Select Committee on Treasury Third Report


4  Working practices

Follow-up activities

38. In following-up a committee report, the publication of a Government response marks the beginning of a process, and not the end. We have accorded a high priority to such follow-up work. At our first meeting, we agreed that the Chairman would maintain a correspondence with various organisations about progress in implementing recommendations in Reports of the previous Parliament. Our commitment to sustained follow-up has borne fruit in a number of ways.

39. In a Report on Restoring confidence in long-term savings in July 2004, the then Treasury Committee noted the absence of a proper dialogue between the financial services industry, consumers and other interested parties, and recommended the creation of a forum including representatives from industry, the public sector and consumer groups.[71] The Chairman of this Committee subsequently brokered discussions which led to the establishment of the Retail Financial Services Group, initially chaired by Mr Richard Lambert.[72] We heard evidence from the Group as part of our work examining the FSA, and members of the Group from industry and consumer groups described the value of its work.[73]

40. In December 2003, the then Treasury Committee published a Report on Transparency of credit card charges which sought to galvanise the credit card industry to speed up the introduction of a "Summary Box"—a clear presentation of the key elements of a credit card offer in a standard tabular form—and outlined measures to promote responsible lending.[74] In February 2005, the then Committee published a follow-up Report, which identified improvements which still needed to be made to Summary Boxes and called for the Government and industry to work together to improve the sharing of historic credit data between lenders.[75] Correspondence in the present Parliament between the Chairman of this Committee and banks and other credit card providers indicates that continued progress has been made on the quality of Summary Boxes, but that steps towards comprehensive data-sharing have been faltering. This is a matter to which we may return as a Committee in 2007.

41. In March 2005, the then Treasury Committee published a Report on Cash Machine Charges. While recognising that cash machines that charged consumers were a legitimate business model, the Committee expressed concern about the public policy implications if such machines were to displace free cash machines. The Report identified action to be taken by Government, but also noted that progress in ensuring that charging cash machines did not lead to financial exclusion depended upon the attitudes of banks, the Post Office and local site owners.[76] Following the publication of the Government response in July 2005, which supported the principle that "people should be able to obtain their cash free of charge",[77] the Chairman corresponded with the banks and others about their own response to the Report. On 16 February 2006, in a debate on the Report on Cash Machine Charges in Westminster Hall, the Chairman outlined not only the key elements of the then Committee's initial Report, but also the findings of his subsequent work. He called for a systematic analysis of the geographical location of free cash machines to discover which low-income areas lacked access and called for the banks to expand provision of free cash machines into any under-served low-income areas identified by the research.[78] In the course of his response, the then Economic Secretary to the Treasury offered to organise a meeting between members of the Committee, key representatives of the banks, independent cash machine operators, consumer groups and members of the Government's Financial Inclusion Taskforce.[79] This meeting took place on 4 May 2006, at which the then Economic Secretary agreed with major banks, consumer groups and charging cash machine operators on a proposal by the Chairman of this Committee that a working group be established to gather evidence and report back before Christmas.

42. The ATM working group which was chaired by the Chairman of this Committee reported in December 2006. It examined evidence about access to cash machines and issues relating to the transparency of charges and set out a systematic analysis of low-income areas that currently lacked access to free cash machines. The group facilitated commitments by a number of banks, building societies and independent operators, as well as the Post Office, to install over 600 new non-charging cash machines to expand provision into the areas identified in the research. The group also recommended the introduction of a "financial inclusion premium" to provide an incentive to extend access to free cash machines in low income areas and identified the need for a joined-up policy for planning permission for cash machines.[80] The working group's report was followed immediately by joint action between the Chairman of this Committee and the Economic Secretary to the Treasury, Mr Ed Balls MP, to promote implementation of the group's recommendations, including a joint letter to local authorities about planning issues.[81] The events which followed the publication of the then Treasury Committee's Report on Cash Machine Charges, including the recent success of the ATM working group in securing a commitment to the introduction of over 600 new non-charging cash machines, demonstrate the value of active commitment to follow-up activities by a Committee and its Chairman. These events also demonstrate that debates on select committee reports in Westminster Hall can play a vital role in pressing for action following the Government response to a Report and that ministerial engagement can play a crucial role in delivering action following a Committee Report. We commend the work of all involved.

Other new approaches

43. The Treasury Committee is unusual among departmental select committees in that a considerable proportion of our work—around 20 of the 45 meetings of the main Committee in Session 2005-06—is devoted to recurring activities, such as inquiries into the Budget and Pre-Budget Report, hearings on the MPC's Inflation Reports and hearings with new appointees to the MPC. This level of effectively pre-determined commitment, when combined with a wider range of more discretionary activities, requires a very considerable time commitment by members of the Committee and by its staff and others. On several occasions we held three meetings in the course a week, including a meeting of the Sub-Committee. In July 2006, we agreed on an experimental basis to set limits on the number of meetings of the Committee and the Sub-Committee, and, in particular, to avoid three meetings a week except when absolutely necessary. In setting the limits, including those for the Sub-Committee, we sought to ensure that our commitment to scrutiny of annual reporting documents was in no way diminished.[82] It is too early to draw conclusions about the effectiveness of our approach, but the introduction of limits has encouraged us to think more carefully about forward planning and ensuring the effective use of available meetings.

44. There were two other innovations in the Committee's working practices in 2005 and 2006 to note:

  • on Tuesday 15 November 2005, we held a private seminar on globalisation with outside experts, which greatly assisted in determining our approach to the subject, leading directly to the decision to hold two separate inquiries, one focused on the role of the IMF and the other focused on the impact of globalisation on the real economy;
  • on 7 June 2006, we took evidence from Dr Ivan Fellegi, Chief Statistician of Canada, by videolink, enabling us to learn directly about the experience of an independent national statistics office in another country while incurring minimal public expense.

Staffing and wider support

45. The current staff of the Committee are listed at the front of this Report. The staff of the Committee and the Sub-Committee in the course of Session 2005-06 are listed in the Sessional Return.[83] We are grateful to all those who served on the Committee staff in the course of the period. We also benefited from significant support from the Scrutiny Unit of the House of Commons, most notably for the Sub-Committee's examination of annual reporting documents, for the Sub-Committee's inquiry on Independence for statistics and for the Committee's inquiry into the scope of FSA insurance regulation. We sought to strengthen our relations with the National Audit Office, and expect to comment further on the value of support and assistance from the National Audit Office in the equivalent Report in 2007. We welcomed the appointment of an additional Media Adviser in the Committee Office, enabling our new media officer to devote more time to support for the Treasury Committee than was previously possible.

Relations with HM Treasury and other public bodies

GENERAL

46. Our relations with HM Treasury have generally been cordial and positive. The Chancellor of the Exchequer agreed to give oral evidence within days of the Committee's establishment and has given oral evidence on four subsequent occasions. Subject to diary issues, we have not generally faced difficulties in arranging evidence sessions with Treasury witnesses or with witnesses from HM Revenue & Customs and other associated public bodies. There are four matters, however, which we wish to mention alongside our this generally positive assessment of our relations with the Treasury.

47. First, like our predecessors,[84] we continue to believe that our work and that of Parliament more generally would be facilitated by more extended notice of the dates of Budgets and of Pre-Budget Reports. In our recent Report on the 2006 Pre-Budget Report we argue that the effectiveness of the Pre-Budget Report as an instrument of fiscal consultation would be enhanced if Parliament and the public were given greater notice of the date of the Pre-Budget Report. We re-state our earlier recommendation that the Treasury announce the date of the Pre-Budget Report at least four weeks before the statement is due to be made and, in any case where the target is not met, give an account of the reasons.[85]

48. Second, on occasions the Treasury has been dilatory in the provision of written evidence following up oral evidence sessions. One such example came during our inquiry into the 2006 Budget. We made a number of requests for further information in the course of oral evidence sessions with Treasury officials and with the Chancellor of the Exchequer. The Treasury is familiar with the timetable for our consideration of Reports on the Budget, because we had made clear months earlier our intention to maintain the practice of publishing our Reports on Budgets prior to the Second Reading of the Finance Bill.[86] Despite this, the supplementary written evidence we requested was not received until after our Report had been agreed. We are now publishing this supplementary material as Appendix 2 to this Report. We do not consider that the information that was provided was of such complexity as to warrant the delay in supplying it. Similarly, information requested from HM Revenue & Customs relating to the inquiry into the administration of tax credits was not received before the inquiry was complete, leading us to draw the attention of the House to "the regrettable lack of priority which has been assigned to requests from this Committee for information central to our inquiry".[87]

49. Third, in October 2005, in the course of the Sub-Committee's scrutiny of HM Revenue & Customs' annual reporting documents, we requested that HM Revenue & Customs provide us with information about the legal basis on which it recovered supposed tax credits overpayments, in cases where HM Revenue & Customs considered that a tax credit had been overpaid, but the claimant disputed that appraisal.[88] The Paymaster General, Dawn Primarolo MP, refused the Sub-Committee's request on the basis that HM Revenue & Customs officials, "as holders of the information", had advised her that they could not agree to the Sub-Committee's request. In other words, the Government responded to the Sub-Committee's request as if it were a request made under the Freedom of Information Act 2001. We drew this matter to the attention of the Liaison Committee, noting that the Government's approach failed to acknowledge that committees derive their powers to request information from the House's own inherent powers, not from the statutory authority of the Freedom of Information Act. There may well be circumstances in which Ministers can and should provide information to select committees which they are not prepared to release under the Freedom of Information Act, a possibility to which the Paymaster General's letter did not refer.

GOVERNMENT REPLIES

50. The fourth matter relates to the timing and quality of Government responses to our Reports. The timing of Government replies has been a concern of the Treasury Committee in successive Parliaments. In 2000, the then Treasury Committee observed that "a disappointingly large number of replies have arrived outside the two-month deadline [for Government responses] (even allowing for the understanding that if the deadline falls in a recess the reply should be received by the time the House next sits)".[89] In 2002, our immediate predecessors considered that the position might have worsened.[90] In the current Parliament, a number of replies have been significantly delayed without any explanation for the delay being forthcoming from Ministers. The most notable delay was over the response to our Report on the administration of tax credits: the Report was published on 6 June 2006; the response was not received until 8 November. We note that the then Leader of the House of Commons said the following to the Liaison Committee about the timing of Government replies in December 2005:

The Guidance on Departmental Evidence and Response to Select Committees (July 2005) … makes clear that there are circumstances in which it may not be possible or appropriate to reply within two months, but that in such cases the committee should be kept informed.[91]

The Treasury has not complied with this Guidance. We expect to receive Government responses to our Reports within two months of publication or, where that deadline would fall when the House of Commons is not sitting, before the House returns. In any case where the Treasury considers that there are sound reasons why this timetable cannot be adhered to, we expect to receive a letter from a Treasury Minister setting out those reasons.

51. We are also concerned about the quality of some replies. We were particularly disappointed with the Government's response to our Report on the administration of tax credits. In addressing our recommendations, the response was too inclined to re-state points that Government witnesses had previously made in evidence and which we had already taken into account in framing our recommendations, rather than tackling the substance of our recommendations.[92]

52. We have seen signs that weaker elements of a Government response might be related to inadequate attention within the Treasury to certain of our recommendations. In our Report on the 2006 Budget, we recommended that future Budgets and Pre-Budget Reports provide information on reported efficiency savings according to each Government-wide theme or "work stream" identified in the Gershon review on efficiency which was published in July 2004.[93] The Government response made no reference to that recommendation, which was not implemented in the 2006 Pre-Budget Report published on 6 December 2006. However, the following day, part of the information we sought was given by the Chief Secretary to the Treasury, the Rt Hon Stephen Timms MP, during Treasury questions.[94] The following week, we sought the full information during oral evidence from Treasury officials, who were unable to supply it even though our interest in obtaining such information had been registered as long ago as April 2006.[95]

53. Similarly, in our Report on the 2006 Budget we recommended that the Treasury analyse the characteristics and income distribution of households facing marginal tax rates in the region of 60% to 70% and the extent to which those marginal tax rates were discouraging people from entering the workforce, from working longer hours or from acquiring additional skills. We further recommended that the Treasury publish the findings of such analysis at the time of the 2006 Pre-Budget Report.[96] The Government response did not address our specific recommendation, and no such analysis was provided in the 2006 Pre-Budget Report. When we asked Treasury officials about this recommendation, they were unable to point to any specific analysis carried out in response to our recommendation.[97]

54. We have no wish to encourage the Government to reject any of our recommendations. However, where the Government does not propose to act on a specific recommendation, it should be willing to say so, giving reasons, and not simply to ignore the recommendation. Furthermore, when Treasury Ministers and officials give oral evidence, we consider it reasonable to expect them to be familiar with previous Committee recommendations, and any relevant Government action or inaction in response, in the policy fields for which they are responsible.

LOOKING TO THE FUTURE

55. Although this Report makes observations designed to strengthen working relations between the Committee and the Treasury, we do not require a formal written response from the Government. Rather, we expect the Treasury to take our observations seriously and to take steps to further enhance its responsiveness to careful parliamentary scrutiny in future. In this way, and through our own endeavours, we look forward to further strengthening our work in 2007 and beyond.


71   HC (2003-04) 71-I, para 115 Back

72   HC (2005-06) 1594-i & ii and HC (2006-07) 191, Ev 57-63 Back

73   HC (2005-06) 1594-i & ii, Qq 1-27 Back

74   HC (2003-04) 125-I Back

75   Treasury Committee, Second Report of Session 2004-05, Credit card charges and marketing, HC 274 Back

76   Treasury Committee, Fifth Report of Session 2004-05, Cash Machines Charges, HC 191 Back

77   Treasury Committee, First Special Report of Session 2005-06, Cash Machine Charges: Government Response to the Committee's Fifth Report of Session 2004-05, HC 359 Back

78   HC Deb, 16 February 2006, cols 517-527WH Back

79   Ibid, col 549WH Back

80   ATM working group, Cash machines - meeting consumer needs, December 2005 Back

81   HM Treasury, 'Over 600 new free cash machines in low income areas', Press Notice 108/06, 13 December 2006 Back

82   See decisions of the Committee of 18 July and 23 November in formal minutes available at http://www.parliament.uk/parliamentary_committees/treasury_committee/tcfmsession0506.cfm Back

83   HC (2006-07) 19 Back

84   HC (2004-05) 335, para 13 Back

85   HC (2006-07) 115, para 96 Back

86   HC (2005-06) 739 Back

87   HC (2005-06) 811-I, para 196 Back

88   Treasury Sub-Committee, Oral and Written Evidence, HM Revenue & Customs Departmental Report 2005, HC (2005-06) 524-i-ii, Ev 40 Back

89   HC (2000-01) 41, para 25 Back

90   HC (2001-02) 590, Appendix S, para 9 Back

91   Liaison Committee, First Report of Session 2005-06, Government Reply to the Annual Report for 2004, HC 855, p 10 Back

92   Treasury Committee, First Special Report of Session 2006-07, The administration of tax credits: Government Response to the Committee's Sixth Report of Session 2005-06, HC 49 Back

93   HC (2005-06) 994-I, para 76 Back

94   HC Deb, 7 December 2006, col 435 Back

95   See HC (2006-07) 115, paragraph 44 for further information on this matter. Back

96   HC (2005-06) 994-I, para 85 Back

97   See HC (2006-07) 115, paragraphs 73-74 for further information in this matter. Back


 
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Prepared 26 January 2007