Francis Maude (Shadow Minister for the Cabinet Office (Also Shadow Chancellor of the Duchy of Lancaster), Cabinet Office; Horsham, Conservative)

I beg to move amendment 50, page 4, line 29, at end insert

'with a fiduciary responsibility to spend taxpayers' money responsibly.'.

The civil service code and its entrenchment in statute is the central part of the civil service portion of the Bill. It is extremely important; we strongly support it. In a way, clause 7, which sets out some minimum requirements for that code, is the heart of this part of the Bill. We strongly support the values promoted here—integrity, honesty, objectivity and political impartiality. I am conscious that because the provision is so important, there is a danger of wanting constantly to add bells and whistles as if it were a Christmas tree, but we believe that a further minimum requirement should be added.

As the Conservative party outlined in a paper, "It's Your Money", published in February this year, a fiduciary responsibility should be placed on civil servants. The term generally means that someone trusted with the assets, wealth or well-being of a third party has a responsibility to manage them in the best interests of that third party. We believe that that is essentially at the heart of much of what the civil service does, and we would like to see it enshrined in the code.

We believe that all employees in the public sector should abide by the principles of fiduciary responsibility, but the proposed code does not cover the full spectrum of people employed by the state. We discussed in the context of clause 1 the lack of a definition about who is covered. Many contract workers, agency temporary workers or employees of non-departmental public bodies are not covered by the civil service code. We propose that a separate code should be established for those employees, stressing the same fiduciary responsibility.

I stress that we do not propose this fiduciary responsibility in any hostile spirit to civil servants; rather, I would say, the reverse. I believe that this provision would provide protection for civil servants, especially if it were backed with the amendments and new clauses grouped together on clause 9, which would place an obligation on Ministers—building on a point made previously—to respect the civil service code. Of course, the ministerial code already does that, although it is not, as David Howarth rightly pointed out, entrenched in statute, but nor would the Bill achieve that.

Ministers have a duty to respect the civil service; they should respect not only its code of values, but its role in providing advice. Of course Ministers are not obliged to accept the advice of their civil servants, but they should surely always seek it, listen to it and make judgments after assessing it. When public money is spent badly or inefficiently, it is very often the consequence not of civil servants being lax, careless, inefficient or hopeless, but of them being forced to do things by unwise ministerial decision, often in the face of civil servants' advice.

I cited on Second Reading the example of the introduction of tax credits. It is now well attested that the then Chancellor, now the Prime Minister, was strongly advised by civil servants in both the Revenue and the Treasury that the way he proposed to proceed with tax credits would introduce serious risk of fraud and error, all of which came about. The advice was ignored and the result was a grave misuse of public money, not to mention the enormous human misery caused to hundreds of thousands of low-paid, hard-working people who found themselves required to pay back money that they had received in good faith. Those people thought that they were doing the right thing and obeying the law. The point about incorporating this fiduciary responsibility into the code of conduct is that if in those circumstances a Minister tells civil servants that they must go ahead and implement the policy regardless, against their own advice, there is at least some protection for those civil servants.

Gordon Prentice (Pendle, Labour)

Is that not already covered by the designation of permanent secretaries as accounting officers for the Departments for which they are responsible?

Francis Maude (Shadow Minister for the Cabinet Office (Also Shadow Chancellor of the Duchy of Lancaster), Cabinet Office; Horsham, Conservative)

There is no harm in making that designation more explicit, and giving it some teeth by entrenching it in statute.

There is, of course, already a provision enabling a permanent secretary who feels that he or she is being required to do something that is not in the interests of the taxpayer to put in writing to the Secretary of State a request that he or she—the permanent secretary—be directed to implement the policy, but to my knowledge that has happened on only eight occasions in the past 12 years. It did not happen when tax credits were introduced. Arguably it should have, because it is understood that robust advice was given to the Chancellor to which he refused to listen. There is a strong case for saying that, given the circumstances, the chairman of the Revenue and the permanent secretary to the Treasury should have put in writing to the Chancellor that they needed to be directed, because their advice was that such action would be very harmful.

In the circumstances in which this country now finds itself, with a ballooning public debt and a budget deficit that seems to be out of control, incredible care with taxpayers' money will be of central importance in the years that lie ahead. It seems to us really important that protection for civil servants against being required to do things that are not in the interests of taxpayers should be entrenched. We think that Ministers should have a statutory obligation to respect the impartiality of civil servants. We have a good deal of sympathy with a Liberal Democrat new clause, which we hope will be reached later. In the meantime, however, this amendment—which reflects the central importance for the whole Executive of respecting and acting in the interests of taxpayers—would provide an extremely valuable additional discipline. As I have said, it would provide protection for civil servants against being bullied into implementing policies that were not in the interests of the taxpayer.

David Howarth (Cambridge, Liberal Democrat)

I sympathise very much with the intention behind the amendment. I do not think that it would do any harm to include a responsibility in the code and the Bill to ensure that public money is spent wisely. My only worry relates to the use of the word "fiduciary", which gives the impression that the relationship between civil servant and Government is similar to the relationship that used to exist between local councillors and their authorities in the days of surcharging. The word "fiduciary" always cropped up in surcharging cases.

Given the vast amounts of public money that go through Departments, it would be entirely wrong to open up civil servants to the possibility of having to repay perhaps billions of pounds to the public. I do not think that that was the intention of the right hon. Gentleman, but perhaps he should rethink the wording of the amendment on a future occasion.

Tony Wright (Cannock Chase, Labour)

This Bill has been through so many previous incarnations that it is sometimes difficult to keep up with it. In one of its incarnations, there was a list of various duties that civil servants would be obliged to perform, including the duty

"to discharge public functions reasonably and according to law"

and another duty to do with standards of administration. It seems to me that there are two possible logical positions: to set out the duties of civil servants, or to take the Bill's approach and simply to say what are the core values. There is not a case, however, for taking one duty—in this instance, fiduciary responsibility—and seeking to insert it into the Bill without addressing all the other ones. There must be all or nothing, and this is just a gesture in the middle.

Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

I have listened carefully to hon. Members' comments, and it might help if I point out the following. Clause 7 sets out the minimum requirements for civil service and diplomatic service codes of conduct. Codes of conduct must require civil servants in the UK, Scotland or Wales to serve the Administration of the day of whatever political complexion, and must contain an obligation on civil servants to carry out their duties in accordance with the core civil service values as set out in the Bill: integrity, honesty, objectivity and impartiality.

Amendment 50 would add the

"fiduciary responsibility to spend taxpayers' money responsibly"

to the minimum requirements of the code as set out in the Bill. The legislation sets out the core civil service values that are essential to maintaining an impartial civil service. The civil service code gives more details on the kinds of behaviour expected from civil servants in clear and accessible language. It sets out the details of the core values under each of their headings. Under "Honesty" it says that civil servants must

"use resources only for the authorised public purposes for which they are provided."

Under "Objectivity" it says they must

"provide information and advice, including advice to Ministers, on the basis of the evidence, and accurately present the options and facts".

Under "Integrity" it says they must

"comply with the law and uphold the administration of justice."

The requirement on the use of public money is set out explicitly in the code under the core value of "Integrity", where it says civil servants must

"make sure public money and other resources are used properly and efficiently".

I think that covers the matter.

I understand why Mr. Maude thought this particular duty was so important that it should be added to the Bill, but I think my hon. Friend Dr. Wright is right—although he does not agree with me entirely—that there must be either a principle-based approach or a more detailed approach. Adding the details of the principles of one aspect of the civil service code to the Bill would undermine the others in the code.

My hon. Friend Mr. Prentice made a point about accounting officers. The accounting officer has a personal responsibility for the propriety of the spending of all the money for which he or she is responsible. That is set out in various codes.

I understand the point made by the right hon. Member for Horsham, and it is valid, but his proposal is unnecessary because of the way in which the Bill is set out and the information that is contained in the code.

Francis Maude (Shadow Minister for the Cabinet Office (Also Shadow Chancellor of the Duchy of Lancaster), Cabinet Office; Horsham, Conservative)

I have listened to the comments of the Minister and others. We think that this duty is an important part of the obligations on civil servants and that a statement of that would give additional protection to civil servants, but there are other ways of addressing the issue and we should look into them further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.