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The Chairman justifiably paid credit to Sir John Bourn and to the devoted work of his staff, which I heartily second, but is there not a case for the Committee
having a small research staff of its own for the immediate preparation of briefings for Committee members before meetings? It is impossible for us to keep up with commercial developments, consultants, companies’ successes and failures and what is happening across Departments.
My hon. Friend the Member for South Norfolk (Mr. Bacon)—I shall call him my hon. Friend for Committee purposes—assiduously keeps up with such matters and must have an enormous machine behind him. I hope that all those people have not been transferred to work for Boris in the cucumber. My hon. Friend’s sources of information are myriad and enthusiastic. He sits there with a pile of information that I do not have, and I try to peer at his notes so that I can ask some telling questions. The rest of us do not have that capability or support—or, indeed, the passionate enthusiasm that he shows. It would benefit our procedures to have a research staff to bring us up to date on the clippings, at least, and on the latest developments, between the publication of the National Audit Office’s report and our examination of it.
I should like briefly to follow the Chairman’s example—this is another example of my growing sycophantic tendencies—by following certain themes. One thing that emerges from the reports is the constant tendency to overreach, or to try to do too much. That is a political problem that comes from Ministers, who are subject to the temptation of promising certain things. They use tripartite phrases, saying that something will not only satisfy world peace and build up British defence, but will do good for Mrs. Bloggs of 13 Columbus way, Grimsby. We try to do too much, and in many cases Ministers try to impose too much on Departments that are not capable of carrying the load.
The RPA has been a disaster. There are now cuts in the British Waterways budget and proposals to sell lock-keepers’ houses as a consequence of the failure of the payments scheme. That disaster and the fines from Europe for being naughty stem from the tendency to overreach. Ministers committed themselves to the most complex payment system available on the ground that it was the best way of proceeding. It was a much more complex system than anyone else used, and the results were disastrous.
The agency simply was not capable of responding, particularly because it was faced with efficiency requirements that led to the redundancies of large numbers of staff. It was firing staff and then was suddenly faced with the need to introduce and implement the most complex system of rural payments of any nation in the European Union. That was barmy, and the agency could not cope. Interestingly, civil servants and the agency tried to cope, and did not effectively warn Ministers that things were not going to happen. Ministers continued to get reports that programmes were rolling ahead and that everything was okay until a week before the payments were due, when they were suddenly faced with disaster. That was partly due to the civil servants being too diffident, but it was largely due to Ministers taking on a commitment and overreaching in the way that I have described. A ministerial head rolled: Lord Bach lost his job, although he was personally told by Tony Blair that that was not because of the disaster with rural payments, which makes me absolutely certain that it was.
That is just one example. We see the same kind of overstretch, and a tendency to try to do too much, in defence. Our major projects report showed that the budgets were being maintained largely because commitments were being shuffled on to other budgets, and therefore effectively concealed. This has led me to believe that we have too many major projects, and that they are too expensive and too technical for the system to bear. Added to all that is the commitment to update our nuclear deterrent, which is a very expensive project that has been heaped on top of other projects. All these projects are overstretching the Department’s resources, and the ability of the taxpayer to finance them. This is incredible.
We do not need the nuclear deterrent. The world has changed, and we are no longer in a cold war. We can never use our nuclear deterrent. Who would we use it on? Would we ever use it without the authorisation of the Americans? It is extremely expensive, yet, because of the system of political overreach, we are now placing an obligation on the Ministry of Defence at a time when it is already stretched because we are fighting two wars, in Iraq and Afghanistan, and putting in more effort than any of our NATO allies except the United States. There is already equipment strain, and problems with coping with those who have been wounded and damaged in the war. This is another example of overstretch that emerged in our report. It is a warning to us as politicians, and certainly to Ministers, to think through the commitments before they are made.
Another example involves efficiency savings. They are now part of the magic of government. There is a pretence that we can go on making efficiency savings of 2, 3, 4 or 5 per cent. every year, but this amounts to a process of continuous anorexia. My own figure does not testify to this, but I understand that anorexia is eventually fatal, which is why I have managed to avoid it through my own personal eating habits. When it comes to efficiency savings in Government Departments, it is also a myth.
Our report on this subject states:
“The Government’s Efficiency Programme is designed to achieve ongoing efficiency gains across the public sector of £21.5 billion”.
Whenever politicians are told that the tax burden is too heavy, they always say, “We’re going to make efficiency savings, and we’ll cut out waste.” But that never happens. Only two thirds of the £21.5 billion target was expected to release resources for other projects. The efficiency savings involved were often mythical. Our report also rightly pointed out:
“There is evidence that some efficiency projects may be having an adverse impact on service quality.”
It gives an example in the Department of Health, where there has clearly been an impact on service quality. The report goes on to state:
“Improvements in efficiency might not be sustainable.”
For example, the Ministry of Defence’s early decommissioning of some of its fast jets gave a one-off financial saving but reduced the capability of the Royal Air Force to deal with certain situations. So I believe that there is a good deal of myth involved in these efficiency savings. A large proportion of them are phoney.
Jobcentre Plus made efficiency savings, but as I pointed out in Committee, they are often made by shifting costs on to the clients, who now have to be dealt with by
telephone. If they do not have a telephone, too bad; they then have to sponge on the citizens advice bureau or my office in Grimsby or a centre for the homeless and use their telephones to get through to fix up an appointment. It has to be done and dealt with by telephone and personal bonding between the Department and the recipient is damaged. That is one example and, as I have pointed out at some length, the Rural Payment Agency provides another.
Another example of overreach applies to consultants. There have been fewer examples this year of overpayments and excessive use of consultants, but whenever a problem arises, there is still a tendency to say “Bring in the consultants”. The assumption is that the civil service cannot deal with the problem, but that consultants have access to some form of higher wisdom; they are the way, the truth and the light, as far as the Government are concerned, so they bring them in at inordinate expense.
What we need is an audit of the efficiency of consultants. Some are bad, some are good, some are brilliant and some are bums. I think the hon. Member for Gainsborough mentioned the role of the Office of Government Commerce. It is not providing effective advice on who to use and it is not auditing performance on a continuous basis so that it can make serious recommendations. It acts as a sort of agency for the employment of consultants rather than providing a critique of their employment.
There are certainly problems with the competence of Departments in some areas. I would cite the issue of Icelandic compensation in the fisheries industry as an example. The Department of Trade and Industry, as it was, did not have enough expertise or knowledge of the industry to provide a foolproof system. Some of the mistakes it made were laughable, and I engaged in a long correspondence over this matter. The DTI seemed to think that the Icelandic limits were 200 terrestrial miles rather than 200 nautical miles, which is much more. Indeed, the area extending to 200 nautical miles included large chunks of Faroese waters, so many people should have had compensation accordingly. Because the Department did not understand, it took ages to convince it that this was the case. It did not know the practice of the industry, decreeing that a 12-week break in service precluded people from compensation.
In Grimsby, when the fisherman who used to fish in Icelandic waters could no longer do so, he was forced to fish in the North sea. That was deemed as being a break in service, although it was part of the structure of the industry and a Government necessity. A ludicrous situation developed: some fishermen got compensation because although they had had a 12-week break, they had served it in prison and had not been paid; while others who had spent that time on the North sea and consequently had been paid were not entitled to the compensation.
Clearly, some Departments make mistakes by not listening enough to the voice of the industry, while other Departments listen too much. I was very worried by the tendency of Her Majesty’s Revenue and Customs to schmooze with the big taxpayers in its dealings with big companies. I find it difficult to believe that these companies, some of which are chiselling crooks like the rest of us, comprise honest and honourable people who always rush to pay their taxes. That attitude—of rushing enthusiastically to pay taxes—is associated with no company that I have ever known on the market, yet that is what HMRC appears to believe. I was a bit concerned
about that, and also by the small number of staff employed to deal with big-company tax evasion and avoidance in comparison with the number employed to deal with social security fraud, who bring home much smaller sums than are available to those dealing with companies properly.
I do not want to go on for much longer, as I have already exceeded my welcome. I sense that from the growing indifference to my jokes as the debate proceeds. However, I want to issue a few more congratulations. We have produced some excellent reports. We have speeded up the dilatory progress of the Thames Gateway scheme, which was plodding along far too slowly.
Andrew Mackinlay: It still is.
Mr. Mitchell: Is it? We suggested that it needed a driving central authority, and our recommendation was accepted. I certainly feared that it was proceeding too slowly, but I think we achieved something.
When we examined the academies programme, despite all the new techniques, solutions and approaches that were supposed to be on offer—after all, the academies had been given 20 million quid of Government money to go away and play with—we found that although there had been an improvement it was no greater than the Hawthorne effect, in which change means improvement, which then fades away.
The Chairman may not know of one brilliant achievement of mine while the Committee was examining the use of Government buildings and space in London, as opposed to the rest of the country. As I passed the Treasury each day and looked down into the basement, I saw endless equipment, particularly coffee-making equipment, but no sign of human life. I took that as an indication that the Treasury was wasting space. However, I did achieve something. The following week when I walked past the Treasury the blinds were down, so I could not see what was going on in the basement. I am sorry to have to produce that as my one success of the whole programme.
It has been a challenging year, and the programme has been very successful. I think that a little self-congratulation is very much in order for the entire Committee, its backing by the National Audit Office, its staff and its members.
3.22 pm
Mr. Richard Bacon (South Norfolk) (Con): It is a great pleasure to follow the hon. Member for Great Grimsby (Mr. Mitchell). He is a colourful member of the Committee, and he certainly enlivens our proceedings. It was also interesting for me personally to hear him confirm what I had long suspected—that he cranes over to look at my notes in order to steal my best questions. I am glad that he has finally “fessed up” to that.
I too pay tribute to Sir John Bourn, the recently retired Comptroller and Auditor General. He has rendered the country an extraordinary service in the way in which he has led the National Audit Office over the past 20 years, and the way in which he has built it up. He has done nothing less than create a world leader among supreme audit institutions. We need only speak to people in those institutions to understand that that is their view of the NAO. Having visited the Bundesrechnungshof in
Germany, the Cour des Comptes in Paris, the Tribunal de Cuentas in Madrid, the Government Accountability Office in Washington and the Kyrgyzstani national audit institution in Bishkek—I will not try to pronounce its name—I can confirm, on the basis of worldwide experience, that the NAO is held in very high regard. I also pay tribute to Sir John Bourn’s successor, Tim Burr, and to the entire staff of the NAO. As our Chairman said, we could not possibly do our work without them.
Before I deal with the reports that are the subject of the motion, let me briefly discuss the terms of the motion itself, which require the debate to be confined to the reports from our Committee—named and numbered on the Order Paper—to which the Treasury has issued a minute in reply. There are good reasons for that, in particular that it ensures that the Treasury Minister—in this case, our distinguished colleague the Exchequer Secretary—can be properly briefed and give informed answers. It might also be argued that it prevents the debate from drifting off in too many different directions—although I think that our friend the hon. Member for Great Grimsby has proved that wrong. However, we are in any case discussing 32 different reports, whose subjects vary from the coal health compensation scheme to the Icelandic trawler compensation scheme; from costs in primary care to use of the Heritage Lottery Fund; and from the recovery of the ill-gotten assets of criminals to the management of sickness absence in the Department for Transport, so the argument that the motion as constructed stops the debate going off in lots of different directions is a non-starter, as that is in the nature of what we do.
The key question for me is whether the terms of the motion restrict the topicality of our debate in a way that is unhelpful to the public interest and to effective scrutiny by Parliament of what the Government do. I think that they do, and although I do not want to make too much of this point, I shall give two brief examples of why that is the case before I move on to discuss the reports listed in the motion.
The national programme for IT in the health service is an ongoing concern of the Public Accounts Committee, the NAO and commentators on health IT. It is the world’s largest health technology programme, and it is not unfair to say that it is in serious trouble. A report will be published on the subject tomorrow. It is a curious fact that in the last of these PAC debates we could, and did, refer to the NHS IT project, whereas we could not do so in the one before that. If your eye, Mr. Deputy Speaker, was sufficiently acute in attending to the 32 reports on our list for today, you will be aware that we cannot refer to it. It seems rather arbitrary that in some debates we can and in some we cannot, when this concern is both long running and ongoing. There have been developments since our last debate. Ministers have made statements about the timetable for the deployment of systems into acute hospital trusts, and there have been problems with slippage on those timetables. It would be appropriate and topical to be able to talk about that, but it is not technically in order to do so.
My second example involves Postcomm and the regulatory framework that Royal Mail works under. We have frequently looked at regulators, including Postcomm; we did so most recently yesterday. This is an important
issue for our constituents. In particular, the maintenance of the universal service obligation, which has been referred to, is a matter of great importance in rural areas such as my constituency, and it has also been a matter of some controversy in the press recently, as Postcomm has commissioned an economic consultancy firm to study the costs underlying the universal service obligation—or, to be accurate, some of those costs, because it failed to include the international component. It would be good to be able to raise this matter, and to hear the Treasury’s thoughts on it. Once again, however, it is outside the terms of the motion. That seems a little odd given that yesterday we could discuss it in Committee, and that this morning the chairman of Postcomm went on Radio 4 and said that a universal service obligation that is viable for the future is most likely to be achieved through a radical transformation of the governance and structure of the Royal Mail, including the introduction of private capital to safeguard the universal service obligation. The best adjective to describe that remark might be “startling”, and it at least seems worthy of debate—and debate now. However, we cannot discuss that.
For future debates, I propose the slight change—I would be interested to know what the Exchequer Secretary thinks of this—that we add that the House takes note not only of the numbered reports and the Treasury minutes, but of “the work of the National Audit Office and of the Public Accounts Committee in general.” This is not an attempt to catch the Treasury out. It will plainly be the case that the Minister who appears before us will want to talk about our most recent reports, and the Treasury employs some very bright civil servants—it attracts some of our brightest university graduates—and I think they are more than capable of briefing Ministers on the work of the NAO and the Committee in general.
I must say to the Exchequer Secretary that we miss her on the Committee. She is still a member of it ex officio, but when she was a full-blown member she was a very incisive questioner, and I have no doubt that were we to have a more wide-ranging debate, technically speaking, she would have no difficulty at all in coping with it, and I doubt whether any of her Treasury colleagues would either.
With those preliminary remarks, may I turn to some of the reports detailed in the motion? The first one that I wish to discuss is “Building for the future: Sustainable construction and refurbishment on the government estate”. The NAO’s trend of increasingly examining real estate issues in Government is a welcome one. We examined the national health service estate a while ago, and we have examined property issues across different Departments. There are huge potential benefits for the Government in managing those estates more efficiently.
I wish to raise one particular recommendation with the Exchequer Secretary. Recommendation 4 states:
“Departments are failing to implement Treasury guidance and assess costs and benefits of sustainable design options”.
What I want to ask her touches not so much on sustainable design options but on the generic question of Treasury guidance. The Treasury issues guidance on a range of subjects, and I am interested in understanding what the Treasury does to ensure that that is followed.
The theme that one finds repeatedly across Departments—we examine £600 billion or £700 billion of income and expenditure across virtually every public
sector activity—is that guidance, advice and clear instruction was given as to what ought to happen, but that it just did not happen. Does the Treasury just rely on the NAO, which, after all, in its earlier incarnation was the Exchequer and Audit Department, to check that its guidance is being followed? Alternatively, do the responsible policy desk officers in the Treasury covering different Departments have an ongoing responsibility to check that what they say should be done is being done. I have had a deep suspicion for a long time that perhaps it is not that, as people often say, the Treasury is too powerful, but that it is not powerful and big enough, and that we need a stronger centre.
The second report that I wish to discuss dealt with maintaining river and coastal flood defences. Recommendation 2 stated:
“There are significant shortcomings in the Agency’s”
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