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Mrs. Theresa Villiers (Chipping Barnet) (Con): I am delighted that my first speech at the Dispatch Box concerns the hugely valuable work of the Public Accounts Committee. For well over 100 years it has been keeping a watchful eye on the activities of the Government and the way in which they spend the money of British citizens.
In the period of the Committee's work that we are considering today, it has continued its long tradition of producing hard-hitting reports, which I believe have had a significant impact on the work of the Government and the way in which they carry forward their policies. There can be few more important tasks for a parliamentarian than to scrutinise the spending of taxpayers' money. I pay tribute to all the members of the Committee and its Chairman, my hon. Friend the Member for Gainsborough (Mr. Leigh), for carrying out their watchdog role in such an effective and dedicated manner. I should also like to join others in paying tribute to the staff of the Committee and to Sir John Bourn and his staff at the National Audit Office for their detailed, dispassionate and tireless work in this area.
My hon. Friend made, as one would expect, a wide-ranging speech on the work of the Committee over the past 18 months, the themes of which I will return to in my speech. The hon. Member for Dagenham (Jon Cruddas) talked in depth about population growth issues in his constituency and statistical analysis of demography, and its impact on social cohesion and infrastructure provision in his area. The hon. Member for Somerton and Frome (Mr. Heath) chose three themes: mismanagement, referring to IT disasters, which cropped up several times during the debate, misguided application of policy, in particular the Qinetiq project, and fraud and the crisis in the tax credit system. The hon. Member for Bishop Auckland (Helen Goodman) spoke of improving the methods of the PAC and expressed concerns about some of the IT programmes that the Committee had looked at, describing them with accuracy as often a triumph of hope over experience. My hon. Friend the Member for South Norfolk (Mr. Bacon) gave us an in depth account of what can go wrong with private finance initiatives and
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hospital provision. The hon. Member for Portsmouth, North (Sarah McCarthy-Fry) informed us that applying accountancy skills and effective project management could have a tremendous benefit if applied more widely in public procurement matters. My hon. Friend the Member for Tunbridge Wells (Greg Clark) emphasised the importance of robust bodies not accountable to the public or the marketplace, and spoke in rather frightening terms of a para-state which is difficult to interrogate properly. The hon. Member for Burnley (Kitty Ussher) referred to smart procurement and paid generous tributes to her colleagues on the Committee. I agree with her that in many ways the PAC is the voice of the people in keeping track of their money. Finally, my hon. Friend the Member for Basingstoke (Mrs. Miller) spoke with great insight into and information about child care problems and the PAC report on early years.
Given the Committee's vast output and the late hour I cannot hope to cover all the reports. Instead I shall focus on a few of the more striking conclusions. Also I shall look to the lessons for the future. I should like to take this opportunity to point out how it would be useful to those embarking on preparations for the London Olympics to read some of the reports that we are discussing. That would help them avoid many of the mistakes that have characterised Olympic projects in the past. My constituents in Chipping Barnet are among the council tax payers expected to pick up the bill for the 2012 games. It is my fervent hope that the Government and the various organisations preparing for the Olympics follow the wise advice of the PAC in effective planning and project management. Let us hope that in a few years' time we are not standing here discussing a coruscating PAC critique of overspend on the 2012 games.
As we have heard this afternoon, much of the work of the PAC focuses on achieving value for money in the public services. As the Chairman pointed out, there can be few issues more central to modern political discourse than this one. The sums at stake are huge. The Comptroller and Auditor General has calculated that a mere 1 per cent. efficiency improvement in the spending allocated to Departments over three years could release £14.5 billion to redeploy on front-line services. I find it difficult to believe that the Government's Gershon review or the Opposition's James report would have been initiated without the trailblazing work of the PAC; nor might we have seen the creation of the Government's departmental capability reviews without the PAC's bringing pressure to bear on achieving value for money for the taxpayer.
Although some of the issues addressed by the PAC are complex in the extreme, much of its advice is a matter of simple good housekeeping and sensible project management. Time and again, it has emphasised the importance of carrying out an effective and thorough planning process—a theme mentioned already today—including an in-depth assessment of potential risks and problems; of ensuring that all timetables are realistic; of breaking down complex projects into smaller, more manageable components; of putting in place reliable back-up plans to maintain services in the event of problems; of retaining a strong management grip on all projects at all times; and above all, of acting commercially when procuring services from the private sector, and applying hard-headed
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commercial common sense to contract negotiations. I am sure that Members in all parts of the House will regretfully agree that the reports that we are discussing today demonstrate that the PAC's message has yet to percolate widely throughout Whitehall. Good practice in one Department too often fails to spread across to others. Examples still abound of projects on which taxpayers' money is wasted because of poor planning, and of lessons from past failures not being learned.
The PAC's report on Operation Telic identified worrying mismanagement that exposed troops in Iraq to increased risk as a result of inadequate supply of important equipment. We heard this afternoon about the notorious case of the Ministry of Defence's purchasing eight Chinook HC3 helicopters for some £250 million, only to find that they were unusable. The report described this as
In its report on asylum decisions, the National Audit Office estimated that up to £500 million could have been saved if the Home Office had been able to put in place sufficient staff and infrastructure to meet the significant rise in asylum applications in 1999 and 2000. Sadly, we are all too well aware that a recurring theme in the PAC's deliberations is IT projects that go horribly wrong. In the most recent of many reports on this issue, the PAC expressed concern that the systems set up by the Government to prevent procurement disasters, such as the gateway review process, are too often overridden. A case study in how such projects can go wrong is set out in the PAC's damning report on the Criminal Records Bureau, and in its report on the transfer of GCHQ computers. The cost of that transfer was initially estimated at some £41 million; it eventually rose to nearer £450 million.
Mr. Bacon: I had a conversation with the former Minister—I shall not embarrass him by naming him—who was responsible for the decision to go ahead with the Criminal Records Bureau project. He told me that he sat in a room with 12 people, read the relevant information, said, "This isn't going to work, is it?", and twelve voices replied, "Yes, Minister." Does that example not indicate the lack of independent advice available to Ministers on these complex projects?
Mrs. Villiers: I agree, and my hon. Friend makes the point very well. It is particularly important that Government Departments heed the PAC's advice to act commercially and ensure that they look at a wide range of providers. One problem with IT procurement is that only a very few firms are competing for large Government contracts.
Another theme returned to time and again by the PAC, and which was referred to by its Chairman today, is the disadvantage arising from complexity in the provision of public services. As well as being more expensive to run, the more complex the process is, the more likely it is that mistakes will be made. The PAC has estimated that rectifying errors costs the Department for Work and Pensions £1 billion every year. But looking at the financial cost of rectifying errors is to understate the
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human cost in terms of frustration and upset. All Members see that frustration daily in our constituency postbags.
A recent and disturbing example of the problem was explored by the Committee's report on tax credits. It states that the complexity of the tax credits system is one of the major causes of the problems that we have witnessed over the past few months. Complexity means that customers and officials find it hard to understand the system, which increases the number of mistakes that they make. It also makes it more difficult to rectify the mistakes once they are made, and increases the opportunity for fraud—a point made by the hon. Member for Somerton and Frome (Mr. Heath).
Recent developments have shown just how serious the problem is, with the Government forced to shut down their on-line applications systems because of large-scale identity fraud involving the names of thousands of workers at the Department for Work and Pensions and Network Rail.
The Committee also noted that the way that the system was structured contributed to significant problems even where no mistakes were made. The system of provisional awards routinely overpays customers—a major factor in the crisis that means that many of the very poorest families are suddenly subject to demands to repay large sums of money. As a result, MPs and citizens advice bureaux have been inundated with distressing complaints from people forced to take desperate measures to repay the money that they owe. That very disturbing example provides a graphic illustration of how the work of the PAC goes beyond dry matters of Government spending and statistics and touches on real lives and hardship.
Further examples of how complexity can hinder the efficient provision of public services were highlighted in the Committee's report on regional policy. For example, it found that, in the Thames Gateway area, a multiplicity of different organisations were responsible for regeneration. The Committee wisely advised that the Government should have a presumption against establishing new institutions and new tiers of bureaucracy unless it was clear that policy objectives could not be achieved through existing bodies.
The Committee also noted the severe difficulties faced by organisations in the regions that have to grapple with many different funding streams—in the south-east, there are no fewer than 40 such streams. Much of that complexity results from the complexity of EU schemes, which brings me to another PAC report on the EU budget.
The House is well aware that, for the past decade, the EU's own auditors have refused to sign off on their accounts—a shocking fact when compared with the exemplary standards of scrutiny demonstrated in the UK by the NAO and PAC. However, one of the biggest roadblocks to cleaning up the EU's accounts is the complexity of its agricultural support and regional aid programmes, which gives rise to high levels of fraud, error and maladministration. Only when the EU heeds the advice of the PAC and many other bodies and radically streamlines and simplifies its regional aid and agriculture programmes will there be any real hope that, one day, we will be able to ensure that every euro of the EU budget is properly accounted for.
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Another telling example of where complexity and bureaucracy get in the way of the efficient delivery of public services is revealed by the Committee's work on transport. When it looked at rail services, it established that the process for introducing new trains involved no fewer than 60 key stages. From my own constituency work, I know how difficult it can sometimes be to get things done on our rail network. It took many years of campaigning to get one of my local stations renovated. On the day that it was formally reopened, a cast of thousands from all the multiple different organisations that had to be involved in the project was in attendance.
I hope that Government, Opposition and all those working in the rail industry can strive to put in place some of the Committee's recommendations for streamlining and simplifying how we run this crucial part of our transport infrastructure. I am sure that we would all agree that an efficient public transport network is vital for our international competitiveness and for the quality of life of our constituents.
The Committee also had invaluable advice in relation to the public-private partnership for the London Underground. It expressed concern at the complexity of the structures put in place to operate the tube, and of the process by which PPP contracts were concluded. The deal took five years to conclude and transaction and consultancy costs soared to a staggering £455 million. The resulting contracts are opaque and difficult to understand. Many of my constituents complain to me almost daily of the dire performance of the Northern line, but the complexity of the PPP structures makes it very difficult to hold those responsible for the tube to account. Whether one asks the Government, the Mayor or Tube Lines, somehow the fact that my constituents cannot get to work in the morning is always somebody else's fault and somebody else's problem.
One of the striking aspects of the work of the PAC is the wide range of areas that it looks at. It is not just the computer overspend disasters; it looks at a whole range of areas. It has done some extremely valuable work on health, of which today's publication of a report on cancer is merely the most recent example. The Committee can claim much credit for pushing the issue of hospital-acquired infection right to the top of the political agenda. It is one of a number of areas in which the Committee's work has stretched over many years and several reports. Back in 2000, the Committee expressed its concern that the NHS had little grip on the problem or the measures needed to tackle it. Worryingly, returning to the subject four years later, the Committee commented that the response to its earlier report had been patchy and that there was still a distinct lack of urgency on several key issues, such as ward cleanliness. Let us hope that the recent political attention devoted to this issue will mean that the PAC's next report on this matter will have better news for NHS patients.
Lastly, I should like to look briefly at the Committee's valuable work on the Government's programmes on HIV/AIDS. In its thoughtful and considered report on this issue, the Committee recommended that greater priority should be given to tackling the social and economic aspect of the epidemic. The report details the devastating impact the disease is having on the work force of many developing countries, impairing their ability to cope with the epidemic and to run public services or a functioning economy.
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Yet between 1997 and 2003, only 1 per cent. of DFID's country-level spending was focused on this issue. Perhaps more seriously, the Committee noted that the priority given by the Government to their HIV/AIDS projects was not reflected in the spending of the multilateral agencies funded by DFID. In particular, the Committee discovered that, at the time of reporting, only £19 million of the £1 billion contributed by DFID to the European Commission was spent on programmes related to HIV/AIDS.
In recent months, tackling the epidemic has rightly shot up the international political agenda. I hope, therefore, that there is now a much greater awareness of the importance of this issue among the multilateral organisations with which DFID works. However, it is frustrating to read the evidence given to the Committee from senior officials and experts in the area who freely admit that aid is spent more wisely and effectively if it is spent directly by the UK Government rather than via an international intermediary such as the European Commission. In the light of the conclusions of the report and the urgent need to tackle the AIDS epidemic, there seems to me to be a very strong case to ask DFID to reconsider the level of funding that it deploys via the EU and switch far more of its resources to programmes that it administers directly or via NGOs. I am sure that the Financial Secretary will agree that the priority here must be saving lives rather than EU sensitivities.
I imagine that HIV/AIDS is a subject that has never been raised before in a debate on the Public Accounts Committee, but I make no apology for doing so. I have chosen this topic to end on for two reasons. First, the significant amount of money now being devoted to such programmes must be effectively scrutinised. We must all be well aware of the difficulties of ensuring that aid for developing countries is effectively and wisely spent. Secondly, I highlight this issue because of the pressing need to tackle an epidemic that has seen 65 million infected and 20 million dead from the disease in the last two decades. I am pleased that the PAC found time in its busy schedule to address this humanitarian crisis. I pay tribute to the Committee's work on this issue and on all the other high-quality reports that we have had the honour to consider this afternoon, and it is with great pleasure that I commend them all to the House.
6.50 pm
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