Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Sharp of Guildford: I rise briefly to give our support to this amendment, which links up very much with the amendment we have just been discussing. Indeed, the two might well have been taken together because one leads on to the other. The issue is one of the accountability of the executive to Parliament and the spending of money that Parliament votes. This is why these non-departmental public bodies should be subject to scrutiny. There are differences between the standards of scrutiny required for public sector—as distinct from private sector—organisations. This is the case for the first amendment we debated, Amendment No. 16. This amendment is concerned with the whole issue of access and it is because, on quite a number of occasions, the National Audit Office has rights of access but they have to be negotiated independently.

Each act creates a separate arrangement for audit. For example, the National Audit Office had to spend five years negotiating the required access for the Housing Corporation, four years with Camelot. It has been having a lot of difficulty with the private train operators. All this takes time and money resources out

12 Jun 2000 : Column CWH41

of the public sector. It seems absurd that there is no consistency of standards here. For that reason we very much support the amendment.

6.45 p.m.

Lord McIntosh of Haringey: This is an extraordinary amendment which seeks to replace the current access clause in the Bill. However, it will increase very considerably the statutory right of access by the Comptroller and Auditor General, and I wonder whether the implications of the amendment have been thought through. The amendment would allow the Comptroller and Auditor General to follow public money through a chain of grants, even where the final recipient was very remote from government, and have access to anyone who was allowed to keep money that would otherwise go to the Government. Therefore, it would allow the Comptroller and Auditor General to follow public money wherever it went. On the face of it, that may sound a desirable objective but let us see how it would work.

The new clause would give the Comptroller and Auditor General the same right of access to the records of a body receiving public money as is available to the body paying over the money. Therefore, where the Department of the Environment, Transport and the Regions pays grant to the Housing Corporation, which passes it on to social landlords, which may in turn pass it on to construction firms, which may in turn pay sub-contractors, the Comptroller and Auditor General will have access to all of those bodies simply for the purpose of auditing the DETR. Even the department does not have such sweeping powers of access. The new clause allows him access to the books and records of private sector firms, on the same basis as the Inland Revenue, to investigate whether tax credits have been properly calculated. That simply doubles the scrutiny process. The Inland Revenue already operates a pretty tough regime of oversight in these areas.

The new clause also provides the Comptroller and Auditor General with statutory access to the accounting records of all public service contractors. Government guidance is already perfectly clear on the need for government contracts to allow the Comptroller and Auditor General access to the books and records of contractors for the audit of the department concerned. The Comptroller and Auditor General has reported on a large number of contracting out situations, including the Inland Revenue contract with EDS and the contracted-out Wolds remand prison. As for PFI contracts, separate Treasury guidance makes it absolutely clear that access should be routinely included in those contracts.

There are other problems. The clause would impose a potential regulatory burden on all the firms concerned. The British Chambers of Commerce and the Federation of Small Businesses have said that to enhance the Comptroller and Auditor General's access in the manner proposed will increase the burden of red tape on small and medium-sized enterprises. To give him a statutory right of access when such a right is not necessary in practice may well deter suppliers from

12 Jun 2000 : Column CWH42

competing for government contracts, thereby pushing up costs. It could lead to excessive scrutiny, particularly in relation to regulatory functions which Parliament has asked other bodies to undertake, such as the Housing Corporation in respect of social landlords or the rail regulators in respect of the train operating companies. If we agreed to this amendment I do not believe that we would ever get it passed my noble friend Lord Haskins and the Better Regulation Task Force.

The burden on employers and contractors to the Government would be absolutely extraordinary. This is a classic case where it is not a matter for the Bill but the Sharman review. All of the agenda for modernising government has important implications for audit. We can and will consider the possibility of extending the Comptroller and Auditor General's access by administrative means where it can be shown to be necessary to provide effective audit and where it will help to promote well thought through innovation and risk-taking. However, we need to look at matters in the round, and that was why we appointed the Sharman committee in the first place.

I do not believe that outside the Committee the Conservative Party and Liberal Democrat Party would be pleased to see an amendment of this kind included in their election manifestos; nor do I believe that it would be welcomed by those in the business community who deal with government.

Lord Higgins: I listened carefully to the Minister. In short, he seems to be saying that this amendment is not well targeted. Obviously we need to consider the points he made, which we will do between now and Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

[Amendment No. 19 not moved.]

Clause 9 [Preparation]:

Lord McIntosh of Haringey moved Amendment No 20:

    Page 5, line 31, leave out subsection (3) and insert—

("(3) The accounts shall contain such information in such form as the Treasury think fit.
(4) In determining the form and content of the accounts the Treasury shall aim to ensure that the accounts—
(a) present a true and fair view, and
(b) conform to generally accepted accounting practice subject to such adaptations as are necessary in the context.").

The noble Lord said: This amendment would require the whole of government accounts to present a full, "true and fair view". We are bringing forward this amendment in order to bring the requirements for the whole of government accounts into line with those for resource accounts. An amendment requiring resource accounts to present a true and fair view was made at Report stage in the other place. The Companies Act requires that the profit and loss account and the balance sheet present a true and fair view. We go further and extend it to the whole of government

12 Jun 2000 : Column CWH43

accounts. It is an overriding requirement in company legislation and we are content for it to apply to the accounts which we produce. I beg to move.

Lord Higgins: We shall come to the whole of government accounts in a moment. I do not wish to comment further on what the Minister said.

On Question, amendment agreed to.

On Question, Whether Clause 9, as amended, shall stand part of the Bill?

Lord Higgins: We come to Clause 9 of the Bill, which is concerned with whole of government accounts. This clause raises some important issues and one understands why it is being moved. One great advantage of what the Government are now proposing—I have already indicated that we support generally the move towards resource accounting—is that, in addition to the equivalent of a profit and loss account, it includes the provisions for balance sheets. As I understand it, that is not only the balance sheets of individual departments but also, under this clause, a balance sheet for the whole of government accounts. That is a major change; it raises extremely complex and difficult issues. Nonetheless, it is an objective that we on this side of the Committee feel should be pursued.

It has long been the case that the traditional objectives of government economic policy are to achieve a high level of employment, low inflation, equilibrium in the balance of payments and so forth. It has always seemed strange that, while in the private sector we have a profit and loss and a balance sheet, as well as a cash flow statement, we do not have a government balance sheet. Crucially, that enables one to get some sense of what is happening across the generations. One has only to look at such preliminary estimates—we have made some progress over the past 10 or 15 years as to what a national or government balance sheet will look like—to realise the importance of this point.

It ought perhaps to be an explicit objective of government policy to have some view as to whether the balance sheet should go up or down in relation to what is happening to the general level of economic activity. It has certainly been the case that in the past the value on the balance sheet has been run down or increased beyond what is justified by the normal dynamics of the economy. As a result, people in particular generations, leaving aside the problem of dividing up generations, have gained or lost. If we can make some progress in this area, and it would need to extend beyond Government balance sheets towards balance sheets for the economy as a whole, then a declaration by the Government that they would not penalise the present generation at the expense of future generations—or the other way about—is certainly very important indeed. Of course, in this context that is the most relevant issue as far as pensions are concerned.

We are in a situation where, as far as company pensions are concerned, despite what the Government did on ACT, I believe the value of our company

12 Jun 2000 : Column CWH44

pensions—I declare an interest here since I am chairman of one—is equal to that in the rest of Europe, with nasty implications for the future of interest rates and the single currency argument and so on, which I do not propose to go into now. If we have a serious set of figures as far as balance sheets are concerned, then we can make considerable progress.

As regards pensions, I remarked on Second Reading that we had a splendid document which showed the Government's assets but did not indicate the extent of government liabilities.

I do not know whether the Minister could tell us to what extent, for example, given my other responsibilities, the Department of Social Security is likely to produce a balance sheet showing how it is likely to change over time. Certainly that would be something of considerable importance.

The Committee has been sitting for some while now. I will not ride my particular hobbyhorse any longer, but we believe that the proposals which are made here are very much to be welcomed. What I have been saying is relevant in building up the whole of government accounts' balance sheets from the balance sheets of the individual departments.

Perhaps the Minister can indicate over what time we are likely to make progress on this matter. Of course, the whole of government accounts also propose that for each financial year there should be separate accounts for groups of bodies, each of which appear to the Treasury to exercise these various functions.

On the nitty-gritty detail of the clause I am a little puzzled by the use of the expression "groups of bodies", each of which appears to the Treasury to fulfil these various functions. One criterion is that it should appear to the Treasury to be an activity of a public nature. Whether that includes football teams, for example, I am not clear. Indeed, the criteria as set out seem to be a little wide at times. Perhaps we ought to look at that in rather more detail.

Nonetheless, overall the proposal for the whole of government accounts is of value, and it is the view of Opposition Peers that it should be encouraged.

Next Section Back to Table of Contents Lords Hansard Home Page