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Angus Robertson: My hon. Friend will be aware that more than 50 per cent. of all Scotland's distilleries are in my constituency, and that many thousands of jobs in Moray depend on the success of the whisky industry. Is he aware that people from leading companies—small, medium and large—have already been to see me since the announcement? They say that the measure will have an impact on jobs and the competitiveness of their businesses. They do not understand why a Chancellor who represents a Scottish constituency would not even listen to the advice of the Labour Chair of the Scottish Affairs Committee on the Friday before the Budget when she said that bringing in the stamps would be "hasty and unwise". Does my hon. Friend agree that the Chancellor has indeed acted hastily and unwisely?
Mr. Salmond: Yes, and I know from speaking to the hon. Member for Paisley, North (Mrs. Adams) that she would have added a few more adjectives before the words that my hon. Friend mentioned.
The Treasury team should take on board the analogy that I am making with the oil industry. Having spoken to Ministers, I think that they would have approached the tax changes two years ago in a different way if they had their time again. The tax changes affecting oil and gas could have been introduced in a way that would not have damaged exploration and appraisal drilling yet would still have secured the Government the additional revenue that they wanted. They chose to ignore advice, and the consequence of that has been lost jobs, lost opportunities, and unnecessarily lost investment in the oil and gas industry.
We are in exactly the same position now. The unions, the companies and the whisky industry have put forward an alternative proposal, but it cannot have been subject to serious consideration, because it was made only recently. The evidence from Customs and Excise has been shot to pieces in front of a Select Committee of the House, and members of the Scottish Affairs Committee from every single party agree about deficiencies in the evidence presented. In those circumstances, why not take the wise advice, consider the matter again and at least try out the industry and union proposals before going on to introduce a measure that might damage investment and jobs in, and prospects for, another of Scotland's great industries, as happened with the oil and gas industry?
As I said at the outset, there seems to be a pattern of behaviour. During the Chancellor's term in office, the oil industry has been responsible for some £30 billion of Government revenue. As we know, the whisky industry is a huge earner for the Government, and the revenue from it runs to many billions of pounds a year. Is the Chancellor trying to demonstrate—as he hopes for higher office in the years to come—that he will not be thirlled to his Scottish background nor show an unwanted pro-Scottish bias? If that is the case, I give a message to the Chancellor of the Exchequer: we accept that although he represents a Scottish constituency, the measures that he is introducing show no signs of Scottish bias. Relieved of that burden, perhaps the Treasury team will look again at the prospects for that major industry in Scotland and not inflict unnecessary damage on an industry that contributes so much to our economy and, like the oil industry, bankrolls the Chancellor of the Exchequer and the Treasury team.
3.45 pm
Mr. Edward Leigh (Gainsborough) (Con): It is always a pleasure to follow the hon. Member for Banff and Buchan (Mr. Salmond). I may not always agree with him, but he is a noteworthy parliamentarian, and we always enjoy his speeches very much indeed.
A number of Budget announcements have a deep resonance with the Public Accounts Committee, which I have the honour of chairing. I want to highlight the relevance of our work in driving through the efficiency improvements that the Chancellor expects and that, indeed, the British people deserve. I also want to sound a warning note about the ability of Departments to achieve their objectives in making large planned increases in public expenditure. I shall say a few words about the Comptroller and Auditor General's work in auditing the Budget assumptions, and finally, I shall address ways in which we can promote private sector involvement and solutions for Government efficiency and economy.
The PAC is not political, but is concerned about achieving value for the taxpayer. It does not matter whether its members are Labour, Liberal or Conservative—in theory, at least, they should hate and detest waste. We have an important role to play in encouraging efficiency across Government. Most people, including the taxpayer and the man in street—the people who matter—agree that we are not getting full value for money at the moment. I would argue that rapid increases in spending in any country in any historical era always result in less economy and efficiency. A recent report by the independent National Audit Office, which does not have a political axe to grind, stated that there is a risk that if more money is put into public services, it will simply be wasted. Given that, we are told, there are fewer qualified nurses in the NHS than there are support staff and managers, that is a definite and worrying possibility.
Angus Robertson: The hon. Gentleman will certainly have seen the NAO report on Customs and Excise warnings about fraud on spirits. Will he confirm that it concluded that Customs and Excise statistics were unreliable and that it would not be right to introduce expensive and fraud-prone strip stamps on that basis?
Mr. Leigh: The NAO is careful not to come to any conclusion about whether a new tax is right or not, as
that is a policy matter. However, it found that although the Customs and Excise assumptions were made in good faith, as were those of the Scotch Whisky Association, there was an enormous difference, ranging from £10 million to £1 billion. The hon. Gentleman is therefore right that the jury is out, and it is for the Government to make a policy decision.Central Government administration costs have already increased from £14 billion to £21 billion in the past six years. It is not surprising that the NAO says that just a 1 per cent. improvement in the way in which money already voted by Parliament is spent over the next three years would give us £14.5 billion more for essential public services, which is why the battleground of politics is now how we can reduce waste, incompetence and inefficiency in the public services. The Public Accounts Committee and the National Audit Office have together published a wide range of reports making recommendations to secure greater efficiency, well over 90 per cent. of which have been accepted by the Government. It is true that improvements have been made following our recommendation, but there is still far more to be done. I could spend the next 10 minutes detailing examples of waste, incompetence and inefficiency in Government Departments.
Waste in government is legion. I shall give one or two well known examples. Forty brand-new Apache helicopters, worth more than £1.2 billion, are waiting around on Salisbury plain unused, costing the taxpayer £6 million, because the Ministry of Defence did not train enough new pilots. The Libra project—the national IT project for magistrates courts handled by the former Lord Chancellor's Department—has in four years more than doubled in cost to almost £400 million. The project management was a catalogue of disasters and, needless to say, the magistrates courts still do not have the IT system that they deserve. That is unacceptable.
We have heard a great deal about the Department for Work and Pensions, one of the worst offenders. No one has yet mentioned, though, that just one computer project—a failed project: the benefits payment card—cost more than £1 billion. The new Child Support Agency computer does not work properly. Unbelievably, the Department for Work and Pensions loses between £3 billion and £7 billion every year in fraud and error. Neither the Department nor the Committee has any idea whether the sum is £3 billion or £7 billion. The accounts have had to be qualified every year for the past 13 years.
Let us consider a future project: the plans for a new supreme court. How much will that cost the man in the street? Lord Woolf says it will cost about £50 million, which is already a great increase on the Government's estimate. I make one prediction—that the costs of the new supreme court, like the costs of the Scottish Parliament, will rise remorselessly.
That is as it may be. We all know that there is waste and incompetence in government, and there always has been. But the Chancellor, we are told, has set the agenda—5 per cent. real-terms cuts in departmental administration costs across the board by 2008—and we wish him well. Sir Peter Gershon is working to identify how new technology, changing working practices and better procurement could free up resources for the front line. We all eagerly await his report, which is due to be published in June. So far, we have had only leaks and a
predictable furious reaction from the public service unions, which have spoken of it as a cut-and-paste job. One can dismiss that reaction as typical and obvious, but it does not say much for the ease with which the cuts can be carried out.My Committee, supported by the NAO, has already identified many specific areas in which savings can be made, and it will continue to do so. Departments should take that into account in driving through efficiency measures. I shall take a few recent examples. The National Audit Office reported a fortnight ago on the work of the Office of Government Commerce to improve procurement in Whitehall. I am pleased to say that the OGC has had a beneficial impact. Since March 2003, savings have totalled £1.6 billion, well over the target of £1 billion set for that period. Indeed, the ease with which the target was exceeded makes one wonder whether the target was too easy.
Among other things, the OGC's guidance and advice has led to an increased emphasis on professional procurement skills and the development of framework agreements for purchasing goods and services. I will say one thing about Sir Peter Gershon, whom I have got to know reasonably well over the past two or three years: he is an object lesson in the new type of public servant that we need—someone brought in from the private sector who is willing and prepared to get a grip on a difficult problem. But much more can be done. The NAO has identified a possible £300 million in savings that could be generated quickly if there were greater take-up by Departments of the OGC's advice. When the PAC considers the subject next month, we will look hard at why some Departments are much better than others at making savings.
Under the Government's plans, the Department for Work and Pensions will be subject to the largest reduction in staff posts, as we know. In order to achieve that without affecting front-line services, it will be necessary to eliminate duplication and inefficiency in all the Department's work. I must sound a warning, however. History tells us that, to achieve such cuts, civil servants will inevitably push some of them on to front-line services. That will happen, as sure as night follows day, whatever the good intentions of Ministers.
Later this week, my Committee will highlight how greater reconsideration of benefits decisions could reduce the number of cases taken to appeal, with consequential administrative savings. That is all good solid work, but it is often on the margins, and we have to get to the root of the problem. For example, savings in one Department can often be achieved elsewhere. The NAO identified more than £3 million that could be saved by reducing the cost of processing application forms for driving licences and attendance allowance. Similar improvements across Departments could save hundreds of millions of pounds.
In his Budget speech, the Chancellor pointed to spending increases across a range of Departments and programmes, including continued and substantial increases in health, education and transport. The NAO recently published a progress report on preparations by those three Departments to spend that extra money. The
NAO is, of course, completely independent, but I have always tried to encourage it in this area, which represents a valuable new part of its work.Our Committee will hold a hearing on these issues in a month's time. Managing resources on this scale requires of Departments highly developed skills, robust systems and comprehensive, reliable information management. As the Committee has pointed out in many previous Administrations, if those are not in place, there is not only a risk but a certainty that waste and inefficiency will follow. I stress, as I did when I questioned the Prime Minister in the Liaison Committee a few weeks ago, that this is not a party political point. We must be confident that the extra money will make its way to front-line services and lead to better performance, and that it will not be consumed by extra bureaucracy or regulation, or by over-targeting, as has clearly happened in the past.
When I put those questions to the Prime Minister, it was interesting to hear him come out with the defence that we have employed so many more nurses, doctors and people in front-line services. We all accept that. Of course, if we spend an extra £61 billion, we are going to get more nurses, doctors and operations. Immediately, however, the Chairman of the Liaison Committee, who is not a member of my party, butted in on the Prime Minister and said, "We're not interested in what you have achieved, Prime Minister. We're interested in what you haven't achieved, given the amount of extra money that you are spending." I believe that that is the key battleground of politics.
Extra resources must be used to bring beneficial changes across the public service. The Chancellor said that 99 per cent. of cancer patients are now seen within two weeks of urgent referral to a specialist. That is excellent news, as early specialised care greatly improves chances of survival. However, not everyone with cancer is benefiting. A recent NAO survey of GPs showed that one third of those eventually diagnosed with cancer were referred "routinely", rather than urgently, and were therefore not seen so quickly.
Improvements in public services must be sustainable. Spending on early education and child care will continue to rise until 2007–08, and there is no doubt that that is leading to real improvements. How could it not, given the huge increases in spending on child care? I warned in February, however, that half the 600,000 additional places created since 1998 had subsequently closed. We have, therefore, created a huge amount of churning with this increased spending. Worse still, the children and families who have the greatest needs and the most to gain still have the worst access. There are too few child care places for children living in the most deprived areas of the UK, and too few services available to children with disabilities.
The Chancellor announced ambitious plans to reduce administration and to cut civil service jobs. He hopes that these proposals, together with other measures, will realise efficiency savings of £20 billion a year. That is his target, and it is very ambitious indeed. I believe that it will require a massive sea change in Whitehall of a kind that we have never seen before, either in wartime or in peacetime. I welcome the cuts, but they must reduce administrative bureaucracy, rather than cutting front-line staff such as doctors, nurses, teachers and policemen.
Cuts in so-called back office administration, which has become a cliché, to which we all sign up, must not lead to poor performance and inadequate capacity in any one part of the delivery chain. The civil service will always have a tendency to make a political point to its political masters by passing on those cuts quickly to front-line services.
I want to draw the attention of the Treasury Bench to the work of my Committee and the NAO on Departments' management of resources and their capacity to spend. I hope that they will ensure that it is read widely in Whitehall. To avoid waste and inefficiency on the huge scale to which, sadly, we have already borne witness, the NAO should be free to conduct detailed and continuous audits of each and every Department. It should register staff numbers and efficiency levels, and the resultant information and recommendations should be freely available in a publication, including a league table format as is the case for local authorities. Departments should be rated for their work, as local authorities are, as poor, good or weak. Permanent secretaries should be held accountable to Parliament, as accounting officers, in the same way that directors are held accountable to shareholders. In the private sector, managers are given performance incentives, bonuses if they do well and the sack if they do badly. That still does not happen in the public sector.
I no longer believe, having been involved in this field for a few years, that mere ministerial instruction, however well intentioned, even with the backing of a huge majority in Parliament, will ever deliver fewer civil servants or a more effective civil service. There must be incentives on senior managers.
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