SECTION 82 OF THE WELFARE REFORM AND PENSIONS
ACT 1999
ARE ARRANGEMENTS FOR SCRUTINY OF SECTION 82 REPORTS
SATISFACTORY?
24. The Parliamentary Under-Secretary, Ms Eagle,
reviewing her experience of piloting through the first report
under Section 82, concluded that the procedure had been "open
and transparent", and that it "got ... me involved as
a Minister, the members of the select committee involved, in far
more detailed discussions and sessions on what was going on and
what was being done with this money and when, than any other procedure
that I have been involved in".[38]
25. The Chairman of the Social Security Committee,
Mr Kirkwood, made a number of criticisms of the DSS arising from
his Committee's involvement in the scrutiny process. He felt that
the department had given his committee insufficient time to consider
the draft report (the DSS had written to the committee on 3 December
1999 asking for scrutiny to be completed by Christmas). He considered
that the report itself should have been drafted with more care:
"it did not last for two minutes when we started cross-examining
[officials]". He expressed regret that because the report
was subsequently considered in Delegated Legislation Committee,
there was no opportunity to inform the House of the Social Security
Committee's two reports through a 'tag' on the Order Paper. Finally,
he argued that it was unfortunate that no members of the Social
Security Committee were appointed to the Delegated Legislation
Committee which considered the report.[39]
26. Notwithstanding these criticisms, Mr Kirkwood
considered that the result of the scrutiny process was a sensible
compromise between the DSS and his Committee, which resulted in
the report as finally laid being a significant improvement upon
the initial draft. He said that the DSS had regarded some of his
Committee's proposals as "a bit unrealistic", and acknowledged
that "maybe they were". The Chairman of PAC, Mr Davis,
also concluded that the overall effect of the scrutiny process
was beneficial: "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".[40]
27. We agree that the scrutiny of the first draft
Section 82 report by the Social Security Committee led to significant
improvements, and we commend the Committee for its diligence.
The fact that this process of scrutiny led to a considerable reduction
in the amount of expenditure for which authority was sought is
testimony to the Committee's effectiveness (as well as supplying
evidence that the DSS was insufficiently rigorous in drawing up
its initial projections).
28. Ms Eagle made clear to us that further Section
82 applications by the DSS are likely, though she could not at
this stage give details. She said that:
"we may well come back
to Parliament at some time in the future with our extensive modernisation
programme but it would be attached to some kind of change in primary
legislation well signalled in advance. I certainly do not have
a list of times when we are planning to use it in my pocket that
I can produce for you. Given the state of our IT, given the huge
agenda of welfare modernisation that we are developing in the
department, I think it would be wrong of me to suggest that we
are not going to seek its use again."[41]
29. We have considered ways in which the parliamentary
scrutiny of further draft reports and reports under Section 82
might be improved. At the heart of this question is the quality
of information supplied by the DSS to the House. We wrote to the
DSS asking if they saw any reason why the following information
should not be included in future Section 82 reports:
(a) a detailed breakdown
of the proposed expenditure together with the expected timing
of this expenditure and the reasons why it is desirable to incur
the expenditure;
(b) the amount, nature and timing of any financial
liabilities to be accrued;
(c) details of any contractual relationships
into which the Government proposes to enter in relation to the
proposed spending; and
(d) an estimate of the unavoidable expenditure
that would arise in the event of the subsequent bill not being
enacted or being substantively amended.
30. In response to this request the Government
has given a broad undertaking that "we are happy to share
all the information that we have about the expenditure that is
the subject of a Section 82 report, subject only to considerations
of 'commercial confidentiality'".[42]
We welcome this assurance. We accept that the need to preserve
the confidentiality of sensitive negotiations may impose some
constraints on the information that can be divulged, but subject
to this one restriction we believe that information in all the
categories set out above should be made available to the House
and its Committees as early in the scrutiny process as possible.
We also support the recommendation of the Chairman of PAC that
"expenditure reports should include a thorough analysis of
the risks, as well as the value-for-money benefits, of incurring
preparatory expenditure", and that Section 82 proposals "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)".[43]
31. We note Mr Kirkwood's points about some of the
difficulties his committee encountered. With regard to timing,
it is important that the committee should be given a realistic
period of time in which to consider a draft report under Section
82. For this reason we recommend that the Government should
normally make allowance for a period of at least six sitting weeks
between the submission of a draft report to the Social Security
Committee and receipt of the committee's comments.
32. We have no strong views as to whether the subsequent
consideration of the report as actually laid should take place
on the Floor of the House or in a Delegated Legislation Committee.
The Government told us that they have "an open mind"
on this. It very much depends on the content of each report and
the seriousness of the issues raised. We recommend, however,
that the Government should accede to any request either by the
Social Security Committee or the official Opposition that a report
be taken on the Floor. If so taken, any relevant select committee
reports should be 'tagged' on the Order Paper.
33. If the report is to be taken in a Delegated Legislation
Committee, it would make sense for some of the members of the
Social Security Committee, who have invested time and effort in
mastering the issues involved, to be appointed to that DL Committee.
We regret that this was not done in the case of the first report
under Section 82, and recommend that it should be done in future
cases, in the interests of coherent scrutiny.
34. In oral evidence, Ms Eagle offered on behalf
of the Government to make available an outturn report on the money
actually spent under the powers granted. This was subsequently
done by means of the Written Answer referred to in paragraph 14
above.[44]
In the same Written Answer the Government gave a wider undertaking
"to provide the House with an outturn report setting out
the actual expenditure incurred under the terms of Section 82
for each use of the power, either at the end of the specific period
to which the power relates or following the termination of its
application by the receipt of Royal Assent to the related Bill,
whichever is earlier".[45]
We welcome this undertaking by the Government.
35. We support the recommendation by the Chairman
of PAC that HM Treasury should develop guidance on the use, format
and content of future Section 82 expenditure reports, such guidance
to be drawn up in liaison with the National Audit Office.[46]
SHOULD THE GOVERNMENT SEEK SIMILAR
POWERS IN RESPECT OF OTHER DEPARTMENTS?
36. The Government have not ruled out the possibility
of seeking powers similar to those conferred by Section 82 in
respect of other departments. The DSS state that "there is
no reason in principle why other departments should not consider
seeking a power similar to Section 82 if circumstances suggest
that such a move is sensible".[47]
Ms Eagle said that:
"Any potential future
case ought to be looked at on its merits, but it is not for me
to speak for other government departments about what they may
or may not be planning to do, or may argue in the future. But,
yes, it is possible for any department to argue that Section 82-type
powers ought to be available to it."[48]
37. The DSS told us that "Her Majesty's Treasury
would expect any such proposals to be cleared by them and would
not agree unless there was a compelling justification".[49]
We sought clarification from the Treasury as to how they would
assess any such proposals. The Chief Secretary to the Treasury,
the Rt Hon Andrew Smith MP, replied. He commented that the case
put forward by DSS for its Section 82 powers had been a strong
one, and noted that other departments have not sought similar
powers. He stated that:
"If other departments
were to seek similar powers, having explored all available alternative
options, the Treasury would have to satisfy itself that without
those powers implementation would be seriously delayed, at greater
risk than without such powers and would incur greater expense
than would otherwise be the case—and so the power would
secure improved value for money. Such problems would also need
to be of a continuing nature, since a one-off problem could of
course be solved by the department bringing forward a paving bill
for that project, and the Treasury would want to ensure that any
such proposals included similar safeguards to those in paragraphs
2 and 3 of Section 82 of the Welfare Reform and Pensions Act."[50]
38. Mr Smith added that "of course, if such
proposals were to be brought forward for other departments the
House of Commons would have the opportunity to debate those, both
in principle and in detail, in the course of the relevant legislation".[51]
39. The two chairmen of select committees from whom
we took evidence both expressed deep unease about the prospect
of Section 82-type powers being sought by other departments. The
Chairman of the PAC, Mr Davis, said that he did not think Section
82 was "a very good precedent for any legislation".
He was worried that the precedent having been set, it would be
extended to other departments which had a less strong case: "I
would worry if you started to apply that argument to the Health
Service, to the DTI, to whoever, because it seems to me they picked
the nice soft target here and once they have the soft target in
hand they can extend it beyond that".[52]
The Chairman of the Social Security Committee, Mr Kirkwood, said
that "if you really stretched the Section 82 procedure to
its limits, any department could use it every year, in my opinion,
and that is my real base fear".[53]
He said that "if other departments latch on, very quickly
I believe that expenditure will spiral out of the control of the
legislature"; and he argued that there was a case for limiting
the extension of Section 82 powers to computer development and
procurement.[54]
40. As we state in paragraph 22 above, we are
not persuaded that it was necessary to seek the Section 82 powers
even in relation to DSS. It follows that we are even more sceptical
about any future extension of them to other government departments.
It would be deplorable if any Government were to seek further
Section 82 powers as a device for circumventing normal parliamentary
scrutiny of expenditure.
41. Nevertheless, we do not wish to state dogmatically
that no other government department should ever seek comparable
powers. It may be that exceptional circumstances might justify
Parliament granting such powers. If so, we believe that safeguards
should apply as set out in the following paragraphs.
42. The Treasury in the first instance, and subsequently
Parliament, should be satisfied that the circumstances are genuinely
exceptional. For the reasons given in Mr Smith's letter, 'one-off'
projects would not be suitable for a grant of expenditure under
Section 82-type powers. In the case of such projects, and where
possible in relation to other projects, a paving bill is a more
appropriate way of proceeding.
43. We recommend that in considering any future
proposals, the Treasury should adopt more stringent criteria than
appears to have been the case in relation to Section 82. The
deficiencies identified by the Social Security Committee, and
the contrast between the large sums of money originally sought
and the small sums actually spent, suggest that this was a proposal
which should not have been cleared by the Treasury. Full
account should be taken of the risks as well as the prospective
benefits of authorising preparatory expenditure.
44. We agree with Mr Kirkwood's view that, as
a general rule, Section 82-type powers are only likely to be appropriate
in relation to IT development and procurement.
45. The Treasury's assurance that the House of Commons
will have the opportunity to debate future Section 82-type proposals
"in the course of the relevant legislation" rings somewhat
hollow, considering that no such debate was possible in the case
of Section 82 itself in consequence of the operation of guillotines.
We recommend that any Programme Motion governing a bill which
contains clauses conferring Section 82-type powers should make
specific provision for those clauses to receive guaranteed and
separate debating time.
46. Finally, we recommend that all the undertakings
given by the Government in relation to the exercise of powers
under Section 82 should be extended, mutatis mutandis,
to any future comparable legislative provisions.
38 QQ 8, 12. Back
39
Q 69. Back
40
Ev p 16. Back
41
Q 24. Back
42
Ev p 15; see also more detailed comments at Ev pp 3-4. Back
43
Ev p 16. Back
44
Official Report, 30 November 2000, col. 850W. Back
45
Ibid. Back
46
Ev p 16. Back
47
Ev p 2. Back
48
Q 18. Back
49
Ev p 2. Back
50
Ev p 25. Back
51
Ibid. Back
52
Q 74. Back
53
Q 74. Back
54
QQ 69, 76. Back
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