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In that respect, I am pleased to report the progress that has been made on the Company Law Reform Bill since we last debated the PAC in January. Subject to the approval of the House, the new legislation should enable the Comptroller and Auditor General to audit companies in central Government, hopefully from April next year. That will be a significant further step towards implementing the recommendations of Lord Sharman’s report, “Holding to Account”. One mark of the Treasury’s respect for the NAO is the fact that my hon. Friend the Economic Secretary recently decided to ask it to conduct an independent review of the Financial Services Authority. That underlines the value that the Treasury places on the work of the NAO and especially the special commissions that it undertakes for us and other parts of the Government.

Mr. Bacon: I was pleased to hear the Economic Secretary’s announcement that the Government had invited the NAO to look at the FSA, as that is a welcome development. However, on the subject of wider scrutiny, the PAC went to the United States, where the Government Accountability Office can follow the public dollar to state level. Indeed, we visited the GAO regional branch in Boston. Yesterday, I met the Auditor General for Wales, together with his staff in Cardiff, who can follow the public pound from the highest to the lowest level, which suggests that our arrangements, particularly for block grants via the Office of the Deputy Prime Minister to local government, leave a great deal to be desired. Obviously, the Audit Commission has separate responsibilities, but there is a case for increasing the NAO’s capacity to dig deeper should it wish to do so.

John Healey: The hon. Gentleman has been a PAC member long enough to know that the NAO’s capacity is essentially a matter for the House rather than the Treasury. However, there may well be a case for following the pound through, as he put it. I shall come on to the scrutiny of public spending, on which a number of hon. Members commented, but it is important to make a clearer link between budgeting, accounting and reporting in the House.

First, however, may I respond to the contribution of my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry)? Like the hon. Member for South Norfolk (Mr. Bacon), she mentioned the PAC’s Washington visit, which clearly had a significant impact on the Committee. In discussing the Committee’s 36th report, she rightly said that the simplification unit and other programmes that had been put in place were a direct result of the PAC inquiry and report. That underlines the point made by the Chairman that 94 per cent. of the Committee’s recommendations have been accepted by Government. The hon. Member for South Norfolk dwelt at length on NHS information systems and development. The subject was not a formal part of our debate, as Mr. Speaker reminded him, but I am sure that the PAC will return to it again and again. I am sure, too, that we will have a chance to debate it properly.

Like the hon. Member for Gainsborough, the hon. Member for South Norfolk spoke strongly about the problem with the Home Office accounts. The Treasury shares those serious concerns. To put it bluntly, the
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Home Office failed to achieve the professional standards expected of it—the introduction of new accounting software is a routine challenge that Departments should be able to meet. With the support and active involvement of the NAO and the Treasury, the Home Office is working to remedy those shortcomings and to deal with weaknesses under the guidance of its audit committee and accounting officer, who are striving to do as thorough a job as possible, given the limited quality of the available data and the position at the beginning of the year. As for wider financial skills across Government, more than 70 per cent. of Departments, including the Home Office, now have professionally qualified finance directors. A further improvement is evident in their capacity to lay their resource accounts before Parliament before the recess. Some 86 per cent. of departmental accounts are expected to be laid before the summer recess, compared with 51 per cent. last year.

My hon. Friend the Member for Bishop Auckland (Helen Goodman) spoke about the 17th report of the Committee—an extremely important report that draws on the experience of the Public Accounts Committee over recent years and which, like my hon. Friend’s contribution, draws on good examples as well as bad in public service and project delivery. She cited the benefit modernisation programme, where order books were replaced by 2.5 million direct payments into bank accounts on time and on budget. My hon. Friend might have cited some of the other subjects that have been covered by PAC hearings of a similar nature—for example, NHS emergency care. Thirty-nine out of 40 of those using accident and emergency departments are now seen within four hours, even though since 1997 the numbers attending A and E are up by 39 per cent.

As the hon. Member for Gainsborough reminded us, the importance of public services is ultimately in the impact that they have on users. The PAC held a hearing on cancer mortality and confirmed that between 1996 and 2003 it went down 14 per cent. for those over 75. In relation to the Treasury’s more direct responsibilities, the online filing of self-assessment returns in 2006 meant that nearly 2 million taxpayers filed online. The system coped with enormous peak demands—more than 150 returns a minute at one point—a very significant and successful implementation of a major programme.

My hon. Friend the Member for Bishop Auckland also spoke about the importance of efficiency and the interim report on the comprehensive spending review that my hon. Friend the Chief Secretary published last week. Although it was published only last week, my hon. Friend the Member for Bishop Auckland has obviously taken a preliminary look at some of the ways that we can deliver savings of at least 2.5 per cent. a year in the CSR 2007 period. I know that my hon. Friend the Chief Secretary is working with the Public Accounts Committee to try and establish ways in which the Committee can be as closely involved as possible in the efficiency programme, so that members of the Committee can be confident that they understand the efficiency gains being made without encouraging Departments to concentrate on getting good public reports, rather than achieving the efficiencies required.

The hon. Member for Somerton and Frome (Mr. Heath) stressed that the PAC’s reports and its
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work are not all about bad practice, and that they contain some examples of excellent practice, as he put it. He is not a member of the Committee. I think he is the only Member contributing tonight who is not a member of the Public Accounts Committee, apart from the hon. Member for Chipping Barnet (Mrs. Villiers), who speaks from the Conservative Front Bench. The hon. Member for Somerton and Frome demonstrated the breadth of his interests by dealing with concerns in the Home Office, the Environment Agency, Her Majesty’s Revenue and Customs, and even his Somerset villages, which are, rather surprisingly, well served by the Environment Agency Wales for flood protection measures.

My hon. Friend the Member for Tooting (Mr. Khan) picked an interesting report as the focus of his speech—the 22nd report, which looked at maintaining and improving Britain’s railway stations. That inquiry by the PAC highlighted the poor state of many stations, particularly in respect of access for disabled people and security. In responding to the report, the Government made it clear that Network Rail is fully funded to maintain the fabric of its stations, and train operators should have priced station upkeep into their bids.

My hon. Friend’s remarks demonstrated how the National Audit Office can shine a forensic light on an overlooked part of public service and public spending and study that. The PAC can then hold its inquiry and report. It is part of building up parliamentary and public pressure to bring about reform, change and improvement. I pay tribute to the way my hon. Friend is clearly following up the PAC’s work on the subject and will not let the issue go.

Mr. Bacon: I am grateful to the Financial Secretary, who is being very generous. With reference to the contribution of the hon. Member for Tooting (Mr. Khan), I had a chance to go to the Table Office and look at early-day motion 911, which I commend to all hon. Members. I have just signed it.

John Healey: I am glad to hear that the hon. Gentleman is continuing the bipartisan tradition of the PAC.

When my hon. Friend the Member for Tooting dealt with the 37th report, he gave the other side of the tax credit story from the one given by the hon. Members for Somerton and Frome, for Chipping Barnet and for Tunbridge Wells (Greg Clark). My hon. Friend was right to say that end-of-year adjustments are inevitable in a system that is designed to be flexible in responding to the changing circumstances of families. The policy and operational changes that my right hon. Friend the Paymaster General has announced are designed to ease some of the problems inherent in that approach.

The hon. Member for Tunbridge Wells discussed tax credits, the report on the Office of Fair Trading and audit access to the BBC, as did the hon. Member for Chipping Barnet. NAO access to the BBC was considered as part of the charter review. Current arrangements involve the BBC’s audit committee holding discussions with the Comptroller and Auditor General, with the aim of framing a programme of reviews that the NAO can carry out. That is an
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important step forward. I should point out that the BBC is not part of government—an important principle and fact to remember—and that it is not, as the hon. Member for Chipping Barnet argued, directly comparable with a Government Department. The importance of its independence is part of the reason why the current arrangements are the right next step to be taken.

Greg Clark: In that case, how does the Financial Secretary account for the fact that the NAO has access to the World Service, to which questions of independence apply in just the same way?

John Healey: As an independent corporation, the BBC is determining—now in close in consultation, and then with the NAO carrying out much of this audit work—the appropriate audit programme for its activities. That seems to me the right way to proceed.

My hon. Friend the Member for Glasgow, South-West (Mr. Davidson) brought an element of entertainment, as well as enlightenment, late on in our proceedings, but he also brought to bear his long experience on the Committee and made two particularly serious points. First, he pointed out that the PAC is perhaps the one body that can be consistently and forensically critical of the Executive’s operation without being partisan. It is therefore not only fulfilling a very special role in the scrutiny of government in England and Wales, but clearly playing an important part during the period of the Northern Ireland Assembly’s suspension.

My hon. Friend the Member for Glasgow, South-West also argued, importantly, for the assessment of social class being a more regular feature of the way that the NAO studies the pattern of provision of, and the impact of, public services. He is right to stress that, because it is an important element in securing the equity in public service delivery that the hon. Member for Gainsborough identified as one of his six key ingredients in the report published today.

Although there have been no specific PAC hearings this year on the private finance initiative, the hon. Member for Chipping Barnet talked about the Norfolk and Norwich PFI hospital. I remind her that that PFI project opened early and on budget; the problems that the NAO and the PAC examined were to do with the refinancing of that deal. Lessons have therefore subsequently been learned, and all refinancing gains from September 2002 are now shared 50:50 between the public and private sectors. The Treasury has set up a taskforce to assist with refinancing deals in the public sector, as they become a more relevant feature of the conduct of PFI contracts.

In the short time left, I want to touch on three points that the hon. Member for Gainsborough stressed: the comprehensive spending review, this House’s scrutiny of public expenditure, and the report that his Committee published this morning. The CSR 2007 provides us with an opportunity for a fundamental review of the balance and pattern of public expenditure. We will take account of what investments and reforms have been delivered to date. We will identify what more needs to be done to meet the challenges and the opportunities that are ahead in the next decade and beyond.

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The interim report that was published by the Treasury last Thursday is an important part of that process. However, in all the assessments that we make as part of the comprehensive review process we will use the lessons that can be learned from the work of the PAC. The seriousness and the rigour with which we are determined to approach the comprehensive spending review is demonstrated by the early settlements that were made and announced in the Budget, where for the Department for Work and Pensions, the Cabinet Office, Her Majesty’s Revenue and Customs and the Treasury the expenditure limits will fall by 5 per cent. a year in cash terms over the CSR period. The reason for doing this is that it will release almost £2 billion that we can redeploy to our priorities and to front-line services.

I move on to the parliamentary scrutiny of expenditure while I am on the theme of departmental expenditure. I am interested to note that this month the PAC is inviting the Chairman of the Liaison Committee to encourage the departmental Select Committees to devote more time to the scrutiny of expenditure plans. That is an important role for the PAC. The rights and privileges of the elected House of Commons to scrutinise public expenditure are a fundamental part of our democracy and an essential part of our parliamentary system. I welcome, therefore, the PAC’s paper, which was published earlier this month. I welcome also the report that was published recently by the Hansard Society called “The Fiscal Maze”. It, too, looks at the challenge of how Parliament can scrutinise more effectively the expenditure of the Executive. It is clear from the arguments set out in the Hansard Society’s report—it is also the view of the PAC—that we need to introduce a more systematic and challenging parliamentary scrutiny of spending plans. I believe that we need to be able to link more directly the process and scrutiny of estimates, budgets and accounts. In large part, that is a challenge for Parliament. However, the Treasury stands ready to work with Parliament on establishing workable arrangements for improving parliamentary scrutiny of planned spending.

Today, there was published the 63rd report this Session of the PAC, which I welcome. It builds on the 17th report, which was the major focus of our debate in January. It provides a good framework that Departments and public bodies could use when designing and delivering high-quality public services. The 10 steps that it sets out to achieve successful and high quality services probably provide a sound basis for the development of better public services. The six key ingredients that the hon. Member for Gainsborough identified and stressed are also a useful perspective. I am confident that the Government will be able to respond positively to the report within a couple of months.

The PAC, with the National Audit Office, brings an intense inquiry and analysis to the shortcomings of Government. I am reminded of the words of Edward Phelps, who in the 19th century was the Second Comptroller of the US Treasury. I am prompted by the comments of several Members in the debate to say that it is the examples of good as well as of bad that need to be considered. If we concentrate on the bad, there are risks. Edward Phelps said:

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The most important thing to do when things go wrong is to learn from the event. Undoubtedly, the work of the PAC helps us to do just that. As Cicero said,

I commend the work of the PAC. I commend the 63 reports produced by the PAC this Session. The Committee carries out important work on behalf of the House and also on behalf of the taxpayer and public service users.

11.44 pm

Mr. Leigh: With permission, Madam Deputy Speaker, I shall briefly sum up and, in particular, thank the Financial Secretary, who has just given a model summing up for a debate. He made an effort to go through every speech and ended with an important point about increasing financial scrutiny by the House of the whole budget process. When I started this process, I think that there was some scepticism about whether other Select Committees would be sufficiently interested in these issues, because in recent years they have tended to concentrate on policy. Following what the Financial Secretary said today, we have had an extremely important pointer now that the Treasury in a sense is giving a green light to the process upon which the Liaison Committee is embarking. Our meeting in October or November will be very important. I am particularly grateful for what the Financial Secretary said.

I apologise for the fact that I cannot at this late hour indulge in Ciceronian poetry and prose—I wish that I could. All I can do is briefly thank those hon. Members who have taken part. However, I should say to the hon. Member for Somerton and Frome (Mr. Heath) that he made an important point. We are talking about the scrutiny of £500 billion-worth of expenditure. The main part of parliamentary scrutiny lies in this Committee, and it is unfortunate that this debate has lost some of its zest in recent years and is dominated only by members of the Committee. I wish that we could find some way of getting other hon. Members to take more of an interest in these debates, but I say to the business managers that we will certainly not do that if we are still debating these issues at a quarter to midnight. We must pursue this, and I am grateful to the hon. Gentleman for what he said.

The hon. Member for Tooting (Mr. Khan) made a fundamental point, and the Financial Secretary made this point too, when he said that this is the one Committee that can be a critical friend of Government without being partisan. We take enormous care to try to ensure that our reports are balanced, that we encourage risk taking—the Financial Secretary quoted Edward Phelps on risk taking—and enormous care is taken with the press releases. The trouble is that whether it is the “Today” programme or newspapers, the media are not generally interested in good news. I apologise for that, but as politicians we recognise that that is the nature of our business, so we try to be a critical friend.

I thank also the hon. Member for Portsmouth, North (Sarah McCarthy-Fry); my hon. Friend the Member for South Norfolk (Mr. Bacon), who reminded us that to err is human, but for a really
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monumental cock-up, hire a new computer system; the hon. Member for Bishop Auckland (Helen Goodman), who dealt so effectively with the need for efficiency gains; the hon. Member for Tooting, to whom I have already referred; my comrade friend the hon. Member for Glasgow, South-West (Mr. Davidson); and my hon. Friends the Members for Chipping Barnet (Mrs. Villiers) and for Tunbridge Wells (Greg Clark), who brings a superbly gifted forensic mind to our debates.

We have had a good debate and we look forward to our next six months of work.

Question put and agreed to.



Mr. Deputy Speaker (Sir Alan Haselhurst): I propose to put together the Questions on the two motions on terms and conditions of employment.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Terms and Conditions of Employment

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