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Jon Cruddas (Dagenham) (Lab): It is a pleasure to follow the hon. Member for South Norfolk (Mr. Bacon) and I shall cover some of the points that he raised later in my remarks. I have a few general comments about the work of the Committee before making some specific remarks about public expenditure. Like other members of the Committee, I wish to place on record my appreciation of the work of the people who service it. Nick Wright and his staff do a tremendous job, especially for newer members of the Committee. I joined just before the hon. Member for Sheffield, Hallam (Mr. Allan), who joined in late autumn last year. In those early months, the staff walked me through the methodology of the Committee and an impenetrable series of reports, and I bear witness to the work that they do on behalf of all of us.
I also wish to praise the work of the National Audit Office. It is commonly understood that every £1 spent by the NAO saves the taxpayer some £8, as my right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out. The NAO also provides a key check on Government activity by its own existence. That is demonstrated by the seriousness with which accounting officers take preparing to appear before the Committee as witnesses. That itself is a check on the activities of Government.
The volume of work carried out by the Committee was mentioned earlier. It covers a staggering amount of territory across all Departments. It covers the general
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and the specific, the macro and the micro elements of public expenditure. As such, it proves the uniqueness of its contributions. No other Committee can provide the rigour of analysis that the PAC does in terms of the conclusions it draws about Government activity.
The civil service comes out well from the deliberations of the PAC. Time and again, I am impressed by the commitment to public service that we witness in our deliberations. I also respect the tradition whereby civil servants take responsibility for the actions of those who preceded them and who, more often than not, took the decisions that we are investigating. To me, that remains an honourable tradition, and it is displayed week in and week out. I have one slight caveat, however, and that is the recent incident when reports on the public-private partnership on the tube were issued very late for our hearing last Wednesday. That was regrettable, because the impression was given that someone was holding off signing off the report to put more pressure on the NAO as it came up against the Committee's deadlines. It would be a concern if such pressure were to blur the edges of any NAO conclusions, although I have no specific evidence that that has been done.
Overall, I find being a member of the Committee and its work deeply rewarding, although it is difficult at times to assimilate the data and research projects that await us in our folders every week before the Committee meets. I find the politics of the Committee fascinating. It operates in a non-partisan way, which is especially impressive when we consider that it covers the key political battleground between the two main political parties—the efficiency of the Government in using our constituents' tax revenues. No votes are taken in the Committee: its conclusions remain unanimous. Indeed, if an outsider considered the workings of the Committee, it would be difficult for them to ascertain the political loyalties of a specific questioner in any given debate. That reflects well on the Committee and strengthens the conclusions it reaches.
None of that is to say that Committee members cannot draw their own conclusions for use outside the Committee. For example, given the speech today by the hon. Member for South Norfolk, I eagerly await his next article in The Daily Telegraph to reinforce his argument in an earlier article that
"if we stopped the haemorrhage of cash from our public sector we would have to worry less about extra taxes and borrowing".
In terms of waste, the hon. Gentleman is correct to list examples that the Committee has considered and that are contained in the reports before us. For example, there is the £7 billion to £10 billion in unpaid VAT lost to Customs and Excise. Several hon. Members have mentioned the £400 million spent on the new GCHQ building, when the management were informed that it would cost some £20 million. The sorry tale of equipment at the Child Support Agency has been touched on. Last week, we heard about the extraordinary amount of money spent on establishing the public-private partnership for the London underground and we shall look at that again. A general leakage of public money to consultants, financiers and middlemen is evident in the PFI projects we consider. There is the sorry tale of the refinancing of British Energy and the costs of specific items of kit in the Ministry of Defence—the list could go on and on.
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The issue is not waste alone, however; it is waste alongside reform. At times, there is a danger that we may look at the work of the Committee in a slightly unbalanced fashion, considering only the failings in Government strategy, expenditure and management of resources. That is only one side of the equation. Analysis of waste must be considered alongside the evidence we receive of changes in the expenditure strategies deployed by the state. That is all the more important when we have a Government who believe in the role of the state and who are investing a further £61 billion of taxpayers' money in public services.
The NAO report, "Managing Resources to Deliver Better Public Services" provides balance when considering the reports put before the Committee. The NAO suggests a greater focus on delivery and an attempt to grapple with short-termism, through annual cash accounting with money handed back at the end of the year. It suggests a new emphasis on performance outcomes and that, among other things, we should consider whether the move to accruals-based accounting would better inform state expenditure. It considers the relative effectiveness of three-year comprehensive spending review periods, the flexibility to carry forward budgets and so forth. It will be interesting to see how those changes improve the relative efficiency of the state in managing and spending our resources. As the NAO stated:
"new flexibilities and changes in the way resources can be managed, if used effectively, should make an important contribution to improving public services".
Against a changing background, where the Government are trying systematically to rebuild the public services of our country, the work of the Committee is centre stage and is even more important in terms of the general political debates that arise from its deliberations.
The Committee considers the most important domestic political issues and the key political battleground for western market economies—how public resources are utilised and the efficiency of the public sector.
Mr. Howard Flight (Arundel and South Downs) (Con): I wholly agree with what the hon. Gentleman is saying. Is it not sad that more Members did not turn up for this debate which is at the centre of the issues of our times?
Jon Cruddas: I take the hon. Gentleman's point, but before I became a member of the Committee I did not realise how penetrating its proceedings were and the fact that they form the cornerstone of all political discourse in terms of the core issues of tax expenditure, perceptions about the role of the state—which divide political parties—the role of intervention versus markets, devolution, centralisation, central planning versus more devolved decision-making and the like. All those issues will be centre stage over the next 12 months, if there is an election, and they all have a route back to the core terrain over which the PAC presides every week. That makes our work more rewarding, but also more complex, given the amount of information on which we have to deliberate.
The conclusions of the Government efficiency review—part of the overall spending review about which we shall hear soon—will be of interest in the
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process of debating waste and reform. We know that the general shape of that work is to release more money down to the front line. We hear a lot of talk about that, as we do about reducing bureaucracy. In general, we know which changes are being considered: a focus on procurement, given Sir Peter Gershon's work at the OGC; a look at emptying back-office functions, given technological change; better use of IT in the delivery of services; examination of the devolved agencies—for example, their regulation regimes; and a look at bureaucracy in the public services.
I presume that those factors will inform a lot of the Committee's work in future. Indeed, they will inform a lot of the political battleground right up to the next election, which we touched on earlier. It will be interesting to see how the Committee's work can remain separate from heightened political debate and controversy about investment and reform in the public services and the role of the state itself, as we move into a heightened election gearing.
I want to make a simple final point about how the Committee's work and general political debate about the respective economic efficiency of state activity interrelates with what may be described as spatial economic development. One aspect that has tended to be underplayed in the debate about investment and reform in the public sector and the Government's strategy is whether it is cross-referenced with the dynamic spatial economic change in our country. At times, our sittings imply a static model of resource allocation on the basis of a certain population distribution.
I shall give an example that has been the subject of questioning during some recent sittings. It is estimated that London will grow by some 700,000 people in the next 10 to 15 years. For example, my borough's population is 155,000—the smallest in London—but it will grow by an estimated 50,000 in the next 10 to 15 years. It sits at the geographical centre of the so-called Thames gateway—a key growth area in the Government's sustainable communities agenda. I simply flag that up to make a number of simple points.
The Committee considers the complex issues of resource allocation and expenditure. We find that those issues become even more complex when analysed alongside current and projected population movements. For example, the Department of Health accepts, as did Sir Nigel Crisp during one of our recent sittings, that the budget allocations for the primary care trusts in my borough are underfunded by about £24 million. That figure was calculated before taking account of the major changes in population that are anticipated for the next 10 years. The comprehensive spending review will presumably consider both that structural underfunding and future budgeting, given the growth in that illustrative borough.
Let us take another example. The Government are setting up new delivery vehicles for economic regeneration. Last week, we processed the order to establish an east London urban development corporation to work alongside the London Development Agency and a host of other regional and sub-regional economic partnerships to spend public money. At times, it looks as though a jungle of structures and responsibilities operates within a positive sum game of financial investment by the state. How all
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that works through to public service delivery on the ground will be the real test of Government strategy in my constituency during the next 10 years.
We as a Committee are starting to study some of those interrelationships, but they will provide a rich seam of work in the next few years. I do not underestimate the difficulties for the state in its various manifestations, given the relative efficiency of its activities. Everything else being equal, cutting waste and boosting efficiency is a tough job, but when the population is radically changing, an even more complex task is at hand. To cut short my comments, I very much enjoy the work of the Committee. It provides a unique service to this country's taxpayers, but I do not underestimate the difficulties that lie ahead in monitoring the activities of the state in its various manifestations.
5.58 pm
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