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3.43 pm

Justine Greening (Putney) (Con): It is a pleasure to respond to this debate, which has been fascinating to listen to. Speaking as someone who spent about 14 or 15 years in business and industry before becoming an MP, I know that many of the issues spoken about today make a lot of sense, as I often ran up against them in industry.

The excellent Chairman of the Public Accounts Committee—I shall pay further, more detailed tribute to him shortly—rightly opened the debate by pointing to the considerable changes that have occurred since we debated the previous PAC reports back in May. If we had thought back in May that we would see the current bank rescue plan, hear the word “nationalisation” being used more frequently than it has been for years, and witness the general worsening of our country’s fiscal position—the Governor of the Bank of England delivered a bleak prognosis only this week, and today the Institute for Fiscal Studies has reportedly flagged up a potential £125 billion black hole in the public finances—we would have found it difficult to believe that all that could happen so quickly.

There is no doubt that times are changing, but one of the reassuring facts to which we can cling in these changing times is that not everything changes; some things remain constant. For me, the work of the PAC is one of the reliable constants that we have in public life. There are a number of reasons why the Committee works so well, and I hope to discuss them briefly, but first I want to add to what others have said about some of the issues raised in the reports.

The Committee’s leadership is, of course, critical. There is no doubt that the ethos of the Committee—its tenacity, and its forensic ability to look under the difficult
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stones and rocks presented by the Government—is embodied in my hon. Friend the Member for Gainsborough (Mr. Leigh). He set out very clearly the challenges that the Committee faces in examining so many different topics. As we have seen today, it contains a unique combination of talents: an eclectic mix of members, with a massive variety of not just skills but opinions. I pay tribute to its Chairman for his ability to corral that diversity of talent, skills and opinion into such powerful reports. There is real verve in the Committee’s work and, beneath it all, a clear understanding of what it is there to do—to play a critical role in carrying out its parliamentary scrutiny of the work of Government.

What strikes me when I listen to and participate in debates on the PAC is the breadth of its remit. We need only consider the sheer breadth of the issues covered by the reports, which range from tax credits and PAYE in the eighth report to the 2012 Olympics in London in the 14th report, the single payment scheme in the 29th report, and benefit fraud. People are often asked to engage in a trade-off between quantity and quality, but—as was made clear by my hon. Friend the Member for Tiverton and Honiton (Angela Browning)—although the Committee’s members may have to wade through an awful lot of material, they make no trade-off in favour of either quantity or quality. It produces numerous reports, which are always of extremely high quality.

I was particularly interested to hear the Chairman’s views on financial management, reducing internal costs and understanding risks. I felt that he hit the nail on the head in highlighting those three elements. Without them, it is difficult for any Government of any political persuasion to deliver true value for money, which is, of course, the key focus of the PAC.

As was suggested by my hon. Friend the Member for Tiverton and Honiton, in today’s IT age there should be more scope for understanding of the financial management of Government than ever before. We should have better data and information to enable us to exert control over public expenditure, and over the devising of policy more generally, by means of effective decision making. However, that does not seem to be happening, as has been emphasised in a number of the PAC’s reports. Three examples are the tax credits report, the benefit fraud report and—this was close to my heart because I am a London Member—the 2012 Olympics report.

I was shocked to see in the benefit fraud report that £2 billion of taxpayers’ money has been lost owing to customer and official error, and it is worrying to learn that that has doubled in the last five years. There is no doubt in my mind that the complexity of the benefit system is one of the key reasons why this is able to happen.

On tax credits, we heard that £4.3 billion of taxpayers’ money remains to be recovered. All those who hold their constituency surgeries on a weekly basis, as I do, regularly see people who have been the victims, as it were, of overpayments and who are now having to struggle to pay the money back. The Committee is right to point out that there must be a question mark over how much of that £4.3 billion that has been overpaid will ever actually be recovered.

I was particularly interested in the London 2012 Olympics report, and I was fascinated to learn of the Committee’s concerns about the unrealistic original budgeting for the Olympics. As an accountant, I shared
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those concerns about the robustness of that budget when the Olympics Bill passed through this House. It is one of the reasons why I was one of the few Members who voted to cap the contribution of the London taxpayer to the London Olympics budget; I had a clear sense that an increase in that budget would be required, and that that would swiftly make its way into the taxpaying liability of London taxpayers—and, unfortunately, I can clearly see that happening. I hope that over the coming years the Committee will be able to return to not only difficult issues such as tax credits and benefits fraud but the London Olympics, to continue to watch how taxpayers’ money is being managed and how the Government are delivering value for taxpayers’ money.

My hon. Friend the Member for Gainsborough raised the very pertinent and valid issue of financial skills and awareness among not only civil servants who are responsible for budgets, but those who are non-financially responsible, as it were. With my background as an accountant, I fully understand why being able to manage budgets is important, but it is also vital for the accountability of Government, because when all the political rhetoric of this place is set aside, in my experience all we are often left with is the figures. Therefore, being able to understand what the figures mean is crucial for parliamentary accountability. As my hon. Friend the Member for Henley (John Howell) articulately pointed out, it is essential to have the figures in place against which Government can be held to account on whether they planned ahead or went into the necessary detail. The reports often rightly point out that there was not sufficient planning ahead on key projects or enough detail in implementation plans, and that insufficient project management skills were brought to bear. The result is that we lose taxpayer value for money and gain Government waste.

Another reason why it is vital that all civil servants have an ability to manage finances—after all, they are all ultimately responsible for some form of taxpayers’ money in their activities—is that when people understand how to manage the budgets they are impacting on and responsible for, they have the confidence to be able to take better decisions. The worst situations I have come across in industry have been when I have been confronted with people who were not clear about how to manage their resources, and who therefore would resort to ever more elaborate ways of hiding that fact by generally making their resource management as complex as possible, as once other people understood how they were managing their budgets it became clear that they were not doing so very effectively. Therefore, giving people the toolkit to manage their budgets better means that we are bound to have much better taxpayer value for money.

I also welcome the upcoming national audit reviews of the financial management of each Department, because I have no doubt that the reviews themselves and the reports they generate will be of great value to the Departments and will also provide valuable fodder for careful consideration by the PAC. If government is to be set up for success, it is vital that we have good financial control, clear accountability and good information and transparency across the board. We must confront issues, whether climate change and carbon footprints—that is ultimately about how broadly we examine the carbon impact of different options—immigration and the
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contribution that migration brings to this country, or another diverse topic, calculating our debt. Ultimately, it is critical to understand what are the right figures to examine in any given situation, and that means good training. It is only with good training that we will end up with much better decision making.

I share the frustration of the right hon. Member for Islwyn (Mr. Touhig) about waste. He talked about the very real impact that it has on projects in his constituency, and we can all think of such projects in our own constituencies. I instantly thought of Elliott school, which is desperate for capital spending to make it a school that we can be proud of, and the lifts that we are keen to get at East Putney station to make it accessible to everyone. Such projects bring into sharp focus the cost of waste, which is much more than just a figure—it is money that cannot be spent on the key projects that communities across Britain would like it to be spent on. We all have such projects in our constituencies, and they demonstrate clearly why the work of the PAC is so important.

Comments have been made about responsibility for decisions and waste, which is critical. Running through all the comments has been frustration and the sense that there needs to be more accountability and responsibility for things when they go wrong. Having come into the House from industry, I get worried that it seems that the best way for a civil servant to stop their next promotion is to say no to a Minister and to be the person who tells him or her that things are not going well and that change is needed.

Angela Eagle: I agree with a great deal of what the hon. Lady is saying, but I wanted to pop up while she was talking about promotion and civil servants to point out to her that Ministers have no bearing whatever on who is promoted in the civil service. That is done independently. It actually sometimes gets a bit frustrating for Ministers to see people who are doing a superb job not being promoted as much as we might want. There has always been a strict separation.

Justine Greening: I am very grateful for that extremely helpful intervention. It brings me to the point that I was trying to make, which is that a lot of risk management goes on in government, but sometimes it is—dare I say?—too focused on short-term political risk rather than the longer-term delivery risk of particular projects.

My hon. Friends the Members for South Norfolk (Mr. Bacon), for Henley and for Tiverton and Honiton made clear points about the issues that the Public Accounts Committee has highlighted, especially those to do with IT projects. I know that the hon. Member for Great Grimsby (Mr. Mitchell) shares our real frustration with a whole range of projects, but he said that we are all socialists now. Although I have said that I am concerned that things are not looking good in our country at the moment, I do not think that they are quite that bad. I share much of his frustration, but that was definitely one comment with which I could not agree.

I found the comments of the hon. Member for Southport (Dr. Pugh) extremely interesting. He was the one Member who talked particularly about property management.
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That topic perhaps does not get as much attention as it ought to, and I was extremely pleased to see the PAC examine it. As the Member whose constituency contains the site of the old Putney hospital, which has been derelict for 10 years, I have found it amazing that property management across government sometimes happens at a pace that seems glacial compared with what would happen outside this place. The Committee’s report on that matter was quite important in generating a debate not just inside but outside the House.

I shall wrap up by again congratulating the PAC and its Clerks. It plays a crucial role in our parliamentary democracy and in ensuring that the Government and Ministers are accountable. As I said, its spirit is embodied in the articulate, forensic and tenacious approach of its Chairman, my hon. Friend the Member for Gainsborough, who opened today’s debate. I wish the Committee well in the many challenging reports that I am sure it will produce over the next few months, and I look forward to our next chance to debate the results of those reports in this Chamber.

4 pm

The Exchequer Secretary to the Treasury (Angela Eagle): It is a great pleasure to have the opportunity to respond, once more, to our debate on the Public Accounts Committee’s reports—this is the third time that I have done so. Today’s debate has demonstrated not only the wide-ranging nature of the PAC’s work, but the fascinating insight that it gives its members into the way in which government works. I speak as a three-times member of the Committee; I was a member when I was in opposition and when I was on the Back Benches in government after having been a Minister, and I am now a member, although in the slightly more formal sense of being the Treasury team’s representative on the Committee.

I have always been a great advocate of the Committee’s worth; it proves its worth every time it sits. That tradition has been carried on under its current Chairman in the usual fine way, and I too congratulate him on the work that he does. The Committee builds on a great, long and proud tradition of ensuring that public moneys, which are voted by Parliament, are properly accounted for in respect of value for money and ensuring that the appropriate lessons can be learned when reports are produced.

In these difficult and turbulent times, thinking about what the Committee does might not be to the fore. People might call its work accountability and they might dismiss it as housekeeping, but it is even more important in difficult and turbulent times; a recurring theme of today’s speeches has been that public expenditure and getting value for every pound spent becomes even more important. I know that members of the Committee are driven by a strong desire to secure high quality public services and value for the money spent, and I share that desire.

Working in the Treasury recently has obviously been challenging, but I suspect that the same could be said in respect of every finance ministry in the world, as we have been struggling to deal with the turbulence and the unique set of circumstances endangering the global financial system. Some of us have only read about such times in history books; actually experiencing them is a different thing. In this storm, the Government’s priority is financial stability, as my right hon. Friend the Chancellor
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of the Exchequer has repeatedly made clear in statements to the House. We are determined to do whatever it takes to secure that stability, and we have already put in place a comprehensive package of measures to support the financial system and to protect ordinary savers and businesses, who rely on a strong banking system in order for the economy to work. We maintain a careful watching brief.

As a number of reports this week from the CBI, the National Institute of Economic and Social Research and the Governor of the Bank of England have made clear, we are in very difficult and challenging times. The economy is dealing with the biggest shock to the system for generations, and the Government will continue to act to ensure that we get through these challenges in the fairest way possible. I assure all hon. Members that we will continue to pay extremely close attention to the work of the PAC, even in times when the attention of the media and others who follow our debates is torn to other areas.

The Government take the recommendations of the Committee very seriously and have a good record in implementing the vast majority of them. This year in response to the Committee’s requests, Departments will report progress on all their outstanding agreed recommendations in their autumn performance reports, which I think will be an extremely good discipline on them. It may focus a few minds and ensure that things that may have slipped off the radar suddenly re-emerge so that that they can receive the focus that they deserve.

I want to respond to some of the issues raised by right hon. and hon. Members. The Chairman of the Committee, the hon. Member for Gainsborough (Mr. Leigh)—whom we all love and who has had a lot of praise today—had a little dig at the Treasury with respect to the efficiency of the use of the Government’s property and pointed out, helpfully I thought, that the Treasury sat at the bottom of the list. We have taken action to mitigate that and have continued to increase our building occupancy since 2005-06, increasing our net internal area figure—the hon. Gentleman will know what that is —for 1 Horse Guards road, our main building, from 21.9 sq m per full-time equivalent person to 16.62 sq m, which I think is significant progress.

We continue also to look for new tenants to take up the vacant space but I hope that the hon. Gentleman will recognise that the fact that the Treasury’s main building has some constraints upon it because of its listed status, the wide range and sweep of some of the stairwells and the width of some of the corridors make it difficult to use absolutely every square inch in the efficient way in which some newer buildings might be utilised. However, I assure him that we continue to try to make progress on that, and we have made some.

The Committee Chairman said that there was a narrowed ideological gap between all parties. I do not know whether that means that we are all socialists. The hon. Member for Putney (Justine Greening) was denying that earlier. I have an inkling that the ideological gap has widened in the last few months and we are no longer talking about how to manage a system established post-Thatcher and Reagan, but are looking to see how the pieces will reorder themselves after the shocks that we have had. This is only a personal opinion; ideological gaps might be widening rather than narrowing, but I am sure time will tell.

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My right hon. Friend the Member for Islwyn (Mr. Touhig) expressed great frustration, which everybody shares, at the opportunity cost of money that is wasted and what could have been done with it if it had been used more effectively and efficiently. That is right at the heart of the work that the Committee does and my right hon. Friend represented the zeal with which those of us who have been privileged enough to sit on the PAC during the course of our parliamentary careers—at whatever stage that might be—can identify and feel. Committee members in the debate today have managed to get across that motivation. I share his ambition to reduce the “blood sport” nature of the Committee’s hearings, even though Ministers do not appear before it, a fact that has been commented on today. If the hearings are less like a blood sport, it will improve the efficiency and value for money of Government expenditure. I therefore share my right hon. Friend’s ambition to try to make them a kinder experience.

The hon. Member for Southport (Dr. Pugh) made some interesting points, ranging from money laundering in foreign dependencies to the review of neonatal care, which was similar to the work that the Committee did last year on social care—taking a more thematic approach to areas that do not always get considered. He also talked about the report on leaving the services, which was raised by other hon. Members. He set out a forward agenda, and was possibly making a bid that the Chairman will doubtless consider and will make a few civil servants shake in their boots, as he suggested consideration of the remuneration of senior civil servants. Far be it from me to comment on that, because the Chairman will obviously decide how he wants to take forward the work of the Committee in conjunction with his colleagues.

As usual, the hon. Member for South Norfolk (Mr. Bacon) walked in with a huge box full of all of the reports that we are discussing. I have a list of them on a large piece of paper, but he has a box of them, which sums up the way in which he approaches his work on the Committee. He is on top of all the detail of its scrutiny. He asked why EDS has not paid HMRC’s compensation. There was a PAC hearing on 8 October at which the subject came up —[ Interruption. ] Ah, the hon. Gentleman was in Turkey so he missed the vital information that would have answered his question. The acting chief executive officer of HMRC said that it was in delicate negotiations on that very subject. The time by which HMRC expects to be paid runs out in the next couple of months and the acting CEO made it clear that he intends to be paid, but asked for the Committee’s forbearance while the discussions concluded. The Chairman said that that was reassuring. I am sure that the hon. Member for South Norfolk will pursue the issue the next chance he gets, if he is not in Turkey—

Mr. Bacon: May I just point out that I was not on a beach: I was speaking at a symposium on the changing role of Parliament and the budget process.

Angela Eagle: That is entirely typical of the hon. Gentleman’s commitment to his duties and how seriously he takes the whole issue of financial control and probity.

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