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2.4 pm
Mr. Richard Bacon (South Norfolk) (Con): It is a pleasure to follow the hon. Member for Bishop Auckland (Helen Goodman), and I should like to start by agreeing with her about the importance of accountability. She also mentioned the possibility of paying some civil servants more, something that Partnerships UK has shown can be done. The Shareholder Executive to which she referred is looking into the possibility of doing the same and, although whether what has been done with the director general of the NHS IT service produced value for money is still open to question, it is true that civil servants can be paid more, and sometimes should be.
The hon. Lady was also right to say that the PAC must make sure that we are not regarded as being against the public sector just for the sake of it. There are some very good examples of good work being done in the public sector, and perhaps we could do a little more to make that clear. However, the PAC deals with public accounts, and that means that we must look at the accounts of public bodies. When things go wrong, the people in charge—the accounting officers—should expect to be accountable.
The PAC’s Chairman, my hon. Friend the Member for Gainsborough (Mr. Leigh), earlier called me an anorak, and I have decided to try to rise to the challenge and prove him right. To that end, I can tell the House that the Comptroller and Auditor General has qualified 22 accounts including the armed forces pension scheme, the Assets Recovery Agency, the Department for Work and Pensions—which has had its accounts qualified since 1988—the House of Commons Members’ account, the NHS pension scheme, the NHS compensation for early retirement scheme, the Revenue and Customs prosecution office, and the Home Office.
In addition, a further 15 non-resource accounts are also qualified. They are Energywatch, the Ordnance Survey, the Marine Fisheries Agency, the Council for Healthcare Regulatory Excellence, the Nuclear Decommissioning Authority, the HMRC’s trust statement—which is a mere £1 billion or so adrift because of tax credits—the Civil Nuclear Police
Authority, the social fund, the Child Support Agency client funds account, the NHS Pensions Agency administration account, the Northern Ireland national insurance fund, the British Transport Police, the Public Health Laboratory Service board, NHS Direct and the Health Professions Council.
I have read out the names of all those accounts to make sure that they are on the record. I believe that every one of the accounting officers involved should, as a matter of complete routine, be required to report to our Committee to explain why their accounts were qualified. Their job is to be the legal guardian of public funds voted to them by Parliament, and to account legally for how that money is spent. If, by marking the accounts as qualified in some way, the CAG is telling us that he is not able, in certain respects, to form an accurate opinion of how the moneys have been spent, the PAC ought to know about it. We ought to know why he has qualified the accounts, and we ought to discuss the matter with the accounting officers concerned. In many cases, of course, we do know those things. The HMRC chairman is a regular customer of ours. His accounts have been qualified in the past three or four years because of tax credits, but that is a relatively new development. However, I think that we ought to establish, as a routine principle, that accounting officers come before us when accounts are qualified.
The Chairman of the PAC mentioned the Home Office, whose accounts are qualified this year. They were disclaimed last year, and one member of the Committee asked Sir John Bourn what that meant. He replied that a disclaimer signified that he had no information at all with which to form any opinion whatsoever. My hon. Friend was right to mention that the Adelphi accounting system showed the Home Office accounts to have £27.527 trillion. In the Home Office’s defence, I point out that there was £27 trillion in both the credit and debit columns, but the total is 2,000 times the size of the Home Office’s actual turnover—and 1.5 times the gross domestic product of the entire planet. The Australian auditor who had been put in charge of the account inserted a rather blunt note to the Home Office audit committee to the effect that there might be something awry. The figures suggest that he might have been right.
My first point, then, is that I believe that all such matters should be referred to the PAC as a matter of routine because accountability is so important. My second point has to do with gateway reviews. That matter is a hardy perennial, and in the past the Financial Secretary has made speeches explaining why gateway reviews cannot be more public. I heard his predecessor—who is now the Secretary of State for Communities and Local Government—use exactly the same wording, and people who scrutinise the trade press will know that the Secretary of State for Work and Pensions has used it too. It is clear that someone in Whitehall knows how to do copy and paste, but that does not alter the fact that not holding gateways in public has a deleterious effect.
Several colleagues have mentioned the Rural Payments Agency. Extracts from the gateway reviews are published in the back of the report into the episode involving the RPA, which was in many ways
disgraceful. That means that they are available now, although they were not at the time. After a rosy start in March 2001 where the
“report concluded that the proposed change programme has strong stakeholder support and a focused and energetic management team”,
three years later by May 2004, the gateway review, now marked as red, stated:
“This is a complex Programme requiring fundamental change in the way the Agency operates. In respect of releases 1a and 1b, although testing has been delayed the process is under good control, the problems are understood and we believe that delivery will be successfully achieved in the coming weeks.”
Again and again one of the key points is testing being delayed or compressed, and it was testing being compressed to a point where it was inadequate which was one of the big problems in relation to tax credits. The review went on:
“In respect of releases 2 and 3, the combination of the timescale left, the number of serious risks identified and the fact that the final policy decisions will not be made until July, with the system well into design and build, result in a critical situation that will require urgent action.”
They were designing and building a system although they did not know yet what the policy was, which takes us back to what the hon. Member for Bishop Auckland said earlier.
Some seven or eight months later, in January 2005, the gateway review, still at red, found the review team under strong leadership but said that
“there is no room for further change requests, which would lead the programme into serious difficulties and overload the operation of the Agency.”
Six months after that, in June 2005, still at red, the review said:
“The programme is in considerable difficulties.”
Anybody with a farming constituency could have told the team that. The review continued:
“The Agency have sought to keep to the February timescale, but the risks of failing have continued to increase. The team were concerned that there is not a finalised and secured contingency plan, nor clarity about when it could be invoked.”
There was still a further nine months before the chief executive was removed from office.
In May 2006, some two years after the first red review, the next red review said:
“The computer system performed well technically but the business processes required to use it, in order to make full payments in the early part of the payment window, were not fit for purpose.”
When read twice that seems to contradict itself. It basically says that the computer system performed well but was not fit for purpose or that the processes required to use it were not fit for purpose. That is the sort of double Dutch with which the public, farmers and Parliament are confronted. The conclusion, as if we did not know it, was:
“The Agency is now in crisis management.”
My point from all that is that had everything been more widely discussed and publicised earlier, something might have been done earlier. The Financial Secretary might say that I do not understand, as if the gateway review had been public, these things would not have come out. The point is that we were all able to tell from our own experiences at the rock face that things
were badly wrong, yet the process by which things were put right was extremely slow.
Although several hon. Members including our esteemed Chairman have referred to the Rural Payments Agency, everything that I have just said is outside the terms of this motion because we have not yet had a reply from the Treasury in the form of a minute. In future we should change the wording of our motion slightly because we are unduly hidebound. I refer to the Rural Payments Agency, the Olympic games, NHS IT and the Dr. Foster NHS information services, to which the hon. Member for Bishop Auckland referred. All four are important and of central concern to the Committee, but all are outside the terms of this motion.
We tend to rely on our esteemed Speaker or one of his deputies being not au fait with the anorak work that we do to such a degree that on any particular interstice or minutiae he or she cannot say whether something is within the terms of the motion. It is unfortunate that we should have to rely on that, as I found to my cost when I was trying to place on the record some points about NHS IT last July only to find that the Speaker had noted that they were outside the terms of the motion. I brought my remarks to a slightly more rapid conclusion than I had proposed.
Choose and book, the doctors’ appointment system, on which the NAO did a report to which we have replied, and which has been the subject of a Treasury minute, accounts for a small proportion of the total national programme for IT in the health service. Although NHS IT is costing, depending on whom one believes, at least £12 billion—if one believes the NAO—and although it was thought of in February 2002, the contracts were being let from autumn 2003 and here we are in the spring of 2007, it has yet to be discussed properly in a debate in Parliament. Earlier this week we issued a report saying that there is a significant danger that the clinical benefits will not be achieved by the end of the contract period. Our motion should be amended to take account in particular of the reports to which the Treasury has issued a minute in response and, more generally, to take account of the work of the PAC and the NAO. We unnecessarily hamstring ourselves if we cannot talk about matters such as NHS IT and the Olympic games.
A very good article appeared in The Daily Telegraph on Tuesday on that subject and I shall make it available to the Minister. I can probably be forgiven for saying that I thought it was a very good article because I wrote it myself . [Laughter.] It is certainly worth his attention and I shall make sure he gets a copy.
Finally, since I know that two other Members wish to speak, I want to talk about the efficiency programme. I am pleased to say that it is certainly within the terms of the motion. The NAO produced a review of the efficiency programme, on which we took evidence and on which the Treasury has issued its minute. In the original NAO report a chart showed the overall likelihood of delivery against the Gershon savings and said that although significant chunks of the programme were good, requiring only refinement, some were mixed with some aspects requiring substantial attention and some were problematic requiring urgent attention, a small percentage required
urgent and decisive action and were “highly problematic”. In December 2004 that amounted to 3 per cent. of the programme, but by December 2005 that had increased by a third to 4 per cent. When I asked the then chief executive of the Office of Government Commerce which Departments were being referred to, his reply was, “I can’t tell you that. That’s advice to the Prime Minister.”
Earlier this year we had an interesting seminar with the Chief Secretary and chief executive of the Office of Government Commerce, to which a number of members and former members of the PAC came. I showed the Chief Secretary a chart which I got from the Office of Management and Budget website. When the Committee visited the United States last summer we had the opportunity to meet Clay Johnson, the deputy director in charge of management inside the federal Government. They have a different approach. Their score card is completely public and can be downloaded from the website. Not only do they say which Departments are responsible for which particular scores, but some Departments, for example the US Department of Justice, put their traffic light scores in the lobby of the Department so that all employees can find out where they stand. We could learn a great deal from their much more open approach.
Last summer I spoke at a conference at the French Ministry of Finance. One of the other speakers was Barry Anderson, a senior official at the Organisation for Economic Co-operation and Development. He used five words which are apposite. He said:
“Sunshine is the best disinfectant.”
We understand what we are here to do, which is to scrutinise public money—money paid in taxes by constituents to the Government for public purposes—and to discharge a trust. That trust can be better discharged if there is greater openness and transparency. I hope that the Treasury will take that on board because there is still some way to go.
2.19 pm
Mr. Sadiq Khan (Tooting) (Lab): One of the problems when one is the seventh speaker in a debate is that almost everything that can be said has been said, so I apologise if some of my remarks are a repetition of some of the excellent points made by previous speakers.
One of the biggest advantages of the peace dividend in Northern Ireland is that we in the PAC have now examined the last ever Northern Ireland departmental report. That is a source of joy and pleasure for me, as I am sure it is for other members of the Committee.
First I pay tribute to the Comptroller and Auditor General, Sir John Bourn, who showed tremendous enthusiasm and a remarkably dry sense of humour in his use of words such as “disclaim” before the PAC, and to all those at the NAO who do such a tremendous job. I also pay tribute to Mark Etherton, the Clerk of the Committee, and other of his colleagues for their work in servicing the PAC. I pay tribute, too, to the witnesses. Those permanent secretaries who come to the Committee who are open and straight, and get to the point, make far better witnesses, even when they are concealing mistakes, than those who dither, beat about the bush and waffle.
A wry smile crossed my face when my hon. Friend the Member for Bishop Auckland (Helen Goodman) mentioned the good humour of the Chairman. I suspect that the good humour is shared only by those of us who sit around the table rather than those who sit behind the desk. I pay tribute to the Chairman. The way in which he conducts the meeting is remarkable. He is non-partisan; the Committee is non-partisan. Only one thing disappoints me, and I made this point last time. I understand the reasons, of course, but sometimes when the media pick up on the excellent work of the PAC it appears to the lay public that we are being critical of Government policy. I am sorry that the hon. Member for Sutton and Cheam (Mr. Burstow) is not in his place now. Towards the end of his speech, he was being political. I was disappointed; it shows that he does not understand the PAC culture when we talk about government inefficiencies and the things that we can do to make government more efficient.
I also smiled at the reference to the hon. Member for South Norfolk (Mr. Bacon) as an anorak. There is a rumour circulating that the reason the anti-stalking and harassment legislation was introduced is the forensic skill that he demonstrates both on the Committee and outside it when he chases up the written questions that he has asked and the memos that he has sent. The Chairman of the Committee referred in passing to the fact that the PAC’s constitution requires a Chairman to step down after two terms. It also requires the Chairman to be a member of Her Majesty’s official Opposition. I look forward to the hon. Member for South Norfolk being the Chairman after the next general election.
One of my concerns is the fact that when it comes to public discourse on our work the PAC appears only to be critical of the work of Departments and permanent secretaries. The reality is that we often commend innovative work by Departments. A recent example is biometric passports; an innovation led to a project being completed not only on time but under budget.
When we have an unprecedented level of public investment, it is clear that after 10 years there will be significant inefficiencies. We must not forget that we have helped to uncover some inefficiencies and that that has led to savings. I believe that, because there has been so much public investment, there is a duty on those of us who voted in favour of it to scrutinise it and ensure that every pound is spent properly and we have proper value for money and maximum potential for saving.
I want to talk about two PAC reports. The first deals with the National Offender Management Service. My interest in NOMS stems from the fact that Wandsworth prison is in my constituency. One of the matters that we looked at is the increased numbers in custody, which has a direct bearing on the ability of Wandsworth prison and its excellent governor Ian Mulholland to do as good a job as possible in rehabilitating those who are guests of Her Majesty’s prisons.
The report examined the challenge of accommodating record numbers of prisoners and the action taken to do so. It considered the impact on education and other training of prisoners. It is worth thinking about the context of our report. One of the frustrations that all members of the PAC share is the time lags between the National Audit Office doing its work, the report being agreed by the relevant Department, the report reaching
the PAC, the PAC interviewing witnesses, the publication of our report and the Treasury responding with its minute.
Helen Goodman: The point that my hon. Friend makes is right. On average, the time between the initiation of the NAO report and the Treasury minute is 18 months.
Mr. Khan: That demonstrates the point. I am sure that the Minister on the Treasury Bench will accept that due to the hard work of the PAC millions of pounds have been saved. Clearly, if it takes a minimum of 18 months between our making recommendations and change on the ground—it takes time for Departments to change their practices—there is a question about whether the PAC can provide value for money.
We looked at the prison population between 2002 and 2004, during which period there was a 17 per cent. increase. One thing that was clear from the report was that the rising numbers of prisoners caused major operational problems for NOMS. The real problem is that it is difficult to predict further increases in prison numbers. We cannot predict levels of crime, the success rate in securing convictions or changes in court sentencing powers. However, we have learned from the experience in 2002 that there is a need for the Prison Service to put in place contingency plans because sometimes things go pretty badly.
We know why prison overcrowding is a major problem. It means that prisoners cannot receive a suitable level of care or be properly rehabilitated. I know from my own experience in Wandsworth that it leads to increases in the incidence of self-harm and suicide. More than 700 prisoners are transferred to hospitals under the Mental Health Act because they live in overcrowded prisons. It also leads to disruption of the education and training of prisoners. I am afraid that all those points did not reach the same sunshine that the hon. Member for South Norfolk maintains led to his neighbour, my right hon. Friend the Member for Norwich, South (Mr. Clarke), losing his job as Home Secretary and to the excellent changes that were made with regard to foreign prisoners, which would not have come about were it not for the work that we did.
One of our recommendations was for the courses that prisoners follow in prison to be provided in shorter modules. When prisoners are transferred, if their education files are not transferred with them, it can lead to real problems, especially when it comes to the most ill-educated prisoners. If we magnify the problem with education files being transferred, we can see one of the reasons why there is a huge problem with foreign prisoners. Information may not be transferred between the immigration and nationality directorate and prisons when prisoners are transferred. It leads to debacles such as that which led ultimately to the Home Office being declared not fit for purpose.
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