Public Accounts

– in the House of Commons at 1:35 pm on 12th March 2009.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee 1:35 pm, 12th March 2009

I beg to move,

That this House
takes note of the 30th, the 36th, the 39th to the 41st, the 43rd to the 49th, the 51st and the 57th Reports of the Committee of Public Accounts of Session 2007-08, and of the Treasury Minutes on those Reports (Cm 7493, 7522 and 7545).

As ever, I am delighted to open this debate on the work of the Public Accounts Committee. In January 2002, in my first contribution as Chairman, I said that our duty was to act as the parliamentary laymen and women who hold the mandarins to account. As a Committee, we retain a unique relationship with the civil service. We ask the questions our constituents would ask if they were in our place. We do so without fear or favour, and without political rancour, and always for a positive purpose. In short, we promote and protect the interests of taxpayers.

In the subsequent seven years of my tenure as Chairman, I do not think there has been a more important time than the present to prod, press and pursue those who run our public services, to make sure they get the most bang from our buck. I do not consider us remiss when the loudness of our own "bang" startles the occasional permanent secretary. It is, after all, a milder form of shock than Voltaire's original observation that we kill an admiral from time to time "pour encourager les autres", although judging from his occasional comments on the social background of those before us—especially those in uniform—Mr. Davidson might, perhaps, not be averse to such a punishment occasionally being dealt out to senior mandarins.

While I am following a French theme, hon. Members may be aware that my views on the malevolent economic climate recently led one of our national newspapers to compare me with a great historical figure. Unfortunately, that figure was Marie Antoinette. I am therefore relieved that the word "guillotine" has a slightly different meaning in this place from that which it had in revolutionary France. I am bound to note, however, that spiralling national debt was one of the sparks that ignited the French revolution. I do not think it a party political point to suggest that our own growing fiscal predicament should spark—indeed require—another kind of revolution: a genuine upheaval in the delivery of public services.

In a recession, the demands on public services grow, and in this recession the public purse continues to slake the seemingly unquenchable thirst of the financial sector. Even should the Government be proved right and economic spring begin to bloom next year, there will be no escaping tough fiscal choices. To meet the expectations of those who fund and use public services without adding to the burden of debt, we need more than incremental reform; I believe we need a Whitehall revolution. It is in this context that we consider the work of the Committee today. In my view, it makes our work all the more relevant and all the more important. Our recommendations contribute to reform; perhaps our deliberations can help to stimulate this revolution in Whitehall.

I want to focus on a few central themes. Some unkind critics say that much of what is said by Members in this place is spoken with one eye on tomorrow's headlines. However, when I say I want to talk about efficiency and financial management, I am sure Members will recognise that I must be motivated by more than the allure of an increased public profile. I doubt that this report will figure much in the tabloids tomorrow, but that does not mean that it is not important.

I also want to touch on a third, more specific issue arising from the Committee's work—how the public sector works with the private sector. Such worthy topics are meat and drink to members of the Committee and, indeed, to the Minister herself. True efficiency is about delivering more out for the same in, or the same bang for fewer bucks. It must be the engine of our Whitehall revolution—at the top of every public servant's agenda. When people have to tighten their belt and watch the pennies, they expect the same from their own Government.

I acknowledge that there has been progress in parts of Whitehall in improving efficiency and the effective delivery of Government programmes. I believe that I am less at risk than some in seeing some green shoots here, although in this case they are of reform, not yet, I fear, of revolution. I am happy to celebrate—we have mentioned this before but it bears repeating—the example of the work to update Jobcentre Plus offices. Given that it is one of the biggest public sector construction projects the UK has seen in recent years, we might have been forgiven for fearing the worst, but this tough project was delivered on time and within budget. It is worth dwelling on why.

The project demonstrated the value of continuity in leadership, the importance of experience and the benefit of engaging local staff throughout a change programme. Members might think that I am attempting to lobby for them, or even myself, in celebrating the benefit of age and experience, but between them the senior management team that oversaw the Jobcentre Plus project boasted more than 100 years of front-line operational experience. They had all started from the very bottom, as clerical assistants. They knew how to run projects. There is no question but that the knowledge and savvy that this brought contributed to their success. We all know that the right team with the right skills on the right project can make all the difference. There is no need to throw endless sums of money at a project to make it work. What is needed is the right mix of experience and know-how, and, of course hard work. Whitehall needs to let those with the skills get on and do their jobs properly, and there is no reason why these projects—even IT projects—should not be run successfully.

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Photo of Don Touhig Don Touhig Chair, Members' Allowances Committee

I apologise to the hon. Gentleman and to the House—I would like to take part in this debate but I have to attend a meeting of Members' pension fund trustees shortly. I pay tribute to him and his chairmanship of our Committee. He makes a very important point about the successful operation of Jobcentre Plus. Does he share my frustration at the fact that the good practice that we do see in the PAC—we do not see it very often—is not shared across Whitehall? What can we do to make other Government Departments wake up and say, "Here's a good way of doing something; let's copy it"?

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

That is a very important point with which I agree entirely. It is very frustrating. This morning, the National Audit Office report on the new computer system for offender management was published. That is another disastrous project. In answer to the right hon. Gentleman's question, we can help. I went out of my way on Monday in our Committee to congratulate Mrs. Lesley Strathie, who worked her way up from the bottom of the civil service and ran the Jobcentre Plus projects that we have helped to launch into the stratosphere. She is now chief executive of Her Majesty's Revenue and Customs—an absolutely top job in Government. I think it is still the case that, with the exception of Mrs. Strathie—I may be wrong—there are no other permanent secretaries who have actually run projects. There is no great mystery about this. We should reward public servants for delivering projects on time and on budget.

Regarding this disastrous thing that we looked at with the NAO this morning—there have been other such projects—nobody has ever been sacked; nobody's career, so far as we know, has ever been harmed. We have to reward civil servants who perform properly—yes, even with bonuses—and we have to be prepared to move sideways or even dismiss from their posts civil servants who do not deliver because, ultimately, the public suffer. In that regard, the intervention made by Mr. Touhig was a very important one.

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Photo of Angela Browning Angela Browning Conservative, Tiverton and Honiton

I totally agree. It is typical for civil servants to be moved sideways if there is some terrible problem that they have been involved with. However, I wonder whether, in addition to the rewards that my hon. Friend is suggesting, there is a much more structured way of improving in-service training and skilling for existing civil servants, and of improving the training of new civil servants, so that those already in-post can benefit while in-post from the skills training they clearly need, and the necessary skills can be introduced in the core training.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

Yes, we need a much better developed training system for civil servants.

I have discussed the issue with Gus O'Donnell, the Secretary to the Cabinet, whom I have great confidence in and who is trying to change the whole culture of Whitehall in terms of training and a more professional approach. We must create almost a convention within Whitehall that someone who gets to the very top as a permanent secretary who advises Ministers must have run a project successfully. That is what happens in the private sector. People do not get to the very top of the private sector in an industrial company simply by advising the chairman or the chief executive on policy; they get there by delivering a successful project on time and on budget.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

Is not one of the lessons to be drawn from the roll-out of the Jobcentre Plus office network shown in the response of the head civil servant to the point that I made about the social origins of her staff? As page 17 of the Committee's report shows, she responded by saying that only one of the top 23 members of staff in her department had come from Oxbridge. This is undoubtedly the most successful department that we have ever come across in terms of rolling out successful projects. Does the hon. Gentleman believe that there could be anything more than a coincidence there?

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

I did not go to Oxbridge myself. I do not know, Mr. Deputy Speaker, whether you went to Oxbridge—you are not going to enlighten us. Anyway, we had better move on, but I take the hon. Gentleman's point, which is a very good one.

Knowing that the public sector can sometimes get the job done makes it all the more frustrating when things go pear-shaped, as I am afraid they often do. Unfortunately, my Committee has found that excellence across the board still remains elusive. Let us take one example—the Committee's report on the Department for Transport's initiative to share with its seven agencies a central unit of corporate services. The project was dreamt up as an efficiency drive aimed at saving the taxpayer £57 million by 2015. Sadly, what followed was an example at risk of ridicule, rather than a shining example of revolution. This "inefficiency" initiative managed to cost the taxpayer an extra £81 million, and on occasion the swanky new system took to communicating in German—not so much "Yes, Minister" as "Jawohl, Minister". Rather than obtaining the benefits of German efficiency—

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

Probably, yes. Rather than obtaining the benefits of German efficiency, the Department for Transport lumbered itself with inefficiency in German. I recognise that this is an extreme and perhaps amusing example, but our report suggests that there needs to be a more consistent focus on delivering efficiency.

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Photo of Greg Knight Greg Knight Chair, Procedure Committee

I assume that my hon. Friend is referring to his Committee's 57th report. I notice that on page 5, the Committee report states:

"This case is one of the worst this Committee has seen and responsibility for these serious weaknesses rests firmly with some of its top officials."

What disciplinary action has been taken against those top officials?

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

To be honest, I do not recall—we have 60 sessions a year; other members of the Committee are here—but at a guess, none, despite the staggering failure in project management. A project that was supposed to save some £50 million actually wasted £80 million. I think we were told, as we always are, that we are not entitled to pursue civil servants by name, and I do not think it right that we should. My father was a civil servant and I have a great sense of the ethos of senior civil servants. It is not for us physically to pursue, persecute and crucify them, but I do think that it is for the civil service itself to take to task people who are responsible for such a catastrophic failure.

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Photo of Greg Knight Greg Knight Chair, Procedure Committee

I totally accept what my hon. Friend is saying, but I note that in its response to his report, the Treasury states at paragraph 4:

"There have been consequences for individuals responsible for those weaknesses".

What on earth does that mean? Does he not agree that, at the very least, we ought to know what those consequences are?

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

It may be that we should pursue that matter further. I suspect the consequences are that promotion for those individuals has been less accelerated than it might have been otherwise. As my hon. Friend Angela Browning said, that is usually the way of the civil service—people are never sacked, but sidelined. Traditionally, the deal in the civil service has been that people do not get bonuses, but they do not get sacked. It is a job for life, but people do not get paid terribly well. As a House, we have to think about the matter much more than we do.

The financial rewards at the top of central and local government are very high. Permanent secretaries earn a minimum of £140,000 a year and their salaries can go up to £220,000 a year, and many civil servants earn far more than that because they are on bonus-related schemes. The whole culture of Whitehall is changing, and perhaps the traditional way of doing things—that civil servants are never sacked—has to be thought about again by the Government, but it is for them to make up their minds on that.

We looked at a project run by the Department for Culture, Media and Sport, and the nine grant-making organisations it sponsors. We found that it spent a hefty £200 million to administer and pay out just £1.8 billion in grants without efforts to benchmark the grant makers' way of doing things against each other, or against other ways of working elsewhere, which we might have expected. The Department could have no idea of how other grant-giving organisations operate or of what the costs were. Ordinary times would require greater focus on efficiency than is evident from those examples, but today we face extraordinary times. I am concerned that, far from driving true efficiency in the everyday business of Departments, circumstances may be leading us to institutionalised inefficiency. Spending taxpayers' money is what Governments do, but we know that spending money is the easiest thing in the world; getting something practical for it is much harder.

We have seen before that it is easy to increase spending rapidly on a service. We saw that as we drew up numerous PAC reports into the NHS and the Rural Payments Agency. We make no comment on or complaint about the increase in spending—that is not our job. Too often, the rush to spend has been unaccompanied by any insistence on improved efficiency. When new money is put in, the taxpayer is entitled to expect identifiable improvements in productivity on the front line.

As the Government bring forward spending plans to try to counter the recession—the Department for Transport is one of the bodies most involved—we must be vigilant in guarding against waste, and we should try to ensure that the efficiency gains we have achieved so far are protected as spending increases rapidly. There should be a forensic efficiency assessment of every proposal to buy now what was expected later. Accounting officers should be certain of the costs and benefits of moving money around, and we expect to see evidence that they have adopted the most efficient solution, not leapt at the most convenient spending opportunity.

With so many pressures threatening efficiency, the public must be able to have faith in the savings claimed. The Committee has had to express scepticism over claimed efficiency gains in the past—I put that point to the Prime Minister myself, in the Liaison Committee. Our 2007 report cast doubt on the reliability of 74 per cent. of the savings claimed. I am not going to go into that again, and I have welcomed the fact that Departments' claims will now be subject to the independent scrutiny of the National Audit Office, which is very good news. I am pleased to say that the Treasury has already promised to take into account associated increases in costs elsewhere before proclaiming efficiency gains. That is becoming more and more important.

As well as external scrutiny, the civil service needs far more internal challenge to how things are done—a point emphasised by the recent National Audit Office report "Helping Government Learn". In Departments' thinking, the question "Is this the best way to do it?" seems only to arise late. One of the challenges for my Committee is to help to shake Whitehall free from the mentality, wherever it remains, of, "This is the way we work because this is the way we've always worked".

True efficiency will not be achieved without an ongoing revolution in financial management in the public sector. We have seen some improvements in that area, too. I welcome the increase in the number of qualified finance directors sitting on the boards of Departments. Today, I note at last that that includes the Department with the biggest asset base: the Ministry of Defence, which now has a qualified finance director—we have campaigned for that for years. However, that should be set in the context of a general lack of financial know-how among staff, who are not finance specialists. It simply cannot add up that the financial skills of the people who spend public money are not up to scratch.

The Committee's report on managing financial resources highlighted the disturbing truth that only 20 per cent. of Departments base their policy decisions on a thorough assessment of the financial implications of their proposed actions. Departments will not get true efficiency unless they know the true cost of what they propose, and factor that into their decisions. It is all too easy to predict the results of that gap in financial skills. Things are better now, but in two successive years the Department for Environment, Food and Rural Affairs budgeted to spend more than it had been given by the Treasury. Anyone with experience of managing a household's weekly account knows that that would lead to disaster. If, halfway through the year, a Department has to invest creative energies in juggling funds to try to stretch its budget, or to make cuts to its planned programme of work, that can only be counter-productive and harm the delivery of public services. I am sure that the Minister will agree that it is not for the Treasury to pull Departments out of the mire of their own making.

My final theme reflects an environment in which revolution is already upon us, whether we like it or not. The days when the public sector designed, developed and delivered public services in splendid isolation are gone. Engaging with the private sector requires different skills and brings different risks. Public sector officials must have their eyes wide open to profiteering, and their commercial acumen honed by experience, especially in today's environment.

It is not only in setting out the terms of a contract that we have seen problems. The Committee's report on changes to operational private finance initiative contracts showed that whether a PFI contract represents value for money for the taxpayer depends not just on the terms of the original deal, which is what we may have put emphasis on before, but on how the contract is managed over the next 20 to 30 years. Unfortunately, we found that many public sector authorities are not doing well enough in managing PFI deals once they are up and running, and too often that is down to the familiar problem of a lack of commercial expertise. If one adds to that the results of an NAO survey which found that more than 15 per cent. of PFI projects examined are not managed on a full-time basis—unbelievably—the whole thing can start to look somewhat amateurish.

In this case, as elsewhere, there are some green shoots. The Committee found much to laud in the Highways Agency project to introduce a better motorway communication system, delivering up-to-the-minute information for motorists. The small black cloud on this particular horizon was that it took five years to negotiate a deal that the agency had expected to be tied up in just two. But the agency was determined to sign the deal only—and this is good news—when it had set out exactly what it wanted at a price it could afford, and it successfully did so, which meant that it remained within budget and got the project delivered on spec and in good time. I do not know whether those involved went to Oxbridge, but they did it. In signing the agreement, the agency was also successful in passing many of the risks of the project over to the private sector contractor.

Before I close, I want to take a moment to consider the broader implications of our reports for the scale of private sector involvement in public services in the current financial climate. In our last debate, I queried the level of debt being built up under PFI. It is staggering. There are 630 signed PFI projects, with a further 110 in the pipeline, amounting to hundreds of billions of pounds, but only last week the Chief Secretary to the Treasury announced that the embattled financial markets can no longer support these new deals, which is worrying, frankly. The Government will now act as banker to themselves, changing the balance of risk in deals, and with an uncertain exit strategy. Let us remember that the point of PFI was that we would get projects delivered on time and on budget, and that the risk would be passed to the private sector. We are now in an uncertain world. That is a sign of how revolutions have unforeseen consequences, and it will require the very best commercial skills to manage the risk to the taxpayer.

It is not for me, as Chairman of the Committee, to cheer or decry any particular measure. The Government have a perfect right to do anything they like—well, within reason. However, my Committee will, I hope, continue to be the taxpayers' conscience, reminding Ministers and officials—should they ever need such a reminder—that the test we apply is not simply, "Can you spend?" but rather, "Can you spend wisely?" I think that the work of our Committee is held in high regard, and that all its members would agree that we are privileged to serve on it. Our impact is the result of the hard work and commitment of all Committee members and I thank them for their dedication. In particular, I would like to thank the my hon. Friend Mr. Dunne who has left the Committee since the last debate. I welcome my hon. Friend Mr. Carswell who, I am sure, will bring much to our deliberations. As ever, I would like to thank our clerk, Mark Etherton, and the Committee staff.

Lastly, seven years ago, I commented on the importance of the National Audit Office to our work. That importance remains and I pay tribute to its work in providing so much evidence, across every conceivable aspect of Government activity.

I want to thank, too, the current Comptroller and Auditor General, Tim Burr, for his efforts and his support for the Committee during his tenure and for taking on the National Audit Office on an acting basis at a difficult time. Last month, the Committee held its first ever pre-appointment hearing in its 150-year history with the Comptroller and Auditor General-designate, Mr. Amyas Morse. Mr. Morse, I am pleased to say, will be the first ever chartered accountant to hold the historic post of Comptroller and Auditor General. I pay tribute to Nick Macpherson, the permanent secretary to the Treasury, Tim Burr and Andrew Likierman, the new chairman of the NAO. We have worked together to make what I hope is a good choice. The Committee had no hesitation in declaring its confidence in Mr. Morse's suitability for the role and we look forward to working with him from the summer. I hope that the changes in the NAO's governance arrangements will also soon be put on a firm statutory base and we look to the Minister to try to make progress on that.

Finally, many of the people whom we represent are going through tough times that are not of their creation. I believe that that makes the role of the Committee even more important. That role is not simply to scrutinise spending, nor is it solely to terrorise witnesses. As I said seven years ago, we do not want to be just an undertaker. We are, I believe, a practical force for good, trying to suggest how things can be done better. Taxpayers and officials both benefit when action is taken to give impact to our recommendations, when they are acted on promptly and when, once the Government say to Treasury Ministers that they have to do something, they actually do it. In our hearings and in our speeches in this debate, we can encourage the revolution in the delivery of public services that hard times require.

As we go through these times of financial difficulty and flux, I can say with absolute conviction that one thing, at least, will remain consistent: the determination of the Committee to serve the interests of taxpayers, to stimulate change on their behalf and to hold the Government to account for what they do with our money. I commend the motion to the House.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 2:01 pm, 12th March 2009

I apologise for the delay in getting to my feet, Mr. Deputy Speaker; I was halfway through writing the speech that I shall now deliver.

The Public Accounts Committee is quite definitely the queen of Committees, from any point of view. Its work is centrally important and it does a vital job. From my brief experience as a member of the Committee, I think that it is doing that job very well and very effectively. I congratulate our Chairman on the guidance that he gives to the Committee and on the points that he has raised today, all of which are crucial.

The Committee's work is a bit like the old American series about the cop called Friday: day and night, a dedicated body of men carry on a relentless fight against wasteful spending. It is a fight that has its ups and downs, but now that I have been on the Committee a little longer it is possible to discern common patterns in many of the problems that we face. Each report is exciting and seeing that it is implemented is important and interesting.

A common pattern emerges from the bunch of reports that we are dealing with today and from our work over the years. It is useful to discuss that. One thing that emerges, for instance, is the constant desire of this Government—and of most Governments in the populist climate in which we operate, where every Government want to show that they are in command of the problems, that they are dealing with the problems as they arise and that they are responding to public pressures—to change and to pull everything up by the roots and put it back again in a different order.

That constant pressure to change causes many of the problems, because administration, proper financial controls and efficiency need a settled routine. Instead, we constantly change things. The Jobcentre Plus change commented on by my hon. Friend Mr. Davidson, which was implemented by people who knew the business, who had grown up in the department and who had the skill to do it, has been very successful. Other changes have been a good deal less successful.

While we are chopping and changing, the constantly grinding Gershon process of efficiency savings is working away in the Departments producing other changes. Those changes are often counter-productive. We saw in the Rural Payments Agency the consequences of the Gershon efficiency savings. The agency had shed staff who were to prove vital when it came to dealing with the rural payments, which was a big change on a huge scale with which the agency was not capable of dealing. It had to bring back the staff who had been got rid of because of the efficiency changes.

We are seeing that problem now in the Valuation Office Agency with the argument about the business rates for port businesses. The VOA, which has been shedding staff due to the grinding away of efficiency savings, is effectively understaffed and did not carry through the necessary assessments of individual port businesses in 2005. Port businesses have been getting bills in 2008 and 2009 requesting back-payments going back to 2005, which they cannot pay.

The Committee does not consider the constant process of economies, cuts and staff reductions produced by the Gershon efficiency savings. We should consider it as an overall subject. We should consider not just the burdens of change that Governments introduce so regularly but the effects that the grinding down of numbers has on the efficiency of the Departments. There are spectacular examples, such as the RPA and the VOA. Indeed, in Jobcentre Plus there were plans to shed large numbers of staff later this year, but at a time when the recession is producing far more work in Jobcentre Plus, more staff now have to be hired.

The constant process of pushing staff numbers down and then responding to emergencies by bringing people back is a very unsatisfactory method of proceeding. The Committee could consider the process as a whole, and it is a common pattern that we need to investigate. The constant changes lead to gross inefficiency and they are not based on any reliable estimate of the costs. For example, the 14-to-19 education and qualification changes that were examined in one of the reports have been launched into with no assessment of the costs. Local providers have been left to devise their own systems, sometimes in consultation with the industries concerned about what the qualifications should be and sometimes without consultation. Each provider is going down its own path with no overall estimate of the costs of the change and of what should be done financially to make it work effectively. A substantial change has been rushed into without adequate assessment and without the provision of funds.

We have produced a report on the Department for Environment, Food and Rural Affairs. Functions and agencies have been handed to DEFRA, but it has not been provided with the proper management ability, particularly when it comes to financial management. As Mr. Leigh said, there is a dearth of financial experience and expertise in many of the Departments. The Treasury is trying to control things from outside, but it is the internal financial controls that are so important. In DEFRA, those controls have clearly been inadequate. It has been given extra agencies and functions and has faced crises that have led to increased spending, particularly those produced by emergencies such as flooding and by the rural payments fiasco. Those crises have resulted in haphazard economies and attempts to grapple with the situation without proper effective financial controls or financial expertise in the Department. Departmental change has to be backed by proper financial management, but we are not providing that.

The second common pattern that I want to emphasise—unfortunately there is not much scope for doing so in the reports that we are dealing with today—is the obsession with employing consultants. We employ them for every problem that comes up, and the resulting bill is enormous. Overall, it amounts to £70 billion or more, but the assumption is that the necessary expertise is no longer available in the civil service. Matters that could and should be decided by advice from within the Departments concerned, and by proper planning by them, are now decided by consultants.

The normal practice of consultants is to tell us what we want to hear. They wrap it up with statistics and managerial formulae, but they do not offer value for money. That is another common pattern that the Committee should keep an eye on.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

Does the hon. Gentleman agree that the discussion about the use of consultants is often very general and that it needs to be more specific? Of course there are cases in which consultants have been used when they should not, but if one wants to build a motorway one does not consult only those civil engineers who are on the books. One hires them in when one wants to build the motorway, knowing that the rest of the time they will be employed on building a bridge in Saudi Arabia, or something else useful. Is that not a better way of using public money than employing people on the books full time?

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

That is a specialised expertise and it is relevant to employ it as necessary. However, the problem goes wider than that, because the big accountancy houses that provide the consultancy services have no more experience or expertise than the Government Departments responsible for any particular service. It is the general use of consultants that causes the problems.

The Government like to say that a matter has been reported on by consultants. That is why they employ them, but they should have the confidence to say what people in a Department think should be done, and how.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Where did my hon. Friend get his figure of £70 billion for Government spending on consultants? For the record, the amount is £900 million. That total fell by 31 per cent. between 2005 and 2008, so good progress is being made—although I agree in general with his point that Whitehall Departments should not reach for the consultancy option too soon and without proper thought.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

The problem is a psychological one—we like the reassurance that a consultants' report gives us before we take action. I admit that the figure that I quoted was my own concoction, but I did not hire a consultant—I made it up myself.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I think that the Minister was getting a bit excited at the thought that suddenly there was nearly £70 billion that the Treasury did not know about that could be used for something. We all know the hon. Gentleman's aesthetic temperament when it comes to statistics. I have completely forgotten what I wanted to say in this intervention! It was something to do with consultants and, if I remember, I shall let him know.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

The figure includes consultants employed by local government.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I have remembered what I wanted to say. The hon. Gentleman mentioned that people in government feel more secure if they have a consultants' report. Does he recall the case of the Criminal Records Bureau and Capita? Bids were made by Capita and PricewaterhouseCoopers, but there was a difference of £150 million between them. The Department concerned commissioned PA Consulting and paid it £300,000 for an assurance that both bids were compliant. They were, but that was because the terms of reference were drawn so loosely that almost any bid would have been compliant. Not only was that £300,000 completely wasted, but it gave false and misleading reassurance to that Department.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

I am dimly aware of that case. It casts a comic light on the whole procedure, but I am concerned about the rush to employ consultants without checking whether people in the Department can do the work. The problem is that we seem to need to reassure ourselves of the value of any change by getting it authenticated in a consultants' report.

We need tighter management, so that those firms of consultants that have failed, or whose reports have proved inadequate, are excluded from future contracts. That lack of control is another problem but, although I have spent so much time talking about consultants, it is not a matter that appears in any of the reports that we are dealing with today. I shall therefore move on, delicately and gently, to another common obsession—the private finance initiative, which our Chairman mentioned in his speech.

More than 600 PFI projects have gone through so far, and more than 100 are in the pipeline. We are reaching a difficult moment, as many PFI contracts—such as Building Schools for the Future, and others—are crumbling because of the credit crunch, with the private sector no longer able to provide the necessary credit.

This is an emergency, and it is interesting that the Government have said that some projects will be paid for out of the public purse. In my view, that is what they should have done in the first place. In this country, the PFI amounts to a sort of outdoor relief for capitalism: we shove money into the pockets of the private sector, at no great risk to it or benefit to us. The one benefit to the Government is that the use of PFI keeps projects off the public sector borrowing requirement. If we had been willing to defend borrowing and accept a higher PSBR, we could have done everything more cheaply and efficiently.

However, PFI is a fact of life. Our report on it dealt with the need for proper project management in the service or sector where the contract work is being done. Again, the Treasury has failed to provide advice—to local government, for example, or the NHS—about how a project should be managed, or to ensure that a proper manager is in place to control the contract.

When one looks at PFI contracts, one finds all sorts of excesses, such as the management charges that are imposed, for instance when a PFI contract is transferred to a special-purpose vehicle, or when services are provided. One of the more ludicrous examples was the charge for replacing light bulbs. How many PFI contracts does it take to change a light bulb? At the present rate, we might need another PFI contract to find out, but the imposition of management charges in an unsupervised and uncontrolled manner is a way for companies to extort money from a contract. The lack of specific management control by the recipient of a project, and of specific advice from the Treasury about how the project should be managed, is leading to waste.

That brings me to another common failing: the inability of Departments to deal effectively with business or organised unions and pressure groups. For example, the management of health service contracts for GPs resulted in their being made much wealthier, but there was no dramatic improvement in the service provided to patients. We are now trying to catch up by asking GPs to provide more services and to open for longer hours, but the contract should have provided for such things in the first place.

We more recently examined the new system of health service pay, and although it is right to provide a proper, effective structure, and everyone ended up being better paid, the system did not achieve the purpose of having more effectively trained and qualified staff, although that should have been what the contract was all about. That was a failure.

We have not considered in these reports further failures in defence issues, but there is an inadequacy in dealing with those big interests and big problems.

The last common fault that is worth considering overall is that, while we are spending money through the PFI contracts and consultancies, we are less adequate in raising the tax revenues to support doing so. We have been soft on tax avoidance and tax evasion. That comes out in the report on large company tax payments, where the resort of Her Majesty's Revenue and Customs is to appoint a customer manager to each company to maintain friendly relations, rather using than strict, powerful supervision like the American tax authorities, which are pretty tough on tax avoidance and tax evasion.

We highlighted the problem of the relative inability of the teams that deal with tax matters and tax havens. Fortunately, we are now committed to dealing with tax havens and I am glad that the Prime Minister has made that a central issue. For many years, we have told HMRC and Treasury Ministers that the issue needs to be dealt with, and they have said, "Very interesting. That's slightly shocking. Thank you for the information." We have gone away, and nothing has happened. Now, it will be a front-line issue. Jersey and Guernsey are already saying, "Well, we are not tax havens. We're just rather nice islands, with a pleasant existence and a low-tax regime, so please don't call us tax havens." It is a big issue.

The TUC report on the amount of money lost to the Revenue by tax manipulated through tax havens is startling. What we came across in the report on large companies is that Revenue staff are comparatively underpaid and under-skilled in dealing with the large teams that big businesses and tax consultants can mobilise. They are always leaping one step ahead in developing new devices, and the Revenue is lumbering slowly behind. It now proposes to bring back retired staff and put them into service again, but the problem is one of building up the expertise, paying them sufficiently and keeping them, given all the poaching done by the accountancy houses and big business. It is unsatisfactory—this, too, comes from the customs and excise report—that the means of bringing in the tax are less well developed than the procedures for spending it. That is the essence of my observations today.

Not only do we have a problem in ensuring that the reports are implemented—on the whole, they are—but the procedure is unsatisfactory for us, because we are always being confronted by officials who are not responsible for the mess that has been created who promise to clean it up and ensure that things work okay. We are making posthumous changes. We are successful in individual reports, but we need to look at the common patterns of failings that produce such reports, because it has become clear over a long period that there are common patterns and that they should be dealt with as a pattern, rather than as specific issues.

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Photo of John Pugh John Pugh Shadow Minister (Treasury) 2:24 pm, 12th March 2009

One of the most worthwhile things that I do in the House of Commons is serve on the Public Accounts Committee. It is a pleasure, and the comments from hon. Members on both sides of the House today show that we are a very well adjusted group.

I shall comment briefly on two points that I picked out from the speech made by Mr. Mitchell. He mentioned tax havens, which I anecdotally mentioned in a Statutory Instrument Committee, where I did not think that anyone was paying any attention whatsoever. I mentioned the Isle of Man. Within a few days of doing so, a delegation from the Isle of Man arrived, desperate to see me to explain that it was not really a tax haven after all and that it is largely dependent on fishing mackerel and the like.

On the PFI point, one of my early experiences as a Member of Parliament was voting at a Liberal Democrat party conference against our public service policy, which was then known as the Huhne commission, on the grounds that it gave too much succour to the PFI. That move did me absolutely no good in terms of my promotion prospects in the party, but none the less there is a virtue in being right.

Yesterday, I was involved in a debate where the Financial Secretary to the Treasury defended tax office closures, which is a tough call. I have got a lot of time for the Financial Secretary; he is a rational, reasonable person, who always responds to the points made and never makes forensic, rhetorical or unnecessary points. He made one very good point in the context of this debate. He said that, in a time of recession, when the call goes out for fiscal stimulus and big public spending, it is more important than ever to get value for money for public expenditure, and he is dead right on that point.

The Government should see the Public Accounts Committee not as an occasional irritant, but as a useful ally, particularly in the eternal quest to get public money spent effectively. That can be done. It is not necessarily the case that the private citizen spends money effectively, as hon. Members will find out if they study any shopper—my wife or whoever—nor is it necessarily the case that the public servant spends money profligately. However, it is the case that public servant lacks some of the incentives that a private citizen has to husband resources. Perhaps that is where a theme comes into the PAC. We have all picked out that no one seems to suffer, particularly when money is spent unwisely or when there is simply a bad project.

A classic example is the Chinook case, which has been aired time and again, but it is self-evident that no one has fundamentally taken the blame—people have moved up; people have moved on. In many environments, not necessarily with that project, people seem to acquire bonuses irrespective of their actual performance or efficiency. In other words, there seem in Whitehall to be few disincentives for poor performance. That is our concern. Incidentally, there are not simply few disincentives; there are many expensively acquired alibis for poor performance—they are called consultants. Now, as hon. Members have said previously, there is nothing wrong per se with consultants, always provided—this is not always so—that they are unconnected with the suppliers that they recommend.

There is a lingering anxiety throughout many of our deliberations about the lack of client-side expertise. Recently, we had a session in which we talked about Building Schools for the Future—a massive Government programme—and I inquired about how many people who run that project have any construction experience. I was informed that the bulk of them are lawyers and that very few of them have pertinent experience in construction. I should have thought that Building Schools for the Future would naturally be a magnet for people with some kind of construction experience. However, I am genuinely far from believing that public servants do not want to get things right, and far from believing that they do not get satisfaction from getting things right. There are people whose services we are very fortunate to have, and whose efforts we should applaud; we have mentioned some such instances in this debate. What has eluded not just this Government, but many Governments, is the secret of encouraging optimum performance in public service.

There is quite a good example in our report on NHS general practitioner contracts. Most people recognise that most GPs do a reasonably good job, but they also recognise that there is scope for progress. The Government and the Department of Health wanted GPs to work harder, more effectively and, in particular, proactively, so that we had a national health service that promoted health, and not a national sickness service that dealt with the problems when people suffered from ill-health. On the face of it, the method that the Department pursued did not seem wrong. In GP practices, good behaviours were incentivised under the quality and outcome frameworks. GPs were relieved of some of their load—out-of-hours work was taken off them—but the result of that plan was far from satisfactory.

There was a huge cash bonanza for practice doctors, but not, sadly, for the doctors employed by the practice or for nurse practitioners. That was slightly depressing; in a sense, one would expect doctors to reward those who had helped them to get the marks, the rewards and the funds. There has been a boost to preventive medicine, and I do not dismiss that altogether. Clearly, there are certain effects that we are yet to see—there may be benefits to people having their blood pressure taken more regularly and the like. Unquestionably, though, one result of the changes was a rickety out-of-hours service. In sum, the quality and outcomes frameworks that the regime imposed on the doctors undoubtedly got things done that needed to be done, but to be absolutely frank, they also got things done that were simply rewarded. The Government were genuinely surprised by the volume of things that were rewarded that were done, and by the cost of that. When they got the bill, it took them aback.

What we are proving, I guess, is that micro-management has good and bad effects. One could say, "Well, what would be the alternative? Should the Government just let things go on as per usual?" Incidentally, I recently discussed with a panel of British Medical Association people what alternative they would have put in place. What they said is quite salutary and worth taking on board. They said that it is healthy to assume a degree of professional pride rather than venal self-interest. If we assume one or the other, we are likely to get it. If we assume that professionals will behave venally, after a while they will be insulted by how they are treated, and they will behave differently as a result. The people from the BMA said, and I agree with them, that professionals are not opposed to benchmarking, transparency or peer comparison; all those things work as incentives for good, professional practice and are probably sufficient in themselves, without duress. Professionalism is not to be equated with self-interest or an absence of self-improvement, and it is certainly not to be identified with that phrase, "the producer class."

On the out-of-hours service, which we also looked at in our report, a different route was taken. GPs have been replaced by businesses, or the curiously named social enterprises, which are supposed to be slightly better than businesses, although I have never seen an adequate definition of a social enterprise. I refer to companies such as Serco, which is probably better known for running trains than for running aspects of the health service. Those businesses are commissioned by primary care trusts. In other words, they are answerable to quangos—inexperienced, recently set-up quangos at that—which are answerable in turn to the regional health authorities or the Department of Health, but certainly not directly to the people whom they serve. As a result of the way in which the contract was set up, they were given insufficient funds, because costs were deliberately underestimated. That was done for a particular reason—no one wanted the GPs to opt out and back out of the deal. The money was to come from the GP pot. Had the bodies taken more than was needed, or more than the GPs were prepared to bear, there would have been a problem. Across the country, the record shows that PCTs are now having to find extra money to deliver a satisfactory out-of-hours service.

The result is unquestionably fewer tired doctors, but it is also more difficulties in communication between the out-of-hours service and GPs. As I have said, there are cost pressures on providers and PCTs, and we have, essentially, a more remote service. If I may make a constituency point, that is certainly true in my area, where much of what is happening appears to be driven by cost. The process has certainly not been consulted on, and it has certainly replaced a superior service. Current provision is failing to integrate with the previously excellent, but now demoralised, district nurse service. In other words, our research and our reports tend to show that throwing out the professionals does not necessarily increase efficiency, value for money or quality of service.

I shall conclude on this point, because there is something that the Government can learn and are learning from it. A Hegelian dialectic is being played out in government. We once used to think that professionals and public servants do their best and should be left to their own devices to do their best. That was, in a sense, the thesis. We replaced that with the new Labour view that public servants need to be challenged, outsourced, bound to targets, incentivised, micro-managed, plugged into commercial values and, if that does not work, exposed to competition. That was the antithesis, so to speak.

The evidence suggests that we may gradually be arriving at a satisfactory synthesis, where the public servants and the professionals simply need to have a structure put in place in order to see professional judgment and experience rewarded and encouraged. That is not what happened in the case of the doctors' contract, and it is not what happens time and again, but anything that the PAC can do to facilitate that process is more than welcome.

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Photo of Angela Browning Angela Browning Conservative, Tiverton and Honiton 2:35 pm, 12th March 2009

I join the Chairman of our Committee, my hon. Friend Mr. Leigh, in thanking all those who help to support the Public Accounts Committee and the National Audit Office, which provides us with so much information through its reports.

Today, we are considering 14 reports that have been produced since the House last debated the work of the Public Accounts Committee. I shall do as others have done and pick out some of the themes that recur in departmental reports. Many of the reports deal with a specific issue or responsibility within a Government Department, and sometimes not only the core Department, but the agencies for which that Department has responsibility. Increasingly, common themes emerge about which we have particular concerns, yet the same themes recur in subsequent reports.

We take a Department-by-Department approach, but sometimes one wonders whether there should be not only a cross-departmental approach but a cross-Government approach to the commonly recurring problems, some of which are systemic within a given Department, and some of which may be systemic within the functioning of Government.

It is easy to say that the workings of Government should seek to reflect the efficiency of the way in which the commercial sector works outwith Government. But having entered the House 17 years ago from a business background, including working for some years in a manufacturing company, I have learned that it is wrong to assume that everything that one sees put into practice outside this place can be transposed to the workings of a Government Department. That is not to say that Government Departments and those who work in them cannot learn a great deal from commercial operations in the areas where we have identified repeated problems, not least in the management of the Government's operation.

As a personal observation, when one comes into the House of Commons—especially if one is fortunate enough, as I was in the early part of my political career, to be involved for a period in government as a junior Minister—a big difference is that decision making is so much slower in government than it is outside. Anyone who has worked in a large corporation, as I have, or even in the small and medium-sized enterprises that we often pick as exemplars of how to do things, knows that the route by which key decisions are made is usually so much more transparent. It is so much easier to identify where the decision-maker is, and getting a decision to deal with problems or to initiate a project is so much faster.

It is tempting to say that decision making will inevitably be slower in government, because a legislature is involved; issues might require primary legislation for policy to be drafted, and the procedures of Parliament must be put in place before action can be taken. All those are self-evident reasons as to why things are slowed down. However, such considerations do not always apply, certainly not in respect of the National Audit Office reports that the Public Accounts Committee examines.

I venture to suggest that one of the ways in which the Committee could help the Government is to look more broadly across the whole range of reports that we produce—within a given year, say—and make recommendations in respect of the systemic problems and weaknesses in how various management systems operate. The Government could accept that as a means of resolving such problems across Government, rather than just dealing with how those issues have affected a particular project or report. Management is a broad concept, so in talking about it I should clarify the areas of management where the PAC reports could help. Previous speakers in this debate have already touched on those areas, and they are certainly issues on which we repeatedly touch in our Committee inquiries.

There is the question of IT. So many problems have come from how IT systems have been commissioned, implemented and subsequently managed in practice. A previous speaker mentioned commissioning and whether consultants are needed. Whether we are talking about a procurement project, the commissioning of a service or a change in how an internal Government function works, before consultants are brought in it is important for the Department to be crystal clear about what it is commissioning. It may not have the internal technical expertise to know exactly what is required, and the appropriate consultant would be expected to help on that. However if something—particularly something technical or complex—is being procured, it is important that there should be access to people who can define the issues as accurately as possible.

In the broader sense of project management, and particularly as far as IT is concerned—some IT systems used in government are particularly complex—it is important to get the commissioning and procurement right. Before the green button is pressed and the work starts, it is important that the detail has been considered. Occasionally, I get the impression that the process is speeded up to fulfil a Government pledge or commitment related to policy. We can think of many examples, but I will not go into detail, although the Department for Work and Pensions and other such Departments have certainly produced classic examples. In many cases, it would have been better to have trialled a system for a lot longer before rolling it out more broadly, with all the problems that that involves.

There are many reports on the tangible procurement side—not least, as others have mentioned, involving the Ministry of Defence. It is a sorry experience to have to look repeatedly at defence procurement and see not only the money wasted—that is almost certainly one of the consequences—but the difficulties caused for those in the field serving as military personnel when the projected procurements overrun. If such procurements overrun on time, they almost certainly overrun on budget. That goes for just about all procurement projects, whichever Department they are in. If there is a significant overrun on time, there is inevitably a significant overrun on the initial costings.

Some of the problems could be addressed if there were not only departmental but cross-Government examination of how the Government manage projects. We see in some of the reports before us fundamental problems that, although it is easy to say so with the benefit of hindsight, could have been addressed. The so-called under-management in DEFRA has been mentioned.

There is always somebody who is responsible for a project. I quite deliberately use the word "somebody" because in the case of a Government Department, it is easy to think that a particular person is not responsible. However, in any system of management, there is always somebody in charge—there is a cascade system. I would be nervous of any system or project in which one could not readily identify the person who was in charge, whatever the level at which the project was being addressed. I say to the Minister that that is a fundamental point.

Of course, there are excellent systems in place to help with project management, but what is important is the combination of the people and the system. Even if an IT system of project management is used, one can see how under-management, and not having somebody who is known to be in charge full-time, can cause problems to everyone else in the cascade needed to deliver the project on time, probably including external agencies. I know that it is an old cliché, but I remember from a previous existence that projects overrun and become late one day at a time. If there is an overrun of one or two days somewhere in the process and nobody is alert to that or does anything about it, it is easy for the project to overrun by three or four days further down the track, in which case the overrun becomes weeks then months. As we have occasionally seen in our Committee inquiries, a project can sometimes overrun by years, which can have consequences for all sorts of important things associated with the project. In particular, as far as the Committee is concerned, such overruns affect value for money for the taxpayer.

I suggest to the Minister that at a low level within Departments, when anybody initiates a procurement, commissions a service or makes any change that requires management involvement, there seems to be a lack of anyone asking what the consequences will be for value for money. That should be at heart of projects such as commissioning and procurement, but somehow they are all done before people look at whether there has been value for money, as though that is something accidental that is bolted on right at the end. That is the wrong way to look at it.

It is too simplistic to say that competitive tendering is, of itself, the answer. We have seen a huge lack of competitive tendering in some Departments and some projects. It is, of course, a good thing and should be done, but it does not necessarily guarantee value for money when a project is eventually delivered. All sorts of things can happen between a tender being submitted and accepted and a project's final delivery.

There is much to learn not only for the outcome of the 14 reports, but for the Government. I hope that my colleagues on the Committee will forgive me for repeating points that I have made previously, but I find myself constantly asking permanent secretaries and others the same question. The time that elapses between the NAO producing a report, which the Government see in draft form some months previously so they have a good idea of any criticisms or recommendations for improving Government efficiency, and permanent secretaries appearing before the Committee means that they inevitably say, "We've got that in hand now. We're already doing that." Occasionally, I ask, "Were you doing that before you saw the NAO report or have you done it since?" Sometimes, they say honestly that they have done it only since reading the NAO report and at other times, as happened on Monday, that they were already alert to the problem and were doing something about it. It is not a bad thing if an NAO report acts as a trigger for a Department to take action to improve its performance. I say to the Chairman of our Committee that perhaps we should meet every day and get the NAO to produce more reports. Perhaps Government efficiency would then improve and, in a couple of years, we would not even need NAO reports and the PAC. However, I suspect that that will not happen.

I want to emphasise to those on the Treasury Bench—and especially those in the Treasury, because they have an overview and can identify some of the systemic, recurring problems in Ministries—that it is worrying that it sometimes takes an NAO report to flag up the reason for a problem and the possible remedy. One hopes that it would be picked up internally and that the Treasury, witnessing repeated poor management, poor systems and systemic problems across Government, would initiate some sort of oversight and consider how it could help to alleviate some of the difficulties.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The hon. Lady is making a series of pertinent observations, which I think stem from her experiences in government as well as on the Public Accounts Committee. Perhaps one example of the sort of approach that she suggests is the creation of the Office of Government Commerce, which did not exist 10 years ago and was established precisely because of the continuing systemic problems with procurement that kept coming up, not least in front of the National Audit Office and the Public Accounts Committee. That has led to considerable improvement in the structure of procurement and, increasingly, the outcomes. I hope that that will happen more in the future.

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Photo of Angela Browning Angela Browning Conservative, Tiverton and Honiton

I appreciate the Exchequer Secretary's remarks, which are welcome. Being responsible for overview and able to initiate change in systems is important. However, as I said at the beginning of my remarks, initiating change once it has been identified is dreadfully slow.

I intervened on my hon. Friend the Member for Gainsborough to mention in-service training for civil servants. For a long time, schemes have existed whereby civil servants go to work in industry, and people in industry work in the civil service. That is a good idea but, by itself, it is not the answer. The PAC has been concerned about a matter that is now being rigorously addressed—the lack of accounting qualifications among senior personnel in Departments, not least among accounting officers. It seems so fundamental that one wonders why we did not realise that it was a genuine problem some years ago.

It is perhaps wrong to blame civil servants who have been asked to carry out a specific task for which they have not got the experience and qualifications, when it all goes wrong. I am not saying for one minute that they should not be rewarded for good work or that there should not be recriminations if people foul up, as in any other walk of life. However, the Government need to look at the changing skills that are required of the civil service and incorporate more of them into the initial training, particularly for those who enter through the fast-track system and whom one hopes will later become our senior civil servants. They also need to look at in-service training to ensure that we do not ask people to do jobs for which they are not equipped. When that happens, it is not uncommon for people not to know who is in charge. I am always nervous when I look at a situation and find it hard to identify who is in charge.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich 2:55 pm, 12th March 2009

This is the first time that I have taken part in a debate on the work of the Public Accounts Committee. Indeed, I am a new member, having only recently joined the Committee. I am extremely pleased to be on the PAC. From the short time that I have been on it, I sense that it is a Committee whose members think, act and speak foremost as Members of the legislature; only secondarily do they take account of slightly more partisan considerations.

The work of the PAC is immensely important. The Government spend many billions of pounds and run vast public procurement contracts. Enormous quantities of our constituents' money are spent. Ensuring that that money is spent wisely and without waste is vital. The work of the Public Accounts Committee, which is to conduct, in effect, retrospective audits, is all the more important precisely because Parliament no longer does its job of—to use the quaint phrase—approving supply properly.

Sure, we vote on estimates and Budgets and we have that ritual called Budget day, but that does not amount to proper scrutiny of how the Executive spend taxpayers' money. Indeed, it took almost a whole year for some Members of this legislature to realise fully what was in one of the Budgets when it came to 10p tax rates. This House rubber-stamps Government expenditure; we no longer control it. This House approves Executive expenditure more in theory than in practice. As I read through the list of PAC reports, I reflect on how once this House properly scrutinised how the Executive use taxpayers' money. There was once genuine scrutiny.

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Photo of John Pugh John Pugh Shadow Minister (Treasury)

It is not my job to defend them, but to be fair to the Government, they are developing the "line of sight" programme, which will give greater clarity about estimates and how the Government spend money. That is surely a desirable development, which we can all support.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

Absolutely. I welcome any initiative from any part of the House—this is a cross-party issue, not a partisan one—to ensure that this legislature is better able to hold the Executive to account on how they spend our money.

Once upon a time there was genuine scrutiny. Indeed, as some people may know, a war was once fought over the extent to which the House was able to vote to approve supply and Government moneys. However, this House has slowly but definitely lost its power to oversee how the Executive spend our money. The quango state, on which the PAC produces so many of its reports, is in effect beyond budgetary scrutiny. Retrospective audit on the PAC is pretty much all that is left.

Belying each PAC report and the National Audit Office reports on which we comment is a profound question: why is our legislature now so supine and spineless? Why is our legislature not able to do a better job of scrutinising how the Government spend money? Instead of conducting merely retrospective audit, why does this House not properly scrutinise forward spending proposals? The failure of this House to oversee Whitehall budgets properly makes the work of the PAC vital.

My second point concerns what I see as a pattern in those 14 reports. The PAC produces a vast number of reports. Each week, it seems, we produce a report. Sometimes, scarcely a day goes by when I do not switch on the radio to listen to the "Today" programme and hear my hon. Friend Mr. Leigh talking about one of the reports. It is great that we produce so many reports, but to what effect are they produced? We give permanent secretaries a hard time and we can huff and puff, but the waste and the catastrophically inept project management and public procurement continue.

Let us take just one area—defence procurement. It has almost become a cliché for the Public Accounts Committee to produce reports criticising such procurement that catalogue incompetence and failure, yet nothing happens. On the basis of my short time serving on the PAC, I suspect that there is a more profound reason for that failure, and it is this: when big government and big business meet, we get corporatism, and we find that taxpayers' money is siphoned off for their convenience rather than that of the taxpayer.

If the supplier is constrained in any market, the seller is by definition allowed to set the terms of trade. I wonder whether too much of public procurement is inept and incompetent because big government restrains the number of people who can bid for the work. That applies whether we are talking about big defence procurement contracts or the Warm Front scheme: it is the same story, the same pattern of corporate government constraining supply.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

Does the hon. Gentleman accept that in some circumstances of defence procurement, genuine competition actually means opening up to international competition? Is he arguing that British shipbuilding contracts, for example, should be opened up to builders from other countries? If so, that would certainly be opposed in my constituency.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

I am and always have been a staunch advocate of off-the-shelf defence procurement. I believe that we do not have a choice between spending on the building and supply of British equipment paid for by the British taxpayer in the UK or paying a little less by buying overseas—ultimately, it is a choice between whether we have the equipment or not. Too often we spend tax pounds on defence, which does not actually result in the equipment that our armed forces so desperately need. That is the price of protectionist procurement, and I am very much against it.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

When the hon. Gentleman says that he is against protectionist procurement, is he saying, as the Liberals said on one occasion, that aircraft carriers should have been built in the United States because they were cheaper there? Is that exactly what he is saying?

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

I personally believe that we could get better bang for our buck if we spent more of the £34 billion that we spend on defence on buying the best equipment for our armed forces, sourced from wherever in the world. By buying protectionist equipment, we deny our armed forces the equipment they so desperately need in Afghanistan and Iraq. I have spoken in the House before about the high price I believe our armed forces pay for that. Protectionism may be in the interests of a few corporate suppliers and a few defence contractors, but it is not in the interest of taxpayers or, ultimately, of our armed forces.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

It is not just a choice between buying American and buying elsewhere. As we saw with the Chinooks, we can buying elsewhere, but what so often happens in the Ministry of Defence is that our own civil servants then gold-plate it. As a result, eight Chinooks have been sitting on the ground unused for eight years. We made the decision to buy American; let us buy off the shelf and get them flying.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

I thank my hon. Friend for that intervention. If people believe that the primary purpose of the British defence budget is to create jobs in Britain, I believe that they do a disservice to our armed forces, whom we ask to make such big sacrifices on our behalf.

I believe that in order to reform how the legislature does its job, it would be good if the Public Accounts Committee, and perhaps all Select Committees, had real power: power to censure and power to remove inept civil servants. To stay with the theme of defence procurement, if it had been possible for the PAC to recommend a P45 for the particular officials who oversaw the Chinook fiasco, I do not believe that it would have dragged on for so many years. For all the reports produced on the Chinook affair, I am not aware that a single civil servant has been fired, but I believe that some of them should have been.

Other legislatures—grown-up, proper legislatures, ones that are not in the pockets of the Executive—have Committees that do have the power to confirm appointments, the power to oversee budgets and the power to censure failure. I believe that we need to give Committees like the PAC and others the power to veto or ratify departmental budgets. If we did that, we would be able to do something about waste before it happened, not simply pass comment on it retrospectively. Until then, in the spirit of the television shows "Yes Minister" or "The Thick of It", officialdom, Sir Humphrey Appleby and the civil servants will continue to run the show, however ineptly. Ministers will continue to be little more than departmental mouthpieces, occasionally even apologists. The PAC will continue to fume, huff and puff. Unless and until the House has Select Committees with the power to oversee appointments and budgets in Whitehall, we will continue to produce excellent reports, but nothing will fundamentally change.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West 3:05 pm, 12th March 2009

The work of the Public Accounts Committee is immensely helpful and constructive, and we do a good job. I pay tribute to my colleagues on the Committee, who work conscientiously at their endeavours, led by the Chairman, Mr. Leigh. I want to make all the usual comments about how wonderful the staff are—blah, blah, blah. Everybody says these things. On occasion, we mean them. This is one of the occasions when, generally, we do.

Before going into a couple of particular issues, I want to raise some general points. First, we need to strike the difficult balance between holding the Government to account and making partisan attacks. It is entirely possible for us to ensure that we make criticisms of the Government and how the machinery works without lapsing over into simply using those criticisms to gain party political advantage. We have not always managed that, although it is all too easy for some to see any criticism whatever of the Government as partisan and something that ought to be opposed.

I am thinking of a colleague who was on the Committee, who took the view that any criticism of anything that had ever happened under this Government was a calumny, a foul slander and to be bitterly opposed. That Member was dealt with appropriately by the Whips Office when they were promoted, which presumably was the intention of their comments. That perhaps took things to an extreme, but it is possible to be extremist in the other direction. That means identifying every error in the Government procurement machinery as an opportunity to argue that the policy itself is invalid, inappropriate or incorrect. We must try to strike that balance.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

The hon. Lady was not the Member to whom I referred.

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Photo of Angela Browning Angela Browning Conservative, Tiverton and Honiton

I would hope not. For the record, does the hon. Gentleman include within such partisanship views on the royal household?

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

I was going to restrict myself from that particular area. I do not take the view that attitudes to the royal household are a party political matter. While this is an immensely valuable opportunity for us to raise those matters of value for money—those who have been paying attention may have identified my views—I do not see the issue as central. This is just a bonus; it is like shooting fish in a barrel, like so many of the things that we do.

Coming back to the question of managing to give criticism where it is due without lapsing into partisan disputes, the Committee has, on balance, handled that very well. In particular, I pay tribute to Opposition Members, who could easily lapse into making that mistake, and to the Chairman, who has in general managed to avoid that difficulty.

However, we face genuine problems in how we present criticisms of the Government and the language that we use. Many of our arguments about how Government procurements or decisions have been progressed are quite complicated and in many ways quite dull. They do not provide a soundbite or a snippet, whether for the "Today" programme or something else. There is always a balance to be struck between being inflammatory to attract attention—if people do not do that, they do not get any coverage—and being worthy and boring, and therefore not achieving very much. I am not sure that we have always got that right. We need to continue to bear that in mind.

As well as examining the 27 million reports that we receive every week, the PAC gives us the opportunity to cover some other issues. One of my favourites has been referred to, and I am glad that it is a growing interest of some other Members, who obviously spot a dripping roast when they see one. I have also been particularly interested in the social origins of senior members of the civil service and other Government Departments. We all welcomed the information from the Ministry of Defence that the Army has the worst record in this regard, with about 90 per cent. of top generals coming from that narrow band of educational experience—public school, and mostly Oxbridge as well, if I remember correctly. Clearly, they do not reflect the society that they seek to defend. I have been pursuing that, and I want to make a couple of points.

The great success of the Jobcentre Plus office network roll-out has been mentioned. I do not have the date of the Committee hearing in front of me, but I asked:

"Can you give us a note about your top 20 staff, giving an indication of how many of them were in either public school or Oxbridge or both in order that we can compare it with other departments from whom we have had information?"

The response came back:

"I have interpreted my Top 20 as my senior team at Director level...and my Customer Service Directors...who are responsible for operational delivery and the customer experience—a total of 23. Of these 23, only one was educated at Oxbridge."

Then she says that, none the less, he is okay; I am prepared to concede that on rare occasions that may well be the case. The point has been made that people who have come through a service have a much greater knowledge of it, and because they will be there for some time, are more likely to have a commitment to its ongoing success.

However, I also remember asking the permanent secretary to the Treasury the same question:

"May I ask how many of the top 20 officials in the Treasury are drawn from the same background as you of public school and Oxbridge?"

I also asked for a note. I got a note back, which is appended at the back of the document:

"The Treasury does not routinely hold this information for individual members of staff. Disclosure of this information is a matter for the individual concerned."

That raises two issues, which the Minister ought to take on board. First, why does the Treasury not produce such information when other Departments have been perfectly prepared to produce it? It seems to me that if the Treasury declines to produce the information, it must feel that it has something to hide.

Secondly, there is an issue about a permanent secretary giving a commitment to the Chairman of the Committee, and to its members, and not carrying it through. He said in the first line of his reply to my question:

"I am very happy to give you the information."

When a permanent secretary says that in front of us, we not unreasonably expect to receive the information. It does not seem acceptable to get a reply in writing that says:

"The Treasury does not routinely hold this information for individual members of staff. Disclosure of this information is a matter for the individual concerned."

I hope that that matter will be taken up and pursued.

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Photo of John Pugh John Pugh Shadow Minister (Treasury)

Is not the consequence that, presumably, the Treasury employs people whose educational qualifications it does not know?

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

Like the hon. Gentleman, I have been canvassing, and sometimes it is difficult to know whether people are a "don't know" or a "won't say". Sometimes, when they do not tell us something, we do not know whether they do not know it or just refuse to tell. It is cause for concern when those at the Treasury tell us that they will tell us, and then refuse to tell us. They have generally been more open with us on these matters. Having made the point, however, I have no desire to make too much of it I suspect that I shall return to it only three or four more times during my speech.

Leaving aside the question of the Treasury's not replying to a question to which it swore that it would reply, I want to raise a number of other points. I remember receiving an astonishing response relating to the shared services centre being set up by the Department for Transport for the Department and its agencies. At the time when we investigated the matter, the establishment of the centre, which had originally been going to save us £57 million, was going to cost us £81 million. The Department told us that it would not actually cost us that amount, because it would take action to reduce the figure. No one was dismissed as a result; I believe that people moved on. The point has already been made about careers possibly being slightly blighted, but there was not the degree of accountability to which others have referred.

Another issue that interested me was the NHS pay modernisation scheme, when GPs' mouths were stuffed with gold. As the debate proceeded, what was increasingly noticeable was the contrast between the extent to which partners in general practices had hoovered up as much of the available money as they thought they could possibly get away with, and the amount that they were giving to their staff. If I remember correctly, the salaried GPs received 3 per cent. increases over a period of two years—although it may have been one—while some nurses' salaries actually fell. As far as I know, those facts were not picked up anywhere else in the system.

In the light of those examples, I have some sympathy with the views of Mr. Carswell about the need to hold the Government to account. However, some of his statements have led me to conclude that he is a true zealot when it comes to open markets. I see that he takes that as a compliment, but I have not finished my point yet. He confessed that he would be perfectly happy to see shipyard orders going abroad and believed that all British defence orders should be opened up to international competition, notwithstanding the impact that that would have on jobs in the United Kingdom. His clear expression of that view gives us some understanding of why he speaks from the Back Benches rather than the Front Bench. I am quite sure that it is not the view that will be expressed shortly by Mr. Hands, although I will happily give way to him if he wishes to assure us otherwise.

Answer came there none.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

Does the hon. Gentleman believe that protectionist procurement sometimes means that our soldiers in Afghanistan and Iraq do not have the equipment that they would otherwise have, and does he consider that acceptable?

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

I do not believe that protectionist procurement necessarily leads to that result. All the evidence that we have received over a period in relation to urgent operational requirement contracting suggests that British defence industries can respond speedily in providing equipment when it is needed urgently by our forces in the front line, and when that has not been possible, the Government have always been perfectly willing to go abroad to pursue the very point that the hon. Gentleman has raised.

Let me give an example relating to ships, in which my constituency has an interest. I have no doubt that we would have been able to buy some of the ships that we have more cheaply had we bought them abroad, but that would have destroyed our capacity to purchase them in the United Kingdom in the future. There is always a balance to be struck between savings now and retaining capacity for the future, which is what the defence industrial strategy is all about—but I am happy to let the hon. Gentleman dig himself further into a hole.

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Photo of Douglas Carswell Douglas Carswell Conservative, Harwich

Does not the hon. Gentleman agree that one reason why there has been such a big increase in the use of urgent operational requirements to procure is precisely that the armed forces find that by procuring through urgent operational procurements they are free from any of the protectionist constraints inherent in the defence industrial strategy?

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

No, that is not my view. Most of the urgent operational requirement contracts have arisen because the armed forces are in new environments and they discover that they have urgent operational requirements for particular pieces of equipment. They did not envisage having an urgent operational requirement for a piece of equipment until they found that they needed it, otherwise it would have been in the system already. I know from provision made from plants in my constituency that the forces have been genuinely astonished about what they found they needed, as they thought they had equipment that was entirely satisfactory. As I am sure we are all aware, the stuff that is necessary for fighting on the north German plain is not necessarily the same stuff that is needed for fighting in the mountains of Afghanistan; even some of the materiel that was necessary for Iraq is not adequate for Afghanistan. Therefore, it is changes of environment that produce urgent operational requirements; I would have thought that was blindingly obvious.

Let me return to the point about the hon. Gentleman being a zealot and joining the PAC as a member of the Tory Taliban. There is an issue to do with the extent to which Members sit on the Committee to paddle their own canoes and pursue their own private obsessions—the extent to which they are there to judge whether a Government decision was right in the first place—and the extent to which they are there to judge whether that decision, having been made, has been implemented correctly. It seems to me that the hon. Gentleman has got himself on the wrong side of that balance. It is not our job as PAC members to decide whether these contracts should have been thrown open to competition across the world; it is our job to decide, the Government having made such decisions, whether a contract has been implemented as speedily, accurately and well as it should have been. I look forward to the PAC Chairman ruling the hon. Gentleman out of order on a number of occasions in future, since the Chairman's predecessor did that often enough to me—in another direction, politically speaking.

I also want to raise the issue of culture—not the kind of culture that makes me reach for my revolver, but the culture of the Departments. That was most clearly expounded when we were discussing the management of expenditure in the Department for Environment, Food and Rural Affairs. It was revealed that the culture in some sections of the Department was always to assume that they would underspend, and that therefore they could over-order on the basis that there would then be a rough balancing-out. That is very much a case of amateur night, and is entirely indefensible. Should not the Treasury have been pursuing that, as I presume that it is the Department that supervises such matters—when it is not covering up whether or not it knows whom it employs and what their educational qualifications and social backgrounds are? Perhaps the PAC ought to return to such questions of culture in a more systematic way. I very much welcome the fact that the Chairman has been taking us down the road of undertaking thematic explorations, in particular in relation to project management. Once we have made more progress on that, we ought to pursue the issue of changing culture.

I shall now turn to the report, "Meeting needs? The Offenders' Learning and Skills Service". It was revealed that in some policy areas there is a lack of provision and of delivery of service. We ought to have some system of passing that on to the appropriate committee. It is not our job to pursue the extent to which there continues to be a low level of literacy and numeracy among prisoners, or the extent to which the Prison Service's need to move people around the estate means that their opportunities to learn are constantly disrupted. It is perhaps our job to identify that difficulty, but I am not quite clear what the mechanism then is for the concerns that we identify and express to be passed on to someone else, and for us to be sure that they are picking them up. Select Committees focus on major issues, and relatively small issues such as that might be swept up in an overall look at the Prison Service, for example, or at adult literacy. The question of the balance between moving prisoners around the system and the education and training opportunities that we offer them does not then get picked up on. I wonder whether the Chairman of the Committee could reflect on that and provide some possible solutions for the future.

Finally, I want to remind the House about our examination of the Revenue and Customs Prosecutions Office. We heard the long litany of what I regarded as exploitation of the system by barristers, who were clearly bleeding the system white. That reminds us that being involved with the private sector is not always a route toward enhanced efficiency. Some elements of the private sector are in many ways far more inefficient and self-serving, and far less controllable or demonstrably operating in the public interest than sections of the public sector. There is the assumption that says, "Private good, public bad". Anyone who looks at the way that barristers operate—simply gouging the public sector—cannot doubt for a moment that there is a very strong argument for such sections to be examined more fully by us.

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Photo of Angela Browning Angela Browning Conservative, Tiverton and Honiton

In that particular case, was not the problem that the department did not get the fees agreed with barristers in advance? Rather, it waited until afterwards, without any idea of what the bill was going to be. So although I agree with the hon. Gentleman that barristers made a lot of money out of that, at the heart of the report is the view that the department was at fault.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

I have some sympathy with that perspective, but it is a bit like saying that the foxes will always raid the hen coop and it is the farmer's fault if he does not fence in the chickens. If the premise is that barristers are generally thieves—that, given any opportunity, they will lift the silver, that they cannot be trusted to bill fairly, and that therefore it is the fault of the department in question if it has not nailed them down beforehand—then yes, that is fair. It is the attitude that I have always taken when we deal with farmers. As people will be aware—

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

Ah—the Chairman wants to intervene.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

If barristers are generally thieves, then I am a very poor thief.

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Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

I have nothing to add to that point.

Farmers, as we are well aware, are rapacious and will take anything that is not nailed down, so it is absolutely correct that to some extent, it is the fault of Government if they ever allow them to get away with the money. However, I cannot help but think that we ought to be blaming those who try to commit the theft, rather than those who have perhaps inadequately prevented them from doing it.

I have, as ever, enjoyed my time on the Public Accounts Committee. If only I did not have constituents, I could spend much more time looking after its affairs, and I look forward to continuing under the chairmanship of my esteemed colleague.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk 3:29 pm, 12th March 2009

It is a great pleasure to follow Mr. Davidson, who is one of the most fearless of our interrogators, and sometimes one of the funniest of our members. I regret that the name of his constituency changed from Glasgow, Pollok to Glasgow, South-West because we always liked saying Glasgow, Pollok. I know little about his constituency except that I am fairly sure he has very few barristers as constituents—

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

Indeed. The hon. Member for Glasgow, South-West did not actually say just now that all farmers are thieves, but I have heard him say that before; and he did say on the record that barristers are thieves.

The hon. Gentleman also said that the right balance had to be struck between talking about reports to the Committee in a way that was not too party political and getting enough attention paid to the issue. It is something I am aware of every time I broadcast on the Committee's work. If I am being critical, I try to be critical of the Department concerned. The hon. Gentleman used the word "dull", and one tries to make comments sound non-party political. I go out of my way to avoid ever using the phrase "the Labour party" when I am broadcasting about Committee matters, because that would simply be inappropriate. Were there to be a change of Government at some point, which is possible, I hope that the same thing would apply if the hon. Gentleman were broadcasting in that way as an Opposition Member.

In the same spirit, there might be occasions when the hon. Gentleman should think about tempering his words. I represent a lot of farmers, and they are not all rapacious. He will remember the National Audit Office report, and our Committee report, on the case of Joseph Bowden. He was a farmer claiming money under the arable area payments scheme and the fibre flax scheme for territories—I use that word advisedly—that on closer examination, when one used the entire grid reference rather than part of it, which is all the form had required him to fill in, turned out in one case to be in the North sea between Scotland and Denmark and, in another, to be on the mainland of Greenland. That fraud was brought to the attention of the authorities, not because of the diligence of the Ministry of Agriculture, Fisheries and Food, as it then was, but because of another farmer who realised what was going on and thought that something was odd.

I also regret that the Committee only narrowly failed to pass a resolution when we had the Duke of Westminster in front of us, as the Assistant Chief of Defence Staff, requiring the hon. Member for Glasgow, South-West to address him as "Your grace" each time he spoke to him, but that is, unfortunately, now water under the bridge.

I wondered which of the various reports I should focus on. I started the day reeling under the impact of the National Offender Management Service information system report published by the NAO. Although that report is outside the scope of this debate, as we have not even had a hearing on it, many of its themes are relevant not only to the reports before us today, but to the Committee's work in general. The National Audit Office, together with the Office of Government Commerce, agreed in 2002 a list of eight of the most common causes of project failure. The first was the lack of a clear link between the project—whatever it was—and the organisation's key strategic priorities, including agreed measures of success. The second was a lack of clear senior management and ministerial ownership and leadership—we certainly saw that in the case of the Rural Payments Agency, and in that of the shared services report from the Department for Transport. The third was a lack of effective engagement with stakeholders—we have seen that in many reports. The fourth was a lack of skills and a proven approach to project management and risk management. The fifth was too little attention to breaking down the development and implementation of projects into manageable steps. The sixth was that the evolution of proposals were driven by the initial price, rather than by considerations of longer-term value for money, especially the delivery of business benefits. The seventh was a lack of understanding of and contact with the supply industry at senior levels of the organisation, and the eighth was a lack of an effective project team working with the clients, supply team and supply chain.

The report published this morning happened to touch on almost all those factors, in full or in part, but they are common themes we see again and again in different reports. One thing that I hope the Minister will find time to do is to address the role of the Office of Government Commerce in scrutinising and challenging the management of Government projects and in ensuring that Departments are steering projects properly, because I do not think that there is nearly enough evidence to convince us that the system is working properly. The OGC gives advice, for sure, but time and again that advice is put to one side or ignored.

The Minister will know that applications to the fast track of the civil service are up 30 per cent., which is good news for the civil service. It is unsurprising that that should be the case in these straitened financial times. It gives the civil service a better choice from among those talented graduates, and that is good news. However, I want to know what the civil service is doing at the centre to ensure that the principles of project management and risk management—all the things that the hon. Member for Glasgow, South-West described as being seen to be rather dull in some cases, but which are incredibly important for the successful delivery of projects—are tattooed on the eyelids of new entrants to the civil service so that they understand as they join that effective project management and focusing on outcomes are important from that moment on. They need to understand that the civil service is not only about policy advice but, as the Committee Chairman said earlier, about successfully delivering projects. I would be grateful for the Minister's comments on that.

Our report on the roll-out of Jobcentre Plus speaks on that theme. As was mentioned earlier, the key staff included Mrs. Lesley Strathie, who is now chief executive of HMRC and who started as a clerical assistant in 1974. I was very pleased, as it was a point that I made in the Committee, that one of the recommendations of our report noted the need to focus on the fact that key leadership roles should be taken by people with significant front-line experience who had started at the bottom. The three witnesses had a total of 112 years of experience between them, and because they had started at the bottom, as the poor bloody infantry, they were going to ensure that no project was imposed in a way that could not work at grass-roots level. That was welcome.

That goes back to the Fulton report and the way its proposals were eventually defeated by William Armstrong, who was then head of the civil service, ensuring that the generalist stream of the civil service remained on top. That has been a 30 or 40-year failure across successive Governments, and I would be interested to hear the Minister's comments on it. I think we are now getting a little more expertise. I always read the CVs of our witnesses, and more and more of them come from the private sector, or have at least some private sector background, which is interesting. They also seem to have genuine expertise in the subject that they are appearing before us to discuss. That is most welcome, but I would like to know what that says about fast-track entry and how it will be integrated into the recruitment process for the future.

I also wanted to make a point about the report on the Revenue and Customs Prosecutions Office. David Green, QC, was hired to be director of the prosecutions office, not because he had management experience or knew how to run a budget or how to procure and deliver an IT system, but because he was one of the leading criminal barristers in this country specialising in Revenue work. That was an ideal background for somebody to become director of the Revenue and Customs prosecutions office. He is a leading silk in his area, but that does not mean that the Treasury or civil service, in giving him the responsibilities of an accounting officer, which include ensuring that there is probity in the use of public money and that the proper systems are in place, can assume that a man who is extremely talented in his field will have the requisite expertise in what one might call general management. I asked Mr. Green whether he was familiar with the Treasury document on the responsibilities of an accounting officer, and he said that he had been given it and that he had been on a training course. I asked how long the training course had lasted, and he said, "Half a day."

I think I am right in saying that the Treasury minute in response to the report acknowledges that more must be done for people from different backgrounds who come in as accounting officers. I am glad that that recommendation has been made, although it is slightly worrying that it was necessary. Perhaps it is a consequence of the fact that more people from different backgrounds are coming in from outside the civil service, but it is something that it is important to bear in mind.

Finally, I want to focus on the comments made by Mr. Mitchell about the use of consultants. A lot of flannel is talked about this subject. I have an interest, in that many years ago—in the mid-1990s, when there was a Conservative Government—I was employed for two years by the trade body representing the consulting industry. I remember someone who worked for one of our member firms saying that he was looking forward to a Labour Government being elected, because that would mean more work for consultants. I asked why that would be, and was told that consultants always get more work whenever there is change. Of course, there has been a great deal more work for consultants since then.

The public sector needs to be very careful about when it uses consultants. Of course, consultants have been used for a variety of purposes in many of the reports before us. We should not dismiss the possibility of using them, but nor should we assume that we must use them.

There are three classic reasons for using consultants—first, because they have an expertise unavailable elsewhere: secondly, because a temporary shortage needs to be filled on an interim basis; and thirdly, because an independent view is required. Those three reasons always apply in the commercial or private sector, but in the public sector one would hope that the independent view came more often from the civil service. However, the knee-jerk tendency that emerged under the previous Conservative Government, and which has continued under this Government, is to reach for consultants. That is because they provide an external and apparently independent endorsement of something that Ministers do not have the confidence to take forward solely on the basis of civil service advice.

Ministers use consultants for another reason—doing so allows them to say publicly, "Well, this is what KPMG has said," as though what KPMG says were a mantra that cannot be disproved. We must be very careful about that, but we must also recognise that there are plenty of occasions—and I mentioned the building of motorways—when one would want to employ someone on a temporary rather than permanent basis. When we do that, however, we must make sure that the proper skills are transferred.

Although I do not go quite as far as my Taliban Friend Mr. Carswell in the use of ideological language about the corporate state, I have a sneaking sympathy for some of what he said about the use of big firms.

I met representatives of Microsoft this morning. It is a very big firm, but I was surprised and interested to hear that its representatives were worried about the failure of the public sector to hire small and medium-sized enterprises, especially in the IT sector. Because of what it does and supplies, Microsoft gets a lot of business from small and medium-sized entrepreneurial companies that use their products to develop other things for the public sector.

One point made to me was that the Government are not very good at using SMEs, especially in the IT area, even though they may have fantastic products offering technically advanced solutions and often very good value for money. I know that the Government are aware of that, and I should be interested to hear the Minister's comments on what more can be done.

I fully accept that there may not always be an alternative to using a big consultancy firm like KPMG or PricewaterhouseCoopers to deliver a big project, and projects set up by the Department for Work and Pensions would be a classic example of that. In the negotiations that have to take place, a big company can tell the Government that it is able to put 1,000 people on the project, with the result that civil servants are reassured that it has the necessary clout.

However, it seems to me—and this is where I have some sympathy with my hon. Friend the Member for Harwich—that the other side of the coin is that the big firm has 1,000 people on its payroll whom it has to put on a job somewhere. There is almost a kind of oligopoly at work, and if we are not careful it can shut out the smaller and more agile suppliers that may be able to provide taxpayers with much better value for money.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I hope that the hon. Gentleman recognises that the Government have accepted all the recommendations in the Glover report, which was published at the time of the last Budget. They are well on the way to being put into effect, and we hope that all of them will be adopted by the beginning of next year. That should make access to the large amounts of Government procurement that arise every year much easier and simpler for SMEs.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I am grateful to the Minister for that intervention; it is good that she has put that on the record. Of course, the Government are aware of the problem, but a series of steps needs to be taken between being aware of the problem and ensuring that it is solved on the ground.

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Photo of John Pugh John Pugh Shadow Minister (Treasury)

The hon. Gentleman mentioned Microsoft. He will be aware of course that, in the Building Schools for the Future programme, small to medium-sized enterprises—IT companies—had grave difficulty getting a look in, whereas Microsoft has got its feet well under the table. So I hope that he will not take its protestations too seriously.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

When anyone comes to see us, we naturally think that they will have a vested interest. I am reminded of the diaries of Mr. Mullin, which were published yesterday and in which he said that one of his first steps was to see no vested interests of any kind when he became a junior Minister. That did not last. Richard Branson wrote to the Prime Minister and was passed on to the Foreign Secretary, and when the issue was finally passed to the hon. Member for Sunderland, South, he felt unable to say no to meeting Mr. Branson.

Of course, Dr. Pugh is right. All companies have their own commercial interests, and it is quite right that they do their best to protect them. He mentioned Building Schools for the Future, which raises another issue about consultancy, on which I will finish. We had that hearing only a few months ago, so the issue is not yet before us in a Treasury minute. The average salary of the employees of Building Schools for the Future is £85,000, which is pretty high. It has 111 employees. Hon. Members might think that the reason why they have high salaries—indeed, this is the reason given—is that they are all specialists and therefore such salaries are needed to attract them.

The permanent secretary said that there is a market in such things. Perhaps he is right—one assumes that he is—but people might assume that, if there were a lot of in-house expertise, consultants would not be used so much. Yet since that body has been established, it has spent nearly £6 million on consultancy. In the past year alone, it has spent £750,000 on consultants and, when asked about that, those involved said, "Oh, that's mostly for lawyers." Why are the schemes so complex that people cannot bid for them without enormously thick contracts? The average cost of bidding for a Building Schools for the Future contract is about £1 million, which, admittedly, is a lot less than the cost of bidding for a PFI hospital, at £11 million, but that goes back to the point about oligopoly—people are possibly being shut out, and the Government, on behalf of taxpayers, must always be aware of that.

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Photo of Alan Duncan Alan Duncan Shadow Leader of the House of Commons

On a point of order, Mr. Deputy Speaker. May I invite you to advise the House on the fact that one of the written statements listed on the Order Paper is on Ministers' interests and that, whereas all other written statements are available in the Library, the one on Ministers' interests is not, yet it is all over the Evening Standard? Why is it that the Government, saying that there will be written statements, are prepared to brief the press but not to tell the House, as the Order Paper suggests they should?

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I was unaware of that situation until the hon. Gentleman raised it, so I cannot afford him an instant explanation, but it would certainly be usual for all written ministerial statements to be placed in the Library. I can only imagine therefore that there has been a slip-up on this occasion, which has been put on the record, and I hope that it will corrected at the earliest possible moment.

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Photo of Greg Hands Greg Hands Shadow Minister (Treasury) 3:48 pm, 12th March 2009

It is a great pleasure to respond to this afternoon's debate, which has been of extremely high quality, and to pay tribute to the work of the Public Accounts Committee and its scrutiny of public finances. The debate has provided ample evidence of the value of that work, which is spread across a pretty dauntingly wide field, as shown by the reports. It has also provided an opportunity to hear from its estimable Chairman—my hon. Friend Mr. Leigh—whose opening remarks provided an impressive analysis of the lessons to be learned from the reports.

Let us be in no doubt about the value of our Public Accounts Committee. Indeed, it has become a model for many other Parliaments that follow the British system. I have visited in recent years the legislatures of countries such as Nigeria and Ghana, both of which are very proud of their public accounts committees. Many Commonwealth countries have sought to adapt their parliamentary systems over time. Nigeria, for example, has moved to a presidential model, with a Senate and a House, and Ghana has introduced primary elections and a President. However, both proudly retained their public accounts committees. In the Nigerian Senate, the public accounts committee there ranks after only a very busy ethics committee.

When I was in Ghana last month, I gave a training course to the excellent centre-right party, the New Patriotic party, which has just entered opposition after eight years in government. Ghana is now setting the pace for Africa, having made a second transition from one democratically elected Government to another. During my training course, I asked the assembled new MPs whether they could list the benefits of being in opposition, and one of the very first responses was, "Now at least we control the public accounts committee." That goes to show to what extent our Westminster Committee has provided the model for many public accounts committees across the world. It is the model for similar committees in Canada, India, Hong Kong and other countries.

In his speech, my hon. Friend the Member for Gainsborough set the debate in its proper context. The Government's fiscal position is precarious and worsening. It is imperative that we find better and more efficient ways to provide public services if, as he said, the expectations of those who fund and use them are to be met. I noted with interest his appeal for revolution. He may not think of himself as a predictable revolutionary, but I can think of few more agreeable companions on the barricades come the reforms ahead. He was right to acknowledge that some good work is already being done by the Government on some of the issues that have been raised, if not nearly enough and not always at the pace that we would like.

There is a danger in these debates—and, I am sure, in the work of the Committee—that we focus only on the bad practice that emerges from the pages of the Committee's reports, and ignore achievements and progress; that point was well made by Mr. Davidson. He was right to say that Committee members should not be afraid to hold the Government to account; that is different from making a partisan attack. That sums up the attitude of the Committee. If I may say so, the Select Committee on which I sit—the European Scrutiny Committee, which is ably chaired by Michael Connarty—follows a similar approach. The Committee's criticism and probing is not necessarily taken as a partisan attack.

My hon. Friend Angela Browning drew on her experience as a Minister and a member of the Public Accounts Committee in highlighting how slow and complex decision making can be in government. She urged that at the very beginning of the process, particularly for some contracts, someone should ask, "Is this value for money?" That is extremely important.

My hon. Friend Mr. Carswell made a characteristically radical and questioning speech. It questioned both Government procedures and the workings of the Public Accounts Committee. I expect him to call, before too long, for a value-for-money study of the Public Accounts Committee itself, such is his dedication to small government.

My hon. Friend Mr. Bacon followed a more thematic approach, and notably considered the role of the Office of Government Commerce in steering projects through once they are approved. Again, he focused on IT projects and the Government's pretty poor record in delivering on them.

One particular theme that emerges from the debate is that Government Departments need to elevate purpose over process. Too often, the best way to achieve a result is left unexamined, and talented people are forced to muddle on in the way that the departmental bureaucracy prescribes. That is not efficient, and it does not give value for taxpayers' money. The lesson of the Committee's work is that there is far more value to be had for our money than we are getting at present.

I should like to mention individual reports. I hope that I will be forgiven for turning first to those that relate directly to the work of the Treasury. One of them is "Managing financial resources to deliver better public services"; it is one of those slightly vague-sounding titles, but I found it particularly fascinating. I thought it staggering that 60 per cent. of Departments do not automatically include a full financial appraisal when producing policy proposals for Ministers and board members. Worse, as other hon. Members have mentioned, only 20 per cent. of Departments produced a thorough assessment of the financial implications of a policy at the time when Ministers are asked to take a decision. The Committee report is surely right to suggest that that should be obligatory if Ministers and board members are to assess value for money. I am pleased that the Government have accepted that recommendation.

We also learn that half of all boards are not getting information in a form that they can use. The Government indicate only that joint financial and performance information will be provided to "a greater extent". I shall be interested to hear the Minister expand on that point in her response to the debate.

Despite resource management improving, it is troubling that so many Departments are not getting proper value out of their balance sheets, and that 19 per cent. rate themselves as very weak in that area. The Government need to do more to ensure that failing programmes are not allowed to stagger on consuming funds, but are wound up promptly and efficiently instead.

I congratulate my hon. Friend the Member for Gainsborough on a notable success that the Committee has had under his chairmanship. I refer to his campaign to make sure that all finance directors are financially qualified. I understand that fewer than half had a relevant qualification when he began raising the issue five years ago, but that now we are approaching 100 per cent. That is robust common sense, and I hope the Committee has equal success with its recommendations for adequate financial training for other staff as well.

When it comes to managing financial resources to deliver better public services, the Government could learn an awful lot from best practice elsewhere, and perhaps they are already doing so. A few weeks ago, the Minister for Local Government came to see me and Hammersmith and Fulham council in our town hall to learn more about how the council manages its finances.

The House will know that the council has cut its council tax take by 3 per cent. in each of three years, providing an average saving of £700 per resident, compared with the situation that would have pertained if the council had continued increasing the tax take at the same rate that it inherited. What the House might not know is that the council has managed to reduce its work force by some 18 per cent. in three years through efficient management and the contracting out of services. I do not believe that a single employee has been sacked, other than a set of political advisers. I am sure that if the PAC were constitutionally able to do so, it would benefit from receiving the same presentation, as would Treasury Ministers.

At the same time, the Audit Commission has increased the rating for my council's services to a maximum 4 stars in its comprehensive performance assessment, and resident satisfaction with council services has increased from 53 per cent. to 64 per cent. in just two years. That shows that it is perfectly possible to get more while spending less.

On the subject of PFI projects, the ground has, of course, shifted somewhat since the Public Accounts Committee produced its recommendations, given the Government bail-out of projects in recent weeks. I am not sure whether I understood the points made by Mr. Mitchell when he described PFI as outdoor relief for capitalism. A number of Committee members made various points about the report, including the Chairman about the lack of financial expertise on PFI projects and the ongoing discipline in monitoring the deal during the life of the project, which is so necessary.

With reference to the Committee's excellent report, I was particularly struck by the number of projects that were not subject to competitive tendering. Only 29 per cent. of the projects worth more than £100,000 were tendered, and I would be interested to hear in the Government's response whether and how they will seek to raise that percentage.

A number of Members mentioned the report on DEFRA. I found the lack of expenditure controls in DEFRA pretty frightening. The point was mentioned by the Chairman and by the hon. Members for Great Grimsby and for Glasgow, South-West. The findings were that the Department had poor contingency planning and an absence of a culture of tight financial management. Moreover, the Department has had budget problems for two years running, and little seems to have been rectified since the 2006-07 budget outturn. The Committee also pointed to an unwillingness to tackle budgetary problems within the Department's management board. This is pretty damning stuff, and again I would welcome the Minister's comments on whether DEFRA has corrected those faults.

On the Jobcentre Plus network report, all hon. Members have been affected by the closure programme. Many of us, like the hon. Member for Great Grimsby, initially found it odd that the Government decided to close half of the country's jobcentres at a time of rising unemployment. The national claimant count in January was some 1.97 million, up 483,000 on the year before. The claimant count in my constituency has risen as fast as the national average, even though I already represented more unemployed people than any other Conservative MP. Locally, the number of claimants has risen from 1,974 to 2,572—up 30 per cent. in just one year.

As highlighted by the Chairman and my hon. Friend Mr. Bacon, the Committee has shown its worth on the restructuring of the Jobcentre Plus network by giving praise where praise is due. It seems that the whole project is delivering savings of about £135 million a year, although its break-even point will not be reached until 2012-13. Nevertheless, I would welcome from the Minister her views on the lessons to be learned from the positive aspects of the project and how they might be applied to other rationalisations in future.

The final report that I wanted to highlight is about shared services in transport. That has made for less happy reading. The Chairman said that it was one of the worst cases of project management that he had ever seen. He highlighted its almost comical failings, one being that the new IT system started to communicate in German. Although it is a transport project with German content, it did not offer us any kind of Vorsprung durch Technik—a point also highlighted by the hon. Member for Glasgow, South-West. The project has been a monumental failure at a cost of £80 million. Nearly a year after the scheme was supposed to be operational, it is still not functioning properly. The £80 million wasted could have made a nice starting contribution towards building a high-speed rail network, for example. I know that that would be welcomed by my constituents, among many others.

To conclude, as my hon. Friend the Member for Gainsborough said, the Committee is looking for more bang for the buck. Especially given our massive public deficit—£100 billion or more, and rising—we desperately need more careful control over our public finances. My hon. Friend said that we must be vigilant in guarding against waste, that spending taxpayers' money is what Governments do—probably never more so than under this Government—and that spending money is the easiest thing in the world, but getting something practical for it is harder.

I congratulate the Public Accounts Committee and look forward to reading and commenting on, and perhaps even responding to, its reports in the future.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee 4:02 pm, 12th March 2009

It is a pleasure to respond to what has been, in the tradition of the debates that we have here, a wide-ranging, extremely interesting and beneficial debate on the important work of the Public Accounts Committee.

I was surprised to hear Mr. Leigh compared to Marie Antoinette; I would not have thought of her, if somebody had asked me to think of the historical figure of whom the hon. Gentleman most reminds me—I am trying to get the picture of him in a beautiful ball-gown out of my head. On beautiful ball-gowns, I noted a little item in the newspapers recently about the hon. Gentleman's trip to the Republican national convention. Following Sarah Palin's inaugural address ahead of her run for the US vice-presidency, the hon. Gentleman wrote in his journal that he felt absolutely reinvigorated by what she had said and that he was looking forward to a positive response to his invitation to her to address the Cornerstone group, but it looks as though he has been disappointed. Perhaps he can call yet another Public Accounts Committee meeting to cover his disappointment at her non-arrival.

The hon. Gentleman made a number of points, one of which I shall turn to soon, but first it is important to acknowledge the broad range and wide diversity of the subjects that he and his Committee members cover. Hon. Members of both parties have been quick to draw systemic lessons from some of the failures that have occurred in the use of public money. However, it is increasingly welcome that Committee members are willing to congratulate Departments that do a good job and produce something worth while, along with producing the more traditional—in some ways perhaps more enjoyable—reports that demonstrate where things have gone badly wrong.

In the battle to get maximum value out of public money, we all share the same aim. It is important that we highlight and reward good practice in debates such as this as well as pointing out where things have gone wrong. That gives Departments a much greater incentive to do well and makes them more likely to try new things without being too defensive in the battle to get value for public money.

On the Committee's 57th report, the hon. Gentleman and many other Members asked whether any officials had suffered any detriment as a result of what happened in the shared services project and the propensity of the IT to converse in German. I understand that some officials were dismissed. Hon. Members expressed doubt that that happened, but I will ask the appropriate Minister to write in more detail about the aftermath of the pretty sorry tale covered by the 57th report.

My hon. Friend Mr. Mitchell made a characteristically enjoyable speech. He ran through a range of issues, including the current matter of the Valuation Office Agency and its port ratings. He made a rather overblown—and, he admitted, personal—estimate of £70 billion as the amount of consultants' fees paid. I was happy to tell him that the figure actually fell by 31 per cent. to £903 million of Government spend this year.

Mr. Bacon commented, as an ex-consultant, that not all consultancy spending is bad and that some of it can in fact be very productive. He made the accurate comment that consultants are sometimes engaged out of confidence and a well focused approach to procurement and project management, and sometimes as a crutch to shore up confidence in a rather false way. It is important that we continue to make progress on the use of consultants and ensure that they are used appropriately and because they are needed.

The Office of Government Commerce has established a consultancy value programme, which is a cross-departmental, collaborative programme aimed at deriving greater value from our use of consultants. We have also implemented the recommendations of the National Audit Office and the Committee on the matter. That is one of the ways in which we have managed to achieve that 31 per cent. decline in consultancy spend. I trust and believe that because we have developed a standardised business case process, those approving consultancy spend can be assured that it is adding value. We have also introduced schemes such as skills transfer to ensure that there is not an unhealthy reliance on the expertise of consultants. I therefore feel that we are in a much better situation in that regard than we were a few years ago.

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Photo of Greg Hands Greg Hands Shadow Minister (Treasury)

The Exchequer Secretary has mentioned 31 per cent. twice. Does that represent a decrease from a recent high or a decline over the course of the Government's tenure? Expenditure on consultants has dramatically increased since 1997. [This section has been corrected on 1 April 2009, column 8MC — read correction]

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The figure relates to the last Public Accounts Committee and National Audit Office report on the matter, which was published in 2001-02. I make that clear so that hon. Members are not under the wrong impression.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

The organisation that we are considering—namely, UK Government—spends £600 billion in total. Of that, they spend £2.5 billion to £3 billion—0.5 per cent.—on consultancy, which is less than many private organisations and certainly less than FTSE 100 companies. They probably spend considerably more than 0.5 per cent. on what one might call outside help. We should stop banging on about consultancy in an ill-informed way and try to analyse some of the problems with the management, procurement and purchasing of consultancy to ensure that what is bought is worth while, and that, if it is not worth while, we do not buy it.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I am not going to argue for more consultants from the Dispatch Box, but we should use consultancy services in government, when appropriate, and ensure that, if we use them, we get the best value from them and that they are not used as a sort of prop to allay individual project directors' worries about whether they are doing the right thing. That is all we can do from the centre, and, to be fair, the consultancy value programme, which is driven by the Office of Government Commerce, has been doing that. I hope that that will create a position whereby we can be much more confident that consultancy spend is undertaken for the right reasons.

Some of the hysterical media coverage that we get, which assumes that any amount of consultancy spend is wrong and a waste of money, is not helpful in fostering circumstances in which those responsible for introducing consultancy work feel that they can do it without being subject to public criticism. For example, the recent screaming and inaccurate headlines in the Daily Mail about £7 billion a year spent on consultancy firms were unhelpful. I therefore agree with the comments of the hon. Member for South Norfolk about the matter.

A theme of the debates is that the Committee's considered recommendations about procurement, project management and delays in introducing IT systems have not been implemented and that, consequently, Departments repeat the same mistakes. My right hon. Friend Mr. Touhig made that point with some frustration in an intervention, and Angela Browning returned to the matter more than once in her contribution. It is a source of frustration to anyone who has been involved in that aspect of parliamentary scrutiny, including me as a member of the PAC when in opposition and now on the Treasury Bench. There must be a way in which to ensure that best practice is spread more effectively and appropriate lessons are learned. Again, that is a matter of training, as the hon. Lady pointed out.

The hon. Lady also asked about skills training for the civil service. The civil service has the "Professional Skills for Government" programme, which gives high quality training and is tailored, when appropriate, to provide procurement and project management skills to ensure the availability of the skills needed to deliver good value for money for public services. Again, the hon. Member for South Norfolk made similar comments, which I endorse.

On good practice, I was pleased to read the Committee's report on prison procurement, which was published only two days ago. The report demonstrated that the Prison Service has managed to implement a new strategy for procurement following a critical report from the Committee in 2003. The service has introduced a centralised and professionalised procurement team supported by five regional procurement teams in a new information technology system that was successfully phased in and that worked when it was turned on. As far I can tell, the system did not communicate in German or any other language apart from English.

As a direct result of the Prison Service responding to the Committee's wide-ranging representations, the quality of goods and services procured has improved and £120 million in cash has been saved over five years. I welcome the praise that the hon. Member for Gainsborough lavished on that example of successful change management. He is often on the radio criticising, and quite rightly, but it is important that he also gives praise where praise is due, and in this instance it certainly is due. I understand that the Prison Service procurement model is to be used throughout the Ministry of Justice, with the prospect of further savings. It is precisely that kind of positive approach and successful implementation that we want to spread throughout government at all levels.

That news also comes on the back of the positive report on Jobcentre Plus. That report was much commented on by my hon. Friends and by Opposition Members, particularly with respect to the observation that those who were responsible for implementing the successful changes in Jobcentre Plus had behind them a lot of operational experience at the front line, which they brought to bear on the decisions that they made. That observation should not go unnoticed by senior managers in the civil service as they contemplate what works and what is likely to increase the chances of success in any change project.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I am delighted to hear the Minister say that that observation should not go unnoticed by senior managers. What will the Treasury and the Cabinet Office do at the centre to ensure both that notice is taken of it across the service and that active steps are taken to spot people with talent who have not come up through the fast-stream route?

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I agree that that is precisely what needs to happen. At the suggestion of hon. Members at the previous occasion when we held this debate, I agreed to write to every permanent secretary asking them to look at the Committee's report on Jobcentre Plus and act accordingly. That is the kind of thing that I can do as a Minister who is not directly responsible for day-to-day management decisions in a Department. I also know that there is a great deal of awareness at the permanent secretary level of the success that has been enjoyed in this instance.

I want to respond to the questions that Dr. Pugh asked about the out-of-hours contract and the Hegelian dialectic. We had revolution from the hon. Member for Gainsborough and an Hegelian synthesis from the hon. Member for Southport. As always, this is an interesting time to debate the Public Accounts Committee's reports, and we are even adding a dash of philosophy just to keep ourselves more interested. The hon. Gentleman asked about the out-of-hours contract. He is right that the new contract initially pushed up GPs' pay, but since then costs have been held back to achieve compensatory savings. More importantly, Health Ministers now have much better control of doctors' pay. They commission services and get what they pay for, which is value for public money. Despite a wobbly start, the overall impact of the changes has been positive, now that there have been further shifts.

I welcome Mr. Carswell as a new member of the Committee. He has been called a zealot by my hon. Friend Mr. Davidson. The hon. Member for Harwich expresses himself with a great deal of ideological certainty and belief. I am sure there will be many vigorous debates and moments of conflict and clash on a Committee that is not usually known for that kind of approach. I know that the hon. Gentleman will enjoy his time on the Public Accounts Committee, as those of us who have been fortunate enough to serve on it in the past inevitably do. I welcome him for the first time to these debates and I certainly hope that it will not be the last time he contributes to our debates as provocatively as he wishes to.

My hon. Friend the Member for Glasgow, South-West commented on the number of senior Treasury civil servants who have Oxbridge and public school backgrounds. I have to admit that I do not know the answer. I was interested in what my hon. Friend had to say about it and I will look further into the responses he received to his letter and see whether we can get him a more forthcoming one. [Interruption.] I was just about to say that it should not be assumed that just because my hon. Friend the Member for Glasgow, South-West has a particular view of people with public school or indeed Oxbridge backgrounds, there must be something wrong with those people. Speaking as an ex-member of St. John's college, Oxford—actually, I am sure that one is a member of St. John's for life—I certainly have many happy memories of it. [Interruption.] Yes, I am sure that Alan Duncan does, too, but perhaps the less said about that the better!

My hon. Friend the Member for Glasgow, South-West raised two further points. He asked about the 40th report, which is on the management of expenditure by the Department for Environment, Food and Rural Affairs. I hope I can reassure my hon. Friend that since the report was published, we have seen systematic monthly reporting of the Department's financial position to the management board and a new system of portfolio management through senior responsible owners of programmes. There is a refreshed financial management improvement project, which is delivering more effective and focused financial management across DEFRA, including of relationships with the delivery agents. Many might think that that should have been in place as a matter of course, but we can at least be relieved that it is in place now.

My hon. Friend also asked about the report on the Revenue and Customs Prosecutions Office. He is right that the system as described was open to exploitation. He did not complete the story, however, as the accounting officer has instituted a new system of control and achieved enormous improvements in efficiency in respect of public spending since that difficult start, which the hon. Member for Tiverton and Honiton also mentioned.

The hon. Member for South Norfolk asked about the Fulton report and the appropriate balance between generalist and operational effectiveness and experience in the civil service. I suspect that this is a slightly less class-confrontational way of getting at the same issue raised by my hon. Friend the Member for Glasgow, South-West in his efforts to find out the educational background and experience of top-flight civil servants. As change management and the experience of delivering change in already complex existing organisations goes higher up the scale in terms of the Government's requirements, it becomes increasingly important for senior civil servants responsible for managing Departments in new and fresher ways to look into this balance. The hon. Member for South Norfolk has hit on an issue that ought to be thought about a great deal more than perhaps it has been. Settlements such as Fulton and Northcote-Trevelyan—which is another, even older one—still influence the civil service. We need to look at all those things in the light of the 21st century, rather than the 19th. He makes perfectly reasonable observations.

I want to say a few things about some of the more technical issues that have been mentioned, perhaps in passing. I am happy to announce that the last piece of the jigsaw in the Government implementing our response to Lord Sharman's report on audit and accountability in central Government is now in place. Hon. Members will be aware that, until recently, the Comptroller and Auditor General was not eligible to audit non-departmental public body companies, but provisions in the Companies Act 2006 clear the way for him to do so with effect from financial year 2008-09. There are separate provisions for profit-making and non-profit-making companies, but happily they are now in place.

The Comptroller and Auditor General now has public audit responsibility for 26 non-profit-making NDPB companies. I understand that 24 companies, which are either profit making or have profit-making subsidiaries, have also agreed to come under the auspices of the Comptroller and Auditor General for audit purposes.

I share the Committee's disappointment—this is a point that the Chairman of the Committee brought to our attention in his opening comments—that the implementation of the new governance arrangements for the National Audit Office has been delayed, along with the constitutional renewal Bill. However, the Public Accounts Commission has seen the draft provisions in near final form and the Treasury is ready to proceed as soon as a decision is taken on the Bill's timing.

I welcome other progress in this area, such as the appointment of Sir Andrew Likierman as the new chair of the National Audit Office and of Mr. Amyas Morse as the new Comptroller and Auditor General. The hon. Member for Gainsborough told us about the selection panel, which he chaired, and expressed his confidence in the choice that has been made. The formal appointment of Mr. Morse will follow, through a motion in Parliament. I am glad that he can take up his appointment on 1 June.

I was interested to read the transcript of the first ever pre-appointment hearing that the Committee has held. The Committee gauged Mr. Morse's views on a wide range of issues. I note that he has ambitions for the NAO in improving the efficiency, cost efficiency and functional efficiency of government. We share those ambitions and I welcome the fact that Mr. Morse wants to work with Departments and the Treasury to progress that. Progress and a push from the NAO, as well as from the Treasury, have a good record in achieving change, which we all wish to see.

Our Green Paper, "The Governance of Britain", explained that the Government would simplify our reporting to Parliament by bringing together the processes for planning, parliamentary approval and reporting of public spending on a more consistent basis. I hope that that responds to some of the worries expressed by the hon. Member for Harwich, and it recognises the point made by the hon. Member for Southport about what are known as the "clear line of sight" changes, or the alignment review.

We made it clear that the Government would consult widely on the detailed changes needed to implement what is a major reform of parliamentary scrutiny, which is designed to make the system of Government finance easier to understand and operate, and to improve Government accountability to the House.

On 28 February, my right hon. Friend the Chief Secretary to the Treasury wrote to the hon. Member for Gainsborough and the Chairs of a number of other House Committees, drawing their attention to the parliamentary memorandum—which was published on 5 March as a Command Paper, Cm. 7567—setting out our formal proposals for achieving better alignment between budgets, estimates and accounts.

The proposals in the memorandum will result in a simpler system, with a single set of numbers, which is more transparent, more comprehensive and easier to use. It will improve public debate and understanding through enhanced parliamentary scrutiny of Government. I believe that the proposals are fully consistent with Parliament's wishes. We would welcome Parliament's agreement to the detailed proposal by the summer recess, so that we can start implementing the new arrangements from 2010-11.

In closing, I again pay tribute to the work of the Committee, which proves its value every time it sits, and demonstrates its value in these debates. On behalf of the Government, I also thank Tim Burr, as the hon. Member for Gainsborough quite properly did in his opening remarks. Mr. Burr has displayed impressive abilities as Comptroller and Auditor General, not least because he took on the role on an interim basis pending the appointment of a successor. He commands the respect of the Government, and all in the House, as he has guided and led the National Audit Office through that period of transition. We need the National Audit Office to hold the Government to account, and Mr. Burr is courageous in ensuring that that continues. I wish him well for the future.

We all know that the National Audit Office and Public Accounts Committee together provide a valuable public service. We have seen evidence of that again today, if we doubted it. Improvements have been made, and as always in this continuous revolution—to use the words of the Committee Chairman—there is scope for even more improvement. I hope and believe that we will see that in future.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee 4:31 pm, 12th March 2009

It is a great pleasure to spend three or four minutes thanking all those who have taken part in what has been a good debate. It is always pleasant to take a three-hour break from the normal partisanship of the House, and try to get to grips in a completely non-partisan way—not mentioning the political debate at all—with how the public sector works.

I am grateful to all those who have taken part in the Back-Bench debate, which was opened by my friend Mr. Mitchell. He is such an honest man that when he came forth with a figure and it was proved wrong, he just admitted that it was his own concoction. I wish we were all so honest when we made mistakes in this place. He made a serious point that the trouble with Whitehall is that there is no settled culture—not just continuous policy changes, but a continuous driving through of Gershon, which makes it difficult to get to grips with efficiency savings. His wise words should be remembered.

Dr. Pugh, who is a valued member of the Committee, made one of the great understatements of the year—that public servants lack the incentive of private citizens in husbanding resources. You can say that again. We do our best to try to help public servants to be just as good as private citizens in husbanding resources. His wise words about the GP contract will be engraved in the heart of any future Government in dealing with a powerful public sector trade union, which is all that the British Medical Association is.

I am grateful to my hon. Friend Angela Browning for her contribution. She made an important point about the problem of change continually recurring, and project management. We have made a difference, as the Exchequer Secretary mentioned, in trying to ensure that all finance directors are professionally qualified. I have tried to make the focus on project management a theme of my chairmanship. I believe that so many of our mistakes are made because we drive through change too quickly. I say to the Exchequer Secretary that we try to have a balance and give praise—we are not just Jeremiahs. My press release on the roll-out of prison procurement this week was very laudatory of the Department. Where such procurements work well, they are delivered slowly, with piloting, and are not continuous changes. My hon. Friend's point about the need for more training is important.

My hon. Friend Mr. Carswell made a dynamic, young man's speech. He reminded me of my early days as an ardent Thatcherite. All I can do now is go to bed with the collected speeches of Sarah Palin—not a very thick volume. My hon. Friend keeps us all on our toes, and it is good to have him on the Committee. He made the point that when the oversight of Parliament has become so weak in respect of the whole budget process, the audit process is even more important. That is why the Committee's work is so important.

Of course we all love Mr. Davidson and his critiques of the royal family, public schools and the rest, and we are very grateful for what he says. We are also very grateful to my hon. Friend Mr. Bacon. Lastly, we are grateful to my hon. Friend Mr. Hands.

The PAC model has spread throughout the Commonwealth, and I think we should be extremely proud of it. We are proud of our work. We do try to make a difference, and we hope that at the end of the day we save taxpayers money.

Question put and agreed to.

Resolved,

That this House takes note of the 30th, the 36th, the 39th to the 41st, the 43rd to the 49th, the 51st and the 57th Reports of the Committee of Public Accounts of Session 2007-08, and of the Treasury Minutes on those Reports (Cm 7493, 7522 and 7545).

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Photo of Greg Knight Greg Knight Chair, Procedure Committee

On a point of order, Madam Deputy Speaker. May I refer you to a written question in column 1124W of volume 463 of Hansard? It was asked on 25 July 2007 by Mr. Drew, who I see is present, and concerned the possibility of the Youth Parliament using this Chamber. The reply given by Helen Goodman, who was then Deputy Leader of the House, stated that the matter would be referred to the Modernisation Committee.

Although the motion that I assume a representative of the Government is about to move is not irregular in the procedural sense, it is clear that the Government have failed to honour the commitment that they gave the House, because the matter has not been put before the Modernisation Committee. I therefore wonder, Madam Deputy Speaker, whether you feel that it would be more appropriate for the motion not to be moved until the Committee has had an opportunity to consider the matter.

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Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

Further to that point of order, Madam Deputy Speaker. I have been a member of the Modernisation Committee since its very first meeting, in the last half of 1997, and I can vouch for the truth of what has been said by my right hon. Friend Mr. Knight. The question of using this Chamber—uniquely—for a meeting of the UK Youth Parliament has never been discussed. I fervently believe that if the policy was that it should be referred to the Committee, and if that was stated by a Government Minister—the Deputy Leader of the House—that commitment should be honoured before the matter is put before the House as a whole.

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

I will take one more point of order.

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Photo of Martin Salter Martin Salter Labour, Reading West

Further to that point of order, Madam Deputy Speaker. Can you advise the House how to deal with circumstances in which hon. Members may have inadvertently misled the House? The Modernisation Committee's 2004 report "Connecting Parliament with the Public", to which I was party along with several other Members, contained a recommendation that the UK Youth Parliament use the Chamber of the House.

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

May I respond to the points of order that have been made? I really do think— [Interruption.] Order. Two points of order have been raised with me. I intend to reply to them, and I want the Members concerned to hear what I have to say.

Let me advise Members that the points raised with the Chair as points of order are actually points that they could well introduce into the debate that is about to take place.

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Photo of Christopher Chope Christopher Chope Conservative, Christchurch

On a point of order, Madam Deputy Speaker. Bearing in mind what you have said—that certain matters are obviously matters for debate—may I raise with you something that was said by the Prime Minister in his statement following the publication of the Green Paper "The Governance of Britain" on 3 July 2007? He said:

"Consultation will take place with you, Mr. Speaker, and through the Leader of the House, with this House as to whether the Youth Parliament should be invited here in this Chamber once a year, on a non-sitting day."—[ Hansard, 3 July 2007; Vol. 462, c. 819.]

Is it possible to find out, Madam Deputy Speaker, the nature of the consultation that has taken place with Mr. Speaker, and through the Leader of the House, with this House?

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Let me repeat the ruling that I have already made. The points made by the hon. Gentleman could well be made as part of the debate that I hope we shall now be able to hear.

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Is it another further point of order?

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

It is directly related to the point of order, Madam Deputy Speaker, and your answer to it.

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

We have heard quite a few variations on the original point of order, but I shall allow one more.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I am very grateful to you, Madam Deputy Speaker. My hon. Friend Mr. Chope asked whether it would be possible to find out what consultation has taken place with the Speaker's Office. It seems to me that that is not a question for debate, as I have been a Member of this House since 2001 and I have never seen either the Speaker or any of the Deputy Speakers making a speech from the Chair in the sense of taking part in a debate, and I do not expect to see that. Therefore, Madam Deputy Speaker, how should we ascertain what consultation has taken place with the Speaker's Office, as, with the greatest respect, that is plainly not a matter for debate?

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With the greatest of respect to the Member, who says he has been in the House since, I think, 2002—[Hon. Members: "2001."] He has been a Member of the House since 2001, and I think that he will therefore be aware that during the course of a debate it is quite possible—this frequently happens—for Members to intervene on Ministers standing at the Dispatch Box to clarify certain queries they may have. Let us now proceed, and commence with this debate.

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