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Let me deal finally with the appointment of Mr. Amyas Morse. We have heard from the Chairman of the Public Accounts Committee and the Prime Minister
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what a distinguished career Mr. Morse has had, at PricewaterhouseCoopers and, more recently, at the Ministry of Defence. I know from speaking to my hon. Friend the Chairman how deeply impressed he was by Mr. Morse, and I know that this view was shared by the rest of the panel. Indeed, I think that Mr. Morse impressed the Public Accounts Committee as a whole when giving his evidence to it in February. I have also spoken to others who know Mr. Morse, all of whom speak very highly of him. He has an important task, and we are confident that he will perform his role with great distinction. On behalf of the official Opposition, I wish him well.

1.40 pm

Mr. Alan Williams (Swansea, West) (Lab): In my role as Chair of the Public Accounts Commission, may I endorse completely everything that has been said about Mr. Morse’s suitability for this job? There was an extremely good shortlist, and he was undoubtedly the best candidate. It is not surprising that it was a good list, because this is one of the most important public sector roles. Parliament would be impotent to carry out its financial scrutiny of the Government if it did not have an effective National Audit Office headed by a clearly independent and strong-minded Comptroller and Auditor General. Without the Comptroller and Auditor General, we would be incapable of monitoring the hundreds of billions of pounds of expenditure and income. He does not simply audit; he checks for value for money, probity and accuracy.

I should like to put a different hat on to describe another role of the Comptroller and Auditor General. In my role as Chair of the Liaison Committee, I have been very grateful to the previous Comptrollers and Auditors General, Sir John Bourn and Tim Burr, for all the work they have done with the Committees outside the Public Accounts Committee. For many years, the other Committees have justifiably been envious of the incredible support that the PAC receives from the National Audit Office. Sir John must be given credit for his decision to start using the NAO’s expertise to support the other Select Committees, through the use of secondees and briefings. At the post-appointment hearing, I spoke to Sir Andrew Likierman, the new chair of the NAO, which is a new post. I was particularly delighted when he and Mr. Morse reiterated their commitment to expand the role of supporting the Select Committees. That can only be good news for the Committees.

I, too, would like to thank Tim Burr. He stood in at a difficult time, and he indicated that he had no intention of applying for the post himself. I know that the Chair of the PAC will agree that he has done an excellent job in running the National Audit Office. More than that, however, he has started to implement the restructuring of the NAO and to adapt it to the best modern standards of corporate government, as recommended by the Tiner report. We owe him a lot for that.

I first started to serve on the PAC in 1990, when I left the Front Bench. At that stage, the NAO was saving the taxpayer five times its annual running costs. That gradually increased, under pressure from the Commission and the Committee, to seven, eight and then nine times the running costs. Tim Burr gave us a pleasant surprise at the last meeting of the Commission, when he told us that the NAO is now recovering 10 times its cost to the taxpayer. That works out at more than £1 billion every 18 months, which is a remarkable achievement. Tim has
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done a great job. He has been a pleasure to work with, and I wish him well in whatever he decides to do in the future.

1.44 pm

Mr. Jeremy Browne (Taunton) (LD): It is indicative of the significance of the position of Comptroller and Auditor General that the Prime Minister himself moved the motion on the appointment of Mr. Morse. I congratulate the Prime Minister on the nerveless performance that he gave a few minutes ago.

The post of Comptroller and Auditor General is a highly significant one, particularly at this time, when the Government have a public sector deficit of £175 billion this year, falling to £173 billion next year—according to their projections. The deficit represents more than 10 per cent. of gross domestic product, so it is essential that we achieve value for money in public spending. That is clearly a task that Mr. Morse is well equipped to contribute to.

A number of concerns have been expressed, not about Mr. Morse’s individual qualifications and suitability but about the role more generally. There is a potential for conflict between the positions of the chairman, Sir Andrew Likierman, and of Mr. Morse. I am talking not about them as individuals but about the two roles, which have the potential to overlap. There are issues about the usefulness of the hearing processes, when they do not contribute directly to a recommendation or otherwise on the suitability of an applicant. There is also an issue about the balance between finding value for money and the financial audit work undertaken by the NAO. Mr. Morse will of course have some significant issues in his in-tray, not least the vexed question of whether private finance initiatives will contribute to the overall public debt of the country.

Mr. Richard Bacon (South Norfolk) (Con): If the hon. Gentleman had taken the trouble to read the PAC report, he would have seen that the hearing process contributed directly to the satisfaction expressed by the Committee that Mr. Morse was a suitable person to appoint.

Mr. Browne: I am grateful to the hon. Gentleman for that contribution. Perhaps I did not word my comment as neatly as I might have done, but my understanding is that the Committee was not able to ratify the appointment, and that it was able only to guide it. That might be suitable, however; perhaps everyone on the Committee feels that that level of authority is appropriate.

Mr. Leigh: This is a very important point. The reason we did it this way is that the Committee, like every other Committee in the House, has a Labour majority. If it had seconded the motion of the Prime Minister, we would have had a Labour Prime Minister proposing the new Comptroller and Auditor General and a Labour-dominated Committee seconding his appointment. The whole point, as I outlined earlier, is that both the Opposition and the Government have a lock on this process.

Mr. Browne: I am delighted that Mr. Morse’s appointment finds favour with all parts of the House. His appointment is certainly supported by my party. I
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have not, to my recollection, ever met him, but his CV is certainly impressive and hours of hearings have been undertaken to gauge his suitability. I can only conclude that he must indeed be a person who can undertake this onerous task in a distinguished manner.

I shall conclude with a quote from the Committee’s report—which I have indeed read—that makes this point forcefully. It states:

On that basis, I hope that the appointment will find favour among all Members.

1.48 pm

Mr. Richard Bacon (South Norfolk) (Con): I am pleased to take part in the debate to confirm the appointment of Mr. Morse as Comptroller and Auditor General. Having seen him in the hearing, I have no doubt at all about his suitability. His experience of running a large international accountancy practice, PricewaterhouseCoopers, combined with his experience as commercial director of the Ministry of Defence, renders him highly suitable for this very difficult job.

In appointing Mr. Morse as Comptroller and Auditor General, the Government are going to have to fix several things. It is a pleasure to see a number of former members of the Public Accounts Committee now sitting on the Treasury Bench and taking part in the debate. I saw the hon. Member for Hemsworth (Jon Trickett) earlier. When he was a member of the Committee, I always used to feel that he and I were hunting together as a pack when we were probing the civil servants before us. Unfortunately, he is now engaged on other responsibilities—bunker maintenance might be the best description for them. There are others sitting on the Treasury Bench who have had recent PAC experience. I enjoyed their incisive contributions through the years when they were members.

There are aspects of the Comptroller and Auditor General’s access to the information he needs that will have to be fixed. The National Audit Act 1983 states that the Comptroller and Auditor General should have complete discretion in the exercise of his functions. One might assume that this is completely true, but in fact it is not true at all, as there are three obvious exceptions.

The first is the Financial Services Authority, to which the Comptroller and Auditor General does not have access. That means that he cannot carry out an audit of the effectiveness, efficiency and economy of the FSA in the way he can with, say, the Ministry of Defence or the Department of Health. I personally believe that that has had significant consequences—for example, in respect of Northern Rock. When it got into huge difficulties, it was discovered to be subject to a regulatory system under which the different players did not know what they were doing. It became very obvious in the autumn of 2007, as seen in the National Audit Office report based on evidence from the Comptroller Auditor General,
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that the three parts of the regulatory system did not know what the others were doing. That was the result of a lack of scrutiny of the FSA. The Comptroller and Auditor General would have carried it out, I believe, if he had had the right of access to do so—but he did not, so when it was done, it was done by the Treasury.

I am afraid that only once over a period of seven or eight years did the Treasury ask the NAO to look at the activities of the FSA. In that regard, it failed in its functions. I do not blame the Exchequer Secretary, who was a very incisive member of our Committee when she was on it. Functionally, however, the Treasury has failed, and Sir Nicholas Macpherson has more or less admitted that point and agreed to go back and look over the matter.


Mr. Deputy Speaker (Sir Michael Lord): Order. I think the hon. Gentleman is ranging rather wide of the measure before the House, which is specifically about an appointment.

Mr. Bacon: Indeed, Mr. Deputy Speaker, so I shall try to confine my remarks to the appointment of the Comptroller and Auditor General. In talking about that appointment, I hope it is in order to discuss the functions of the Comptroller and Auditor General once he is appointed and whether or not he is able to exercise them.

Mr. Deputy Speaker: Perhaps—narrowly and briefly.

Mr. Bacon: I will be very narrow and very brief, Mr. Deputy Speaker.

My second point concerns the BBC, to which the Comptroller and Auditor General does not have access either. That has an impact on the effectiveness, efficiency and economy of the BBC and on the extent to which it is scrutinised. When Dame Ellen MacArthur sailed around the world, 64 television producers turned up in Falmouth to cover it. I am not sure that that would have happened if they had known that they were going to be subject to public audit in the way that most Government Departments are. That has nothing to do with editorial control.

The third point, and it is the most serious of all, concerns this House. I hope that you will agree, Mr. Deputy Speaker, that it is directly relevant to this debate. What better time to appoint the nation’s chief auditor than after what has happened over the last couple of weeks? I can think of no more important appointment for us to make. According to statute, the Comptroller and Auditor General has all the authority over the National Audit Office. As the Government well know, that is why we are soon going to see changes. As I say, the Comptroller and Auditor General has all the authority under statute and the NAO is organised under his control into value-for-money divisions and financial audit divisions.

Mr. Leigh: Will my hon. Friend allow me?

Mr. Bacon: I would rather keep going, if I may, as Mr. Deputy Speaker has asked me to be brief.

As it is organised, the Defence, Health or Transport audit will have two sub-branches: financial and value for money. Within the NAO, there is also a section called “Justice and Parliament”—and I had always
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assumed that the Justice and Parliament section could audit the House of Commons administration in exactly the same way as the Health audit section can audit the Department of Health or as the Culture, Media and Sport section or the Transport section can audit those Government Departments. It turns out, however, not to be the case.

I discussed this issue with an assistant Comptroller and Auditor General last week. Previously, I had always thought that the auditors could go in and examine the House of Commons administration and do all the audit they needed to perform to satisfy themselves in exactly the same way as for Departments. It turns out, however, that for all these years, all they have been able to do is to compare the claims made by Members with the amounts paid and check that the two are the same—that is all they can do. When I asked one of the assistant auditors general why it was not possible to do more, the reply was, “That is all we could get.”

I hope that you will agree, Mr. Deputy Speaker, that what I am saying now is directly relevant to this debate and to the appointment of the Comptroller and Auditor General. The truth is that that is not good enough. It is not the fault of the Comptroller and Auditor General that it is not good enough, as it is the responsibility of the Government and this House. When the Government fix the problem, they have to ensure that the new Comptroller and Auditor General we are appointing—I think he is the right person for the job—has all the access he needs to do the job properly.

1.55 pm

The Exchequer Secretary to the Treasury (Angela Eagle): It is a great pleasure to conclude the debate. I echo the tributes of my right hon. Friend the Prime Minister and of right hon. and hon. Members on all sides of the House to the outgoing Comptroller and Auditor General, Tim Burr. He has been a public servant for more than 40 years, beginning his career in the Treasury. In particular, he was the Treasury Officer of Accounts between 1993 and 1994 before moving to the National Audit Office to become a member of its management board. In 2000, he became deputy Comptroller and Auditor General, before assuming the office of Comptroller and Auditor General, on an interim basis, on 1 February last year. I am glad that all Members—and particularly my right hon. Friend the Member for Swansea, West (Mr. Williams), who although not the current Chairman is the most experienced member of the Public Accounts Committee and provided great service in that role over many years—have paid full tribute to Mr. Burr. The Government were grateful that Mr. Burr agreed to take on the role of Comptroller and Auditor General on a temporary basis. We know that he has fulfilled that role with integrity and been a steadying hand on the tiller.

The hon. Member for Taunton (Mr. Browne) suggested that there might be some disagreement over the roles of the Chairman of the National Audit Office and the Comptroller and Auditor General. Actually, all parties are agreed on what we have done in making this appointment today, and the approach was agreed by the National Audit Office.

Mr. Leigh rose—

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Angela Eagle: I gladly give way to the hon. Gentleman, who has been very much involved in this matter.

Mr. Leigh: This is a very important point, which was carefully considered by the both the Commission and the Committee. There will be no disagreement because Sir Andrew Likierman will concern himself only with the corporate governance of the NAO. The CAG will have the absolute, independent, full and individual right to propose what he studies and to issue his results to the PAC. The PAC will never consider policy in itself, but only its effectiveness. I have chaired more than 450 meetings of the PAC, at which we have never had even one vote. Contrary to what was said earlier, the system does work and does provide independence for the CAG.

Angela Eagle: I am a former member of the Public Accounts Committee and I have had the privilege of occasionally sitting in on some hearings—not all 450—from the Government side. I can certainly confirm that when I was a fully fledged and regularly attending member under the chairmanship of the hon. Gentleman, we did not have any votes. I believe that the PAC continues to do a vital job, so I welcome the hon. Gentleman’s clarification in response to some of the doubts expressed by the hon. Member for Taunton.

The Government are committed to bringing forward legislation to implement the recommendations of the Public Accounts Commission on NAO corporate governance and will do so as soon as the legislative timetable allows.

I want to welcome the appointment of Mr. Morse as Comptroller and Auditor General. As the Prime Minister said, Mr. Morse has had a distinguished career in the private sector and is currently the Ministry of Defence’s commercial director. His appointment brings a number of “firsts”. He will be the first Comptroller and Auditor General to have private sector experience, which will prove invaluable to the National Audit Office. He will be the first chartered accountant, the first to be appointed through open competition and the first to be subject to a pre-appointment hearing. He is also the first to agree to be appointed for a limited term.

Mrs. Jacqui Lait (Beckenham) (Con): I have been listening with great attention to the Minister’s speech. She endorsed the recommendation, with which I agreed, that the new Comptroller and Auditor General should be both a chartered accountant and from private practice. Given that audit background in private practice, will the Government accept any of the Comptroller and Auditor General’s recommendations? I am thinking of, for instance, the recommendation presented jointly by the Audit Commission and the National Audit Office that the private finance initiative should go on the Government’s balance sheet.

Angela Eagle: That is a rather wider question than the question of the appointment hearing, but, as the hon. Lady knows, changes to accounting mechanisms are being considered by the professional bodies that have a bearing on this matter. I look forward to discussing it with her during one of our regular Public Accounts Committee debates, when she may wish to make her points again.

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I suggest that Members read the transcript of Mr. Morse’s pre-appointment hearing before the Public Accounts Committee. It provides an insight into his background and knowledge, as well as how he will work with the new non-executive chairman, Sir Andrew Likierman.

A substantial amount of work will be involved in bringing the corporate governance of the National Audit Office into the 21st century, and, as we have already heard today, similar work is being done in parallel in other institutions. I am sure that Mr. Morse is relishing the opportunity to lead the National Audit Office through the next decade of change. The NAO and the PAC do a vital job in securing value for money for every penny of public expenditure and explaining to us what we can do in the event of failure. I know that Mr. Morse will be ably supported by Sir Andrew Likierman, and I commend the motion to the House.

Question put and agreed to.


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