TUESDAY 9 JULY 2002

SIR JOHN BOURN, MR MARTIN SINCLAIR AND MR MICHAEL WHITEHOUSE

  60. About the answer you gave to Mr Tyrie's question last time. He asked about overseas contracts, and you gave us a note on that, and it says basically that the DFID and the Foreign Office are encouraging promotion of the work at the Audit Office through embassies and consulates. Sensible stuff, but why can it not be offered as part of the Aid Programme? I mean, far more useful than building whole dams they do not want, or bridges they blow up, or pouring money into the pockets of a greedy élite, to offer your services as part of an Aid Programme is, I would have thought, one of the most valuable things we could do.
  (Sir John Bourn) I absolutely agree with that, and of course when we get money from them, it is from the Aid Provisions, and it is exactly the point that I make to both the Foreign Office and DFID, that if you really want to assist in the development of society, you should attend to institutional development and, of course, proper auditing is a crucial part of that. We are very glad to have the Commission's support for that, because it is exactly what I am saying to the two departments.

  61. We have talked a lot about the strengths of the National Audit Office at the moment. I agree with what you have said. What are your weaknesses?
  (Sir John Bourn) Although we have got good people you can have better people still. In that sense, there are some better people that I could have than some of those who I have got. That does not mean to say I denigrate the ones I have got. Although I do encourage them, want to help them to be better, some are not as good as I would like. So, that is one weakness.

  62. You cannot get rid of them?
  (Sir John Bourn) There have been some cases where it has been possible to do that, but there are complexities, and, of course, the employment legislation gives a lot of protection to people when they are in full-time employment. There have been a number of people who have left us, people in their 50s, where it is possible to take early retirement, and so that is a possibility in those areas. So in saying that we could have even better people, that is not knocking those who are there.

  I feel we often have to fight for so long to get the improvements in access, for example, that we need. I mean, I think of all the things that came from Sharman, and often those things myself, the PAC, have been fighting for ten years to get. The fact that we did not get it for ten years, is that a weakness? Should we have found a better way of getting it quicker?

  63. I and another member of the PAC were put onto the committee stage of the Resource Accounting Bill, and we fought the battle there, beat the Ministers in the argument, and Sharman was set up as a consequence. But it shows that they do not always achieve things purely by the normal method, and that is by just sitting in the conventional select committee.
  (Sir John Bourn) That is right. You will not win on the merits alone; it is timing, it is opportunity, it is the politics. I look at it more, not so much as weaknesses, but what risks do we run; what could, as it were, unhorse us? Obviously, a very bad thing from my point of view would be if I spent over the budget limit. If I had to ask for a Supplementary Estimate or an Excess Vote. That would be very bad indeed.

  Another risk, I suppose, would be having said that I will audit all these accounts, that I will do 60 Value for Money studies, supposing I did not actually complete them? That would be a failure. If I could not recruit the people, if I had to say to you, "I know the work is not very good, but it is very hard to get good people and I just have to manage the best I can" that is a risk, so that would be a weakness, if I had it. And it is keeping up the quality of the people, that is a risk that I have got to run, and be concerned about.

  So those are the main sorts of risks that I am conscious of, that I need to assess and manage and lay up for. It has been interesting in the last year or so to develop, I think, in many ways even closer relations between the Office and the Committee of Public Accounts, in particular. More members of the Committee are asking for briefings before the report is taken; more people are coming to us with requests for advice on all sorts of things. I feel that the fact more of them come shows that we must be getting it right, but if nobody came; and nobody asked for our advice on something; nobody thought it worthwhile speaking to us about a report before it was taken; that would be a weakness, and that would be a risk I have to run. So, rather a confused answer as I move between weaknesses and risks, but it is the areas that we have got to watch.

  64. I hesitate to follow up what has been an excellent sort of wind-up reply, but this can also be a wind-up reply really. We have got resource accounting coming through Whitehall, which is revolutionising accounting in Whitehall, and we have identified a number of Departments which have shown serious weaknesses. Is there any more that we can do here, to think about giving you more resources so that you can attack any weaknesses better? Have you got adequate resources? And really, as part of this wind-up, are you happy with the resources that we give you to do your PAC work and your liaison with Parliament? Do you think that we are attacking these issues as forcibly and with adequate resources, or is there more that we could or should be doing?
  (Sir John Bourn) Well, I think that when I ask you for 10 per cent, then that will be adequate to take us through the next financial year. Now for subsequent years, the Corporate Plan provides for a 6 per cent increase on that 10 per cent. If I find, when I come to you with the Corporate Plan next year, that resource account improvements have not picked up, as they are beginning to, I will be asking for the money to do what I know I have got to do, and to do it well and adequately. I have not held back and thought, "Goodness, how could I possibly ask for more than 4 per cent?" I have asked for 10 per cent and that is justified. I do not need to ask you for more than that next year, but I am grateful for that support, because you are always saying to me, "When you have got good things you can do for Parliament, and good work to do to make a success of resource accounting, come to the Commission and tell us", and that is what I will always do.

  65. But in relation to the resource accounting, can you tell us now that every Department is virtually up to speed on it?
  (Sir John Bourn) I cannot tell you that. There are still a number of Departments that have not got it right. There are still, of course, problems with what has been the most problematic of all, which has been Defence. They are getting better. I have discussed it with the Permanent Secretary and the Principal Finance Officer. They have things in place to do better still; they are committed; they edge forward; it is not yet right. There are some, amazingly, as one might see, some small Departments, like Treasury and Cabinet Office, which have not got it right, where you would think they would because, essentially, their accounts are quite simple. I mean, essentially, it is around employing people and managing a building, and they did not get it right. Perhaps I can ask Mr Sinclair to add to that and any other points about resource accounts and the laggards who need more encouragement. But we are giving that to them.
  (Mr Sinclair) Indeed. We are in the throes, at the moment, of just starting to audit the first live resource accounts. Those are the ones for 2001-02. There is a perceptible improvement in the timing and quality of the accounts that are coming to us, but I think we will still have a number of departments who will be very close to the statutory limit of 31 January for presenting audited accounts to Parliament, and those will be the familiar four or six departments that the Public Accounts Committee has previously discussed. And we do find that there is still patchy commitment amongst some senior civil servants to actually driving resource accounts forward. In a sense, the delivery of the first real live resource accounts for 2001-02 is the most acid of all tests throughout this long process. And I think we are hoping to see very significant improvement in this cycle. If there are still laggards, then I think that will be the ultimate point to raise real concerns; that will play out between now and the end of the year.

  66. Laggards are not just a problem in timetabling; they are a problem in terms of Parliamentary accountability, are they not?
  (Mr Sinclair) I use the phrase "laggards" not merely to talk about the timetable, but it is also about the quality. And I think the issue has been that some of the laggards are amongst the biggest Departments of state, and if this were some of the small Departments, which were not big resource consumers, this might be something that would not raise a big deal of concern. But it is a small group of very large Departments, which are consuming large resources and have big liabilities. And those are the Departments we want to see get it right.

  We will be producing a report from the Committee of Public Accounts on the outturn of the 2001-02 resource accounts, so that the Committee will be able to see it and call up witnesses.

  67. In what timescale would that be, now?
  (Mr Sinclair) That will be as soon as the round is completed and soon after 31 January; that is the final statutory date by which Departments have to lay their accounts before Parliament, and from what I have said, I think it is a fair bet that there will be a small handful of Departments that will be right up to that limit, and so we shall report as soon as possible after the round is complete.

  68. I find it distinctly disturbing that you specify particularly the Cabinet Office, which has all these efficiency units telling everyone else how to do things better, but, as we found when we had the E-envoy before the Public Accounts Committee, the scrutiny, as far as he was concerned, seemed to be virtually non-existent. You say you will be producing a report, so we will wait on that.

  69. Well, Sir John, thank you very much, and your colleagues. It has been a new experience in that we have had the crowds of the public listening to our discussion. That does not seem to have inhibited you. Thank you very much and we will look forward to the next discussions and to the notes that you have promised to put in. If there are any points we feel we have not covered, we will drop a note and you can let us have a note in return.

  (Sir John Bourn) Thank you, Chairman.