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29 Jan 2003 : Column 909—continued
Geraint Davies: The hon. Gentleman will remember that the manipulation of data was carried out by a small number of people in a small number of trusts. Those people have since left or been thrown out, but is he aware that there is evidence to show that some of them are emerging on the other side in PFI deals? Will he give an undertaking that our Committee will consider that issue so as to chase through the small minority who have been corrupting public statistics and ensure that they do not play any future role in public service?
Mr. Leigh: That is a very important point. We want to consider each PFI deal individually rather than become involved in policy arguments. One is always worried about the problem to which the hon. Gentleman refers and the possibility of gamekeepers who have worked in the public sector turning poachers in the private sector. There is now a far more of a relationship between the private and public sectors, and we and the Treasury must constantly keep that in mind. The issue may not be
corruption in the accepted meaning of the word, in which people are taking backhanders, but corruption that involves people using knowledge acquired in the public sector for their own private good when they go into the private sector. I give him my undertaking that the Committee will consider that issue.Criminal justice is another interesting area. Financial penalties are the most common punishment imposed on offenders by Crown and magistrates courts—a subject in which I am interested, as I used to be a practising barrister. Such penalties account for 70 per cent. of all sentences. In 2001–02, the financial penalties imposed totalled £387 million, but the collections amounted to only £228 million, and some of them related to fines imposed in previous years. The crucial point is that, in practice, slightly more than half of financial penalties are collected. It seems to be up to criminals to decide whether they pay fines, certainly in some parts of the country. The effectiveness of the criminal justice system is being undermined and both victims of crime and the taxpayer are being sold short.
Our 57th report from the last Session should be read by every public servant, and certainly by every accounting officer. It concerned the operation and wind-up of the Teesside development corporation. We found that weak financial management and oversight of the corporation may have cost the taxpayer some £13 million in additional costs, leaving a deficit of £23 million that could rise to £40 million. To put it in context, one has to say that the corporation achieved much of lasting benefit to the Teesside area. It helped to attract private investment of more than £1 billion, created 12,000 new jobs and brought 1,300 acres of derelict land back into use. However, we believe that this could have been done with greater regard to the principles of the proper conduct of public business. It is not sufficient to deliver a good in Teesside or anywhere else, while still breaking all the rules of public corporate finance, or enough of them to cause concern.
Explanations for some of the more unconventional transactions entered into by the corporation were—how shall I put it?—unconvincing. There was evidence of poor risk taking and acting without appropriate authorisation. The Department failed to act when it should have to bring the corporation's regeneration activities into line, despite warning signals from a number of sources, including colleagues in this House.
Mr. George Osborne: The hearing on the Teesside development corporation revealed a weakness in our hearings. Often, we get the accounting officer who is currently in post, rather than those who were in post when the problems arose. As I remember it, the accounting officers involved in that particular case were the then permanent secretary at the Treasury and the Cabinet Secretary, neither of whom we were able to call before our Committee.
Mr. Leigh: That is a weakness. Our Committee has the right—as do all Select Committees—to call any official, and naturally, we normally call the current accounting officer. The principle is: the king is dead, long live the king. The fact that the officer was not in post at the time does not mean that he cannot answer questions. Having said that, Whitehall should take note that our Committee has passed a new resolution that
makes it absolutely clear that in a case where we believe that we will not get to the bottom of things simply by interrogating the current accounting officer, we will be prepared to summon the former one—in this case, the permanent secretary—even though that person may have moved to another Department or retired. I know that that is controversial in Whitehall: the mandarins do not like it, and I can understand why. However, I am sure that they will appreciate that, if we are to do our work, we cannot simply be presented with someone who has mugged up an argument for that afternoon. There may be long periods when that person was not in control, and we would be unable to question the accounting officer of that time.
Jon Trickett (Hemsworth): Some members of the Committee have been irritated by the principle of collective, almost anonymous responsibility that the civil service seems to apply whenever something goes wrong. As with the private sector, our Committee should emphasise the principle of individual responsibility.
Mr. Leigh: We have to accept that in the modern way of doing business, whether in the public sector or the private sector, people must accept a certain amount of responsibility for their actions, and we shall indeed demand that that happens.
Geraint Davies: The hon. Gentleman has mentioned Imperial Tobacco, which set a great precedent for the Committee in the summoning of witnesses from the private sector to bring them to account for the loss of public funds. In that case, the smuggling of cigarettes was involved. Will the hon. Gentleman confirm that the Committee will be prepared to summon private sector witnesses when the public purse is being threatened?
Mr. Leigh: Yes, of course. In that case, we were looking at Imperial Tobacco's exporting billions of cigarettes to Kaliningrad, Moldova and Andorra, where they could not possibly all be smoked. For that to be possible, every inhabitant of Kaliningrad would need to have smoked several hundred cigarettes a day. So they can only have been exported to Kaliningrad in order to be re-imported here as smuggled cigarettes, which clearly affected the public revenues available to Customs and Excise. Interestingly, it was the chairman of Customs and Excise who fingered Imperial Tobacco. In fact, he attended our Committee, although we did not know about this issue. He wanted to use the Public Accounts Committee as a lever to put pressure on Imperial Tobacco, and we have indeed caused it considerable embarrassment, which is a fair and proper thing to do.
The key part of improving the quality of public administration is the need to ensure that the lessons learned are spread widely, and that the savings and improvements identified in one area of government are quickly transferred elsewhere. Here, I shall deal briefly with the private finance initiative, about which there is much debate. We believe that each initiative must be judged and assessed on its own terms. However, in 1999, after we examined and reported on some early PFI
deals, we issued a report on the experience so far, to help the public sector to get the best possible deal for the taxpayer. We are currently drafting a follow-up report, which will draw on the 15 reports we have published so far. It will tackle recurring themes in our work, such as the quality of contract management skills available in the public sector, and the extent to which risk is really transferred to the private sector. My personal, strongly held belief is that if things go well, the private sector must be allowed to make a good profit, but if they go badly wrong, it must be prepared to lose its shirt.One area in which our work has already made a difference is in the refinancing of projects. Our work on the refinancing of the Fazakerly prison deal caused the Office of Government Commerce to insist that the taxpayer get a share of refinancing gains. This amounts to a mandatory 50:50 sharing of refinancing gains from new projects, and a 30 per cent. share of refinancing gains on early deals.
So the Committee will look very closely at how robust these new arrangements are. The private sector shoulders the risk of a PFI project, and we do not deny that it is entitled to benefit from refinancing gains, but taxpayers must be able to feel confident that they are also getting the money to which they are entitled. The Government's willingness to accept our views on this again demonstrates the tangible contribution that the Committee can make to the work of the Government.
In summarising the Committee's work, I hope that I have been able to show that we add value in all that we do. We have a distinct role in the House, and we constantly touch on key issues.
Mr. George Howarth (Knowsley, North and Sefton, East): Does the hon. Gentleman agree that, of all the Departments we have interviewed—certainly since I have been a member of the Committee—the one in greatest need of better management is the Lord Chancellor's Department?
Mr. Leigh: That is a Department that could perhaps do a little better. [Interruption.] We must not get involved in personalities. In fact, a National Audit Office report published today shows that the Libra project is probably one of the shoddiest PFI deals ever. It has run completely out of control, costs have risen from £135 million to £400 million, and the basic computer system for magistrates courts is still two years away. I acknowledge the point that the hon. Gentleman makes.
We have a distinct role within the House. We focus on implementation rather than policy, and we are able to stay above party politics. I am always impressed by the way in which my colleagues on the Committee respect that discipline. That is essential if we are to continue to be effective, but we would not be effective without the considerable help of the National Audit Office. In turn, the NAO's effectiveness depends on access rights. I should tell the Financial Secretary that I look forward to the imminent implementation of recommendations stemming from the Sharman report. Nearly two years ago, Lord Sharman recommended, and the Government accepted, that the Comptroller and Auditor General should audit all Executive non-departmental public bodies, and that his access rights
should be on a statutory basis. Once in place, that provision will represent a significant step forward for Parliament. I very much welcome the Government's response to this, and when the Financial Secretary sums up the debate, she will doubtless be able to tell the House what action she intends to take—hopefully, very shortly.Before I finish, there are some small gaps to which I must refer. I remain concerned that the BBC is outside the remit of the CAG. I await with interest the Government's response to our recent recommendation that Parliament's ability to scrutinise the BBC would be considerably enhanced were the CAG able to examine its financial management. For just over £2 billion-worth of compulsory licence fees—in essence, a poll tax—to be outside our scrutiny is simply not sustainable, and I urge the Government to act. I am sure that, sooner or later, we will win this battle on behalf of Parliament.
I have a similar concern—here, I may not carry with me everyone on the two Front Benches—about the civil list. I must say, as a monarchist, that the royal family's position is strengthened by greater transparency about their spending. For example, we were able to demonstrate that the cost of royal travel has substantially reduced over time. I therefore repeat, on behalf of the Committee, our long-standing request for the CAG, on behalf of Parliament, to be given access to the civil list.
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