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29 Jan 2003 : Column 906—continued

Mr. George Osborne: Did not the hearing demonstrate the value of picking apparently small cases of fraud—in that case, £150,000, which is small relative to overall Government spending? By focusing on the issue and getting a permanent secretary to explain why things had gone wrong in that case, we revealed broader lessons about the failure of controls in that Government Department.

Mr. Leigh: That is an important point. It is sometimes tempting for our hearings and NAO reports to cover a whole aspect of better Government policy making, and often the hearings that we hold, though interesting, are less effective than when we focus on a specific subject, possibly involving a relatively small wastage of money. When we focus the spotlight of the PAC on just one small part of a Department, nobody in Whitehall knows whether our spotlight might hit them next. If we were concerned only with value, we could spend all our time dealing with social security and nothing else. We must range widely.

Mr. Richard Bacon (South Norfolk): Does my hon. Friend also recall from that hearing the rather strange fact that the Ministry had had recommendations from our Committee four years ago about ways in which it could reduce fraud, and appeared to have taken no notice of them? Indeed, the permanent secretary was unaware of them. The point made sotto voce by my hon. Friend the Member for Tatton (Mr. Osborne) at the beginning stands: it is not enough for the Government to accept the recommendations of the Committee; they must follow through afterwards.

Mr. Leigh: That is an extremely important point. Sometimes we have a tendency to congratulate ourselves on the fact that 90 per cent. of our recommendations are accepted. It would be surprising if they were not, as we do not get involved in policy. We make sensible suggestions for improved implementation of policy. However, there is no point in the Government accepting 90 per cent. of our recommendations if there is no follow-through mechanism, particularly undertaken by the NAO to keep track of those recommendations. One thing that the Committee could do, which we have not

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actively pursued in the past, is to keep an eye on Treasury minutes and come back to them in questions to Ministers over the ensuing months and years. It is important that that aspect of our work is done effectively.

Mr. Bercow: I am grateful to my hon. Friend for generously giving way again. Although I do not in any way argue with claims made for the probity of British Government in general, or for the integrity of the bulk of our civil service in particular, does my hon. Friend recall that, in a series of parliamentary answers in the previous Session, many Members were shocked to discover the scale of theft and fraud from Government Departments, including Government buildings? Is he not as concerned as I am about the scale of the heists that have taken place from the Lord Chancellor's Department?

Mr. Leigh: Yes, obviously we are concerned about that. I shall deal briefly with the Royal Mint, where there was a particularly serious example, to illustrate the point. The trouble is that we can only take examples. We are speaking about raising and spending £650 billion, so it is a vast field to cover.

Geraint Davies (Croydon, Central): Returning to the case of the farmer, Mr. Bowden, it was suggested that that represented the tip of an iceberg and that there was a systemic problem of fraud. Can the hon. Gentleman confirm that, after our report, the Department looked thoroughly into such activity and found, perhaps as much by good fortune as by judgment, that that was an isolated case, and that the public need not fear that people like Mr. Bowden with lots of fields in the North sea and elsewhere are claiming subsidy?

Mr. Leigh: We must put the matter into perspective. The fact is that farmers are claiming large amounts from the CAP. As I said, the Ministry has now introduced controls, so it is to be hoped that the attempted scam will not be repeated.

Benefit fraud is far more serious. When we examined the level of fraud and error in income support and jobseeker's allowance, we found that welcome progress was being made towards targets to reduce fraud levels. There is still too little information about the scale of fraud across benefits, which is remarkable. Estimates so far suggest that some £2 billion could be lost in fraud and a further £1 billion in customer and official error each year by the Department for Work and Pensions. As some of the Department's fraud estimates were out of date, however, it was impossible to tell what progress was being made across the board.

Large-scale benefit fraud has been around for a long time and will not be solved overnight. The Department's antiquated IT systems are, to some degree, dogging its attempts to improve performance, but it could do more. The Comptroller and Auditor General has qualified his opinion on the Department's accounts for reasons of fraud and error for the past 13 years. In other words, the Comptroller and Auditor General qualifies the Department's accounts every year. A loss of £3 billion each year to fraud and error may not immediately

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amaze the general public, as like me and others, they are phased by arguments about billions, but when we think that that amount would buy us almost 45 new hospitals each year or, more frivolously, allow us to stage an annual Olympic games, the enormities of the Department's losses come home to us—and this is just one Department of State.

Mr. Bacon: Does my hon. Friend agree that the most extraordinary aspect of the issue was that the then permanent secretary admitted to the Committee that she did not even have a target date for publishing a set of accounts that was not qualified because of fraud?

Mr. Leigh: The matter will be dealt with later this week and I cannot reveal to the House what the result will be, although it may well guess that the problem will be ongoing because of the Department's apparent inability to deal with it. We appreciate the problems that it faces. It is in control of a budget of massive complexity and difficulty, but it must surely concern the House of Commons that the independent auditor has, in layman's language, been unable to approve the accounts of a great Department of State for 12 consecutive years. That must be of great concern to the Treasury, just as it is to the Committee and the House as a whole.

We think that better targets are now in place as a result of our work. We hope that the auditor can work closely with the Department to ensure progress, so that we can reduce the amount that is lost on fraud and error. Unfortunately, the fraud cases that I have outlined were not the only ones to come before the Committee.

Mr. Brian Jenkins (Tamworth): Will the hon. Gentleman clarify the situation? I am sure that, like me, he believes that there is no endemic corruption in the British civil service. We are discussing fraud and corruption not among staff, but among members of the public. We are challenging not corruption in the civil service, but competence.

Mr. Leigh: The hon. Gentleman makes his point very well and I agree entirely. I am firmly of the opinion that the problem is not one of fraud or corruption on the part of civil servants, although there will be isolated incidents. Given the complexity of the system, the problem is fraud on the part of those claiming the benefits. Of course, only a small minority is involved, but it is large enough to waste £2 billion a year.

As I mentioned, the other startling case involved the Royal Mint, which one would have thought was a bastion of tight security. Sadly, we found it to be the mint with the hole. Remarkably, for eight months, a safe containing £25,000 in banknotes was left open and unattended during the working day. Unremarkably, somebody—or some people—took advantage of that slapdash security and put their hands in.

My third and final theme is linked to measures to combat fraud, and it concerns improvements in the quality of public administration, in respect of which the Committee makes a significant contribution. We do so on behalf of the taxpayer. I believe that good governance is an essential ingredient of a stable society. Our work provides the public with confidence about the way in which their money is spent. That is why we find it unacceptable when standards are not maintained and insist that lessons are learned.

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I have mentioned aspects of our work relating to NHS waiting lists, and I want to deal with the appalling lapse to which the hon. Member for Newbury referred. Fortunately—we must put the matter into context—a very small number of NHS trusts were involved. The Committee found examples of 10 hospitals where managers and staff had fiddled their waiting lists to hide the fact that they were missing Government targets. That was a profoundly irresponsible thing to do and had very serious consequences for patients. In some cases, those actions will have prolonged the suffering of patients and their condition may have worsened.

The arrangements for identifying those involved and taking disciplinary action fell well short of good practice. In some cases, the inquiries were not rigorous or complete and some of those who were allegedly responsible were allowed or encouraged to resign during the process. Some trusts breached NHS guidelines that ruled out confidentiality deals as part of severance packages. The right hon. Member for Swansea, West has repeatedly pointed out that the Committee does not want to see confidentiality deals. We want transparency. The severance packages cost some £260,000 and some did not include clawback arrangements in respect of working elsewhere in the NHS. As some people had confidentiality schemes, they went to work elsewhere in the NHS and got their money.

The Department of Health has promised to address all those issues. NHS trusts took steps to develop action plans for the 6,000 or so patients who suffered as a result of the adjustments. That includes sending patients to other trusts and to the private sector for treatment. However, the Department could not tell the extent to which patients' health suffered as a result of delays in treatment or whether compensation will have to be paid.

Manipulating public information such as waiting list statistics can have an appalling effect on public trust. The Chancellor has made it clear that the NHS is an absolute priority for him and is compassion in action, as he puts it. I repeat that the manipulation of public information affects the public trust in what is going on. The Department must ensure that pressure to meet targets does not lead the NHS to engage in any more statistical sleights of hand or distortions of clinical priorities.

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