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There is more we could go through were we allowed more time. What I have read out is by no means a definitive list. For instance, our 14th and 20th reports-on Chinook and on the major projects report-suggest
plenty of scope for further improvement in the MOD. There are plenty of other areas on which I have not touched.
My quick calculations show more than £9 billion of potential savings waiting to be grasped by the Treasury. That may not have been scrutinised rigorously, line by line, in the Committee, but it indicates clear potential. On this the PAC and the Treasury are on the same side. The Treasury knows that there is great potential to make savings from better administration. Indeed, it has previously set targets to save tens of billions of pounds, not least in the operational efficiency programme, but potential and targets amount to naught without action that realises them, and in many cases the action needed is nothing more radical than effective administration-simply getting the basics right, every time in every Department. I do not claim that that is an original thought, but that does nothing to diminish the value behind the thought.
The Committee's 17th report found another area where getting the basics right would reap rewards. We found that central Government Departments spent a huge amount-more than £12 billion in 2007-08 alone-buying in services such as IT and facilities management. If we buy a service in business, or in real life, we look out for every single pound because we know the other guy is doing just that, but cosy relationships and a lack of control prevail. After analysing those huge contracts, the National Audit Office advised the Committee that about £300 million could be saved each year. It is high time that Departments subjected suppliers to the public sector to the same pressures that those suppliers face in business. No taxpayer's pound should be an easy pound of profit, but too often it is.
In order to show how that can be done, let me give an example that was presented to the Committee. In 2003, the Committee investigated how the Prison Service bought goods and services. To be honest, we were not very impressed, but the Prison Service dealt with our report with sound common sense. It paused, acknowledged the situation, took expert guidance and set about putting things right. The Committee returned to the Prison Service in our sixth report, and we found that changes to its procurement approach had saved £120 million over five years. That is a great achievement, and I am very pleased to give the Prison Service the credit it deserves today. I would say this to officials: "Don't be shy. When you save money, change a process or control a system and find efficiencies, shout about it."
We had the Foreign Office in front of us yesterday; the permanent under-secretary Sir Peter Ricketts appeared before us. It had one of the poorest financial management systems, but it has achieved a great deal. The Treasury must ensure that such good practice is spread around Whitehall. Departmental counterparts must be told how they can achieve it too, to help make it common practice, not best practice. There are too many examples of best practice in Whitehall, in the sense that often what we suggest in a report might be acted on by the Department concerned but other Departments do not take up the recommendations.
We have the bundle of reports on the Table before us, and I do not want to go through all of them, because I have taken up enough time. [Interruption.] No, no; it would take too long, and other Members wish to speak. Let me offer a couple of examples, however.
I am proud of what we have done in trying to shine a light on some of what I call the Cinderella areas in the NHS-those areas of medicine that were not given the priority that perhaps cancer or heart services were given. The Committee has achieved a great deal in bringing to light deficiencies in how we deal with stroke patients and hospital-acquired infections, for example, and we produced a very good report on end-of-life care. The fact is that most people would prefer not to die in hospital, but because of a lack of NHS and social care support services many people do so when there is no clinical need for them to be there. There is a lack of training in basic end-of-life care among front-line staff. The Department acknowledged in its reply that such care has not always had the priority it should have had and recognised the need to improve the provision of care for adults. I hope that we can make progress on that, therefore.
Let me turn to the Commonwealth Development Corporation-I am chopping and changing from one issue to another, as we deal with every part of Whitehall. The level and nature of CDC executive remuneration is relevant to its efficiency. The remuneration of the chief executive-of what is, after all, a public body-increased from £383,000 in 2003 to £970,000 in 2007. We were not very impressed. Admittedly, that huge increase in his public sector salary, now amounting to the best part of £1 million a year, reflected CDC's exceptional financial performance, and advisers concluded that CDC executives were paid below the median for such a group. That is fair enough in that they could probably earn even more in the private sector. However, CDC does not compete for cash to invest, offers high job satisfaction and has since 2004 successfully recruited and retained talented staff, so why are we paying so much to the chief executive?
On Her Majesty's Revenue and Customs, tax credits and income tax, it is true that policy changes have helped HMRC to reduce recoverable overpayments from about £1.9 billion to £1 billion annually, but it has not given claimants the support that they need in making claims and reporting changes in circumstances, and it is planning to introduce new measures again. HMRC estimates that in 2006-07 claimant error and fraud led to incorrect payments of between £1.31 billion and £1.54 billion. That shows the amount of work that has to be done. We should also remember that these are only a few examples taken from across Whitehall.
The Ministry of Defence's ability to sustain its nuclear deterrent in the future is dependent on the collaboration of the United States. We found that the new class of submarine is likely to remain in service beyond the extended life of the existing Trident D5 missile, which will be renewed in 2042, and must therefore be compatible with any successor missile developed by the US. The MOD has received a series of assurances from the US that any new missile will be compatible with the UK's new submarine class, but assurances are not enough. Nevertheless, the concern remains that the MOD has no direct control over the development of new missiles.
The Chinook Mk 3 helicopter project has been a catalogue of errors from the very start. We reported on it several times. The original contract is ill defined, preventing easy access to software source coding that was key to enabling certification of airworthiness. Further operational requirements and difficult commercial negotiations led to a protracted five-year negotiation
period and slow decision making under a contract known as "fix to field". We have reported on that many times, and we hope things are finally coming right.
I shall offer one final further example, taken from the bundle of documents on the Table, to show what we are trying to achieve. Last but not least, I turn to the national programme for IT in the NHS. We could have a debate on that alone. The Care Records Service is at least four years behind schedule, with the Department's latest forecast putting completion at 2014-15. By the end of 2008, Lorenzo, the care records software for the north, midlands and east had not been deployed throughout any acute trust and in only one PCT. Given that we are now talking of spending £12 billion, that is not good enough.
Mr. Richard Bacon (South Norfolk) (Con): In the light of what my hon. Friend has just said about the national programme for IT, does he agree that the Treasury minute answering conclusion 6, which basically says that the Department remains confident in the potential of both Cerner's Millennium and Isoft's Lorenzo to work effectively, is remarkably optimistic?
Mr. Leigh: We have found that the Department has been consistently optimistic. We wish it well, of course, but given the sums involved-£12 billion-this is very worrying.
I will not list any more examples. Within the terms of the debate, other Members may refer to more of them if they wish to do so. We might get one more chance before the end of this Parliament to have a debate, but we do not know. Therefore, may I just thank a few people? I thank my colleagues in the Chamber, and those who currently serve on the Committee or have done so over the past eight years. They have to dedicate a great deal of time. The Committee meets twice as often as any other Committee and has a huge amount of paperwork. I also thank the Committee staff, particularly our former Committee Clerk, Mark Etherton, who has just left the role. I welcome our new Clerk, Sîan Woodward, who I am sure will be a huge asset to the Committee.
I cannot talk about the PAC's work without acknowledging the National Audit Office. It has a new head, Amyas Morse, whom the Prime Minister and I appointed last year. Mr. Morse is the first qualified chartered accountant to become the Comptroller and Auditor General. He continues to provide the PAC with excellent evidence, on which our work depends. He takes over the NAO's reins with relish, succeeding Tim Burr, who I also thank. I know that the organisation will go from strength to strength under Mr. Morse's leadership. I welcome the publication of those parts of the Constitutional Reform and Governance Bill that will place important changes to the NAO's governance on a permanent footing. We have modernised the whole organisation and it has a proper board of management, so I hope we can now move forward.
Finally, surely it is high time that the benefits of public scrutiny to which I have referred can be applied to other areas. I shall end on this point, because it is perhaps the most important. The NAO is denied regular access to three hugely important and publicly funded bodies: the Bank of England, the BBC and the Financial Services Authority. I welcome the Culture Secretary's recent statement:
"It is time for the BBC to allow the National Audit Office access to its accounts."
I agree with that, although it is not before time. The BBC spends billions of pounds of public money and it should be fully accountable to Parliament-there is no threat to its editorial independence. The CAG should have statutory financial and value-for-money access to examine how the BBC spends public money. That should prevent a recurrence of the difficulties that he met in his study on the BBC's radio production efficiency when, disgracefully, the BBC tried to limit his remit-that must never happen again. Given the Government's vital interest-and now investment-in the financial sector, it would also make sense for the CAG to audit the FSA and the Bank of England. The Bank is spending billions of pounds of public money, so it should be properly audited through Parliament and be accountable through Parliament and the Public Accounts Committee.
Now is not the time for us to address this-we will start by dealing with the Bank, the FSA and the BBC-but in the next year, in the next Parliament, it will be time to renew the civil list, for which more money will doubtless be asked. That will be a good opportunity for the civil list also to be subject to the scrutiny of the PAC, the NAO and Parliament. That is for a future Parliament to decide. We can make progress now on the BBC, the FSA and the Bank. I hear very encouraging noises from the Treasury on that, so I very much hope that the Exchequer Secretary to the Treasury will in her summing up be able to give more encouragement than we have had in the past.
Beyond this House, the coming months will prove rocky for many of our constituents; there will be tough decisions for individuals and for the country at large. I urge those from this House who make such decisions to keep in mind the work of the PAC, and to remember-I say this to the Treasury-that we are a friend not a foe. We seek to ask the questions our hard-pressed constituents would ask, and our interest is in striving for better results for the taxpayer. If we make a few witnesses squirm, it is because every pound that our constituents give matters. It is a pound less for their businesses or their families in hard times; their contributions should be spent with respect. That is the common purpose of our Committee, and I commend the motion to the House.
2.23 pm
Mr. Colin Breed (South-East Cornwall) (LD): It would be very difficult for the Chair of the Public Accounts Committee, the hon. Member for Gainsborough (Mr. Leigh), to thank himself, so may I thank him on behalf of all of us? We are deeply appreciative of the work that he has done in the eight years-he will be there a few more months yet-on the Committee. He has raised its profile considerably in the public mind, used the media properly, exposed things that should have had light shone upon them and given good advice-I am surprised that it is only £4 billion that he has saved. His overview, which is contained in his letter-I fortunately received a copy of it-is an excellent summary and the starting point from which any future Committee should look deeply.
As the hon. Gentleman says, the Committee is not about just saving money, although that is extremely important; its work often has other, almost better, implications. In this regard, I can think of two of the things that he mentioned in passing, the first of which is secure car parks. Anyone who has had their car broken into or damaged in a car park will use their insurance, but they will encounter the hassle, work, inconvenience and so on that persists from that. It is unquantifiable financially but has a huge effect on people's lives. If we can save money and avoid that, it must be good for everyone.
My second example relates to flooding. I do not know the number of Members whose constituencies contain areas prone to flooding, although the figure is probably more than we realise; the number of such areas has been increasing in recent times. My constituency has suffered major flooding near the coast. Insurance is becoming more difficult to obtain, and the sheer heartache, stress and so on that is visited upon people when they have been flooded is enormous. Again, that is financially unquantifiable, but we must begin to understand that not only is saving money a good thing in its own right, but that doing things better can have even more profound outcomes. I congratulate the hon. Gentleman, his Committee and the National Audit Commission on the work that they have done. They have had some notable successes and I am sure that there will be many to come.
I am a member of the Treasury Committee. I suppose that everybody thinks that their own Committee is the most hard-working, the most valuable, the best organised and so on, but when I knew that I was going to be responding in this debate, I looked at the work of the Public Accounts Committee and was astounded at the amount that it has got through-the reports that it has produced and work that it has done. Although members of the Treasury Committee may feel that we do a lot of work, we have to acknowledge that the work done by the PAC is impressive.
I, too, wish to refer to just three of four reports that have been important to me, as well as to my constituents and others. The first such report, to which reference has been made, is the one on the Ministry of Defence and the Chinook Mk 3. Although my constituency is that of South-East Cornwall, it is close to Devonport dockyard and the Royal Marines, and many of my constituents have direct relationships with our troops. Within that community, and slightly wider than that, the saga of the Chinook Mk 3-those eight years of incompetence and bad decision-making, let alone the enormous cost and so on-has gone down extremely badly. At a time when we have seen inefficiencies and the lack of some equipment, the thought that millions of pounds have been wasted on machines that will not even get into the air for years and the basic mismanagement that that has brought out has left a sour taste in a number of people's mouths. The Ministry of Defence appears to have frittered away, through bad decisions, millions and millions of pounds, yet it seems to be penny pinching on some of the vital equipment that our troops need when they go into theatre.
Clearly, many lessons can be learned across the board about the way in which contracts are negotiated, if we cannot get that sort of agreement with our so-called allies-with the people who are supposedly helping us
in these situations. I am at a loss to understand how we have got to a situation in which we cannot sort out the software source coding with a great deal more alacrity.
The next report-the 11th report, on the UK's future nuclear deterrent-follows on from that. Devonport dockyard is the home of Trident when it is being refitted. It has been an enormous boost to the local economy and significant numbers of my constituents work there. The beginning of the debate on Trident has been watched with great interest and this report is a good start to what ought to be a full debate on the costs of the defence side as well as on all other aspects relating to this major policy area.
Mr. Greg Hands (Hammersmith and Fulham) (Con): Will the hon. Gentleman remind us what the Liberal Democrat policy is on Trident?
Mr. Breed: We are not in favour of renewing it, but the decision does not need to be taken now. We have at least another four years before we have to make the final decisions. In those four years, all sorts of things could happen, such as proliferation in states such as Iran, a greater sorting-out of the technology and a better understanding of the alternatives and their costs. I do not think that the debate has reached a point where anybody can make a final decision. There is an objection to Trident in general and to its amazing costs-indeed, my hon. Friend the Member for Twickenham (Dr. Cable) has put it down as one of the big-ticket items that has to be considered given the financial state of the country.
We need to develop a clearer picture of what is happening in the proliferation states and those that possess, or seek to possess, nuclear weapons. We need to try to reinvigorate the process of multilateral disarmament, but we will have to make a decision soon-in the next two, three or four years. The report offers an excellent opportunity to go over many of the aspects of it.
Finally in the section that we might call "defence" comes the 20th report on the major projects-the 20 biggest MOD projects that have suffered an increase in costs of some £205 million and delays totalling some eight years. By any measure, that is very significant. We all know that defence projects tend to go over budget and to take longer-we have discussed how that happens in defence debates-but at a time when we are looking for significant savings over all aspects of Government expenditure, perhaps we need to redesign how the procurement process is undertaken. The report makes some useful comments and suggestions about how that might be done.
Mr. John Horam (Orpington) (Con): The hon. Gentleman is discussing a very interesting point about procurement, and I take his point, but is he aware that one of the recent problems with MOD procurement has been the so-called smart procurement system that was introduced about eight years ago? It has, perhaps unintentionally, had the effect of penalising small suppliers and small companies in the defence field. It causes great problems for small companies, which can often do things much more cheaply, effectively and swiftly than some of the giants. Is the hon. Gentleman aware of that problem?
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