Letter from the Chairman of the Committee
of Public Accounts to the Chairman of the Committee
I agree that the Committee of Public Accounts
does have a particular interest in the operation of Section 82
and its implications for the parliamentary scrutiny of expenditure.
During the passage of the Welfare Reform and Pensions Bill our
Committees were in close contact on issues of mutual concern,
and I wrote to you on 16 April last year with information to assist
the Procedure Committee in its deliberations on this matter.
Once the Act had received Royal Assent, the Secretary
of State used the powers conferred on him under Section 82, to
enable preparatory expenditure to be incurred on a new information
technology system for the Child Support Agency. This first use
of Section 82 powers was the subject of the First (HC 180) and
Second (HC 135) Reports, Session 1999-2000, of the Select Committee
for Social Security.
As a general rule, I would expect the Committee
of Public Accounts to take the lead in the scrutiny of proposals
to incur preparatory expenditure under Section 82. However, on
this particular occasion, under arrangements described in HC 180,
which I had agreed with the Chairman of the Social Security Committee
and the Secretary of State, the Social Security Committee took
the lead. The Social Security Committee's scrutiny of the draft
expenditure report significantly improved its quality, and was
an effective means of ensuring that the report contained sufficient
relevant information to inform the House of the need for, and
the extent of, preparatory expenditure, and to ensure that taxpayers'
interests were properly protected. I therefore share your Committee's
interest in the way in which the House and its Committees deal
with this procedure. It follows that I consider the Procedure
Committee's current review of Section 82 to be both necessary
and valuable.
On the issues set out in your letter to the
Secretary of State, I would make the following points:
— It is generally accepted that, even
with thorough select committee scrutiny of expenditure reports,
the implementation of Section 82 results in a diminution of the
effectiveness of Parliament's scrutiny of expenditure. In principle
Section 82 should not be extended to other Government departments,
but if it is, such powers should be used only in exceptional cases.
— Authority to incur preparatory expenditure
via the Section 82 route does not override the need for the expenditure
to be included in an Estimate and be voted by Parliament, as part
of the House's annual supply procedure, before it can be incurred.
In order to counter the diminution in Parliament's scrutiny of
expenditure authorised via Section 82, it might be worth considering
whether the Estimates should identify separately the items of
preparatory expenditure included in them.
— Each proposal to use Section 82 powers
should be supported by a well-reasoned case, which should set
out the consequences, in terms of value for money likely to be
foregone, of alternative courses of action (such as a paving bill;
awaiting Royal Assent; delaying implementation).
— Expenditure reports should include
a thorough analysis of the risks, as well as the value-for-money
benefits, of incurring preparatory expenditure. In this regard
there was clearly a deficiency in the first draft of the department's
expenditure report for new information technology for the Child
Support Agency. I agree that, as a minimum, the categories included
against the fifth point in your list of issues should be addressed.
— Given that Section 82(2)(a) requires
Treasury consent before an expenditure report is laid before the
House, there would be clear benefits in the Treasury developing
guidance on the use, format and content of Section 82 expenditure
reports. Such guidance should be agreed with the National Audit
Office.
Rt Hon David Davis MP
6 June 2000
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