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However, all our constituents are still waiting to receive the small amount of money left in Farepak after the collapse. I again urge the liquidator to hasten her work to bring a conclusion to this phase of the collapse and to bring closure for those affected. A gap of £29 million that has been lost to the Farepak savers remains. We know how Farepak savers were affected because of the excellent Unison-sponsored report that I helped to launch in the House last November. It found the following: women, particularly those on low incomes, were disproportionately affected by the Farepak collapse; Farepak customers were being ‘prudent savers’, using Farepak as a way of managing their low household
incomes; and the victims of Farepak want justice, demanding adequate compensation for their plight and enhanced regulation, and demanding that those responsible be held accountable for the harms that have been committed.
Shortly after that launch, my hon. Friends the Members for North Ayrshire and Arran (Ms Clark), for Workington (Tony Cunningham), for Livingston (Mr. Devine) and for Bridgend (Mrs. Moon) joined me for a meeting with our right hon. Friend the Prime Minister, who undertook to examine the regulatory framework for the prepayment industry to see whether anything more could be done to give Christmas club savers protection in future. He gave a commitment to come back to us on all the issues we raised on behalf of those affected by Farepak, and we look forward to hearing from him.
Christmas 2007 could have been a tragedy for two other groups of people, because Northern Rock ran into trouble in September last year—we all know the outcome for thousands of investors, savers and employees—and Travelscope, the tourism company, went into administration just before Christmas, affecting 40,000 holidays and putting 250 jobs at risk. The Government have rightly acted swiftly to protect Northern Rock savers and investors. Travelscope customers’ money was already protected by the arrangements in place to cover what happens when airline companies or tour operators go bust. The air travel organiser’s licence model is based on primary bonds provided by banks and insurance companies, backed up by a common fund, the air travel trust fund, managed by the Civil Aviation Authority. All those people were safe, unlike the Farepak savers.
I am proposing that the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 can be the model for regulation of the Christmas club and prepayment sector, and there are people in the sector who welcome that idea. I am happy to report to the House that last week I sponsored a briefing on the Post Office’s new Christmas club. That product is due to come to market in the next couple of weeks. The Christmas club is the Post Office’s response to the challenge laid down by Brian Pomeroy in his report on the Farepak collapse. The report suggested that the Post Office would be the ideal institution to produce a Christmas savings product, owing to the extent of its network and the trust that consumers have for the Post Office brand. Such a product will also give local post offices another product to offer customers, and will hopefully help keep open branches such as Guildford Avenue and Wescott Place in my constituency, which are currently threatened with closure.
Funds in the Post Office scheme will be locked away until 1 November 2008. The Christmas club card could then be used as a prepaid debit card with retailers signed up to the scheme or exchanged for gift vouchers at post office branches. I welcome this innovative product, because unlike hamper companies, the Post Office’s product will be governed by strict e-money regulations. That is because it is based on a pre-paid card system. Money will be held in a protected account under the control of the Bank of Ireland, and the funds will be accessible only to club members.
The Post Office has told me that it would welcome regulation, and that its business model would be viable were this House to legislate in this area. The short-term
steps the Government took to provide protection for customers’ payments have been good, with existing companies putting in place ring-fenced trust accounts supervised by a new trade association—the Christmas Prepayment Association.
The companies in the hamper industry have introduced new safeguards for consumers’ money in the form of independently controlled, ring-fenced trust accounts. The trusts will safeguard customers’ money should a company go bust. Although such measures are welcome, they are only short-term steps, so I welcomed last November’s confirmation from the Department for Business, Enterprise and Regulatory Reform that, for the longer term, the Government have received advice from the Office of Fair Trading and the Financial Services Authority on the regulatory framework. They will consider that further in the light of the Companies Investigation Branch inquiry into the activities that brought about the collapse of Farepak and its parent company, European Home Retail. That is good news, and I hope that the Government will consider giving the green light to this ten-minute Bill.
My intention is that regulation will place future Christmas club savers on a par with savers using other financial products. It will close the loophole that currently exists, and enable Government to look at ways of closing the £29 million gap for the 122,000 people who lost their money with Farepak. It is the only solution, because without regulation we cannot be assured that something this devastating for low-income families determined to keep out of debt will not happen again.
Bill ordered to be brought in by Anne Snelgrove, Chris Bryant, Lorely Burt, Ms Katy Clark, Michael Connarty, Mr. Jim Devine, Mrs. Madeleine Moon, Mr. Lindsay Hoyle, Bob Russell, Martin Salter, Bob Spink and Mr. Mark Todd.
Christmas Savings Schemes (regulation)
Anne Snelgrove accordingly presented a Bill to make provision for the regulation of Christmas savings schemes; and for connected purposes. And the same was read the First time; and ordered to be read a Second time on Friday 25 April, and to be printed [Bill 58].
Appointment of the Comptroller and Auditor General
1.40 pm
The Prime Minister (Mr. Gordon Brown): I beg to move,
That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint Timothy John Burr to the Office of Comptroller and Auditor General.
The National Audit Act 1983 prescribes that the Comptroller and Auditor General should be appointed by the Queen on a motion by the Prime Minister with the agreement of the Chair of the Select Committee on Public Accounts. Such a motion has been used only once, in 1987, when the then Prime Minister, now Lady Thatcher, proposed the appointment of Sir John Bourn. I am sure that the House will join me in expressing appreciation for the achievements of Sir John Bourn over his 20 years in service as he leaves at the end of this month.
I first visited Sir John in the 1980s, more than two decades ago, and have always found him to be courteous in his dealings with Members of Parliament. I thank him for the work that he has done. The House will be aware that the Public Accounts Commission, under my right hon. Friend the Member for Swansea, West (Mr. Williams), is undertaking a review of the governance of the National Audit Office, which supports the Comptroller and Auditor General in his work. The commission has asked John Tiner, the former managing director of the Financial Services Authority, to advise that review.
The position of the CAG was established nearly 150 years ago and it has been some 25 years since the reforms that saw the creation of the NAO, so the Government fully support the review and will allocate space in the forthcoming constitutional reform Bill for any necessary legislation agreed on a cross-party basis. The Government have taken a series of steps to enhance the transparency and accountability to Parliament of public spending, including the introduction of resource accounting and professional financial management in central Government. We will also align budgets, estimates and accounts to a common format to allow expenditure to be better tracked from allocation to spend.
In our “The Governance of Britain” Green Paper we set out proposals for parliamentary scrutiny of certain key positions in which Parliament has a strong interest. I can announce that my right hon. Friend the Minister for the Cabinet Office has today sent to the Liaison Committee a list of public appointments that we propose should be subject to pre-appointment scrutiny by their relevant Select Committee. A copy has been placed in the Library of the House. The list includes the appointment of the future CAGs; the chairs of the Gas and Electricity Markets Authority and the regulators of water, communications, rail and post; chief inspectors; the Information Commissioner; the chair of the Committee on Standards in Public Life and senior ombudsmen. I am also grateful to the Public Administration Committee for its work on the issue, which is timely and relevant. We will welcome the views of the Liaison Committee on the list of proposed appointments. The laws governing certain appointments like that of the CAG will continue to apply.
The motion before the House recommends that Tim Burr be appointed as the new Comptroller and Auditor General with the agreement of the hon. Member for Gainsborough (Mr. Leigh), the Chairman of the Public Accounts Committee. I am grateful for his support.
Mr. Burr has been deputy CAG for nearly eight years, in addition to some seven years’ previous service at the NAO managing the audit of Departments including the Home Office, Inland Revenue and Customs and Excise. That was preceded by a distinguished career in the civil service. I believe that Mr. Burr is eminently qualified to become CAG. Mr. Burr has undertaken to serve the House as CAG until the commission’s new governance arrangements can come into effect. I commend the motion to the House.
1.44 pm
Simon Hughes (North Southwark and Bermondsey) (LD): We are grateful to the Prime Minister for his motion and his words of support. This is an important announcement regarding an important post, and a matter that Parliament has quite properly decided should be taken seriously. That is evidenced by the fact that the motion is in the Prime Minister’s name and that he is here to move it.
I join the Prime Minister in thanking Sir John Bourn for his service. All those who have worked with him have a high regard for what he has done and for his organisation during his period of tenure. I also welcome the Prime Minister’s statement that he will implement the announcement that he made last July about his wish, and that of the Government, for a new process to scrutinise appointments of this nature. If the Liaison Committee and other Committees can act speedily, this appointment will, I hope, be the last when, as a matter of formal record, we are presented with a name but not a full CV—even though we know the details of the career of the proposed new Comptroller and Auditor General—and when no scrutiny of the appointment has taken place. I hope that the Liaison Committee and the Public Accounts Committee will move quickly to implement the new system.
It must be right that senior public servants should be appointed only after Parliament has scrutinised their appropriateness for the post. It is right that when Parliament comes to vote on such motions, it should be assured that the proposal has been scrutinised by Members of the House and that a CV has been presented for consideration.
I want to make two other points about the accountability and openness to which the Prime Minister is committed. The only thing that, unfortunately, marred Sir John Bourn’s career was the subject of expenses. That matter came into the public gaze last year, in particular. He was regarded as having spent more money than was justified in relation to his job. The same issue has surfaced once in relation to the proposed new—
Mr. Deputy Speaker (Sir Michael Lord): Order. I hesitate to interrupt the hon. Gentleman, but I must say to him and to the House that the motion is specifically about the appointment of a particular person. Although I allowed the Prime Minister a certain amount of latitude, this is not an opportunity for a general debate.
Simon Hughes: Of course I accept that, Mr. Deputy Speaker, and I was not proposing that it should be. My point was that I hope that the new appointee’s period of office, which I believe will begin on 1 February, will see an open regime, such as that which the Prime Minister has advocated elsewhere. The expenses of the new CAG and his colleagues should be in the public domain as a matter of course, as they are for all senior public servants. Our expenses are in the public domain, and that is proper and right. I hope that the new regime will ensure that that happens.
We welcome Mr. Burr’s appointment. We wish him well in his very important job. Scrutiny of the public accounts in this country by Parliament is very important and we all recognise that it is done better now than it has been in the past. We need to continue to do it well. We pay tribute to those on the Liaison Committee and the Public Accounts Committee who are part of the process. It is a good example of public service. It is important that Mr. Burr and his team do a good job to ensure that everything we spend is as well spent as possible, in the public interest.
1.48 pm
Mr. Alan Williams (Swansea, West) (Lab): Yesterday, I received the Tiner review of the governance of the CAG and the NAO, which was referred to by the Prime Minister, although I have not yet had a chance to read it. It is now being circulated to the members of the Liaison Committee and the Public Accounts Commission. The commission will consider it at our meeting with Mr. Tiner on 5 February. We are grateful to him for producing that report so early.
On the question of appointments, I thank the Prime Minister and welcome the pleasingly long list of appointments that will be referred to the Committees of this House. I shall have a response from the Liaison Committee within the next week or so, and we welcome what we have heard.
As the Chair of the House of Commons Commission, I very often work with the hon. Member for Gainsborough (Mr. Leigh), who is the Chair of the Public Accounts Committee. He will be involved in the selection and appointment, although the Commission will not.
Mr. Gordon Prentice (Pendle) (Lab): Has my right hon. Friend formed an early view on the suggestion made at the meeting in December by the outgoing CAG, Sir John Bourn, that his replacement should have a limited tenure?
Mr. Williams: That question was covered by the Tiner review. The Chair of the PAC and I believe that there should be a time limit. I have not read the Tiner review yet, but I suspect that the dispute will be more about the length of service than about whether there should be a limit.
David Taylor (North-West Leicestershire) (Lab/Co-op):
My right hon. Friend will recall our recent discussions in this Chamber about the outgoing CAG, but is he aware that the typical tenure for parallel appointments in other countries is five years? It is never
more than 10, and certainly nothing like the 20 years that Sir John has enjoyed—the second longest tenure in the post’s history.
Mr. Williams: Yes, I am aware of the tenure limits elsewhere. In preliminary discussions, the Chair of the PAC and I made it clear that we hoped that a limit would be adopted, and that up to 10 years would be appropriate. I therefore hope that my hon. Friend will be able to contain his impatience in that regard.
Mr. Richard Bacon (South Norfolk) (Con): There is widespread agreement that there should be a time limit, and Sir John Bourn himself thinks so, but does the right hon. Gentleman accept that it should be longer rather than shorter? In the US, the Budget and Accounting Act 1921 sets a term limit of 15 years for the equivalent post there. That may be a little long, but might not a limit of only five or six years be too short?
Mr. Williams: If I give any more commitments to the House, there will not be much point in having the report from John Tiner. I shall stick to what I have said already, which is that the Chair of the PAC and I feel that a limit of up to 10 years should be considered.
As Chair of the Commission, I should like to express the House’s gratitude to Sir John Bourn. We are indebted to him for his 20 years of service. There may be disagreements about some matters, but right at the beginning of his tenure in the post he did something of supreme importance: he made the early and brave decision that the NAO would deliver to the taxpayer £6 in savings for every £1 that the taxpayer gave him to carry out his duties. That was a risky decision, but he achieved the target that he had set. In fact, he increased the ratio to 7:1. At the request of the Commission and the PAC, he then raised it to 8:1, and subsequently to 9:1, which is where it stands today. Under Sir John Bourn, the NAO is producing savings for the taxpayer that are nine times as great as his total annual operational budget. This year alone, the savings are likely to total £667 million, and I am sure that that is delightful news for the Prime Minister. Sir John should feel proud of that achievement, and he deserves the House’s thanks.
Sir John Bourn has also recognised that the House of Commons has a wider responsibility in the world. Like the US, France and other nations, we have experience that is valuable for the emerging democracies. As the Chair of the PAC will no doubt say, our NAO and the system that supports it are greatly admired throughout the world. The NAO has fee-paying contracts with the UN and other international bodies to help emerging democracies establish systems of scrutiny and accountability. Sir John has taken some stick, including some from this side of the House, for the additional work that he has done, but I think that we owe the third world a duty to share our experience. We cannot tell countries what they must do; we can only share our experience, good or bad.
Switching to my role as Chair of the Liaison Committee, I should like to thank Sir John Bourn for a third thing that he has done. One source of grievance between the PAC and the other Committees has always been that the NAO is a PAC asset. The PAC has guarded it jealously over the years but, at the request of the Liaison Committee
and with the approval of myself and the Chairman of the PAC, Sir John has changed the NAO’s role. He has started to give support to the Select Committees in the form of evidence and witnesses and, most importantly, by making available specialist secondees who help with the Committees’ staffing and background work. That is an invaluable role for the NAO, and one that is very welcome. I think that Sir John has every reason to be proud of what he has done for the House of Commons and for Parliament in his 20 years as CAG.
Finally, I welcome the appointment of Tim Burr. He is a delightful and very unassuming man, with integrity and great ability. He will do the job well, and I hope that he finds it a fascinating experience.
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