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So Mr. Peat had his answer back in June, and we have had our answer again—a flat, illogical refusal in the letter sent to the Committee in the past week. That is not acceptable. The Government should think rationally about the BBC. It is a great institution, but it should not be exempt from the same interrogation and analysis that every other tax-receiving body faces. I ask the Minister to raise that point with her colleagues.

6.59 pm

Julia Goldsworthy (Falmouth and Camborne) (LD): The right hon. Member for Swansea, West (Mr. Williams) asked what the BBC had to fear from giving evidence to the PAC, but the reaction of certain civil servants shows that it has quite a lot to be afraid of.

My first observation follows from the remarks made by the right hon. Member for Swansea, West and by the PAC Chairman, the hon. Member for Gainsborough (Mr. Leigh). It has been announced that the National Audit Office’s remit will be extended to look in more detail at how savings can be made in each Department. Given that the BBC is going through a similar process, it would seem logical that it should be subject to similar scrutiny.

I have never been a member of the PAC, but that is not necessary to appreciate its importance. I welcome the opportunity to discuss the Committee’s prolific work since it was last debated in this House. The Government place ever greater focus on efficiency savings, so it is important that they continue to set ambitious targets, with delivery being scrutinised in great detail.

When the House last discussed the PAC’s work, the hon. Member for Gainsborough spent some time talking about the capability gap—whether public bodies can deliver public services. That question is now being considered by the Government, with Departments assessing
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their capability to deliver what is required of them. The PAC plays a very important role in that process, as is evident from the scope of the contributions made in the debate so far.

One question in particular has emerged from the PAC’s work over the past six months, and the hon. Member for Gainsborough touched on it his remarks: who is affected most keenly by the capability gap in the delivery of public services? Very often, the people who are most in need of help are most let down, and that is especially obvious in the tax credits system. It seems that the people who lose out by being caught up in overpayments are those at the margins, the ones on the lowest incomes who go in and out of work at different levels of pay. Ironically, they suffer most when their circumstances improve.

We are considering various reports today, but I draw the House’s attention to the one that shows the scale of the problems in the tax credits system. The PAC is not alone in investigating the matter: the recent ombudsman’s report was also pretty damning, stating that HMRC

Comments such as that contrast significantly with the Treasury minutes in respect of the PAC’s conclusions, especially where they deal with the cost of some of the proposed changes to the system and their impact on expenditure. In particular, the Treasury minutes on the impact of the proposed changes to the disregard rules state that

The irony is that, although the Treasury is open about its uncertainty about the impact of the changes, it expects a sophisticated level of understanding among the people who are supposed to use the system.

I am sure that all hon. Members have constituents who come to them for help with tax credits because they do not know where else to turn. Such people may have been thrown into debt after receiving a claim for overpayment that goes back over a number of years and runs into many thousands of pounds. One lady came to see me whose tax credit overpayment amounted to quite a few thousand pounds. She was doing everything that she could to meet the demand, and was even trying to save some money for her children. She told me that, for the first time, she was using for living expenses the money that every month she normally put towards child care and into a savings account.

That is what tax credit overpayments can do to people even when they try to do everything right. It seems that the system has become more important than the individual. One constituent of mine completely changed his bank account, because that was the only way to get out of the tax credit system altogether. People are taking extreme measures, and it is very worrying that, in its response to reports such as the PAC’s, the Treasury says only that it will “take note” of recommendations, rather than agree to them. I think that it should go back to first principles and agree to
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look at the system again, as the question goes beyond how the system is administered and what value for money is achieved. The important question posed in many reports produced by the PAC—and it is one that the Public Administration Committee looked into when I was a member—has to do with how systems are structured.

Mr. Bacon: The hon. Lady mentioned tax credits, about which there have been various reports, but does she agree that one of the most extraordinary aspects is that HMRC now has a higher level of fraud and error than any other Department? The CAG has laid a qualified opinion against the accounts of the body that is supposed to collect taxpayers’ money—a state of affairs that should not be allowed to continue.

Julia Goldsworthy: The hon. Gentleman is absolutely right about that, and the saddest thing is that the tax credits structure was set up with the best of intentions. On paper, it seems that the scheme should work perfectly and help everyone to the exact extent that they need support, but the reality is that it is far too complicated. People come to me all the time who say, “I’d rather not have any money whatsoever than be subjected to this system.” That makes me wonder whether the Government should not look at tax credits again. Perhaps they should consider a fixed-payments system, as that might be fairer to the people whom they are trying to help.

The wider theme has to do with the Prime Minister’s approach to such matters. His intentions are no doubt genuine, but the structures are sometimes so complicated that they are out of control. Other reports that we are considering this evening make that clear. For instance, the report on pensioner poverty shows that millions of pensioners eligible for pension credit still do not claim it. Some pensioners find the system too complicated, while others do not want to undertake assessment on the telephone. Yet others find that the pension credit interacts with other benefits, such as those for council tax and housing, in too complex a manner. Once again, the question to be asked has to do with whether that system is more important than the person whom it is supposed to serve.

Another problem is that the amount of bureaucracy involved will rise as more pensioners become eligible for pension credit. If 80 per cent. of pensioners become eligible for the entitlement, at what point will the Government decide that it should be universal rather than means tested? Most worryingly, the PAC report on pension credit found that certain vulnerable groups will be left behind. In theory, no pensioner living in poverty will miss out on pension credit, but the reality, especially in rural areas, is that such people are difficult to identify and to target.

The experience with other schemes is useful in that regard. For example, Warm Front was a big, national programme that was easy to roll out to assist people living in conurbations, as the index of deprivation could be used to identify whole wards where poverty was concentrated. However, it proved very difficult to pick out people living in small pockets of poverty in neighbouring wards, even though they were in as much need as those targeted under the scheme. It is important that the same groups of people are not left behind by other Government schemes.

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Another theme raised in today’s debate has been the poor quality of commissioning. That has further undermined the structures adopted for Government schemes such as the ones that I have described, and it has also had implications for service and for cost-effectiveness. The PAC report into the NHS IT project showed that there had been huge cost overruns, no clear idea about the overall expenditure on the project and significant delays to important aspects.

The situation in respect of tax credits is similar. When I was a member of the Public Administration Committee, Sir David Varney talked about instituting a change in the operation of the tax credit system so that instead of payments stopping immediately when an overpayment was found there would be a three-week window to give the individual an opportunity to appeal. Sir David said that it would take a year to institute that one change in the computer programme; no doubt, since then there have been other unintended consequences that needed to be resolved.

Those examples raise questions about Departments’ experience in commissioning such services. What are the reporting standards when problems—relating to the CSA, for example—are investigated by the Department? One of my constituents had a problem with the CSA; payments had been made to the agency for the best part of two years yet she had received nothing. I wrote to the CSA on her behalf and was told that the agency accepted that there was a problem with her case, caused by some of the IT changes that had been taking place. The CSA could not tell me when, or if, it would be able to resolve the problem, but as it had written to me it assumed the matter was closed and contacted my constituent to tell her so. In how many other cases do the records show that a problem has been resolved when that is patently not so and people continue to receive a poor service? Can we be sure that the lessons are being learned? The Public Accounts Committee plays an important role in that regard.

The PAC report on consulting made a series of recommendations, which were taken up by the Government, to ensure not only that Departments know how much they are spending on consultants and that they routinely assess the value of using them, but also that they share the information so that best practice can be adopted across Departments. It is great that the recommendations have been accepted, but what is being done to ensure that lessons are learned when responsibility is pushed down to local level?

The Committee’s report on out-of-hours services made it clear that primary care trusts were not experienced enough to know what they were trying to commission. In my constituency, a PCT took on a new deliverer of out-of-hours services, claiming that it offered better value for money. The result was appalling services that were internally audited so the people commissioning them had no idea about what was being delivered. Only when the matter was raised in the House did Serco pull its finger out and start to invest considerably more in the service than it had intended. If responsibilities are to be devolved to local government, or any other local body, lessons learned at national level need to be passed on, too.

The same point applies to Sure Start, where the Committee’s report showed that there were capacity problems and that staff lacked financial capability. We
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need to make sure that local authorities know what is being asked of them and that it is clear from the Government’s point of view.

The capability gap needs to be properly identified and the PAC plays an important role in doing so. It often has a vital role, too, in helping to fill the accountability gap: for example, in its work on the Rural Payments Agency, because people had no way of channelling their frustration, and on the NHS. Similarly, there is no clear chain of accountability in the CSA or tax credit systems and the Committee satisfies that lack. Without the doggedness of the Committee, the Government and their Departments would be much slower to learn their lessons.

I thank the Committee for its excellent work and urge Members to continue it.

David Taylor (North-West Leicestershire) (Lab/Co-op): The hon. Lady talks about lessons learned. Does she agree that a common theme in many of the systemic failures, which, as she said, often affect the most vulnerable in our society, is that the delivery of schemes that were broadly approved in this place is made too complex? The CSA, the RPA and the miners’ compensation scheme are just three examples of such over-complexity. How can the message be spread across Departments that they should keep things simple? If we keep it simple, the failures will not multiply and spread as they have done, especially in IT systems.

Julia Goldsworthy: The hon. Gentleman makes an important point. My concern is not just how the lessons are learned in new bodies in the future, but how we deal with the results of existing schemes. It should not have taken 13 years for us to realise that the CSA was in such a state that it needed to be replaced entirely. What happens about the legacy issues? Unfortunately, we cannot start with year zero; we have to work with the legacy, which is where the eminently sensible recommendations of the PAC play a really important role. As a cross-departmental Committee, the PAC can help to unravel some of the complexity so that the impact of its recommendations is felt more widely.

The Committee must keep up its excellent work; otherwise, the vulnerable individuals who seem to suffer most at the hands of a system that is not working will keep coming to our surgeries because they have nowhere else to turn.

7.16 pm

Mr. Austin Mitchell (Great Grimsby) (Lab): In saying that I will be brief, I shall be unusual, and actually be brief. I did not intend to speak in the debate, except of course to ingratiate myself with the Chairman of the Public Accounts Committee, whose work I so much respect. However, I have some observations.

The PAC is the most exciting Committee on which I have ever served. I am rapidly developing my Perry Mason skills, although I am not yet quite brutal enough. At first I was nervous and diffident in the blood sport that is the lust to kill civil servants. I used
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to quake, but I am learning to be as nasty as the rest, and I hope it will stand me in good stead in parliamentary debates.

The experience has been exciting. The Public Administration Committee comes second after the Public Accounts Committee, and it is certainly sexier, but the Public Accounts Committee is the best one to be on. There are a few problems, however.

We never get to grips with the people who make the mistakes and fail in their performance; the perpetrators disappear. In business, when someone makes a disastrous mistake they are richly rewarded with a golden handshake and sent into retirement, to start their own company—or some other symptom of failure—but we do not even have a system for sending failures in the public service to run power stations in Cleethorpes, which would be a profitable and interesting occupation. There seem to be no sanctions, and we are not getting to grips with the people who make mistakes. As the Chairman said, it would be useful if we could examine the accounting officer under whose aegis the mistake was made. We cannot do so, which is infuriating.

Equally infuriating, many of the mistakes are made by politicians and parties—by us. In this era of 24-hour news coverage, there is a tendency to govern by initiative. We constantly announce new initiatives, approve them in this place, because they are obviously common sense, and rush them in. The Child Support Agency had near unanimous support in the House, as did some of the other developments that have gone so disastrously wrong. Initiatives are rushed in with a chorus of approval and pushed on to Departments by Governments—Governments of both parties, although we are a fairly initiative-prone party. New Labour is more initiative-prone than old Labour and, if the Conservatives ever get back to power, they will probably go in the same direction.

As I tried to intimate in my intervention on my Chairman’s speech, the problem is that civil servants do not stand up to Ministers and say, “This can’t be done with these resources. We need more staff. We can’t do this when the Gershon process is firing and getting rid of the people whose skills we need, whose contacts we have and whose experience we want to mobilise on this project. We can’t do it without our existing computer systems.” I know that there is a problem in the sense that the wool is too easily pulled over the eyes of the civil servants by the salesmen from the super computer companies.

David Taylor rose—

Mr. Mitchell: I am not looking at my hon. Friend with malevolent intent. The big computer and IT companies seem able to sell quite extravagant and unnecessary systems.

David Taylor: My hon. Friend is right to draw out the theme that very senior civil servants do not resist the undeliverable wishes of politicians. That might, apply—poetically—to the National Audit Office itself, which is sucked into the snake-oil attractions of things such as the private finance initiative, and draws its teeth before writing critical reports of projects associated with that initiative. The NAO is not free from blame in that respect, is it?

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Mr. Mitchell: I cannot accept that accusation from my hon. Friend, although I accept most of his accusations against other organisations. We agree fairly substantially about them. In a sense, the NAO was too soft in the early stages about the private finance initiative, but it then gradually began to get tougher as it got to grips with the issue. In demanding that the savings from the selling on of PFI debt be paid back to the public sector, it has shown that it has more teeth and is able to deal with the issue. Perhaps it was a little too welcoming at first, but it now has the situation under control. This is a learning experience for all—for the NAO as well as for us.

I therefore acquit the NAO of my hon. Friend’s accusation. Its reports are very cautious and one has to understand their language and read through them. Sir John Bourn tends to hint at things rather than come out extravagantly and say, “These people are making a terrible mistake. It’s an absolute disaster!” Instead, we have a mild response in the report, but that is inevitable. We are working in that kind of atmosphere, and it is up to us as politicians to put the political punch into it and start laying the blame and throwing the accusations around. It is not up to the NAO. Let us not be critical of it.

I am critical, however, of the unwillingness of civil servants to stand up and say, “This won’t work,” or, “It can only be made to work with a lot more extra spending.” The rural payments were a classic instance of that. Ministers, with support from the farmers, went for the most complicated system. It was a system that nobody else used, and I do not know why we went for it. By that time I had come off the Environment, Food and Rural Affairs Committee, but my hon. Friend the Member for North-West Leicestershire (David Taylor) might be able to tell us the answer. Politicians went for the most complex system, and it was pushed through at a time when the Rural Payments Agency was getting rid of staff who had close contact with the farming industry and knew the people in their area. Those staff were being fired, but subsequently had to be brought back, because the agency could not do the job.

Fortunately, the agency’s head eventually appeared before the Committee and gave quite a good account of himself, although I still think he was wrong. He sent monthly reports to Ministers saying, “We’re on course and things are on line to start the payments.” Then he began to put more weasel words in and said that the agency was not quite ready. Then, finally, the total disaster emerged. However, he did not, at the start, say to Ministers, “We can’t do it with these staffing levels; we can’t do it and get rid of these people; we can’t do it on the basis of the regional structure that we have.” He did not say that, but he should have done. The Chairman of the Committee said that making such comments would have been career-limiting—and so it would. But presiding over disaster is even more career-limiting, and it is necessary to point that out.

I have criticised civil servants by saying that they do not have the commercial skills to negotiate better deals on PFIs, and that is certainly true at local government and hospital level. There is a Treasury team to advise them and put backbone into them, but it cannot do everything and go all over the country.

Mr. Bacon rose—

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