiscal policy; better management of public services; and more effective distribution of resources. We look forward to the PAC and the NAO

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contributing to the development of whole-of-Government accounts in the coming months and to working with them on that.

Without doubt, the most intense debates on the Government Resources and Accounts Bill were those relating to the audit and access rights of the Comptroller and Auditor General. I acknowledge again the tenacity with which members of the Committee that considered the Bill pursued the rare opportunity--as they saw it, with some justification--to extend the CAG's rights. The Act contains a new statutory right for the CAG to inspect documents held by contractors that are carrying out financial functions for Departments, and powers for the CAG to be appointed auditor of bodies that he is currently prevented from auditing by statute. It also contains powers for the CAG to be granted access to documents held by third parties. I imagine that those are the measures that constitute the 99 per cent. that was referred to by my right hon. Friend the Member for Swansea, West.

The Government have made it clear that we will implement the powers in the light of the outcome of Lord Sharman's review of audit and accountability in the 21st century, which is expected to be completed early in the new year. It is considering exactly what is public money, what degree of audit and accountability is appropriate to public money and what are the appropriate arrangements for those in receipt of public money to account to Parliament. We shall be receiving conclusions in the fairly near future.

When considering the Bill, we gave an extensive airing to performance validation. This Government have been much more open and transparent about performance monitoring than previous Administrations. In particular, we have published public service agreements, with 160 top-level targets set out in the July spending review announcement. We have also published service delivery agreements, which set out in more detail how the Government will meet their PSA targets. I believe that the targets will help to ensure that there are fewer of the shortcomings in public service delivery which the Committee has identified in a number of the reports that we are considering.

The interest taken by the Committee and the NAO in the progress of modernising government has been helpful. I welcome the PAC's encouragement of joint accountability for the delivery of objectives that do not fit easily into traditional Whitehall structures. I hope that there will be more joint hearings, such as the one to which the right hon. Member for Haltemprice and Howden referred on the criminal justice system, the subject of the Committee's 27th report. I hope that we shall receive further recommendations from the Committee on how joint accountability structures in government might be improved. They can sometimes be difficult to set up successfully.

The modernising government agenda also covers important areas of procurement and project management, to which several right hon. and hon. Members have referred, especially in the context of IT projects. That has been a continuing concern for the Committee, as the reports set out on the Order Paper demonstrate. That is particularly the case of the first report on the improving delivery of the Government IT projects. Subsequent reports have been referred to as well, including those on the Passport Agency--I think that that is the 24th report--

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and on the immigration casework system, which is the seventh report. Many important lessons have been drawn from all the reports.

My hon. Friend the Member for Edmonton (Mr. Love) illustrated vividly the personal consequences for individuals when things go wrong, and the importance of ensuring that they go wrong as infrequently as possible. It is important also that we learn lessons from the problems of the past.

In April, the Government established the Office of Government Commerce. Its role is to provide a firmer sense of direction in procurement, and to ensure adoption of best-practice approaches in the public sector. I visited the OGC a couple of weeks ago and was impressed by the determined way in which it is setting about its role. It has set an ambitious target of securing £1 billion of value for money gains as a result of its work, and is making progress in a number of ways, of which I shall single out two.

First, the OGC is developing a new and independent review process for all new procurements--the so-called gateway process--which will tackle known weaknesses in handling large projects, especially in IT and construction. This was foreshadowed in the recent Cabinet Office report on improving IT project performance. I am pleased to say that pilot testing of the gateway process has confirmed its capacity for improving value for money, timeliness and cost management of high-risk procurements. Further details of the process will be announced early in the new year.

My hon. Friend the Member for Edmonton referred to the interim report and guidance that is due. I understand that that is already available on the central information technology unit website.

The second initiative is that the OGC is harnessing the Government's collective purchasing power to improve the way in which Departments manage suppliers. For example, it is gathering information about key IT and non-IT suppliers for dissemination to Departments. It has employed a consultancy supplier to develop a mechanism to collect and analyse procurement expenditure across central Government, which will report by July 2001. It is also taking steps to improve the Government's relations with their strategic suppliers, which are being assessed in terms of their criticality to Government business, the value of spend and the availability of substitutes and their strategic influence.

We want to ensure that we understand well the nature of the business that we have across Government with those who supply the Government. In the past, there has often been too much fragmentation. Companies have known much more about their business with Government than the Government have known about their business with them. I hope that the Committee will take some encouragement from these developments. They will provide an opportunity to implement some of the lessons drawn from the work of the Committee.

I shall say more about the private finance initiative and public-private partnerships and pick up the points made by my right hon. Friend the Member for Swansea, West. We have taken a range of measures to improve the PFI and to generate other forms of PPPs, which have brought greater clarity and confidence to the public and private sectors alike. They hold out the promise of significantly better outcomes. We have undoubtedly been helped in that process by the Committee's work.

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Since May 1997, PPP contracts have been signed for 259 projects, generating £12.6 billion of private sector capital investment. Another 296 projects are in procurement, with the potential to generate an additional £16.2 billion. That will take us to nearly £30 billion of investment. I welcome the support that my right hon. Friend the Member for Swansea, West expressed for the principle of that approach.

The PFI and other forms of PPP are delivering value for money for the taxpayer and good-quality services for our citizens, and making an increasingly important contribution to modernising government. The Committee has continued to be active in examining PFI projects, and has produced many valuable recommendations. I was reading the Committee's 41st report on the Prime project. Many innovative features negotiated by the Department of Social Security were recognised in what was a large and complex PFI project--possibly the largest ever undertaken by a central Government Department.

I remind the House of the Committee's view of the initiative. The Committee stated:

I am glad that the Committee has been able to recognise that, in that instance and in others, PFI has worked well, and to draw the attention of others to such examples. I am especially pleased that my hon. Friend the Under-Secretary of State for Social Security is on the Government Front Bench listening to the debate.

My right hon. Friend the Member for Swansea, West also referred to the potential windfall gains from refinancing PFI contracts, which has been a major issue in the recent PAC hearing on Fazakerley prison, and reference was also made to Dartford and Gravesham hospitals. Steps have been taken to reduce the chances of such problems recurring. The standard contractual terms produced in 1999, together with the development of the PFI market under the Government's proposals, make it much less likely that new PFI deals will result in windfall gains for the private sector of the kind to which my right hon. Friend referred. However, if there is evidence that such problems have recurred since 1999, I should be interested to see it.

Guidance to cope with the residue of previously agreed deals has been issued by the Office of Government Commerce. Departments are encouraged to seek an equitable outcome in cases where their consent is required to contractual changes or revised financing arrangements. In practice in such cases, that should result in the sharing of gains with a private sector partner on a 50:50 basis, to which my right hon. Friend the Member for Swansea, West referred, unless sound reasons exist for departmental accounting officers to move from that position. However, some older contracts may not have been changed and the problem could still arise.

As the Committee has noted on more than one occasion, competent risk management is as crucial for the successful management of projects and other operations in government as it is in the private sector. That is why

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the Government have embarked on an important initiative to support that aim. In line with private sector initiatives to improve corporate governance and the management of risk, we are introducing a new procedure whereby each year accounting officers signing off the accounts of Departments will need to confirm that their Departments have satisfactory systems to review the adequacy of internal control. Moreover, those statements will be reviewed by the CAG. Again, I am delighted to acknowledge the NAO's important contribution in developing those new arrangements, which will be introduced in 2001-02.

The right hon. Member for Haltemprice and Howden and the hon. Member for Newbury spoke particularly about the huge systemic failure in inherited SERPS--the horrifying breakdown in the machinery of Government in the past 10 years, to which the right hon. Gentleman referred. It is vital that no such breakdown recurs. I am pleased that both Members welcome the announcement on those problems made by the Secretary of State for Social Security.

I want to deal with the exchange between the right hon. Gentleman and the hon. Gentleman on whether letters of direction might be placed in the Library. Of course, some directions might relate to commercially confidential matters, but I should like to consider carefully the suggestion that the normal expectation would be that directions issued to accounting officers should be placed in the Library. I shall reflect on that matter.

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