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Lord McIntosh of Haringey: My Lords, I have little to say about that, as it is entirely congratulatory, except to thank my noble friend.

The difference between the World Service and the rest of the BBC is that the World Service is, of course, funded by the Foreign and Commonwealth Office, whereas the rest of the BBC is funded by grant under the licence fee.

Lord Higgins: My Lords, the noble Lord, Lord Sharman, is certainly to be congratulated on his report, and the Government's acceptance of a number of his recommendations is welcome. However, as the Minister knows, the issues were debated in connection with the Government Resources and Accounts Bill. After a considerable time lag, we are now doing what we originally debated, which the Government should have accepted in that Bill. The problem with all such matters is that it takes an enormous number of years for government time to be found for legislation. Now that we are making some progress, apparently, can the Minister say whether we are likely to need further legislation? Will there be a further Bill?

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My second point is that no amount of improved arrangements for government scrutiny will help if the accounts themselves are defective. With great respect, I say to the Minister that he cannot suggest that that is a separate issue. There is a huge register of government assets and a totally deficient attempt to estimate the Government's liabilities and create a proper balance sheet, particularly with regard to departments and the whole of government accounts. That must be done right, particularly with regard to the long-term liabilities relating to national insurance pensions. In many ways, we are going through a pensions crisis, and we need to know what the situation is relating to intergenerational transfers. We can do that only if the Government make the effort to provide us with a proper balance sheet. Only if that is done and the accounts are generally improved will the kind of improvement that the noble Lord, Lord Sharman, proposes and which the Government have accepted operate efficiently in practice.

Lord McIntosh of Haringey: My Lords, I accept that it is legitimate to ask why it took a year to respond to the noble Lord, Lord Sharman. There may be an element of administrative delay; I do not know, and I do not think so.

I can give two answers that, I hope, will be helpful. The first is that the response is a full response. It covers all the matters. We could have dealt only with the easy ones and said that we would deal with the others later. We could have responded in a couple of months and got some cheap plaudits for that, but we would not really have been any further forward.

The second answer is that the issue of audit following the money where it has gone is a difficult one, as the noble Lord, Lord Higgins, remembers from the Government Resources and Accounts Act 2000. There are issues relating not only to the effectiveness of audit but to intrusion on private companies and individuals who may be in receipt of government money. In some cases—for example, those relating to value for money in the expenditure of government money—it may be legitimate to pursue audit; in other cases—for example, if people are receiving money as pensioners—it may not be.

Much of the time between the publication of the report and the response has been used in the preparation of protocols between the Comptroller and Auditor General and the Government on access to contractors, companies receiving government money, grant recipients and so on. Those protocols have been prepared. There is still a necessity for consultation, so the process is not complete, but that is a significant reason for the delay. I hope that the noble Lord, Lord Higgins, will agree that it is a legitimate reason.

The noble Lord also asked me to say when we are likely to bring forward legislation following the review of company law. The document was produced last summer, and it was almost too heavy to lift. As I have said in the House, drafting is going on, but there will have to be some form of consultation, either on a draft Bill or on draft clauses. It is well known that I cannot

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commit the Government to legislation in a particular Session, but I can assure the noble Lord that the matter is, for obvious reasons, not being neglected.

The noble Lord made a third point about defective accounts. I would be happy to listen to and respond to the arguments in due course. I am as interested when he makes the point about long-term pensions liability as I am when the noble Lord, Lord Saatchi, makes it. But it is not an issue covered by the Sharman report. It is a matter of enormous concern, not only to this Government but to all governments and it is a matter which deserves debate in Parliament.

Lord Bruce of Donington: My Lords, as one who had the honour of being a Member of the Public Accounts Committee in another place during my brief sojourn there, I should like to thank the noble Lord for his presentation this afternoon and the Government for making some progress towards a reorganisation of the accountancy profession to give greater public accountability.

This problem of organisation is a good step to have taken but it begs the whole question: accountability means what it says. It means that people are informed exactly what is happening. These measures do not advance accountability at all. I am an old-fashioned accountant. I have been connected with the Institute of Chartered Accountants since 1930 and have played an active part in it. I can remember the time when the purpose of an audit was to arrive at a true and fair view. All that has gone out of the window.

We now have a situation which will be endlessly enlarged upon in the course of the Enron investigations, to find out whether we know anything about our accounting standards at all and whether accounting standards meet the requirements of democracy for accountability. My respectful suggestion is that they do not.

Moreover, although there are many ways in which the Government are responding to a desire for greater responsibility, regrettably it is a fact that when the Government try to answer Members of Parliament and your Lordships, they are already reluctant to come forward with facts in their possession. They will make it more difficult for questioners to put down Questions than they have done for a number of years.

Accountability and accounting standards require our urgent attention if democracy is to survive in its parliamentary form in the United Kingdom. I am quite sure that events will justify the prophecy that I have just ventured to make.

Lord McIntosh of Haringey: My Lords, there are two points that I need to make in response to my noble friend.

First, the report and the response are about audit and accountability in central government. Broadly speaking, what the report and the response say is that we have in the National Audit Office and the Public Accounts Committee a system for achieving independence and accountability which has stood the test of many years and is no longer an issue of party debate.

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The independence of the National Audit Office from government, the fact that it reports to Parliament rather than to government and is still, to a large extent, independent of Parliament, is something which has been confirmed and recognised by both the report and the government response.

On the second point about audit standards, again it is nothing strictly to do with the Sharman report, but my noble friend will know that my noble friend Lord Brennan has a Motion down for debate next Wednesday in Labour Party time, precisely on these issues. I shall have the privilege of responding to that debate and shall look forward to the points raised from all parts of the House.

Lord Maclennan of Rogart: My Lords, the Minister may know, that having served on the Public Accounts Committee for 18 years, the bulk of them under the distinguished chairmanship of the noble Lord, Lord Sheldon, I welcome the Government's Statement today which goes far to implement recommendations made over many years.

I hope that in his reply to the noble Lord, Lord Higgins, the Minister was not cutting down on the principle that used to be expressed so eloquently by the noble Lord, Lord Sheldon, that it was the proper responsibility of the National Audit Office to follow public money wherever it went.

The Minister appeared to be erecting a countervailing principle of the right to some commercial confidentiality in certain circumstances which could be invoked in defeasance of that broader public principle. I hope the Minister will be clearer about that. The Government's rejection of the recommendation of the Sharman report, and indeed of the Davies report with respect to the BBC, seems to fly in the face of that broad principle of following public funds.

In admitting that the Public Accounts Committee has investigated the spending on a report of the NAO on the World Service, he does not seem to have recognised that it is perfectly possible to do that without threatening the editorial independence of the BBC in respect of the World Service. The same is true of its domestic broadcasting function.

In view of the fact that the matter is still under discussion in the context of the BBC's future and the future of broadcasting, I hope that the Government will reconsider this and listen to the first opinion of Mr Gavyn Davies. That was clearly expressed and carried great weight with all of those who were concerned about the responsibilities of that public service broadcaster.

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