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“looks inward, not outward, to process rather than outcomes, to hierarchies rather than teams, to rules rather than initiative and to detachment from, rather than engagement in, human interests”.
It is certainly not for the National Audit Office to solve all those problems on its own, or even by working with the Public Accounts Committee. Those problems need to be addressed through a more fundamental change to how government is run.
Mr. Cash: I endorse all the remarks that have been made about Sir John Bourn and the distinguished service that he has provided to the nation. As my hon. Friend is moving on to the subject of the Public Accounts Committee in relation to the NAO, may I reaffirm that it is essential that the chairmanship of the PAC is in the hands of the main Opposition party? That also deals with the question of parliamentary control, to which the Father of the House referred. Above all else, there must be maximum independence in such a vital constitutional area.
Mr. Gauke:
My hon. Friend makes an important and valuable point. I shall shortly turn to the issue of the independence of the CAG. As part of the overall process, the chairmanship of the Public Accounts Committee is
rightly in the hands of a member of the Opposition. I do not believe that there is any desire on any side to change that. I am happy to reaffirm what my hon. Friend said.
The National Audit Office and the CAG can identify the worst examples of lack of economy, inefficiency and ineffectiveness in the public sector. Under Sir John’s leadership, and in partnership with the Public Accounts Committee, they have consistently done so.
One of the reasons why Sir John has been successful is that he has been demonstrably independent of the Executive—a point made by a number of right hon. and hon. Members. He has done that in various ways. He has been straightforward in his reports, and he has not pulled his punches. In November, for example, he released e-mails demonstrating that senior HMRC staff were aware of the full child benefit database being provided to the NAO, and that the debacle could not be blamed entirely on one low-level official. That demonstrated, once again, Sir John’s independence.
There are various matters in respect of independence that need to be raised in the context of the motion. On the first, I hope the House will forgive me for making a controversial point. The economics editor of The Sunday Telegraph, Liam Halligan, wrote at the weekend that it remains his view that Sir John
“has been hounded out of office—after a series of heavily spun leaks against him—by ministers tired of being held to account by Bourn and his auditing team.”
I would be grateful if the Exchequer Secretary could confirm in the course of her remarks that, as far as she is aware, no Government Minister, official or special adviser has briefed against Sir John.
Another issue is the appointments process, which we have been debating for some time. Like my hon. Friend the Member for Gainsborough, the Chairman of the Public Accounts Committee, and the hon. Member for Cannock Chase (Dr. Wright), the Chairman of the Public Administration Committee, I have been reading the Official Report of the last time the matter was debated, in December 1987. As has been said, a number of Labour Members, including their Front Bencher, the Treasurer of Her Majesty's Household, the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), who no doubt follows these matters closely and is present today, suggested at that time that Parliament might have a greater role in the appointments process to ensure independence from the Executive. Indeed, the right hon. Gentleman went on to state:
“The Labour party intends to give effect to this principle when in government”—[ Official Report, 16 December 1987; Vol. 124, c. 1201.]
There has been on the Government’s part no unseemly haste to do so but, as we have heard, John Tiner is reviewing the corporate governance of the NAO and we may soon have proposals on these matters. Indeed, we have heard proposals from the Minister for the Cabinet Office. There seems to be a mood on both sides of the House in favour of greater transparency and parliamentary involvement in public appointments. We await Mr. Tiner’s proposals with interest and look forward to examining the proposals from the Minister for the Cabinet Office. Contrary to what the Prime Minister said, we have just checked with the Library and details are not yet available there.
In fairness, we should acknowledge that under the current arrangements for the appointment of the CAG the Chairman of the PAC has a key role in the appointment, as we heard from my hon. Friend the Member for Gainsborough. No one doubts his independence from the Executive, or generally. The fact that an Opposition Member has an influential role in the appointment is important, as the Father of the House observed, allowing greater parliamentary involvement. We must ensure that the governing party, whichever party it may be, does not have too much control through the use of its Whips. There is clearly a balance to be struck, as the Chairman of the PAC recognised.
Mr. Leigh: That is an important point and it should be underlined. At present there is a complete balance because the Chairman of the PAC is, by definition, from the Opposition and the Prime Minister is, by definition, from the Government. It sounds very democratic—I say this to the Chairman of the Public Administration Committee—to hand the appointment over to a Committee, but under the rules of the House, a Committee would always have a Government majority so it would appoint somebody and that would be approved by the Government. The Government would thus effectively make the appointment, which would be dangerous. The present system, which was created under the 1983 Act, was probably quite a wise compromise.
Mr. Gauke: I am grateful to my hon. Friend. As has been mentioned, the fact that the Chairman of the Public Accounts Committee is an Opposition Member provides a degree of balance within the system. If that role is diminished to any extent, we need to consider the issue of balance.
In the context of the Tiner review, it is entirely understandable that the appointment of Mr. Burr is only temporary. A full explanation has been provided by the Prime Minister. Without any criticism of Mr. Burr—a man of integrity and incisiveness, as we heard from my hon. Friend the Chairman of the PAC—we should acknowledge that short-term appointments can weaken the perception of independence.
When appointees are waiting for a decision from the Executive as to reappointment, there may be a perception that that official is not entirely independent and that he is in some respect beholden to the Executive. In the current economic conditions, the point is particularly relevant to the delayed appointment of the Governor of the Bank of England, but I shall not dwell on that. The point should be taken into account in any appointment process where independence from the Executive is crucial.
Finally, I welcome Mr. Burr to his new role. As we have heard this afternoon, those who know him speak highly of him. He has already given a number of years of distinguished service to the National Audit Office. I know that going from No. 2 to No. 1 in an organisation is not always easy, as the Prime Minister may agree. None the less, we wish Mr. Burr well for the future.
2.28 pm
The Exchequer Secretary to the Treasury (Angela Eagle): I close the debate by echoing from my own experience the tributes that have rung out from all parts of the House this afternoon to the record, experience and public service of Sir John Bourn, who retires at the end of the month.
The most important Select Committee on which I served when I first entered the House, when we were in opposition in the 1992-97 Parliament, was the Public Accounts Committee. At that time, Sir John was relatively new in his period of service, and I found him an extremely courteous and sophisticated Comptroller and Auditor General, who was always willing to listen to questions from new Members and help them with the complexities of holding the Government to account through the work of the PAC and the National Audit Office. If anyone went to him worried about issues in particular Departments, he was always ready with an interested ear and an arched eyebrow, full of good suggestions about how to pursue the matter—indeed, he often allowed the NAO to pursue it, to the benefit of the effectiveness of public expenditure.
I pay my own tribute to Sir John as Comptroller and Auditor General. As has been said, he served for 20 years, and it is not an inconsiderable achievement to establish and maintain an excellent record for leadership when in the public gaze for so long. He steered the NAO into becoming a body that, as many right hon. and hon. Members have said today, is regarded as world class by its profession. It is influential internationally and does an extremely good job in the UK in ensuring that we get best value for money from our public expenditure.
As there has not been a new CAG appointment since 1987, I take this opportunity to emphasise the Government’s regard for the importance of the ability of the CAG and the NAO to secure their professional independence as auditors of the Government and, obviously, of the Government’s accountability to Parliament.
As many Members have mentioned, it is especially important that the CAG be independent. In addition to supporting Parliament in holding the Government to account, the NAO helps to improve government through objective reporting and recommendations for improved management practices. Departments in Whitehall do best by taking a great deal of notice of such recommendations; after NAO reports are published, Departments put a great deal of effort into mending their ways and closing the loopholes that have led to inefficient spending. The NAO also helps citizens by providing greater transparency, bringing their concerns to light and prompting improvements in public services and public service outcomes. All of us in this House have an interest in that.
The NAO’s role and responsibilities have substantially increased since 1988 and they continue to evolve. Since Sir John took up his post in that year, the number of financial reports has remained broadly the same at about 480. However, their scale and complexity have increased through the changeover to accruals-based resource accounting. In 1988, the NAO produced 31 value-for-money reports, seven memos to the Public Accounts Committee and two reports on the accounts. In 2007, it produced 60 value-for-money reports and 25 reports on the accounts. In addition, the NAO now reports on a range of other matters, including annual reports on budget assumptions and impact assessments.
In 1988, the NAO supported 30 meetings of the PAC; sometimes it seems as though that Committee now has more meetings than that in one week. In 2007, that
number had increased to 58, with 61 PAC reports, and the NAO now supports 13 other parliamentary Committees. For me as the Treasury Minister with responsibility for ensuring that we try to increase our productivity as a country, the interesting statistic is that in 1988 the NAO employed 900 staff; by 2007, that number had fallen to 850. We are getting a great deal more effort, work and added value from a slightly reduced staff.
In 1988, 40 contracts had been outsourced; in 2007, that number had increased to 155, which amounts to about 25 per cent. of NAO resources. I have twice been a member of the Public Accounts Committee and my experience is that the NAO benefits greatly from the transfer of information from the private sector and other areas through secondments and outsourcing.
Since 1997, the CAG has reported annually on financial management in the European Union. In recent years, he has also been asked to undertake a range of substantial reviews at the Government’s request, such as a review of the Financial Services Authority in 2007 and a review of Home Office statistics on asylum and migration in 2004. As to the future, the House will know that provisions in the Companies Act 2006 will enable the CAG to become eligible to audit non-departmental public bodies. That is likely to add a further 80 or more bodies to the audit portfolio.
I should reiterate what my right hon. Friend the Prime Minister said: in its July 2007 report, the Public Accounts Commission decided to review the corporate governance of the NAO to ensure that it is in line with best practice. We have heard from my right hon. Friend the Member for Swansea, West (Mr. Williams); he was probably the most long-standing member of the Public Accounts Committee and is chairman of the Public Accounts Commission, as well as being Father of the House—a triple whammy. John Tiner agreed to chair that NAO corporate governance review; my right hon. Friend said that its report has arrived on his desk, but that he has not yet had time to read it. Obviously, the corporate governance of the NAO is of great interest to all of us and we look forward to the Public Accounts Commission report, its response to Mr. Tiner’s suggestions and its suggestions on how to take forward the new management arrangements for the NAO and the office of Comptroller and Auditor General.
As my right hon. Friend the Prime Minister said, the Government have agreed, if necessary, to enact reforms to the governance of the NAO that proceed from the Public Accounts Commission’s decisions. I look forward to receiving the commission’s detailed suggestions in due course.
Finally, I echo the widespread welcome today for Mr. Burr’s appointment. I agree with right hon. and hon. Members from across the House that he is eminently qualified to assume the post of Comptroller and Auditor General. He has made a substantial contribution as Sir John Bourn’s deputy over the past eight years, and I am grateful for his flexibility and understanding in stepping into the role while the Public Accounts Commission continues its work on governance. I note that Mr. Burr has indicated his intention to serve as Comptroller and Auditor General only until the reforms flowing from the process are completed and in place, and I thank him for that. I support the motion.
Mike Penning (Hemel Hempstead) (Con): On a point of order, Mr. Deputy Speaker. While the House has been sitting, tens of thousands of off-duty policemen have been demonstrating on the streets of London. Many are lobbying hon. Members of the House. They are demonstrating because the deal that they had with the Government has been reneged on and their pay agreement has been broken. Has the Home Secretary given any indication to the Speaker’s Office whether she is going to come to the House and explain how the Government got into this mess?
Mr. Deputy Speaker: As I am sure the hon. Gentleman will realise, that is not a matter for the Speaker at this stage.
Orders of the Day
Sale of Student Loans Bill
As amended in the Public Bill Committee, considered.
2.38 pm
Mr. Rob Wilson (Reading, East) (Con): I beg to move amendment No. 5, page 2, line 6, at end insert—
‘(4A) Transfer arrangements may not confer on the purchaser the right to alter the repayment terms of sold debts.’.
Mr. Deputy Speaker (Sir Michael Lord): With this it will be convenient to discuss the following amendments: No. 6, page 2, line 11, at end insert—
‘(6A) Transfer arrangements may not be made with an organisation underwritten by the Government.’.
No. 11, page 2, line 13, at end insert—
‘(8) In advance of entering into transfer arrangements the Secretary of State shall—
(a) examine the prevailing market conditions and ensure that a competitive market for the loans has been generated;
(b) provide the market with full information about the loan book in order that the assets can be efficiently valued;
(c) ensure that there has been a genuine transfer of risk from the public accounts to the private sector; and
(d) assess the proceeds that look likely to be achieved in the transaction, using full and clear market information and a comparison with keeping the loans on the Government books, in terms of both likely income flows and levels of risk.
(9) The Secretary of State shall make a written statement on expenditure incurred in connection with each transfer arrangement.’.
No. 7, clause 5, page 4, line 9, leave out
‘a person acting on behalf of a loan purchaser’
‘the Student Loans Company’.
No. 8, page 4, line 15, leave out ‘another agent’ and insert ‘the Student Loans Company’.
Mr. Wilson: There are still some unresolved issues raised by hon. Members on Second Reading and in Committee that Conservative Members hope to clarify with our amendments. I am sure that the Minister will do his utmost to help the House by providing the clarity that we all seek.
The amendments have three important objectives: first, they would prevent loan purchasers from altering repayment terms; secondly, they would ensure that Ministers achieve value for money in any sale; and finally, they would strengthen the ability of this House to hold Ministers and the Government to account. That is key, because too much of the Bill is to do with the Minister and the Department saying to Parliament, “Trust us.” The Opposition would not be doing our job if we left it at that, so our amendments would add a few checks and balances to the sale of the loan book.
Amendment No. 5 reflects our ongoing concern about a lack of safeguards in the Bill. Clause 1 enables the
Secretary of State to sell to a purchaser his rights and obligations relating to student loans and gives details of the rights and obligations that may be transferred if the Secretary of State so wishes. Throughout the Bill’s passage, concerns have been expressed about the precise nature of the transfer of those competencies and what it will mean in practice. I know that the Minister shares our concerns, and my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) raised his concerns in detail in Committee. Let me make the point clearly: loan purchasers should not be able to alter the terms of repayment. The Minister entirely accepts that; he said himself, on Second Reading,
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