I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament, and of the Treasury Minute on the Reports from the Committee of Public Accounts of Session 1964–65 (Command Paper No. 2845).
I am sure the House will appreciate that, although I speak from this Box in moving this Amendment, I do not speak on behalf of my right hon. and hon. Friends. The privilege falls to me of moving this Amendment to take note of the Reports from the Committee of Public Accounts because I have been Chairman of the Committee. It has become the precedent during the few years that these debates have taken place for the Chairman to initiate them. It is not my purpose to seek to initiate either a long or heated debate on this Amendment. The strength of the Committee of Public Accounts lies in its objectivity and in its non-partisan character. For myself, I will attempt to emulate those qualities, at any rate for the duration of this speech.
It is the custom of the House for the Chairman of the Committee of Public Accounts to be chosen from the Opposition Benches. It was partly for that reason that my two immediate predecessors as Chairmen of the Committee, were, working backwards, the right hon. Gentleman the Chancellor of the Duchy of Lancaster and the right hon. Gentleman the Prime Minister. I think I speak for the present Committee when I say that, whatever some of us may think of those right hon. Gentlemen in other capacities, they both discharged their duties to the Committee of Public Accounts with very great zeal, diligence and effect.
I am afraid, however, that the House has been rather badly served—and this is a rarity and I ask the Financial Secretary to take note of it—by the Stationery Office. The volume containing the Reports of the Committee was subjected, on its first publication early in October, to complicated errors of binding, resulting in part of it being out of numerical order and part of it being missing. I understand that there are now, as a result of certain initiatives taken, a supply of accurate and complete copies for the House.
I would like to extend gratitude to the Financial Secretary for providing the House with the White Paper containing the Treasury Minute in reply to the Committee's Reports. Those familiar with the normal procedure will know that the Treasury Minute gives the comments of the Government Departments concerned with the Reports and normally comes before the House as an Appendix to the Report of the Committee of Public Accounts. This is in accordance with the normal and proper practice of this House, under which replies to Select Committees go, first, to that Select Committee, and are subsequently published by that Committee. In this case the debate takes place before there was time for the Committee of Public Accounts to meet in this Session and order publication of the Treasury Minute.
I must, therefore, take the responsibility of having asked the Financial Secretary, for the convenience of the House in the course of this debate, to lay the Treasury Minute as a White Paper. This is a departure from precedent, but I hope that the House will feel that the circumstances justify it. I think it would have been unfair to the Government Departments concerned for the criticisms contained in our Reports to have been before the House without, at the same time, there being before the House the replies and comments made by the Department criticised.
The custom of having a debate on the P.A.C.'s Report is a relatively new one. The first one in recent years took place on 19th December, 1960, in the rather special circumstances of the P.A.C. Report into the question of guided missiles. That debate was opened by the present Prime Minister, then Chairman of the Committee, and it has been the practice in recent years, though not in every year, to have a debate of this kind on its Report.
It might be helpful to the House, and also to people outside, if I were to begin by spelling out what it is that the Committee of Public Accounts does, or seeks to do. The strict terms of reference of the Committee are contained in Standing Order No. 79 which reads:
There shall be a select committee, to be designated the Committee of Public Accounts, for the examination of the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the Committee may think fit, to consist of not more than 15 members, who shall be nominated at the commencement of every session, and of whom five shall be a quorum. The committee shall have power to send for persons, papers and records, and to report from time to time.
I should have added, when speaking of the composition of the Committee, that according to long custom, it also contains the Financial Secretary to the Treasury, whom I am very glad to see on the Government Front Bench. Equally according to long precedent, his attendances are restricted to a courtesy visit at the beginning of the Session and on any occasion on which he might feel that the Committee was criticising the Lords Commissioners of the Treasury. As the latter is in my experience a somewhat rare occurrence, so have been in my experience the Financial Secretary's attendances. That is the established practice and a convenient one.
The Committee has passed a long way in the course of its long life—it celebrated its centenary in 1961—from the bare function virtually of audit or of seeing that the money voted by Parliament was spent in accordance with the way in which it was voted, into considerably wider functions. It now makes what I might describe as an efficiency audit and is concerned very much, as I hope the present Report brings out, with securing that the public, where there is public expenditure involved, secures value for money.
Indeed, the function goes wider than that because, as appears from the Standing Order I read, the Committee can investigate not only appropriation accounts, but:
such other accounts laid before Parliament as the committee may think fit.
That includes, for example, the nationalised industries, and our present Report shows that in the last Session we examined the accounts of the Atomic Energy Authority and also that we examined the affairs of the Livingston New Town Corporation in Scotland, to which considerable reference is made in the body of the Report. The actual function, therefore, of the Committee goes a great deal wider and has developed considerably wider than might be judged outside from a bare reading of Standing Order No. 79.
The Committee is unique among the Select Committees of this House in that it has the help of the Comptroller and Auditor-General and of the Exchequer and Audit department under him. This is a large and very ably staffed department with considerable powers of investigation. The Committee, the House, and the country are all extremely well served by the present Comptroller and Auditor-General, Sir Edmund Compton, an official of the very highest ability, as those who have served with him know well. Our reports to the House are very much on the basis of investigations undertaken throughout the year by the officers of the Exchequer and Audit department. This is of considerable advantage to the Committee.
The Committee also has a special relationship with Her Majesty's Treasury. The Treasury Officer of Accounts attends practically all the sittings of the Committee at which evidence is taken, and the present Treasury Officer of Accounts, Mr. Platt, has given extremely good service to the Committee, which is very much indebted to this able and courteous officer for his help.
I apologise to those of my colleagues who are present, but this might be of some general interest. The Committee proceeds on the basis of the material laid before it by the Comptroller and Auditor General and, of course, on the experience of its members, which is very wide, to examine the accounting officers of the Departments concerned, who are generally but not always the Permanent Secretaries, and such other officers as may accompany them, and the accounting officers of other bodies whose accounts we are examining.
Having been Chairman of the Committee for only one year, I do not think there is any immodesty in my saying that the authority with which the Committee's Reports are thought to be invested is in very large measure due to the fact that our conclusions, whether right or wrong, are based on evidence given before us, evidence which we subsequently, as this volume shows, publish. So that it is possible for any who disagree with any conclusion to see the evidence on which we came to that conclusion. All the evidence is published virtually in full, although it is our practice not to publish such items as could have security implications, or in such cases where there would be commercial disadvantage to the Government and the State. Apart from that, the overwhelming bulk of the evidence is published, and it is open to the House and public opinion outside to consider aye or no whether they agree with the conclusions to which my colleagues and I came on the evidence before us.
The four Reports are embodied in one substantial volume. They are, the Special Report, which is largely formal; the First and Second Reports, with which I do not think I need trouble the House; and the main Report, which is the Third Report and occupies the whole of the volume from page XIX. The result of my attempting to deal with all the matters which we dealt with in the course of the year would be that I should talk out my own Amendment. That, perhaps it would not surprise the House to know, is not my intention. What I should like to do is to pick out quite arbitrarily at my own discretion—I have not consulted my colleagues about this—four or five items in this Report on which I personally should like to comment.
I hope that the House will not feel if as Chairman I do—that I am indicating in any way any degree of relative importance or unimportance of any other of the items. It is simply that it would be of assistance to the House if I commented on some of the more important and some of the less important. By not mentioning any of the others, I am not indicating a view of myself or of my colleagues as to any lack of importance.
The first I refer to is one of the references to the General Post Office which appear, in particular, in paragraphs 139 to 140 of the published Report. The item itself runs from paragraph 138 to paragraph 147, but the particular issue which I have in mind and invite the attention of the House to arises in its sharpest form in paragraphs 139 to 140. The reference is to what is called colloquially "the ring"—or the agreement, as the Report refers to it—under which the Post Office obtains a proportion of its requirements from contractors who are parties to an agreement, and a rather limited proportion from contractors who are not. The current agreement provides that 25 per cent. of telephone apparatus and 10 per cent. of exchange equipment may be so obtained.
In 1963–64 supplies ordered under these reservation clauses by means of competitive tender amounted to £l·9 million for telephone apparatus and £270,000 for exchange equipment. It is therefore clear that the large bulk of this equipment within this sphere was produced within what I have described as "the ring". We therefore say in paragraph 140:
In view of the large savings obtained by competitive contracts under the provisions of the reservation clauses, Your Committee enquired whether it was possible to extend the field of competitive purchase and whether the prices obtained by competition cast doubt on the validity of the prices negotiated under the bulk supply agreements.
If hon. Members look at the evidence on which that is based, they will see that in respect of purchases outside the ring prices were considerably lower. Explanations were given by the officers who represent the Post Office, but it seemed to me, as I think it did to the Committee, to be the fact that whatever the justification for this arrangement—this has gone on for a great many years—it has probably involved the Post Office in higher expenditure than is necessary in respect of equipment. We expressed the hope that when the Post Office next negotiates one of these agreements it will obtain a great deal more freedom in respect of freedom of this kind. I note that the Treasury minute is not unsympathetic to this point of view and that it is, as I understand it, the intention to bear this in mind when a new agreement is negotiated some years hence.
However, this is not only an important issue in itself. It also has a bearing on the general line taken by the Committee in respect of a number of subjects. It was felt in respect, for example, of certain Admiralty contracts that freer competition and a wider choice by the purchasing departments might result in the public obtaining better value for money and better equipment at lower prices. Hon. Members who have been good enough to study our Report will see that this theme runs through a number of the examinations of witnesses which took place before the Committee. I thought, however, that the question of equipment for the General Post Office raised this matter particularly sharply and that, while not attempting in any way to cast any particular criticism on the Post Office, this was perhaps one of the best illustrations to use in indicating a line of thought and development which I hope the present Committee will pursue and which I hope that the Financial Secretary to the Treasury will exercise his powers to secure that the Government follow.
I come to the universities and to a very important issue indeed which arises on them. The paragraphs I have particularly in mind are paragraphs 83–85 of our Report. This refers to an old issue on which I would like to give one or two general thoughts to the House. It has been the practice for a long time for the Comptroller and Auditor General not to have access to the books of the universities and although the Committee, as will he evident from our Report, had a great deal of material before it in respect of the universities, that material was mainly hased on information supplied by the Department of Education and Science and by the University Grants Committee.
The argument for the exclusion of the Comptroller and Auditor General from the books of the universities is, to sum it up in a sentence, that it would involve an interference with academic freedom. That is a serious matter and it has been the view for a great many years that that argument has sufficient force in it to justify the making of an exception in the case of the books of the universities to the normal practice in relation to voted moneys. No one would lightly wish to interfere with so long-established a practice. On the other hand, the whole aspect of the universities problem has changed since this practice developed. When this began, public provision for the universities was on a very modest scale and was made directly, through the University Grants Committee, by the Treasury. It is today on a very large scale, running to over £100 million a year, as the Financial Secretary will confirm, and it is administered, not directly by the Treasury, but as part of the wide-ranging responsibilities of the Department of Education and Science.
That at least constitutes a new circumstance, and that new circumstance caused my Committee to indicate that, while we certainly had not the time to go into this great issue properly last Session, we hoped that a future Committee, because we are only a sessional Committee and had so to express it, would be prepared to take this matter further.
There is a very pertinent passage in paragraph 35 of our Report:
In recent years the Comptroller and Auditor General has had access to the books and records of the Colleges of advanced technology and the Scottish central institutions. This access will cease when these bodies attain university status. There have been no complaints from these bodies on grounds of academic freedom against the scrutiny either of the Comptroller and Auditor General or of the Committee of Public Accounts. Sufficient time has elapsed since the matter was last considered to justify re-opening the question whether the case still holds good for exempting the large and growing area of expenditure on universities from accountability to Parliament.
Then the suggestion follows that a future Committee should investigate this.
No one—let me say this bluntly—on the Committee or, I suggest, in the House, would tolerate for a moment interference with the academic freedom of the universities. Let us be absolutely plain about that. The question which arises is whether to allow the C. & A.G. to see the books and the P.A.C. to investigate the accounts would have that effect. It is significant that other institutions of education of very high status have been subject to this control and have not in fact found any diminution in their academic freedom. Curiously enough, the elevation of these institutions to higher status will take them out of the purview of the C. & A.G. and of the Public Accounts Committee and so add to the area which is not investigated.
I do not want to pre-judge the views of a future Committee and I accept that there were powerful considerations which moved our predecessors for many years against premitting any such investigation. All that my Committee has said so far is that this should be looked at again, and it would be very wrong of me to seek to pre-judge in any way what when we have the evidence before us we will conclude.
I make only one general observation. It is probable that if a change were to be decided on there would have to be some understanding, some constitutional convention, governing the matter and it would have to be made absolutely clear that it would be considered no business of the Public Accounts Committee or, I would say with respect, of the House to question in what precise direction of academic effort the universities expended their money. Whether the study, for example, of Beowulf at Oxford should or should not continue is a matter that I would have thought should be left to Oxford to decide. It is certainly a matter on which I and, I would imagine, many members of my Committee would hardly feel competent to offer intelligent comment. There would have to be some understanding that there would be no interference of that kind.
Whether a future Committee will recommend such a change to the House, and whether a future Chairman will stand at this Dispatch Box announcing it, I do not know. The only reason why I mention it today is that it is an important issue on which I think it would be useful that, before the Public Accounts Committee again considers the matter, opinion outside and, above all, opinion in the universities should have an opportunity to express itself and to crystallise. That would be a useful process and I for my part will not seek to pre-judge the issue. May I, with great respect, express the hope that the House will be disposed similarly not to do so. I hope that the House will not think that it is a mark of my inherent conservatism, spelt with a small "c" on this occasion, that I approach the question of changing the practice of many years with a certain measure of caution.
I come now to a very different issue—that of the provision of service facilities on motorways. This is dealt with in paragraphs 36–42 of the Report. There is a comment on it in the Treasury Minute in reply. The issue seemed to my Com- mittee to be one of ensuring that the public obtained full value for these concessions. As a former Minister of Transport, I am as conscious as any man of the immense cost of motorway construction. On the other hand, concessions for Service stations are very valuable and it was very much the view expressed by my Committee, and the view put to the Permanent Secretary to the Ministry of Transport when he gave evidence before us, that the approach to this problem should have a strong commercial tinge on the part of the Ministry. We were a little surprised to be told that the highest tenders for these concessions had not been accepted in one or two cases because the Ministry felt that the tenderer would not be able to carry out his bargain on those terms.
I do not want—because they were properly excluded from the Report—to give the names of the tenderers concerned, but I assure the House that they were all organisations of great solidity and substance, and it seemed to my Committee that the Ministry had not been as zealous as it might have been in pursuing the desirability of maintaining a high return to the public. There was some discussion on the important issue of the extent to which these payments should take the form of a fixed rent or a royalty basis. The leases are long—in most cases for 50 years—and, judging without pessimism and without reflecting on the economic policy of any Government, it seemed reasonable to assume that over such a long period there would be a certain measure of inflation.
It seemed to the Committee therefore that greater emphasis might be placed on the royalty basis. It seemed plain that traffic would go on increasing and that such a basis is a better hedge against inflation than a fixed payment with a long lease of this sort. I was disappointed with the Department's reply in the Treasury Minute, but I hope that it gives some indication that there will be exercised in future a greater determination to obtain an adequate return to the public for valuable concessions in respect of a very large measure of public expenditure.
We had a considerable discussion on the defence side, but I propose to refer only to a number of items affecting the Army. I think that the impression was formed by my colleagues, and I confirm it, that in some respects financial control in the Army Department requires improvement. Admittedly, those who formerly served in subordinate capacities in the Army may be rather surprised at that, since our impression at that time was that financial control in the Army was rigid to the point of ruthlessness, but the cases with which we dealt show that there is here a field for some improvement.
I should like to take quickly one or two of these items. Work in Hong Kong is dealt with in paragraphs 107 to 114 of the Report. The ordering of accommodation stores for a hospital in Hong Kong before Treasury approval had been given for the construction of the hospital indicates, and I think it was generally admitted, some lapse in the system of control. The question of the soldiers' married quarters at Dills Corner, Hong Kong, is more difficult, since it is the perennial difficulty in all Service matters that forecasts of operational needs continue to change. On the other hand, it is clear that some money might have been saved if a little more foresight had been exercised.
There is the matter in paragraph 119 of the arrangement made with the German Government in respect of what I can call our contribution to the German industrial injuries scheme for German civilian personnel employed by British Forces in Germany. This had the effect that payment was made in advance on a substantially larger scale than necessary to provide the Germans with an interest-free loan across the exchanges, for some time exceeding £1 million. The arrangement is one for which the Committee felt little enthusiasm since it involves British provision of money for a scheme in which we have no control over claims. It was agreed in discussion that the Treasury should have been brought into this matter at an earlier stage.
The manufacture of the new machine gun and tripod is dealt with in paragraphs 120 to 125 of our Report. Here again there was a considerable increase in expenditure over what was estimated. It certainly appeared that the cost of manufacturing this weapon at the Enfield factory was a great deal higher than the cost if it were purchased from the manufacturers. I note that in the Treasury Minute there is apparently no question at present, without prior reference to the Treasury, of the resumption of manufacture of this weapon at Enfield.
On the other hand, having been slightly critical of some aspects of the Army Department, I am glad to see from the Treasury Minute that the Department has accepted our recommendation that it should consider the possibility of using commercial types of 10-ton vehicles instead of manufacturing a special type for the Army. On the evidence before us it appeared that the commercial type would cost about half the cost of the specially manufactured Army model. I am glad to see also that the Army Department has accepted our suggestion that it should consult, in particular, the oil and construction companies which use heavy vehicles of this kind in conditions probably at least as strenuous as those to which many Army vehicles are exposed and in at least as difficult parts of the world. There may be some economy to be obtained in this way. I should like to express my pleasure at the attitude which the Army Department has adopted towards this matter.
In paragraphs 18 to 27 of the Report we deal with the Concord aircraft contract. The only point on which I should like to comment is that we were told that this agreement is likely to be the prototype of other agreements for the internationally shared manufacture of aircraft. This being so, its terms are more important even than its scale alone demands. My Committee was very much concerned with one point. We were told that in order to maintain roughly a balanced cost between the two countries some contracts for certain items were placed not necessarily with the best subcontractor but with the one who would most easily bring the general cost as between one country and another into balance. This may be a reasonable way of sharing the cost, but it has certain rough edges if it is to be the general practice as between countries in respect of future shared aircraft construction and I am glad to see that the Department has said that it will enter into discussion with the French—in my view very properly—on the question of this method of dealing with the problem.
Those are the particular matters on which I thought that I might be of assistance to the House and of which, no doubt, the Financial Secretary has taken note. However, I should not like to leave a false impression with the House. The Committee of Public Accounts, in the nature of things, has the duty of investigating matters where it seems, prima facie, that something, great or small, has gone wrong. Properly and naturally, the Comptroller and Auditor General and his staff draw our attention not to what is going right but to what has gone wrong or may have gone wrong. The fact that I have put to the House a number of examples where, in our view, improvement could be effected—and I am glad to say that in some cases it is being effected—we were told in evidence that remedial steps were taken in many cases some time ago—should not blind us or people outside to the fact that these are clearly exceptional.
No one who has served at the Treasury—and I am sure that the Financial Secretary will agree with me here—or who has been Chairman of the Public Accounts Committee is complacent about the loss or waste of public money. In view of the present level of taxation, all concerned with the spending of public money have a special duty to make sure that it is not wasted. On the other hand, when one considers the scale of Government expenditure, the many thousands of millions of pounds expended under these different heads, the sums about which we have reported, and about which it was our duty to report, are perhaps not very large. I do not say that in any attempt to induce the Financial Secretary other than to conduct the control of the Department with the vigilance which his office demands. I am sure that he does that. I say it lest the fact that I have made a speech dealing with criticisms should induce hon. Members or anybody outside to get a wrong sense of proportion.
On the whole, we can be very proud of our system of financial control in this country. We can certainly be extremely proud of the integrity of our Civil Service. We can be reassured that if, through errors of judgment or delay, some money has been wasted—and I suppose that for all our efforts some money will always be wasted—there was not a hint throughout our investigation of any irregularity of any other kind. When one considers how detailed are our examinations, that can be a matter of very considerable reassurance to the House.
I promised that I would not attempt to cover all the ground or to talk out my Amendment. I must, therefore, redeem that promise and resume my seat.
With the exception of yourself, Mr. Deputy Speaker, I find myself, incredibly, as the longest toothed member of the Public Accounts Committee present, having served under my right hon. Friend the Prime Minister and my right hon. Friend the Member for Sowerby (Mr. Houghton). Therefore, perhaps I could take it on myself, on behalf of the Committee, to express our thanks for the non-partisan way in which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) presided over us and to say, without being unduly pompous, that he measures up to the standards which we expect from a Chairman of the Public Accounts Committee. He certainly has gone to great lengths to do his homework—not that I normally say such things to former Cabinet Ministers. Anyway, the right hon. Gentleman will know what I mean.
I echo the remarks of the right hon. Member for Kingston-upon-Thames about Sir Edmund Compton, who is a great public servant, and the work which his Department does for the Committee. I should also like to acknowledge Dr. Taylor's work as Clerk of the Committee and that of Mr. Platt, who represents the Treasury during our deliberations.
I wish to draw attention to the Treasury Minute on the Scottish new town of Livingston and to echo what it says, namely, that
Departments should fully utilise the existing arrangements for the interchange of information about contractors and have again drawn their existence to the attention of all the Departments which are involved in the letting of public contracts.
The case of the Livingston New Town Development Corporation represents one example of the way in which this Committee is really effective. All the hours which we spend on Tuesday and Thursday afternoons, I suspect that we do not grudge because, at the end of the day, here is an instance of Westminster having some effect in Whitehall.
There is one item which I wish to raise, particularly as the Minister responsible is present. I refer to the question of the universities and the working of the University Grants Committee. I realise that this afternoon is not the time to go into controversial views on how the University Grants Committee might be reformed. I have not given him notice of this question, but I should like to ask the right hon. Member for Kingston-upon-Thames whether he would care to interrupt my speech to say how he thinks that the Public Accounts Committee should proceed in considering whether we should investigate university expenditure. He said in his speech that the universities should have a chance to put their views on this very controversial topic. I concur with this view. Perhaps the right. hon. Gentleman would care to interrupt me to say what his thinking is on this subject.
The hon. Gentleman has been good enough to invite me to intervene. I do not think that I can help him very much, because the new Committee for this Session has not yet met and it would be presumptuous of me, before discussion with my colleagues, to outline even tentatively a line of approach to the practical handling of this difficult matter. I hope that my own observations this afternoon, if reported, will start some discussion on this matter which I am sure would be of help to the Public Accounts Committee when it considers this matter, as no doubt it will. However, as I say, it would be presumptuous of me from this Box to lay down procedure for the Committee. The Committee must consider the matter itself, and I would rather await the advice and guidance of my colleagues on the Committee before committing myself to anything definite.
May I then turn, finally, to a subject which may not come within the purview of the Public Accounts Committee as it at present exists but which is certainly of national concern. I refer to the increase in costs of research. Our understanding is that over the last five years the cost of research has increased annually by about 15 per cent. To use the picturesque example of the noble Lord, Lord Bowden, if this went on until the year A.D. 2,000 the entire gross national product of Great Britain would be involved in research. This is clearly an absurdity. Therefore, somehow or other, we must, rationally one hopes, consider the matter of increasing research costs. The question then arises of the machinery by which we should do this.
Perhaps the greatest difficulty is establishing any criterion by which the usefulness or otherwise of pure research can be judged. Much research is worth while for its own sake, but, clearly, we cannot go on expanding to the absurd point at which anything like a high proportion of the gross national product is involved in research. Therefore, either consideration of the increasing costs of research must come within the scope of a Select Committee of this House—perhaps a subcommittee of the Public Accounts Committee—or there must be a reform of the University Grants Committee.
I should like to see a change made in the University Grants Committee so that for the expensive sciences at any rate there would be a small executive body of scientists seconded for two or three years dealing with expenditure on physics, chemistry, engineering and biology on a national basis. This would get rid of the absurd situation whereby one of the new sciences, perhaps developing rather on the fringe of one of the established sciences, has to compete for cash inside one university, possibly against the claims of mediæval French or of some other science or of mathematics. Surely, allocation of money between sciences should be done on the basis of a national decision, and this could in turn perhaps be done by a small number of people seconded for two or three years with a live participation in a particular science.
I offer these thoughts because when, for instance, those responsible for C.E.R.N. came before the Public Accounts Committee, or latterly when the universities have come before the Public Accounts Committee, this has emerged as a considerable problem and one which is worthy of our attention. I hope that when we discuss the rôle of the Public Accounts Committee in looking at the universities, the problem of the expensive sciences will be gone into. It might be much more meaningful in our deliberations if we could follow the suggestion of the right hon. Member for Kingston-upon-Thames and have evidence from the universities produced before us before we reach any kind of decision.
I should like to echo the words of the hon. Member for West Lothian (Mr. Dalyell) about the felicitous chairmanship under which the Committee of Public Accounts operated last Session. The hon. Member has referred to himself as being the doyen of members and I am the most junior. It would, therefore, perhaps be fitting if I were to join him in saying with what pleasure we served under the chairmanship of my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and how much we appreciated the work that was done to enable us to conduct our operations by the Comptroller and Auditor General and his staff and by Dr. Taylor, and the advice that was tendered by Mr. Platt.
I should like to make a brief comment on one specific item which is referred to in the comments of the Treasury on the Committee's Report. It is on page 2 of the Treasury Minute in reference to the Concord project. This was touched upon by my right hon. Friend the Member for Kingston-upon-Thames and to some extent follows the remarks made by the hon. Member for West Lothian on the problems of research.
The Treasury comment is that
While it is accepted that further studies in this field might be useful, it would not seem appropriate to undertake them on a purely national basis.
The Treasury was referring to a suggestion to examine further the advantages and disadvantages of the cost-sharing system which was operating in the Concord project. We learn that
It is proposed … to invite the French authorities to participate at an appropriate stage in a review of the considerations relevant to the determination of cost-sharing arrangements and the different systems that might be practicable or desirable in particular circumstances.
If I had arbitrarily to choose any item from the Treasury Minute and from the work of the Public Accounts Committee last Session, I would choose the examination of the Concord project, very largely for the reasons advanced this afternoon by my right hon. Friend that it could be the forerunner of a series of arrangements
which concern multinational work on large, complex technological projects.
Very often, one is to some extent blackmailed by the argument that this is a great venture and pioneering work and that to criticise it would throw in jeopardy the whole future of Anglo-French relations. That kind of blackmail argument is one which must be guarded against with considerable vigilance. If the result of the Concord project is a complete inability to control costs, that project will not have laid the foundations for Anglo-French co-operation but will have laid the foundation for increasing recrimination between the British and French Governments as costs career out of hand subject to no meaningful control. Therefore, the recommendation made by the Public Accounts Committee could have real relevance for future relations, not merely in the procurement of aircraft, but in a great deal of other fairly advanced technological work.
My anxiety on this point is sustained when one reads the whole story of the genesis and development of the Concord project. It seemed to me from the evidence which is available for all to read that some fairly primitive market research was conducted in a purely economic sense. I am still not clear whether the project was being developed for commercial reasons or for, as it were, technological investment in the future. I suspect that the argument that there will be fall-out from the project—I gather that if one is wildly contemporary, one now uses the term "spin-off"—becomes the ace of trumps and nothing can be advanced against it. I am highly suspicious of this situation.
If a project which purports to be a commercial project is advanced on commercial grounds and it is argued that incidentally there are other benefits, particularly if they pertain to advanced technology, which is supposed to be fairly good in the arts of measurement, it is not unreasonable to ask for these advantages to be measured. The difficulty is compounded when more than one Government Department is involved—when, for example, there are two spending and two controlling Departments, namely, the Ministry of Aviation and its French counterpart and the French and the British Treasuries. This seems to me to be an acute dilemma.
Clearly, from the kind of developments of which we hear nowadays concerning the aircraft industry, whether we are pro-Common Market or not, there are indications that a great many of these developments will be European in character. This trend is likely to increase rather than to diminish. The Public Accounts Committee may feel that it has a special responsibility in this sphere because, for better or for worse, the whole Concord project came very much at the heart of political controversy about a year ago. One would hope that in the blinding heat of political controversy the crucial questions which are posed by developments of this kind have not been overlooked. Therefore, I shall look forward with interest to see what future revelations may come from an examination by the Public Accounts Committee of the Concord project in the light of the evidence that was gleaned last Session and in the light of the Treasury Minute.
I rise to reply to the debate slightly earlier than I had anticipated. This is, I believe, the fifth debate on Reports of the Public Accounts Committee. It is the first one during the period of the present Government. The position last year was that as the main concern of the Committee had been with the Ferranti missile contract, which had been the subject of a separate debate, it was not felt that there was an occasion for a special debate on the public Accounts Committee Report.
In any event, this occasion is also of significance as it is the first debate on a Report of the Public Accounts Committee under the chairmanship of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), to whom all hon. Members who have spoken have paid their just tributes. As the right hon. Gentleman pointed out, I am a member of the Committee, but I am a little peculiar in that I am an honorific and titular member, and so it is only through the printed word that I have been able to see how the right hon. Gentleman has maintained the very high standard set by his predecessors, to whom he paid tribute, and also has maintained the non-partisan approach which has existed for some time in the Committee.
The right hon. Gentleman is well qualified for his position. If he will allow me to say so, he has the mark of Cain on his brow because he has been a Treasury Minister. He was kind enough to point out to me on the first occasion that I stood at the Dispatch Box as Financial Secretary that I should find that I would never be quite the same again. I do not know whether he has yet recovered sufficiently to the point where he has learned how to say "Yes" again. If he has not, I can assure him that I am reliably informed that Treasury Ministers do, in the fullness of time, recover their full powers of speech.
The transfer from the Treasury to the Public Accounts Committee certainly is not that of gamekeeper turned poacher but almost that of gamekeeper turned bishop, because my right hon. Friend the Prime Minister when speaking in his former Public Accounts Committee capacity referred to the holy inquisition of the Public Accounts Committee as compared with the secular arm of the Treasury. Be that as it may, there is a very close relationship between the Committee and the Treasury. Apart from my own membership, the Treasury Officer of Accounts, to whom the right hon. Gentleman paid a very generous tribute, is present technically as a witness but is there to render what assistance the Treasury can to the Committee.
In general, the effect of the work of the Committee is much greater than perhaps appears on the surface. It is rather like the traditional iceberg. The reported minutes of proceedings and the Report itself of the Committee are the visible part. The invisible part which has perhaps by far the greatest effect is what is often called the deterrent effect of the Committee. I must say that I had not been long in the Treasury before I learned the effect in Whitehall of the words, "I hardly think that the Public Accounts Committee would approve of that". There are times when even a Treasury Minister may be tempted to try and break or stretch the rules, but the Public Accounts Committee is always there to keep us on the straight and narrow path.
What makes the Committee so effective in its work is the long arm and the all-seeing eye of the Comptroller and Auditor General and his staff. To him again the right hon. Gentleman and other hon. Members following him paid a generous tribute, in which I should like to join. He is a unique official in our constitution in being an officer of the House removable only on a Motion of both Houses of Parliament, and he has very considerable powers.
Next year we are to celebrate the centenary of the Exchequer and Audit Department and, if imitation be the sincerest form of flattery, it seems that we are to pay a great compliment to him and his Department if the House sees fit to introduce legislation on the lines of the White Paper that has already been produced with proposals for a Parliamentary Commissioner, because it will not have escaped the attention of hon. Members that many of the proposals contained in that White Paper are modelled on the experience of the work of the Comptroller and Auditor General. The suggestion is that the House should bring into being a new officer of Parliament to assist us in our work and particularly to assist back benchers in their work as Members of Parliament in relation to the Executive. I say no more about that now. Perhaps we will have cause on another occasion.
As I say, the right hon. Gentleman and the Committee have preserved their nonparty character. There was perhaps for some hon. Members an added incentive to do that this year because, although it is the first Report during the period of the present Administration, the expenditure which it has been examining was incurred under the previous one. The right hon. Gentleman must at times have found himself in a somewhat curious position in being the holy inquisitor on expenditure which he had already had a measure of responsibility for controlling at an earlier stage. I do not know if he felt himself in the position of the barrister in his dream of the hunting of the Snark. He was confronted with the Snark not only as prosecuting counsel and defending counsel but, when the time came for the summing-up, found that he was also the judge. The right hon. Gentleman will remember that on that occasion the Snark summed-up teh case so well that "it came to far more than the witnesses ever had said." It would not be becoming for me to suggest that at any point the Public Accounts Committee could have achieved that in its Report. However, perhaps I am getting away from the subject of the debate, and I will now turn more to the contents of the Report.
The field of the Public Accounts Committee's activities is continually widening. With its references to the position of the universities, the Committee has itself drawn attention to the possibility of further widening and this is the result of the great increase in the scope of public expenditure.
In 1861 when the Committee was first set up on a Motion of Mr. Gladstone, the Appropriation Accounts totalled £69 million. For the year which the Committee has been considering, the sum was £6,003 million, which is not quite a hundredfold increase, but no doubt that centenary will also be achieved before long.
The object of the Committee would be to revise the accounts of the public expenditure after they had gone through the regular process of examination in the hands of the executive Government.
Those are Mr. Gladstone's words when proposing the original Motion. As he said on a later occasion,
The Government had sought to ascertain what hon. Members were best qualified to undertake these duties, which were of a dry and repulsive kind.
The rôle of the Committee is not to seek to control the level of public expenditure or its allocation between Departments but to see, as has been pointed out by the right hon. Gentleman, firstly that the moneys voted have been properly applied in accordance with accounting propriety and secondly that there has been effective and efficient financial control to see that the public gets the best possible value for money.
In the early days of the Committee, its concern was principally with matters of accounting propriety, but nowadays increasingly the Committee is concerned with problems of efficient financial control. That is exemplified by the fact that, in its Report, out of the 22 items dealt with, 20 of them are dealing with such questions.
I do not wish to detain the House by seeking to comment at length on these matters because, as the right hon. Gentleman has pointed out, we took the step of laying the Treasury Minute in the form of a White Paper in time for the debate, as the Committee has not yet had time to comment on it in the ordinary way. Reference has been made to the Minute.
May I first offer an apology on behalf of the Stationery Office for the error in the binding of the Report as it first appeared? I can assure the House that I was sufficiently diligent myself to have discovered that fact without anyone else pointing it out to me. The offending edition was withdrawn as early as possible, and properly bound copies are now available. I apologise that this should have occurred.
Hon. Members have raised a number of specific matters on which I should like to comment briefly.
First, the right hon. Member for Kingston-upon-Thames dealt with the passage in the Report and the Treasury Minute referring to the Post Office procedure for ordering telephones and various equipment. The House will have noticed that in the Treasury Minute the reply is in the name of the Post Office. This is because the matters with which it deals are solely within the scope and responsibility of the Post Office. The House will have noticed that in the reply my right hon. Friend and his Department say that they will take the views of the Committee fully into account in reviewing the procedure when the present contracts fall in. The only general comment that I would like to make on that in response to what the right hon. Gentleman said is to confirm that it is the Treasury's view that generally we favour competition unless there are good and specific advantages to be gained from non-competitive contracts.
The question of the universities was raised in a very constructive way by the right hon. Gentleman. The Committee itself said that it would like to look further into this matter, and the House will not expect me to say a great deal about this much-debated, difficult, and thorny question. It is one which has exercised various Public Accounts Committees and also the Treasury and other Ministers in previous Administrations.
We all have two common objects in view: first, to ensure that here, as elsewhere, there is the greatest possible value for money, and, secondly, to ensure that academic freedom is maintained. The question is how we can achieve those objects and what is the most effective way of doing it; and we must not allow our judgment to be clouded one way or the other by emotive phrases.
There is no doubt that we want to see that the most up-to-date techniques of control and management are employed. This is not always an easy matter, but real progress has been made in this field, and it does not follow—like the right hon. Gentleman I do not want to pre-judge the question at all—that these things would be better achieved by making the University Grants Committee accountable to Parliament, or that they ought to be gained—if they would be so gained—by any restriction of academic freedom.
The last independent body to examine this question was the Robbins Committee which went into the matter very fully, and in particular studied the practice abroad and compared our practice with that of other countries. In the result, it attached the greatest importance to the maintenance of the existing freedom from detailed accountability. This advice was accepted by the previous Administration, and remains the basis of the present Government's policy. Clearly any change in the matter would have very far-reaching effects, and the House will not expect me to comment one way or the other. I do not want to give the impression either that I am slamming doors, or opening them. I wish to leave the door where it is, without specifying too precisely what that point is.
The right hon. Gentleman suggested that as a result of the Committee as it were opening up this question there might be an opportunity for opinions to be expressed outside, for the matter to be discussed, and that this might help people in a dispassionate way, and without pre-judgment, to look again at the question. I am sure that we all welcome this in the spirit in which the right hon. Gentleman proposed it.
Would the Financial Secretary accept that ever since the publication of the Robbins Report there has been quite a change in the climate of informed opinion on this issue, particularly in the serious magazines and journals which deal with university affairs? In the light of this, can we take it that the Treasury will lend its good offices to make it possible for the Public Accounts Committee to follow up the suggestion made by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) that at least we should seek university opinion on this?
I do not think that it would be right for me to comment on a matter of that kind unless and until there is some official approach from the Committee, nor do I feel disposed to try to express a personal opinion on the state of public opinion on this matter.
The right hon. Gentleman then turned his attention to the passage in the Report dealing with motorways and the service areas on them, and again he will have noticed that the views of the Committee have been noted on this topic. He expressed the view, which the Committee clearly shared, that the Ministry's approach should have a very strong commercial tinge. I think that the Ministry accepts that there can, and should, be a commercial approach to the fixing of the rent. It also feels that the rent should include a fixed element and the question is one of balance, of deciding the proportion which that element should be in relation to the whole.
I would like to draw the attention of the House to a matter which is referred to in the Treasury Minute but which, as the evidence did not go into it, was not brought to the attention of the Committee, and that is that there are occasions when there is a positive advantage in having a fixed element in the contract, not only on grounds of ordinary prudence and caution in ensuring that there will be at least a certain return on the capital expenditure which the Ministry has incurred in fixed standings, and so on—I think this was dealt with in the evidence—but also because there have been occasions when contractors have been somewhat slow and dilatory in their work of getting the service area built up and getting it functioning. The advantage of having a fixed element in the rent is that it provides a real incentive to the contractor to get on with the job and to instal the service area as promptly as he can. I think that this is a matter of judgment, and in exercising its judgment on it the Ministry will have the benefit of the views expressed by the Committee.
The right hon. Gentleman then drew attention to a number of specific points in respect of which the Committee said that waste or extravagance in one form or another had occured in the Army Department. I do not want to comment on them except to say a few words on the very involved question of the German industrial injuries scheme, which I have sought to understand. I think that the difficulty arose over a decision which was taken by all the sending countries to seek to make a capital payment in respect of certain matters which, under the German practice, would be dealt with in the form of a pension or annuity. Later, the sending countries reversed that decision, and it was essentially this which led to the accumulation. The reversal of the decision did not take place until 1963, so this accumulation across the exchanges of more than £1 million occurred as a result of a decision which was taken jointly by the three sending countries and the opportunity to recover it arose only about three years later. I understand that the balance will have been reduced virtually to zero by the end of this year.
On the question of the machine gun and tripod, I confirm the Treasury Minute. There will be no automatic resumption of production at Enfield. This matter will be examined when the time comes. As for the question of the 10-ton vehicles, I again confirm that consultations with both the oil and construction companies have already begun, and that certain commercial vehicles have been acquired. Tests are shortly to take place.
One or two hon. Members referred to the question of the Concord. The right hon. Gentleman drew attention to one passage in the evidence which suggested that sub-contracts for the Concord were not necessarily placed with the best subcontractors but with those that would most easily bring the general costs into balance. I am sure that the right hon. Gentleman would not want to give a misleading impression which might undermine confidence in a matter as important as this. I concede that that can be an element in the decision, but it is only fair to point out that when the accounting officer gave evidence on the
matter, at Questions 660 and 661, and was asked to say how these two factors related to each other—that is to say, the requirement of efficiency and the requirement of achieving a balance as between the countries—his answer was:
One would hope to be able to reconcile the two factors, but ultimately it must be the division of work as between the two countries. I hope that in hardly any cases will there be a sharp distinction between the two factors you have mentioned.
The next question asked him whether the predominant consideration was to keep the costs as easily divided as possible rather than the efficient discharge of the sub-contract, and he replied, "Yes". All that I wish to stress is that in practice these matters sometimes tend to work themselves out more happily and more favourably than might appear from a purely theoretical and analytical approach.
The hon. Member of Oswestry (Mr. Biffen) referred to the specific point of the Public Account Committee's recommendation that an independent investigation should be made of the sharing system provided for in the 1962 Agreement. I agree with him that this was one of the most important suggestions contained in the Report. The Government accept that a study of this problem would be useful, but they do not think that it would be appropriate, in a collaborative project of this kind, to undertake it on a purely national basis. They therefore propose to invite the French authorities to participate, at an appropriate stage, in a review of the advantages and disadvantages of the different possible cost-sharing systems.
In this connection the House will remember that other important co-operative projects have now been entered into with the French Government since the Concord agreement was concluded, and that lessons should be learned from these. It is clearly in our interests as well as in the interests of the French to compare the different projects to see what lessons are to be learned from them. Under the Concord agreement there is an agreement to share the work, each country paying for the costs of the work of its own country. Therefore, it is for each country solely to devise and be responsible for the control of the work in its own country, because each has a common interest in keeping the costs as low as posssible.
Under some of the other arrangements, while there has been an aim at sharing the work there has been an additional agreement about sharing the costs. Each country pays not only 75 per cent. of its own costs but also 25 per cent. of the costs of the other country. These are the sort of different arrangements which should be studied and compared, and we shall learn what lessons we can from them. That is what we propose to do.
I leave the detailed comments there and conclude by welcoming and agreeing with the general comments made by the right hon. Gentleman at the end of his speech on the general management of public expenditure. As he says, it is the function of the Public Accounts Committee to find fault, to criticise and to point out what is going wrong. The result of this exercise over the year, while drawing attention to many useful points, has been to leave the right hon. Gentleman and, I hope, the Committee, with the general impression that we have a well-proven system of financial control, which is supported by a Civil Service of the highest integrity.