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29 Jan 2003 : Column 917—continued

Jon Trickett indicated assent.

Mr. Gerry Steinberg (City of Durham) indicated assent.

Mr. Williams: I seems that they do, as does the Clerk. I therefore ask you, Madam Deputy Speaker, to find out what went on.

The fact is that the Sharman Committee, the Select Committee on Culture, Media and Sport and numerous Members on both sides of the House—

Geraint Davies: Will my right hon. Friend give way?

Mr. Williams: Let me finish this point, and then I will do so gladly.

All those people—and Mr. Gavyn Davies when he was carrying out a review of BBC finances prior to becoming chairman of the BBC—favoured National Audit Office monitoring. The only one of us who has changed his mind is Mr. Davies, since he changed his job. It is for him to explain why. Up to now, other than stating that we would prejudice or damage editorial freedom, no one at the BBC has given the PAC any evidence or convincing argument to demonstrate that. As I said earlier, one is bound to conclude that what they are worried about is not editorial freedom but impartial external audit and accountability to the House of Commons.

The second no-go area is the Financial Services Authority, where we are talking about £170 million of public money, in Sharman's definition, raised statutorily in the form of levies and fees, in an area of extreme importance to the public. At a time when pension funds are collapsing and there are scandals about the advice that people have received on investments and savings, the FSA monitors banks, building societies, insurance companies, investment

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advisers and fund managers, yet as far as I can determine, it is the only regulatory body of the many that come before us that the Committee cannot investigate. Why? Even powers that were formerly exercised by the Treasury and were thus subject to examination have ceased to be subject to examination because they have been transferred to the FSA. We want to know what is to be done about that.

The Treasury will arrange for value-for-money investigations, but in the case of all other regulators, the NAO determines whether there should be such an investigation and carries it out. The NAO should be given the same powers in relation to the FSA.

I again echo a point made by the Committee Chairman, the hon. Member for Gainsborough. The Committee, Sharman and the NAO have all had a go at the third no-go area. We can look into royal travel, which involves a lot of money, and the cost of the palaces, which takes far more money, but the one thing that we cannot look at is the civil list—all because of a Select Committee recommendation made in 1972.

The PAC found that the real-terms costs of the palaces had fallen to about a third of what they were before—after I had produced a mass of information from a series of parliamentary answers—I persuaded the NAO to carry out an investigation and the PAC to hold a hearing. That was beneficial. The palace told us, "What good boys and girls we are, we're saving all this money."

Seventy per cent. of the civil list goes to pay the salaries of people who support the monarch. There is no problem with that; the monarch must have support. We do not vote against the money, but we want to find out whether it is being used effectively, as we do with other grants of public money.

The Committee was frustrated because for many years it had tried to get access to quangos—a point that was also made by the Committee Chairman. We had access to most but not all of them; we could not look at Government companies. We asked successive Chancellors, but the Treasury seemed to close around them and we lost, so during the last Parliament I made some proposals. The hon. Member for Newbury may remember the occasion. The Government Resources and Accounts Act 2000 was being considered by Parliament, so I suggested that the Committee carry out some political terrorist activity and send a volunteer team to the Standing Committee. The then Chairman of the PAC, the right hon. Member for Haltemprice and Howden (David Davis), the hon. Member for Newbury and I attended the Committee to fight the case for the PAC.

We made such confounded nuisances of ourselves—not by being awkward but by winning the arguments—that, in the end, the Treasury set up the Sharman committee to look into accountability to Parliament in relation to public money. The Government had no problem in giving notional acceptance to Sharman's recommendations, apart from those on the BBC and the civil list. I am delighted about that.

For well over a decade, the Committee had hammered its head against the wall of supplication; the moment that we got awkward, we got somewhere. Accountability to Parliament can be made to work if we want to make it work—if we discover where

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Departments are vulnerable. I am genuinely pleased—as was the whole Committee—that Sharman was almost entirely adopted.

I shall conclude by asking my hon. Friend the Financial Secretary three questions. The first relates to NAO access to bodies receiving public money either from Departments or from non-departmental public bodies, including contractors, subcontractors and so on. I understand that a statutory instrument will be enacted in March. Will my hon. Friend confirm whether it is still on schedule and will be in force by the end of the current financial year?

My second question is about NDPBs that are companies. At the request of the NAO, the PAC took on a case that the NAO strongly believes in and is arguing for in Brussels. It related to how our rights are influenced by European directives. Are the Government giving the NAO full support in those representations and, if so, what form does their support take?

My final question is politically sensitive at present, for obvious reasons. Sharman recommended that the NAO undertake validation of the data systems underlying the public service agreements. Ministers were understandably a bit nervous about that. My understanding is that the NAO is undertaking four trial runs, as it did with resource accounting. It is trying, with four Departments, to devise a system that works effectively. It is hoped that the first reports to the House and to the PAC will go live in 2004. Can my hon. Friend the Financial Secretary tell me whether that is still on target?

I became a Member of the House in 1964. I joined the PAC in 1965 and enjoyed the experience. I then spent 18 years on the Front Bench before returning to my proper position. The first place I headed for was the PAC. I still think that my colleagues and I do some of the most valuable work in the House of Commons. I still find that work rewarding and absorbing, and I hope that all my hon. Friends do, too.

2.54 pm

Mr. David Rendel (Newbury): It is always a pleasure to follow the right hon. Member for Swansea, West (Mr. Williams), who is, as all its members know, one of the Public Accounts Committee's most effective members. It is always a pleasure to see him come in, often at the end of our hearings, to address the witnesses with that delightful smile on his face. It is so disarming as far as the witnesses are concerned, but we all know that it is the smile on the face of the tiger. His bite is always worse than one expects, and it is certainly effective.

I pay tribute to our Chairman, who has proved to be very effective and has done a great job since the last election. I am delighted that we are working closely across all three parties with him.

The Committee has been expanded so that, for the first time, a colleague from the Liberal Democrat party has been appointed to it. Sadly, however, my hon. Friend the Member for Cheltenham (Mr. Jones) has been unable to with us much as he became rather ill shortly after his appointment. I am sure that we would all want to wish him a swift return to the Committee when his health recovers.

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I pay tribute to Nick Wright, our new Clerk, who has had just over a year in office and has proved to be as effective as his predecessor, Ken Brown. It is a delight to work with him and his staff, and they always give us a very good service, as of course do the staff of the National Audit Office, who are invariably patient with all our demands, however insensitive they may be.

The right hon. Member for Swansea, West was absolutely right to say that this is one of the most powerful, if not the most powerful, and effective Committees of the House. It is a delight to serve on it. I am surprised that some of my fellow Opposition Members and some Government Back Benchers have not yet recognised its effectiveness. It is fun to serve on it and to feel that, once in a while, even as an Opposition Member, one can have real influence over the workings of, if not Parliament, the country as a whole and the way in which civil servants work to make Departments more effective.

I should like to speak about a few of the Committee's reports in order to bring some matters to the attention of the House. One report was on obesity. It was the first time that a collection of senior civil servants from a wide variety of Departments—permanent secretaries, accounting officers and others—had appeared before us. If I remember rightly, there were five witnesses, all of whom held senior office. It was fascinating to see some cross-departmental working—so-called joined-up government—and to have a chance to do some joined-up work in the Committee by asking questions of permanent secretaries and others. It also gave me the chance to get on to one of my hobby-horses—cycling—and to mention that cycling and walking reduce the problems of obesity, which are—dare I say it?—growing.

A report on the Victoria and Albert Museum made it clear that the imposition of charges had been a major reason for the drop in visitor numbers. I am delighted that charges have now been removed, as a result of which the figures have risen very quickly. I like to think that that fact, combined with our report on what went wrong after charging was introduced, means that charging to enter our museums will never be reintroduced.

Another report was on oil pollution at sea. That gave me a chance to use, as members of the Committee often do, some of my experience as someone who worked for a while in the oil industry and therefore knew a little about it. I asked the witnesses whether oil transported by pipeline or oil transported by ship was most likely to lead to pollution. It became apparent that oil companies, which decide whether to construct a pipeline to a new oilfield purely on cost grounds, had done no real research into whether the cheaper solution in terms of their costs of moving oil to and from an oilfield was also cheaper in terms of the long-term costs of pollution. The witnesses agreed that research into which of the two was more likely to lead to pollution would be a good thing. I hope that the Government will try to ensure that it is conducted.

We had an interesting hearing on the Post Office. Some of us with rural constituencies made the important point that rural areas are suffering from a drop in the number of post offices. Small post offices are often the heart and soul of small rural villages; often, when such a post office closes the village dies. The maintenance of

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those post offices is therefore very important to us. It became clear that the threat to rural post offices and to the Post Office in general is likely to grow as competition is introduced. I like to think that it is partly as a result of that hearing that the extent to which and speed at which competition was introduced was somewhat reduced.

It became clear that what has really gone wrong with the Post Office is that it has made very large profits over a long period, all of which have been siphoned into the general Government coffers and not reinvested in technology and services. If the Post Office had made such investments, it might still be making some of those profits and would not be in its current state.

We had an interesting investigation into income tax and the Inland Revenue. The Chairman of the Committee said that people should be encouraged, as much as possible, to submit their income tax returns online. However, he did not mention the ironic fact that Members of Parliament are among the few employees, wage earners or whatever who are unable so to submit their income tax returns online because the special parliamentary form that we must use is not yet available online. If the Treasury wants to set a good example, perhaps it could ensure that something is done to correct that.

I was able to make a bit of fun of the Inland Revenue on that occasion by pointing out that it sends out bills for £0.00 to those who have been fined for sending in their forms late when they do not in fact owe any tax. In subsequent parliamentary questions, the Treasury replied that it was important to send out those bills to warn people that they were late sending in their forms, even if no payment was implied. That merely brings the Inland Revenue into disrepute. I hope that the Treasury will think again about whether that is really the best way to approach Inland Revenue taxpayers.

We also had a hearing on clinical negligence in the health service. One of the issues that was discussed was whether we should move towards a no fault, no blame compensation system, on which I have been keen for a long time. I should explain, as I often have to in our hearings, that I have a direct interest in the health service in that my wife is a general practitioner. There is no question about the amount of concern and distress in the health service as a result of people worrying about being taken to court for decisions made, often in very good faith, but nevertheless in error. Medicine is not a science but an art, and it is often difficult to make the right decision. The fact that people do not always make the right decision should not necessarily lead to their being taken at great length, often over many years, through the courts, with all the stress that that adds to them in doing their jobs. I am sure that that is one of the reasons for people wishing to take early retirement, which is leading to some of the health service's staffing problems. A great deal of stress arises from the difficulties that people get into when they are taken through the courts. We also discovered that the amount of money that is spent on lawyers in many negligence claims is more than the victim of the negligence ever receives. The whole system is a way of putting a lot of money into the pockets of lawyers rather than into those of victims, which is not a good way of spending public money.

The private finance initiative was a much-discussed subject, often as a result of individual cases that came before us. Several issues have been common to many of

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our hearings. First, competition is likely to reduce gradually for PFI schemes, not least because of debt refinancing, which the Chairman mentioned. As we get better at demanding back for the public sector some of the savings that are achieved through debt refinancing, PFI schemes will become less attractive for the private sector. There is a danger, which one or two cases have shown, of few companies competing for PFI contracts. When we reach the stage at which the level of competition is so low, the value of PFI is likely to reduce and it will become more difficult to judge whether such a contract is good value for money when compared with the public sector.

On several occasions, some of us have been worried about the way in which the public sector comparator was calculated. We sometimes wondered whether the figures were fudged to show that the private sector contractor offered better value when, had the figures been calculated differently, the result would not have been so clearly in favour of the private sector.

Many of us have been worried about risk transfer. Often, the risk has not been properly transferred in the expected way. Consequently, the value of the PFI contract has been much less than it was believed to be. The public sector has frequently had to bail out a private sector contractor. In practice, the risk has remained with the public sector, which is no great surprise. The major public services that our Government run simply cannot be allowed to go to the wall. One cannot put out a major health service operation to the private sector so that there is nowhere to treat patients if it goes bankrupt. The public sector must keep the facility going. Genuine risk transfer is difficult in major, important public services.

A further point recently came to light. It has not formed part of our hearings so far but I hope that it may do so in future. There is a growing worry that many major contractors who win PFI contracts transfer large parts of the debt to special purpose vehicles, which are subsidiaries of the main contractor. They may be hiding the extent to which they are getting into debt and putting their operations at risk. We may have to take that up in the Committee. It is not direct fraud, but it hides from the public sector the danger that some of our PFI contracts could pose.

The point is worryingly mirrored by the Government's tendency to treat some of their liabilities as off balance book by trying to ensure that genuine Government liabilities in some privatised contracts are hidden off balance sheet and do not count towards the public sector borrowing requirement. Further questions will have to be asked about where the debt lies, especially in relation to, for example, privatisation of the National Air Traffic Services or the tube.

We had some fun with our investigation of pipes and wires. Controlling the number of holes that are dug in our roads is a subject of enormous public interest. Everybody experiences the congestion that roadworks cause. There is a case for telling regulators that they should insist on private utilities ensuring that they use the same hole in the road and do not dig up the road several times in quick succession. That maddens many members of the public.

I want to consider three reports that have particular topical significance. Prisoners and prisoners who reoffend have featured in the press recently. It became

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clear when we talked to the head of the Prison Service that, if we want to reduce crime, the worst thing that we can do is imprison people for a short time. One of the most likely methods of causing reoffending is to give sentences that are too short to provide the education that prisoners need and could mean that they lead a life free of crime.

The point is difficult to get across to the public, who tend to believe that the best thing to do with prisoners is to lock 'em away for as long as possible and throw away the key. If we want to ensure that a prisoner does not reoffend, and if we are interested not in retribution but in securing the minimum number of victims in future, it is important not to put people in prison for a short time, after which they are more likely to commit more crimes. That happens all too often.

There is a strong case for investing much more money in prison education. When Mr. Narey, director general of the Prison Service, came before us, he said that the return from investment "would be dramatic". He stated:

That makes a strong case for the "spend to save" budget—another subject that we considered recently. Spending a little more on educating our prisoners would give them a chance of leaving prison not for a life of more crime but a useful life in the community.

We could spend a little more on such education now. The report states:

As I said earlier, that is a difficult view to present to the public. It is easy to follow the tabloid route of claiming that the best thing to do with those who have committed crimes is to shut them away for a long time. However, the worst thing that we can do is to put them away for a short time and leave them to learn more about how to commit crimes in future.

Combat identification is the second especially topical subject that I want to consider. It is topical because of the severe threat of war with Iraq. The war already has comparatively little public support. Many people believe that we should not even consider going to war in Iraq. If many of our troops are killed by friendly fire or many enemy civilians are killed by our fire, public support for a war is likely to reduce. That was apparent in recent conflicts. For example, in Kosovo, the deaths of innocent civilians constituted a major reason for some people's belief that it was not sensible for us to be there.

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