Public Accounts

Part of the debate – in the House of Commons at 7:27 pm on 24th October 1985.

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Photo of Mr Michael Morris Mr Michael Morris , Northampton South 7:27 pm, 24th October 1985

I wish to discuss the Foreign and Commonwealth Office and its effect on exports, and the perennial topic of the National Health Service which I have now studied in the Public Accounts Committee for seven years.

I pay a personal tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of the Committee. The PAC is one of the happiest of our Committees, and the right hon. Gentleman certainly keeps us working hard. I do not complain about that. Of all the work that I have done in politics, the work on that Committee is by far the most worthwhile.

It is disappointing that we have to debate 51 reports this evening. We are treating the work of our most senior Committee without proper deference. We do our best to analyse the evidence. We try to suggest practical solutions. Much of the cutting edge of our work is wasted because our reports are debated so long after they are made. However, we shall try to put in a few cutting edges this evening.

It is high time that the Comptroller and Auditor General, through the National Audit Office, modernised the presentation of his work in terms of green reports. These are now put out in a succinct and very readable form and the coverage given to them by the media has grown extensively.

I am as much a traditionalist as anybody, but the format in which we produce our reports is as boring as one could possibly find, and we have to be assiduous in working out exactly which report we are dealing with. The format is identical for all the reports. They are pretty unreadable, and I would say to the Chairman and his colleagues that I hope that that will be an urgent item for discussion at our meeting on Monday next and that we shall consider how the general accounting officer in the United States operates. He produces reports that are readable with recommendations that are on the cover. If we followed his example, more than the six or eight Members attracted to the debate tonight might be attracted in future.

The second report, the 15th report and the 21st report 1984–85 relate to helping the nation's exporters. Our reports are so often critical of what is happening in Departments of State that it is quite nice to pick up a report which is thin and in which the evidence is clear. The second report states in recommendation No. 15(1) on page vii: We consider that the C and AG's findings provide welcome assurance that the staffing of the Diplomatic Service has been, and is, scrutinised regularly and carefully. We do not say that lightly, and we long for the day when we can say the same about the National Health Service or indeed about any other Department of State. It is to the credit of the Foreign and Commonwealth Office that it has accepted the strictures that the Committee made of it some years ago and that it got its act together. I pay tribute to the work that it has done.

The 15th report deals with the management of the overseas estate. Considerable progress has been made with it and we believe that further progress will come. I draw the Minister's attention to paragraph 14(v) of the 15th report's recommendations, which states: We regret the significantly reduced resources available to FCO for rationalisation and 'spend to save' proposals with a high rate of return. We think it unfortunate that opportunities for savings are being frustrated by an initial shortage of funds. It is clear from that that the FCO has a much better grip on things than it has had for a long time. I think that the Treasury might relax its control a little in this area. As one who specialises in matters concerning south-east Asia, I am conscious that, had we had more men on the ground and progressed further the concept of a territorial commercial man, we should not have got into such a mess with the Thai bus contract, with every chance of losing it.

The 21st report on the ECGD deals with our exporters and is a most important and timely report. As hon. Members will know, the Minister of State has received recommendations for a review of ECGD. He did not accept all the recommendations that were put to him about the nature of the board, but he said that there were now full-time members on the board and that the result will be a swifter and more responsive service to exporters and, as he put it, more stimulating work for the staff.

It is a perennial worry for anyone at the Treasury to discover that the ECGD is making a substantial loss. My hon. Friend the Minister needs no reminding of that, but I hope that when the Treasury considers the report and the evidence of Mr. Gill and others it will recognise that it is perfectly right, proper and practical that commercial insurance risks should be run at a profit and certainly on nothing worse than a no-profit-no-loss basis but that there are times, a substantial number in today's world, when there is, as it were, political risk. In this context, I draw my hon. Friend's attention to paragraph 46(viii) of the summary of main conclusions, which reads: Guarantee facilities within ECGD's Trading Accounts which incur substantial losses, but which are necessary in the national interest, should be accounted for as public expenditure. The details in paragraph 25 show that in that category of trade the loss was £68·2 million. In the other category, shown in paragraph 29, the loss was £87·7 million. We know that ATP, aid and trade provision, is still being reviewed three months after the initial announcement of its role. I put it to the Government that the £150 million spent on trading risks of a political nature is vital to the nation's exporters, and the House will do a great disservice to the nation if the availability of that cover is removed.

Having praised the Foreign and Commonwealth Office, I come to my bête noir, the National Health Service. Here I must declare a number of interests in that I advise two pharmaceutical companies and am married to a full-time general practitioner. In this context, I wish to dip into a number of reports—Nos. 12, 16, 28 and 29 of 1983–84 and Nos. 17, 22 and 23 of 1984–85. I shall say no more than this for the pharmaceutical industry. Tackling the approximately 10 per cent. of NHS costs accounted for by the national drugs bill is fine and dandy, but it is no use ignoring the other 90 per cent., throwing one's hands up in despair and saying that because we do not know how to get at those costs we cannot do anything about them.

In relation to the pharmaceutical price regulation scheme, I draw attention to just two issues. First, the parallel imports situation is covered in the 29th report of 1983–84. Paragraph 31(vii) of the recommendations states: The suggestion that the NHS has not been overcharged in respect of parallel imports of drugs in no way justifies chemists making large unintended profits at the taxpayer's expense, and DHSS should deal urgently with the problem on this basis. That was printed on 9 July 1984, but to the best of my knowledge action taken on it has been almost nil. I did some telephoning on this yesterday and to my certain knowledge there are still parallel imports at 30 per cent. below the list price cost, the difference being pocketed by the large chemists doing the importing.

The 23rd report of 1984–85 makes a further important point about the PPRS stressing the importance of the Department receiving the main review body report for Government contracts before carrying out its negotiations with the industry. The DHSS previously did its own negotiation but, because of the other main body of Government review contracts, we have the farcical situation that a non-pharmaceutical industry can get a better rate of return than someone under the PPRS.

The 28th report is about the procurement of NHS savings. The not insignificant sum of £60 million is available. However, we sadly report—these are pretty damning words—in 32(i) of the recommendations: The slow progress in securing available economies in the cost of NHS supplies represents a significant missed opportunity. It is lamentable that after nearly 30 years of effort by the NHS we are virtually starting from the beginning. That sentence fills us with horror and it ought to fill every senior official in the DHSS, Ministers and shadow Ministers with absolute horror. It is not good enough to allow that situation to continue, and I hope that the Treasury will put pressure on the Department to sort this out.

It gives me some pride to state that only the Oxford region has virtually eliminated small stores. It is not often that, coming from Northampton, I praise the Oxford regional health authority but it has got something right. The DHSS informed the Committee that the target for centrally co-ordinated supplies was 80 per cent. to be achieved in 1984–85. I would love to know whether we got anywhere near 80 per cent. The £60 million is available without a great loss of sweat in the supplies area. If Sainsbury, Tesco or any other company were involved, it would soon be digging into that £60 million.

The 22nd report concerns energy conservation. First, I quote a few words of praise: We recognise the achievement made by the health service over the last ten years in securing energy savings totalling £379 million". The Committee then goes on to say: But we have grave doubts as to whether the potential for further savings of £1,335 million in the next fifteen years will be realised". "Grave doubts" is an understatement because the Department set up a scheme in 1977 with a great fanfare but which totally collapsed by 1981. We say it faltered. It is extraordinary that when we look, ask, question and probe we find that there is not one piece of guidance given by that Department to its regions for the whole of the period from 1979 to 1984. We forget too easily that 1979 was the middle of an oil crisis, yet the DHSS, despite that crisis, ignored the question of energy saving. In paragraph 7 we state that, in the view of the DHSS, it had delegated that responsibility to the districts and regions, but it is not adequate to delegate in such circumstances, given the Department's record.

I should like to know how near we came to achieving savings of £100 million, which was the Department's own target for 1984–85. My guess is that we had a miserable performance—I doubt whether we got halfway to it—so that leaves at least another £50 million to £100 million.

The report on the general dental services—the 17th—does not show any massive savings. It is right to place on record the Committee's view that, since 1979, dental health in Great Britain has continued to improve and should improve further. The vast majority of our dentists do a first class job for the nation in preventive dentistry. The Department, however, should respond to our recommendation that regulation 22 procedures—a spot check—should be done on those dentists who appear to be either over-providing or over-charging. A little activation of that would go a long way to solving the problems.

The 12th report makes very sorry reading. It is distressing that any Department of State can estimate cost savings from reorganisation of £8·6 million which turn out to be £54 million. That is an incredible difference, and the Committee is not even sure whether £54 million was an accurate figure. We were told that there were 4,000 posts to be saved. We do not know whether they were saved. All we know is that there were 3,000 premature retirements at fairly princely sums of money. Paragraph 29 of the report says: We must express our misgivings about the re-employment in the NHS of officers who have had the benefit of premature retirement terms. We welcome the review being undertaken by the Department and, whilst we can appreciate that re-employment could be an assistance to management, we consider that it should be very strictly controlled by the DHSS themselves. That warning paragraph is just as relevant today, and I hope that it is brought to the attention of the authorities.

The 16th report for 1983–84 concerns manpower control. I am sure that my hon. Friend the Member for Crawley (Mr. Soames) will have drawn attention to it. Recommendation 52(i) says: Progress by the health departments and health authorities in bringing NHS manpower under control has been quite inadequate". That is an understatement. We were aiming for savings of £30 million from the reorganisation, but we are not sure whether we have achieved more than £10 million so far. We know that we have building defects to the tune of at least £30 million and that in terms of claims against contractors and professionals we have garnered the princely sum of £400,000 as at the date of our report, which was not so long ago.

I have tried to highlight the fact that there are several areas in the NHS, which is under a lot of pressure, where substantial savings can be made. I have to attend a meeting of my district health authority next Friday. It wants to close three wards, but when I look through its plans I find that they show every sign of the evidence that I have found in the PAC's reports — inadequate planning and inadequate tackling of what is no more than simple professional good management. The Treasury wants to save money. It is high time that it worked through some of our NHS reports because tens of millions of pounds are lying wasted. That is to the detriment of the whole nation.I hope that, if nothing else, I have stimulated my hon. Friend into reading those reports on the NHS.