Clause 3

Statistics and Registration Service Bill – in a Public Bill Committee at 4:30 pm on 16th January 2007.

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Members

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I beg to move amendment No. 30, in page 2, line 3, leave out ‘Treasury’ and insert ‘Cabinet Office’.

Photo of Bill Olner Bill Olner Labour, Nuneaton

With this it will be convenient to discuss the following amendments: No. 31, in clause 3, page 2, line 4, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 32, in clause 3, page 2, line 7, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 33, in clause 3, page 2, line 9, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 34, in clause 3, page 2, line 11, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 35, in clause 3, page 2, line 13, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 36, in clause 4, page 2, line 29, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 37, in clause 4, page 3, line 3, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 38, in clause 4, page 3, line 5, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 122, in clause 10, page 5, line 15, at end insert—

‘(e) the Cabinet Office.’.

No. 39, in clause 11, page 5, line 39, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 40, in clause 27, page 11, line 2, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 41, in clause 27, page 11, line 13, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 42, in clause 27, page 11, line 20, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 44, in clause 27, page 11, line 27, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 45, in clause 27, page 11, line 29, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 46, in clause 27, page 11, line 41, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 47, in clause 44, page 19, line 6, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 48, in clause 44, page 19, line 35, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 49, in clause 44, page 19, line 41, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 50, in clause 44, page 19, line 42, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 51, in clause 44, page 20, line 6, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 72, in clause 44, page 20, line 8, leave out subsection (11).

No. 73, in clause 44, page 20, line 8, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 74, in clause 44, page 20, line 14, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 75, in clause 44, page 20, line 14, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 76, in clause 44, page 20, line 17, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 77, in clause 44, page 20, line 17, leave out ‘Chancellor of the Exchequer’ and insert ‘Prime Minister’.

No. 52, in clause 44, page 20, line 18, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 53, in clause 47, page 22, line 6, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 54, in clause 47, page 22, line 16, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 55, in clause 47, page 22, line 18, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 56, in clause 47, page 22, line 19, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 57, in clause 47, page 22, line 24, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 58, in clause 47, page 22, line 28, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 59, in clause 48, page 22, line 33, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 60, in clause 48, page 23, line 21, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 61, in clause 48, page 23, line 28, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 62, in clause 48, page 23, line 31, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 63, in clause 49, page 24, line 17, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 64, in clause 49, page 24, line 19, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 65, in clause 50, page 25, line 7, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 66, in clause 50, page 25, line 9, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 67, in clause 55, page 27, line 13, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 68, in clause 58, page 28, line 17, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 69, in clause 62, page 29, line 4, leave out ‘Treasury’ and insert ‘Cabinet Office’.

No. 70, in clause 62, page 29, line 13, leave out ‘Treasury’ and insert ‘Cabinet Office’.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

Welcome to the Chair, Mr. Olner. You have arrived for one of the more controversial debates after a fairly quiet morning. The theme of the amendments relates to the residual ministerial powers vested in the Treasury. My colleagues and I have tabled this string of about 40 amendments, which are also supported by the hon. Member for Chipping Barnet and her colleagues, to question the location of the residual ministerial powers.

I stress from the outset that I do not see this as an opportunity for Treasury-bashing or bashing this particular Chancellor. As the Financial Secretary pointed out on Second Reading, the Treasury has a good record in recent years of being willing to distance Ministers from day-to-day decisions, most importantly in the case of the Monetary Policy Committee and in financial regulation.

Although there are undoubtedly lots of quibbles with appointments and the efficiency with which they have been made, I would not argue that any of the major appointments, particularly to the MPC, have been characterised by cronyism or political bias. They have all been driven essentially by merit and relevant qualifications. I am not having a go at the Treasury for how it discharges its existing responsibilities. However, it is important to stress from the outset that although the Bill will separate the National Statistician, his staff and statisticians in general from political interference to some degree, substantial ministerial powers none the less remain. A run through the amendments will bring to light how important those residual powers are.

Amendments Nos. 30 to 38 deal with clauses 3 and 4, which discuss appointments. As we were reminded this morning, appointment is not just a process of putting forward names; it is also about ministerial discretion over board numbers and dismissal. Ministerial residual powers respecting pre-release are dealt with in amendment No. 39, and amendments Nos. 40 to 47 deal with powers of direction in the event that the board fails in its statutory responsibilities. There are ministerial powers for the disclosure of information to the board, addressed in amendments Nos. 47 to 53, and by the board, in amendments Nos. 59 to 62. Amendments Nos. 53 to 58 deal with ministerial powers in the use of information, amendment No. 77 with particular powers in relation to the devolved authorities and transfers of property to the board and amendment No. 68 with powers relating to remuneration and general orders and obligations. A wide variety of residual powers will still be exercised by the relevant Minister, in this case the Chancellor, and the Treasury.

Why do I argue that the Treasury is not the best place for the powers? There are two main reasons. The first is that many Government statistics—probably the majority, but certainly a very large part—have nothing  to do with economic matters. The Government statistics most in need of quality assurance and the improvements that we expect to flow from the new structure lie outside economics, in Home Office matters and spending Departments such as health and education. There is no particular reason why economic considerations should dominate.

I have spent all my working life dealing with economic matters, whether in the private, public or academic sectors, or in work and, indeed, Parliament. I know, therefore, that there is a tendency if one has an economic training and background to believe that economic issues and arguments are the most important. I am sure that spirit animates the Treasury too, which is perfectly understandable. I am not criticising. Lawyers will always look at points of legal principle and accountants at balance sheets. Economists will be fascinated by economic problems. However, statistics in government are not primarily about economic issues. What seems fundamentally wrong is that the Treasury concern, which is with economic policy, should necessarily dominate the approach to government statistics as a whole.

The second reason is that the Treasury is not disinterested. The Treasury is a major consumer of statistics, and a funder; in both respects there are potential conflicts of interest. Most serious of all, measurement of the Treasury’s basic performance in its primary function of fiscal policy and of the Government’s performance on the Budget and government debt is critically dependent upon the judgment of statisticians. There was an exchange between the hon. Member for Sevenoaks and the Economic Secretary about that. I make no allegations as to whether the Treasury has exercised improper influence over public finance data in the past, but there will be enormous pressures to ensure that people appointed to the statistical board would give the Treasury an easy ride. That is human nature and nothing to do with the party in power or the present fiscal situation. It would be much better if the Department and the Minister responsible did not have that potential conflict of interest.

The question then arises as to whether there is a better locus of responsibility. I think that there is. That is the Prime Minister, acting executively through the Cabinet Office, which has an overview of Government as a whole in a way that the Treasury does not. There are no obvious and direct conflicts of interests. The Cabinet Office is not a major user of statistics in the same way and does not have a funding role. Although of course Government performance is being measured in its entirety, the Cabinet Office has no direct and acute conflict of interest over its performance, as with the Treasury.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

Will the hon. Gentleman answer a question? I remain perplexed. Is the purpose of his amendment simply to follow the current Chancellor from No. 11 to No. 10?

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

That is not the purpose, but I suspect that would be the consequence, which reflects how generous spirited we are, not discriminating or acting against the current Chancellor; we do not know what will happen in the Labour party, but that he would inherit the powers seems likely, were the amendment successful. The hon. Gentleman correctly said that, although I think he supports the amendment.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

Another brief question concerns the Prime Minister, who, as well as having a larger remit to his or her responsibility, is First Lord of the Treasury. Does the conflict of interest for the Chancellor also lie with the First Lord of the Treasury?

Photo of Bill Olner Bill Olner Labour, Nuneaton

Order. Do not stray too far.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I will not. I was not sure of the answer anyway, so you have saved me an awkward moment.

My final point is that circumstances will arise in which there will be a major challenge to the independence of the board. What is important in those circumstances is that the Minister with residual responsibility has the maximum possible authority. There is no greater authority than that which resides in the Prime Minister. At the moment we happen to have a powerful Chancellor of the Exchequer, but that has not always been and will not always be the case. In the future, Chancellors of the Exchequer may be relatively weak Ministers, who will not be able to stand up to departmental Ministers who have been involved in serious manipulation and use of their Department’s statistics. It is important that we build in institutional checks and balances, which are more properly and effectively vested in the Cabinet Office, and through that the Prime Minister.

Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury

I am delighted to be serving under your chairmanship, Mr. Olner.

As we have heard, amendment No. 30 is related to a series of amendments that seek to transfer residual responsibilities from the Treasury to the Cabinet Office. It is a matter of some importance because the responsibilities are significant functions in relation to the new statistical framework.

The Opposition see some of the amendments as a fall-back alternative to our preferred model, which is based on the approach of the National Audit Office. In relation to clauses 3, 4 and 58, our preferred approach is set out in amendments Nos. 176 to 183, to which I will speak later. Those amendments would transfer powers not to another Department, but from the Treasury to the chairman of a powerful new commission of both Houses of Parliament. That would provide the strongest safeguards to ensure real independence from Ministers. However, we are happy to consider the approach set out in amendments Nos. 30 to 42 and 40 to 70 as an alternative on a matter that is subject to the concern of many stakeholder groups. The compromise would not provide the safeguards of our preferred approach, but removing the new structures further from the influence of the Treasury could strengthen the reforms in an important way.

Professor A.F.M. Smith of Queen Mary college, university of London, said that:

“It is important that there be absolute clarity in the separation from ministerial or Treasury authority and influence.

I would recommend therefore that ONS be a Cabinet Office department.”

Ruth Lea, former head of the policy unit at the Institute of Directors, told the Treasury Committee that there was a strong case for locating the new non-ministerial department within the Cabinet Office as a

“much less powerful policy-making department” with

“a ... broader remit”.

Tom Griffin, former Director of Statistics at the United Nations Economic Commission for Europe, describes the retention of the Treasury link as placing an

“unnecessary limit on the break with the present unsatisfactory arrangements.”

He concluded:

“To sever the link with the Treasury now, and to have the Cabinet Office speak for statistics in Parliament, would be a very visible and important move towards independence.”

Commenting on the Government’s initial proposals, Professor David Rhind of the Statistics Commission told the Treasury Committee that the commission had examined the statutory arrangements for Her Majesty’s Revenue and Customs and how it operated as a non-ministerial Department. The commission did not feel that those arrangements represented a sufficiently significant reduction in ministerial or Treasury authority. That led the commission to conclude that the transfer of residual functions to the Cabinet Office would be a better arrangement.

There are mixed views on the matter. I understand that after much discussion, the Treasury Committee did not support the proposition contained in the amendments. However, the Committee rejected the argument that locating the new Department within the remit of the Cabinet Office would not be detrimental to the Treasury’s ability to co-ordinate and measure a Department’s progress against public service agreements and efficiency targets.

Some of the most serious concerns expressed on the issue focus on the potential conflict of interest that the structure proposed by Government could involve. The Royal Statistical Society, for example, expressed support for a switch to the Cabinet Office on the grounds that the Treasury

“has a particular interest in economic statistics and as a major user is now perceived to exercise influence on ONS’s statistical priorities.

It would further enhance public confidence if the residual ministerial responsibility was returned to the Cabinet Office where it began which would be seen to act as an honest broker across government should any Minister need to be consulted on an issue.”

That is a key concept for the Treasury to consider. Which of the Departments would be the best, most honest broker in reconciling conflicts between Departments?

The Cabinet Office has far less of a vested interest, because it is not a direct consumer of as many statistics as the Treasury, so it is less likely to push the board around and more likely to have a feel for the broader range of priorities across different Departments and policy areas. Lord Moser, the former head of the  Government’s statistical service, emphasised in a debate that he initiated in another place that the Cabinet Office’s

“lack of particular subject interest” gives it

“greater strength over the other departments in our decentralised system.”—[Official Report, House of Lords, 15 June 2006; Vol. 683, c. 407.]

He has also said that he feels that giving it this role would enhance the ability of the new structures to examine issues relating to

“education, health and all the other social areas which are not the direct interest of the Treasury”.

There is a serious concern that giving residual responsibilities to the Treasury, a major user of economic statistics, may skew the priorities of the statistical services towards the Treasury. If the Cabinet Office were the relevant Department, the Opposition feel that there is more chance that the board and the National Statistician would be free to focus on the priorities of the statistical services, the users and the public interest rather than on the Government and Treasury interest.

On Second Reading, the Financial Secretary was anxious to persuade us that the reforms will cover a wide range of statistics. We will debate that later, but the Opposition feel that the scope should be wider. Although we differ on the extent of the scope of the Bill and the code of practice, there is agreement that the legislation’s focus should not be confined to economic data, which are of primary interest to the Treasury. There is concern that leaving the ministerial home of the non-ministerial department at the Treasury takes insufficient account of the importance of statistics on crime, health and education. As the hon. Member for Twickenham has said, that is often where the most significant problems have arisen.

Tom Griffin, to whom I referred earlier, has said:

“Given the breadth of government statistics (health, welfare, education, migration, crime and so on) the Cabinet Office is the only department that can legitimately speak for them.”

If, as Ministers claim, we are to have a structure that covers departmental statistics as effectively as ONS ones, it makes sense to give residual ministerial functions to the Cabinet Office, which has co-ordination between other Departments as one of its primary tasks and objectives.

The Cabinet Office’s stated objectives include:

“Providing efficient arrangements for collective decision making, including analyses of policy and performance that cut across more than one part of Government, and systems which promote co-ordinated action and presentation.”

Its website also specifically refers to its role of brokering agreements between Departments. The website sets out a lengthy list of areas where it performs that co-ordinating function, for example on e-government, social exclusion, drugs policy, women’s equality and regulatory impact. Professor David Rhind told the Treasury Sub-Committee that a switch to the Cabinet Office would

“assist with coherent planning to meet future statistical requirements.”

Its expertise across Departments would assist in such coherent planning.

Aside from ensuring that the non-ministerial Department and the board are free to set their own priorities, another more important aspect of this is ensuring that the board and the ONS have someone to fight their corner in negotiating with the Treasury on funding. Getting funding arrangements right is, of course, crucial in ensuring that the Bill is successful in granting real independence to statistics. I imagine that there is cross-party agreement on that. We believe that our parliamentary model would solve the problem, with funding determined by a direct parliamentary vote. However, we are examining this proposal as a compromise and fall-back option, and the issue is important in that context.

Everyone is aware of the struggles between Ministers and the Treasury during the funding round. Under the Bill, Treasury Ministers would effectively be negotiating with themselves when it comes to funding arrangements for statistical services. Yes; presumably the board and the National Statistician would have something to say about funding but, if residual ministerial responsibilities are to remain part of the new structure, surely the statistical services deserve a Minister from a different Department to argue their case with the Treasury. Such arguments can be advanced effectively only if they come from a Department outside the Treasury.

Inextricably linked with the debate is the role of the Prime Minister, which has been alluded to already. It is important that the National Statistician has direct regular access to the Prime Minister. I hope that such access is envisaged by the Government, even though it is not stated in the Bill. If the reforms are to succeed in the way in which both Government and Opposition Members want them to succeed, they will need to have political will behind them, and they will need to operate in a way that builds up the authority and political clout of the board and the National Statistician. Ensuring that the National Statistician has direct access to the Prime Minister will play a key part in that strategy, which is another reason why the transfer of responsibilities from the Chancellor to the Prime Minister will help to build and strengthen proposals for independence.

Len Cook, former head of the government statistical service, has said:

“Almost all of the current concerns involve departments where only the Prime Minister has the authority to challenge Ministers, so the Prime Minister needs to have his existing contingent involvement still recognised.”

That issue certainly seems to be at the heart of Lord Moser’s wish to see the Cabinet Office holding the relevant functions that we are discussing. He said to the Treasury Committee:

“In the old days—and I do not say in the good old days, because lots of things are much better now than they were then—the reporting line was through the Cabinet Office to the Prime Minister. This is a very real link. I served three Prime Ministers. I would see the Prime Minister quite regularly and he would take serious interest. That obviously was a great strength, especially vis-Ã -vis other departments. So it was much less difficult to influence other ministries when it was known that behind me was the Prime Minister.”

Lord Moser considers that, since the switch of responsibility for the ONS from the Cabinet Office to the Treasury, the direct link with the Prime Minister has been broken.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 4:45 pm, 16th January 2007

Will the hon. Lady say whether the issue is really about whoever is running statistics influencing the Government, or is it about the Government influencing those who are running statistics? It seems that the latter point is much more important.

Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury

In this context, it is important to ensure that statisticians have independence, but, when the National Statistician needs to stand up to a particular Department, having direct prime ministerial backing will bolster them in ensuring that good practice is adhered to. It will help to give authority to the new structures if the National Statistician is seen to have the Prime Minister’s support.

Having read the Hansard report of the announcement of the changes that made the transfer to the Treasury, the Prime Minister of the day envisaged that the National Statistician would continue to have access on the validity and integrity of Government statistics. It would be useful to receive clarification from the Financial Secretary on that matter to ensure that the worries of the National Statistician are heard at the highest level of the Government. For example, how often does the National Statistician see the Prime Minister? Does she have access when she needs it? The amendments that would transfer functions to the Cabinet Office would give a visible signal that the National Statistician has that political backing from the Prime Minister, and that would represent an important improvement in the new framework.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

We have heard, and rightly so, from the hon. Member for Twickenham that the Treasury is the greatest producer and user of statistics, and that it should be removed completely from its influence over the board. My hon. Friend the Member for Chipping Barnet has made the point that only parliamentary scrutiny and approval of appointments to the board will give the board the necessary legitimacy in the public’s eyes.

Photo of John Healey John Healey The Financial Secretary to the Treasury

That is the next set of amendments.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

Is it?

The matter concerns the lack of confidence that the public have in those figures. I want to repeat the point that the Financial Secretary made on Second Reading:

“The House has a central role in and responsibility for the new statistics system”.—[Official Report, 8 January 2007; Vol. 455, c. 23.]

That statement will be true, however, only if the new commission which our amendments would establish comes into being.

Photo of David Gauke David Gauke Conservative, South West Hertfordshire

It is a pleasure to serve under your chairmanship, Mr. Olner. I want to make a brief point. I am sympathetic to the views expressed by the hon. Member for Twickenham and my hon. Friend the Member for Chipping Barnet. I am a member of the Treasury Committee, which has considered the issue. The Committee concluded that the Treasury should remain a residual Department in this context, but the  decision was finely balanced. I must admit that my sympathies lean towards the idea of the Cabinet Office being responsible for the matter.

A starting point is the question whether the Treasury is a major user of statistics. In his evidence to the Treasury Sub-Committee on 14 June, in answer to my question 255, which is set out on page 45 of the evidence in the report of the Treasury Committee, the Financial Secretary made the case that one reason for considering the Treasury to be the correct residual body is the fact that, although many Departments produce statistics that fall within the definition of national statistics, economic statistics are generally of greater importance and frequency than those produced by other Departments. The point that economic statistics are very important is central to his case.

I think that the Financial Secretary is right to say that Office for National Statistics economic statistics are more important than many of the departmental statistics, but that argument leads in a slightly dangerous direction with regard to the Government’s stance on the Bill as a whole. One of the points made by my hon. Friend the Member for Chipping Barnet on Second Reading was that the area most affected by the Bill will be statistics produced by the ONS, which, as Lord Moser has pointed out, is the part of the statistical system in need of the least reform.

The Financial Secretary’s response on Second Reading was:

“It is wrong to assert that the Bill or National Statistics focuses principally on what the ONS produces. The ONS is responsible for approximately 250 national statistics. That leaves a little more than 1,000 national statistics that are produced elsewhere in Government and will be subject to the code”.—[Official Report, 8 January 2007; Vol. 455, c. 44.]

It seems to me that there is a contradiction in claiming on the one hand that ONS statistics will be the least affected by the Bill, and on the other that, effectively, ONS economics statistics are the most important, because they are both important and frequent.

None the less, if we accept that the Treasury is the principal user of statistics, we can be led in one of two directions. We could argue that the Treasury is indeed the most closely involved; on the other hand, the hon. Member for Twickenham has expressed the view that that is an argument for the Treasury’s not being involved. Without impugning the honesty of the present Treasury, or its predecessors or successors, part of the point of the Bill is ensuring a perception of independence and a lack of political interference in statistics. The bigger the gap that can be created between the Department that is being assessed or scrutinised by the statistics and the producers of statistics, the greater the perception of independence, which seems to be a strong and powerful argument. Even accepting the position of the Financial Secretary that the important statistics are Treasury-related, it seems to be an argument for switching the residual powers back to the Cabinet Office, as was the case until 1989.

Photo of Michael Fallon Michael Fallon Chair, Treasury Sub-Committee 5:00 pm, 16th January 2007

I reiterate the Committee’s welcome to you, Mr. Olner. I, too, support amendment No. 30. It is true that the Treasury Committee recommended that, on balance, the responsibilities should remain with the Treasury. However, the arguments were  finely balanced. There is no finer example of that than the evidence that we took from the Financial Secretary himself on 14 June, when we pursued that point with him. He told the Committee:

“Without being hard and fast about it, therefore, it seems to me sensible to leave with the Treasury whatever residual responsibilities need to be with ministers. As I say, however, we will examine the views that come in through the consultation.”

So I do not think that this is some great issue of principle. Seven months ago, the Financial Secretary accepted that the arguments were reasonably balanced. The Committee went on to say:

“However, if HM Treasury is to retain residual responsibility for the new department, we recommend that the Government consider carefully how it will demonstrate that its proposals will result in a genuinely independent statistics office. What is important is that the new department should be perceived to be more independent than the present arrangement.”

Given that it is not an argument of principle, that is the test that the Financial Secretary has to meet in coming to his preference in the legislation for the Treasury to retain the residual responsibilities. His problem is that, on the face of it, little has changed. The Chancellor appoints the board and the Chancellor sets its funding. That is the current position and it is the arrangement proposed in the Bill.

The Financial Secretary generously offered to weigh up the consultation and outside views. As my hon. Friend the Member for Chipping Barnet has illustrated, overwhelmingly opinion outside this House among users, academics and those professionally involved in statistics is that it would be better to put the residual responsibility with the Cabinet Office. I take a slightly different view. My conclusion is that there is nothing wrong, per se, with that responsibility staying with the Treasury, and there is nothing particularly preferable about moving it to the Cabinet Office. However, the attraction of the amendment is that it would at least be moved to a Department other than the one that has the responsibility at the moment—it is a different arrangement. We would be demonstrating that we are making a difference, thereby increasing the perception that the statistics office will be more independent than its predecessor.

Photo of Stewart Hosie Stewart Hosie Shadow Spokesperson (Women), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Treasury)

I shall be brief. This is essentially a question for the Financial Secretary. On Second Reading, in response to a question from the right hon. Member for Birkenhead (Mr. Field), he said:

“He is right to point out that this is indeed the next step in the Chancellor’s reforms of the machinery of economic governance”.—[Official Report, 8 January 2007; Vol. 455, c. 25.]

Given that that is the natural and understandable focus of a Treasury Minister, is there not a real risk that other, non-economic, statistics will be given less prominence than they should have? That is a simple question, but it summarises a large amount of what we have heard in the past 25 minutes or so, and I should be grateful if the Financial Secretary would put our minds at rest and say that that will not happen, given that it is anticipated that the residual responsibilities will remain with the Treasury.

Photo of John Healey John Healey The Financial Secretary to the Treasury

I welcome you to the Chair, Mr. Olner; it is a pleasure to serve under you this afternoon and for the rest of the Committee’s proceedings. I pay  tribute to the way in which the hon. Member for Twickenham moved the amendment. He set a constructive tone and avoided allowing this debate to become a simple Treasury-bashing exercise.

The Committee has debated what is a serious set of issues and, as the hon. Member for Sevenoaks and the Treasury Committee both recognised, a set of questions about which there are arguments on both sides. My view, as reflected in the legislation, remains as it was when I gave evidence to the Treasury Committee, which is that it is sensible for the residual functions for Ministers under the Bill—and they are residual functions—to remain with the Treasury. The key point in countering that seems to be that retaining ministerial responsibility for the board within the Treasury risks undermining public confidence, in so far as the Treasury, with its particular policy responsibilities, has a special interest in economic statistics, of which it is a major user. In contrast, some of the advocates of change point out that the Cabinet Office does not produce statistics, is not directly a heavy user of statistics and therefore does not have an axe to grind. Some argue that the Cabinet Office might be better placed to take on the residual, but nevertheless important co-ordinating role, in relation to the Government’s responsibilities for and interest in the reformed system.

Three members of the Treasury Committee are serving on our Committee this afternoon. As the Treasury Committee concluded in its report:

“On balance ... the residual responsibilities” for the board

“should remain with HM Treasury”.

The Treasury Committee noted that the residual responsibilities for Ministers were likely to be limited, and came to the view that the precise location of the new Department was not particularly important, but that it should remain with the Treasury. The Government agree with that, and that is the approach that we are taking.

The important issue is not so much where the residual ministerial responsibilities sit—although I shall explain why the best solution is for them to remain with the Treasury—but the point to which my hon. Friend the Member for Wolverhampton, South-West alluded in his intervention. Our intention is to create a strong independent board, and therefore to remove some of the arguments that the hon. Member for Chipping Barnet made about Ministers in the future, although I shall return to those, too. If the legislation is effective, the question of which Department holds the residual ministerial responsibilities will be of much lesser importance.

Whatever arrangements we contemplate and regardless of which Ministers have residual responsibilities for the board, it is an inescapable fact that the Treasury will always—and rightly—have a role in funding. We have therefore constructed a funding arrangement for the board that, as far as possible, reinforces the independence and freedoms of the board, while retaining—quite rightly, from the public interest point of view—safeguards for value for money, efficiency and spending control. Consequently, I confirmed on Second Reading that the board would benefit from a special arrangement, under which its  funding will be set on a five-year basis and will not be determined through the regular pattern of Government spending reviews. Whatever other arrangements are made, funding is one area in which the Treasury will have a continuing involvement and interest with the board and the new system.

The few responsibilities that will remain with Ministers and the Treasury under the new regime are making appointments and maintaining the interface with Parliament, which includes tabling secondary legislation, laying the board’s annual account formally before Parliament and acting as a conduit—as we do currently—for parliamentary questions that are answered by the board or by the National Statistician. Finally, in extremis only, the Chancellor will also have a responsibility to issue directions to the board under the terms of clause 27.

Why do I suggest that the approach in the Bill is the right one and that the residual responsibilities that remain for Ministers are best and most sensibly left with the Minister in the Treasury? The case is as follows. The Treasury clearly does not currently skew the ONS’s priorities towards its own interests and therefore nor would it seek to influence the board in a similar way. The hon. Member for Twickenham opened this afternoon’s debate in Committee by saying that the Treasury has had a good record in distancing Ministers from day-to-day decisions.

Let me turn to the arguments that the hon. Member for Chipping Barnet tried to make. This is the second area of argument that suggests we lead with the Treasury. I have to say that she got it wrong when she argued that the board or the National Statistician somehow need a strong Minister or Department to argue their case with the Treasury. The purpose of the reform is to remove the need for Ministers to argue their case within Government.

Even if that were a legitimate concern, I would urge the hon. Lady to read the remarks of Lord Turnbull—the former Cabinet Secretary—in the House of Lords debate in which, in supporting the proposal that the responsibilities remain with the Treasury, he commented about the Cabinet Office that

“that department has had seven Ministers in four years, and something like nine months in which it did not have a senior Minister at all.”

If the hon. Lady is looking for a strong Department to argue for the statistics board with the Treasury, I would suggest that she look elsewhere.

Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury

The point was not based on the relative strengths of the Cabinet Office and the Treasury. Of course the Treasury is a much more powerful Department than the Cabinet Office. The point that I was making is that it is important for statistical services to have a voice external to the Cabinet Office within Government to argue its case for funding. Yes, the Minister is planning to put in place arrangements for funding that are not conventional and are slightly different. However, there will still be negotiation. Therefore, presumably there should also still be a Minister who is able to argue on the same side as the board and the National Statistician.

Photo of John Healey John Healey The Financial Secretary to the Treasury

I think that the hon. Lady meant a voice outside the Treasury, not outside the Cabinet Office. The point of the reforms—and putting the new system and the board at arm’s length with Ministers—is that they are not dependent on Ministers arguing their case for them in the normal spending review rounds and that the board itself will have special funding arrangements for its money and other resources.

I should like to suggest the following points to the Committee. Given that the board should be strong enough not to have its strategic priorities skewed by the Department in which the residual ministerial responsibility resides, in addition, the board could benefit from having the Treasury as its link with Government. The Treasury, from the point of view of co-ordinating Government interest in statistics, has a long experience of working with and of understanding statistics. It has a crucial role in co-ordinating the reporting of Government performance and monitoring that across Government.

Therefore, I strongly disagree with one of the points that the hon. Member for Twickenham made, which seemed to suggest that the Treasury was principally or only interested in economic statistics. More than perhaps any other Department, it has an interest in maintaining a good evidence basis, which includes statistics on departmental policies, given the significance of statistics in reporting on departmental performance and understanding the levers for successful reform and the development of public services in which the Treasury has inevitably and increasingly taken an important co-ordinating role.

Photo of Michael Fallon Michael Fallon Chair, Treasury Sub-Committee 5:15 pm, 16th January 2007

I want to return to the point about funding. I do not think that the Financial Secretary is arguing that there will be no ministerial involvement at all. Of course, the arrangement is special—the review will take place every five years, rather than every three years or annually, and we welcome that—but the BBC has to have somebody to argue with the Treasury. Presumably, every five years the Treasury Minister with residual responsibility will have to support the board in the case that it makes to the Chief Secretary. Will that not be the position?

Photo of John Healey John Healey The Financial Secretary to the Treasury

That would depend on which Minister had residual responsibility for the statistics system in the Treasury. The important point is that the statistics board, which is on a separate and special footing outside the normal Government monitoring process, will be in a powerful position to make its own arguments and its own case. Clearly, Parliament will have a view as part of its role in judging and assessing the system’s performance. However, the board and those who are interested in the resources of the statistical system are likely to be in a far stronger position when the five-yearly settlement comes up for renewal if they have direct meetings with the Treasury, rather than playing their arguments through the intermediary of some other Department. That would not be necessary or to the advantage of the board and those who are interested in ensuring that it and the system are strong, significantly independent and authoritative.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

Would the Financial Secretary characterise the relationship between the ONS and the Treasury as regards funding as good? The impression that one gets from the evidence of the Public and Commercial Services Union to the Treasury Committee is that there is actually a very poor relationship between the ONS and the Treasury as regards funding. There have certainly been critical comments about some of the savings targets that the ONS has agreed with the Treasury, and reference has been made to being over-stretched. It appears that there is not a good relationship as regards funding at the moment. Does the Financial Secretary concur with the PCS’s view of that relationship?

Photo of John Healey John Healey The Financial Secretary to the Treasury

No Minister would entirely concur with the PCS’s view of the adequacy of funding or of the plans for the central Government work force—that is the PCS’s job. In the 15 or 18 months that I have been Minister with responsibility for the ONS, I have played an active role, which has had a beneficial impact on the ONS and the resources available to it in that time. On one or two occasions, I have been able to convince my right hon. Friend the Chief Secretary that there is a case for special additional resources. If the hon. Gentleman is interested in judgments on the funding relationship with the ONS, he should probably ask that question elsewhere.

Given the background that I have set out, the Treasury is well placed to play a constructive and co-ordinating role in respect of its residual responsibilities towards the board. Ruth Lea, the director of the Centre for Policy Studies, set out quite openly her reasons for wanting the Cabinet Office to be in charge. As the hon. Member for Chipping Barnet noted, she said that there was

“a very, very strong case” for locating the new non-ministerial department in the Cabinet Office because it was

“a much less powerful policy-making department” than the Treasury. If the objective of some, including perhaps Ruth Lea, is to find one of the weaker locations in the Government for these responsibilities, I would suggest that that does not pay due respect to the importance of the statistical system. Such a move may be attractive to some, but I do not think that it would benefit the board or strengthen the reformed statistical system. Following consultation and the report by the Treasury Committee, therefore, I have concluded, as the hon. Member for Sevenoaks suggested, that the Treasury, not the Cabinet Office or another Department, is the appropriate place for these residual responsibilities.

I hope that our debate on this group of amendments has been useful and that the hon. Gentleman will ask leave to withdraw his amendment.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I certainly concur with the Minister’s last remark. There have been some good, helpful interventions. The hon. Member for Chipping Barnet developed many of the key arguments in more detail than I did. She also reminded us that there are various options, not just the two that we are exploring. We have not yet considered what will now and for ever be known as the Mongolian  option—although I do not want to belittle it—which has a good deal of appeal and is still in play.

The contribution of the hon. Member for Sevenoaks was particularly important, because he played a key role in the Treasury Committee report, which had not decided against the option of using the Cabinet Office as the point of reference. He helpfully reminded us that that Committee’s recommendation was not only finely balanced, but was predicated on certain assumptions about how the legislation would be framed and would give greater strength to ministerial statisticians than the current legislation does. It would work similarly in other respects, too. As the hon. Gentleman has reminded us, it is not helpful to take the conclusion of the Treasury Committee out of context. His punch line, which was original, was that shifting responsibility from the Treasury to somewhere else credible would be quite a powerful statement of independence.

In his response, the Minister quoted various external sources of opinion, which we need to heed. I have particular respect for Sir Andrew Turnbull, because we started our professional lives together four decades ago in east Africa, trying to improve the quality of economic statistics there. So we have been over this ground before. He was taken slightly out of context, because whereas it may be true that there has been a rapid turnover of permanent parliamentary under-secretaries and Ministers of State in the Cabinet Office, the key point is that its political authority rests on the Prime Minister. This Prime Minister has been in office for the longest time in recent history, so whatever the current problems are they are not to do with turnover in relation to its authority. The same point could be made in respect of Ruth Lea. The issue is not the Cabinet Office as a relatively modest civil service department, but the political head of the Cabinet Office, who is the Prime Minister.

The Minister was open minded, as all Committee members have been, in accepting that there are other options. He was fair minded in acknowledging that there are pros and cons. His key argument, as I understand it, is that because the board will be independent it does not matter which Department has the residual powers. However, although it is independent up to a point, the Minister makes the key appointments. We need a source of authority whose appointments are clearly and totally disinterested. The present arrangements do not seem to be the optimum.

To bring my remarks to a conclusion, I am not proposing to put the amendment to a vote. It is not that I am satisfied with the answers, because I am not. However, this issue requires further debate and exchange. There are quite a few ex-Ministers on both sides of the House who will want to pool their experiences of different Departments dealing with statistics. People in the other place have a great deal of direct experience. Lord Moser is the obvious person, because he operated under a system where the Cabinet Office had authority. It is important that those arguments are heard before we come to closure. In that context, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I beg to move amendment No. 176, in page 2, line 3, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

Photo of Bill Olner Bill Olner Labour, Nuneaton

With this it will be convenient to discuss the following amendments:

No. 177, in page 2, line 4, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 186, in page 2, line 5, at end insert—

‘(3A) No appointment shall be made under subsection (2) until it has been approved by the Commission established under section (Establishment of a Commission for Official Statistics).’.

No. 187, in page 2, line 5, at end insert—

‘(3A) Appointments made under subsection (2) shall be subject to review by the Commission established under section (Establishment of a Commission for Official Statistics) within one year of their having been made.

(3B) The Commission shall produce a report on any review carried out under subsection (3A) and shall lay it before each House of Parliament.’.

No. 178, in page 2, line 7, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 179, in page 2, line 9, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 180, in page 2, line 11, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 181, in clause 4, page 2, line 29, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 182, in clause 4, page 3, line 3, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

No. 183, in clause 58, page 28, line 17, leave out ‘Treasury’ and insert ‘Chairman of the Commission’.

New clause 2—Establishment of a Commission for Official Statistics—

‘(1) There shall be a commission name the Commission for Official Statistics (in this Act referred to as “the Commission”) for the examination of the production, release and presentation of official statistics.

(2) The Commission shall consist of six members of the House of Commons appointed by the House of Commons and six Members of the House of Lords appointed by the House of Lords, none of whom shall be a Minister of the Crown.

(3) The Commission shall, from time to time, present to each House of Parliament a report on the exercise of its functions.

(4) Schedule (Commission for Official Statistics) to this Act shall have effect as regards the Commission.’.

New schedule 1—

‘Schedule 1A

Commission for Official Statistics

None

1 (1) Subject to paragraph 2 of this Schedule, a member of the Commission shall vacate his office—

(a) if he ceases to be a Member of the House of Commons or the House of Lords;

(b) if another person is appointed in his place.

(2) Subject to sub-paragraph (1) above, a member of the Commission shall hold office for the duration of the Parliament in which he is nominated or appointed and for a further period provided by paragraph 2 of this Schedule.

(3) A member of the Commission may resign at any time by notice to the Commission.

(4) Past service is no bar to nomination or appointment as a member of the Commission.

2 (1) Subject to sub-paragraph (2) below, on a dissolution of Parliament, the members of the Commission shall continue in office until members are nominated or appointed in their place.

(2) Where at any time after Parliament has been dissolved, it appears that a member of the Commission who is not a Member of the House of Lords—

(a) has not been validly nominated as a candidate in the ensuing general election; or

(b) although so nominated, has not been elected as a Member of Parliament at that election

that member shall resign from the Commission forthwith; but nothing in sub-paragraph (1) above or this sub-paragraph shall be taken as preventing any such member from resigning otherwise than in pursuance of this sub-paragraph.

None

3 The Commission shall elect a chairman from amongst its members (in this Act referred to as “the Chairman of the Committee”).

None

4 (1) The validity of any proceedings of the Commission shall not be affected by any vacancy among the members of the Committee or by any defect in the appointment or nomination of any member.

(2) The Commission may determine its own procedures.

(3) The Commission may appoint one of its members to act as chairman at any meeting of the Commission in the absence of the elected chairman of the Commission.’.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

It is a pleasure to serve under your chairmanship, Mr. Olner.

In his closing remarks on the previous group of amendments, the hon. Member for Twickenham said that other models were available. He called the one that we are discussing the Mongolian model; that would establish a structure similar to that of the NAO asa means of governing the statistics board and theONS.

I would prefer not to call it the Mongolian model; we could use a word much closer to home—[Interruption.] We could call it the Blackburn model. In 1995, the right hon. Member for Blackburn (Mr. Straw), now the Leader of the House, said in a speech:

“The National Statistical Service should be placed at arm’s length to Ministers on a similar basis to that of the National Audit Office, and should report principally to a powerful Committee of the Commons”.

We should give the right hon. Gentleman the credit for identifying that model, and refer to it as the Blackburn model. Why did he suggest that that might be the right approach for the governance of the new board? He did so because the NAO is recognised for its independence from the Government; that independence is created not just through its robust reports to Parliament on how taxpayers’ money is spent, but because it is seen to be demonstrably at arm’s length from the Treasury and all other Government Departments.

The National Audit Act 1983 established the Public Accounts Commission, which is responsible for the appointment of the Comptroller and Auditor General and determining the funding of the National Audit Office. Following that model will best ensure that the new board establishes a reputation like that of the NAO. This is the best opportunity to enshrine the independence of national statistics and put them at arm’s length, not only from the Treasury—this is not about Treasury bashing at all—but from all Government Departments.

The new clause and schedule replicate the wording of the 1983 Act. They would set up the commission and establish how its members were appointed. However, I should like to draw attention to the crucial difference, in respect of commission membership, between the model proposed by the new clause and schedule and that introduced by the 1983 Act. The Public Accounts Commission is drawn from Members of this House. However, interest in statistics’ importance, use and accuracy, and how they are used to hold the Government to account, is felt not only in this House, but in the other place. We feel that the other place should be represented in the commission. Many Lords have an interest in the issues; Lord Moser’s views have already been referred to in the context of that wider interest.

We believe that the model is right; it has proved to work with the NAO. The NAO seems independent of the Government and we should consider how to apply its model to the board and its executive and scrutiny functions. Why might that not be right? In his evidence to the Treasury Committee, the Minister touched on one potential reason when he said that the NAO

“has a very particular role in supporting Parliament's proper scrutiny and accountability function in relation to the executive.”

He went on to say that

“the purpose, the value, the users of national statistics, go very much wider than Parliament.”

He was right; no one would disagree. However, we should also ensure that we do not minimise the vital role of statistics in enabling Parliament to hold the Executive to account.

For example, measuring the number of children achieving five or more good GCSEs does not just provide data to parents, schools, employers or local councils; it helps hon. Members to hold the Government to account on their own policy goals. Data on productivity will help us to decide how the Chancellor is doing by what he refers to as the fundamental yardstick of economic performance. Without accurate, robust data, it is difficult for us to hold the Government to account. The distinction between the role of the National Statistics Board and that of the National Audit Office is perhaps not as great as the Minister indicated.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 5:30 pm, 16th January 2007

Many other hon. Members and I use information from the diplomatic service to hold the Government to account on their foreign policies. Does the hon. Gentleman suggest a 12-person commission should run the diplomatic service because it generates information that Members use to hold the Government to account? That seems to be the thrust of his argument about statistics.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I can see the point that the hon. Gentleman is making—

Photo of Bill Olner Bill Olner Labour, Nuneaton

Order. It was a point, but it was a bit wide of the mark.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

Mr. Olner, you pre-empt me in that comment. I would not wish to tread down that path, although I am grateful for your guidance. There is a  distinction. We are talking about data that can be measured—information about aspects of life that can be measured and need to be collated—and there is an issue about how to measure, report and produce that data accurately. That might be slightly different, I suspect, from some of the diplomatic service information to which the hon. Gentleman refers. To use your words, Mr. Olner, he is rather wide of the mark.

We propose that a commission, rather than Her Majesty the Queen on the Prime Minister’s advice, should appoint the National Statistician. The decision would be made on the basis not of the Prime Minister’s advice but of the advice of Members of this House and the other place. It would give the National Statistician some independence. He would not be beholden to the Government on reappointment, so he would be seen to be independent of the political process. It is important for him to be able to undertake his professional responsibilities without having to look over his shoulder to Government.

Our proposals would meet the concerns of the Society of Business Economists, whose evidence to the Select Committee said that the appointments process needed to be

“as independent, and perceived to be as independent, as possible”.

The amendments would take the appointment out of the party political arena and enhance the accountability of national statistics to the House.

A recurring theme on Second Reading was how to increase parliamentary scrutiny of statistics, and various models were proposed. The hon. Member for Southampton, Test (Dr. Whitehead) suggested that we could use as our model the Speaker’s Committee on the Electoral Commission, and that model has advantages—for example, questions about the committee’s operation can be tabled in the House. My parliamentary neighbour, my hon. Friend the Member for Gosport (Peter Viggers), answers questions on the committee’s behalf in the House once every four weeks. The committee also scrutinises the commission’s funding and business plans, ensuring that its funding is kept at arm’s length from the political process. That model differs from our proposed model in that it does not appoint members of the Electoral Commission. It does not go as far as the amendments would.

Last week, a number of hon. Members questioned whether existing scrutiny of statistical issues through Select Committees was sufficient, as we cannot set up Select Committees through legislation. The ONS is scrutinised at the moment by the Treasury Sub-Committee, but that does not necessarily ensure the full breadth of coverage. With a commission, a wider range of scrutiny might be possible, but that indicates why a Select Committee would not give the same independence as a commission for official statistics. A Select Committee could scrutinise the financial plans of the board and the ONS, but it could not determine their level of funding. Although it could have an important role in enhancing the independence of the statistician, board and ONS, it would not go as far as the NAO model that we are proposing.

In conclusion, the NAO model would achieve two key goals: it would remove the residual power of the Treasury to appoint the National Statistician and the  board and move funding away from the political process so that it would not be accountable or beholden to the Treasury. Earlier, I intervened on the Minister regarding remarks made by the PCS about the ONS. I have to say that from the submission of the PCS to the Treasury Sub-Committee, I was not entirely clear whether it felt that the ONS’s funding problems were the responsibility of the ONS board or the Treasury. As the Minister said, that is a question for somebody else.

I see no evidence in that submission, however, to suggest that the current method of funding is satisfactory. A commission set up to appoint the National Statistician and board and to determine funding would be the best means by which to ensure independence and restore trust in statistics. That would send a clear signal that statistics in the UK are independent of the Government, particularly in respect of the scope of the Bill. I commend the amendment to the Committee.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I formally welcome you to the Chair, Mr. Olner.

To develop my earlier point, and to respond to those made by the hon. Member for Fareham, it is inherent to the function of the NAO that it hold the Government to account by scrutinising their actions, and particularly their spending. That is not inherent to the function of the statistics board, which instead marshals information that others may use in order to hold the Government to account.

Please bear with me, Mr. Olner, while I draw a fair analogy. If I asked an ambassador whether they had made representations to their country about breaches of human rights and that ambassador said no, I could use that information to hold the Government to account for their failure to instruct their diplomats to make such representations. The statistics board produces, and checks the quality of, information, which may then be used by others—and properly so—in this House and outside in order to hold the Government to account. In shorthand, it is an information generating or marshalling body, whose information is used by others.

As I understand it, the position of the NAO is very different. It is an inherent part of the scrutiny mechanism—it scrutinises the spending and actions of the Government. Were the hon. Member for Fareham, in whose name the amendments stand, to adopt a logical position, he would either abandon them or agree that the diplomatic service itself should be supervised by a commission made up of 12 members—six from each House.

Photo of David Gauke David Gauke Conservative, South West Hertfordshire

I shall speak to amendments Nos. 186 and 187, which stand in my name, and to which one or two Opposition Members have been anxious to speak.

Amendment No. 186 would establish a requirement that the appointment of non-executive members of the statistics board be approved by the commission for official statistics, to which my hon. Friend the Member for Fareham referred. The concept is not dissimilar to the Senate hearings that take place in respect of various appointments.

Amendment No. 187 would put in place a reporting system similar to that which currently exists through the Monetary Policy Committee of the Bank of England. That committee holds hearings in front of the Treasury Sub-Committee, which makes a report on a proposed appointment but does not have a right of veto. That is essentially the model that the amendment follows. I would prefer amendment No. 186 to be accepted, but amendment No. 187 presents an alternative.

Both amendments neatly complement the Blackburn model, as my hon. Friend called it. That model would give Parliament a greater role in appointments, which are a key part of the overall statistics system. That does not necessarily mean that the Blackburn model must apply in its entirety for the amendment to be appropriate, but I have used that model because it would allow for the creation of the commission for official statistics, which would be a convenient body to review statistical matters. There could alternatively be parliamentary proceedings to do much the same thing, but I felt it important to suggest an addition to the Bill and considered that the model I chose presented the best opportunity to do so.

I know what the Government’s position will be on the Blackburn model as a whole, but there are two reasons why they should receive the amendments with a degree of sympathy. First, the Bill’s intention is to create greater independence and a greater perception of independence for statistics. One of its weaknesses is the fact that the Treasury will have enormous appointment powers, specifically the ability to appoint a minimum of five non-executive directors other than the chairman. The chairman will be appointed by Her Majesty under the Crown prerogative but presumably with significant advice from the Treasury.

We are concerned about the appointment powers that the Treasury will have, which the Bill does nothing to restrain. There is no provision to prevent members of the board from serving a number of terms. There are always arguments to be had about term limits and so on, and I am not necessarily putting the case for them, but one could argue that a member of the board wanting to renew his position would be under pressure not to upset the Government. Perhaps that is unduly cynical, but we are considering perceptions and it is an issue to consider. If we wish to improve the independence of statistics, giving Parliament a role in the appointments process seems sensible. A right of veto would be stronger than a right to report, but either would be a step in the right direction.

The second reason why the Government might greet the amendments with some degree of sympathy relates to the larger issue of reforming the royal prerogative, a desire that I believe is shared in all parts of the House. The Chancellor of the Exchequer indicated in his interview with Andrew Marr in the new year that a Government led by him would rebalance the relationship between the Executive and Parliament and consider areas in which the royal prerogative could be reformed. Most of that debate has focused on Parliament voting before we go to war, but that happens relatively infrequently, even under this Government. Appointments happen much more frequently.

The hon. Member for Wolverhampton, South-West has raised the issue of Parliament and the diplomatic service. Clearly, the diplomatic service reporting directly to Parliament would not be appropriate, and such a Blackburn model—

Photo of David Gauke David Gauke Conservative, South West Hertfordshire

My point is that if we want to rebalance the relationship between Parliament and Executive, which my amendments attempt to do, a role for Parliament in appointments, be they of members of the statistics board, diplomats, ambassadors or high commissioners, could be hugely important and valuable. The idea of Senate-style hearings before appointments are made by the Executive might be very helpful.

It is worth considering that even if my amendments were accepted, or if the Government were to make alternative proposals along such lines, considerable powers would still be left in the hands of the Treasury, which would still have the opportunity to initiate appointments or to come up with names. A parliamentary Committee would not interview or canvass opinion on a wide range of candidates, because Parliament would be presented with a name and given an opportunity to say yes or no.

Likewise, when we come to the number of non-executive members, the Treasury can create a large number of members of the board, if it wishes to dilute the power of a difficult individual, which is a point made earlier today. In that case, short of using the veto powers in amendment No. 186, Parliament would not be able to do anything, because residual powers would be retained within the Treasury. None the less, if the Government want to increase independence and take the opportunity to rebalance the relationship between Parliament and the Executive, I hope that the Financial Secretary will sympathise with the thrust of my amendments. Here is a clear opportunity to improve parliamentary accountability and the standing of Parliament and, in so doing, aid the Government’s laudable objective of improving independence within the field of statistics.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I will begin where I ended, because, as the Financial Secretary was kind enough to point out, I pre-empted myself in my previous remarks.

Photo of Michael Fallon Michael Fallon Chair, Treasury Sub-Committee

My hon. Friend was giving the Committee some pre-release access.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

Yes, but it involved less than the half hour that the President of the United States gets.

As I have pointed out, the Financial Secretary said this on Second Reading:

“The House has a central role in and responsibility for the new statistics system”—[Official Report, 8 January 2007; Vol. 455, c. 23.].

That is essential to our argument and is the point that drives new clause 2. Surely only through parliamentary scrutiny and approval of appointments to the board will we get the necessary legitimacy in the public’s eyes. The real issue behind our debates in the next seven sittings is public confidence in the numbers that are released, which is what we are trying for.

Anything that removes the Treasury as much as possible from decision making or influence, whether it is over appointments to the board or whether it is over saying what is good or not, has to be a good thing. The point is not that the Treasury is dishonest, but that it is the greatest user and consumer of Government statistics. That is what drives new clause 2. I believe, as do my hon. Friend the Member for Fareham and, I hope, my other hon. Friends, that a separate commission will allow two tiers of scrutiny. The board’s oversight of operational matters and parliamentary scrutiny will lock integrity into official statistics, which is the best solution to the current problem of the muddled responsibilities identified by the Royal Statistical Society.

Photo of John Healey John Healey The Financial Secretary to the Treasury

We have had another constructive and useful discussion. I am especially glad that the hon. Member for Braintree shared his full remarks with the Committee on this occasion. As we have heard, the amendments, the new clause and the proposed new schedule would have two main effects. First, they would establish in statute a commission for official statistics that would be a Committee of both Houses. Subsequently, they would assign to it several roles, including appointments of board members. While we shall deal in more detail with amendments on appointments and on funding, those proposals would significantly alter the accountability model proposed under the Bill. It is useful to examine the principles on which appointments, funding or governance in general should be based to reflect the function and the role that we expect the board to play.

I shall deal with governance as we want to construct it under the Bill, after which I shall turn to the proposals advocated by hon. Members. On the principles, statistical production is as an Executive function, which is appropriately located within Government rather than within Parliament. As has been acknowledged by the Committee, statistics are a public good that serve a wide range of users and interests. That point was supported in our public consultation and by the Treasury Committee in its report earlier this year.

The second principle is that, while there is no overriding international precedent or principle for the organisation of statistical systems, an almost universal feature is that the production of statistics sits with the Executive, with the one exception of Mongolia. A central pillar of our model is the production of statistics as a responsibility of the Executive.

The third important principle is that the monitoring and auditing of the statistics system is carried out by the independent board that requires a non-Executive majority that is capable of reflecting the expertise and experience of a wide range of statistical users and interests in such a way that it is impossible to envisage Parliament doing, even with the combined expertise of both Houses.

The fourth component is that Parliament’s role in the model is to hold to account all those involved in or responsible for the operation and aspects of the system. That is rightly the role that Parliament plays in relation to other executive functions of Government that are devolved or overseen by independent boards, such as the Food Standards Agency. A commission for official  statistics that is established in statute, that is composed of Members of both Houses and that has a role in funding and appointments would therefore complicate the system of governance and Parliament’s role in it, and it would not assist in achieving the overall objectives of the Bill.

Let me set out the principles on which the model proposed by hon. Members is based and the flaws in it. In expressing his interest, the hon. Member for Fareham referred to the National Audit Office and the Electoral Commission. It is true that there are a limited number of other areas where there are commissions of the type proposed in the new clause and new schedule; for example, the Public Accounts Commission, which scrutinises the work of the NAO, and the Speaker’s Committee, which oversees the work of the Electoral Commission. However, there is an important principal difference with the statistics board and what is proposed in the new clause and new schedule.

The Speaker’s Committee and the Electoral Commission, and the Public Accounts Commission and the National Audit Office, are involved in the scrutiny of fundamentally different organisations and issues, neither of which are the responsibility of the Executive. Consequently, those models are not appropriate ones on which to base an accountability regime for the statistical system. The functions of both the NAO and the Electoral Commission are to serve and support the legislature in carrying out specific roles. Therefore, neither example is appropriate in the case of statistics.

The Public Accounts Commission’s primary role is to examine the NAO estimates, and it was established in a manner akin to the proposed commission for official statistics. As I have said, the role of the NAO is quite different from that of the statistical system. The NAO has a particular role in ensuring that Departments achieve the required value for the money, and a particular responsibility for assisting this House in ensuring that the resources authorised by it to Departments are properly spent.

Equally, the Speaker’s Committee, which scrutinises the expenditure and income of the Electoral Commission, was established because of the special role that the Electoral Commission plays in relation to this legislature. The commission is set up to establish and assess the integrity of the conduct and administration of elections to this House and of referendums. Elections to Parliament and the expenditure of moneys voted by it are constitutional matters and are fundamentally different from the production of statistics by the Government, so the governance and accountability models proposed in the Bill are rightly and appropriately different.

On the basis of those principal points, let me turn specifically to amendments Nos. 176 and 177, which would allow the chairman of a commission for official statistics to appoint the non-executive members of the board. That is inconsistent with the board’s executive function, and Parliament should not interpose on executive appointments in that way.

As has been mentioned a couple of times, a recent Treasury Committee report stated that public perceptions about the independence of the board will depend more on the actions of board members than on  the method of their appointment. I agree with that, and I believe that the involvement of Parliament in the appointments process, as proposed in the amendments, would skew and confuse the accountability model. For those reasons, I cannot accept the amendment, and I hope that in the light of this debate the hon. Member for Fareham will withdraw it.

The amendments tabled by the hon. Member for South-West Hertfordshire are a different approach to the same issue. Giving the commission a role in approving appointments would be inconsistent with the board’s wider executive function. It is appropriate that Ministers play a role in appointments, because it is an executive function. For clarity, I shall confirm to the Committee what I said before: we will make appointments entirely in line with the guidance of the Commissioner for Public Appointments. In its report, the Treasury Committee said that that would be sufficient to ensure the independence of the appointments process.

Photo of David Gauke David Gauke Conservative, South West Hertfordshire 6:00 pm, 16th January 2007

The Minister considers it inappropriate for Parliament to play a role in the appointment of persons performing an executive function. Does he hold that position in principle? If so, will he explain why?

Photo of John Healey John Healey The Financial Secretary to the Treasury

I have tried to explain to the Committee that that position follows from an attempt to draw out the principles of a proper accountability model. It is worth pointing out that even without the hon. Gentleman’s amendments, Parliament will be able to review the appointments and report its findings as part of the discharge of its responsibility to hold to account the overall operation of the reformed system.

Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury

Briefly on that point, is the Minister prepared to consider the confirmation-hearing model? Before the appointments were finalised, Parliament would have the opportunity to question the candidates.

Photo of John Healey John Healey The Financial Secretary to the Treasury

That is not a matter for the Government. On this Committee there are three distinguished members of the Treasury Committee, and it holds confirmation hearings for appointments to relevant bodies.

On the subject of the hon. Lady’s new clause and new schedule, I hope that the deliberations of this Committee are a prompt that helps to inform the debate about how Parliament must organise to discharge its functions and responsibilities under the Bill. She may want to ensure that her arguments form part of those discussions in this House and in another place.

Turning to new clause 2, I have said clearly and more than once that under the new arrangements we expect Parliament and the devolved legislatures to play the central role in holding the new system to account. The Bill makes provision to ensure that they can do so. However, Parliament must decide how best to hold the statistical system to account, and it must decide in particular on the arrangements that it wants to put in place so that it can do so.

I see some merit in the proposal for a Joint Committee of the two Houses, although it is not a  matter for me as a Minister. It would enable both Houses’ expertise and interest in such matters to be played in, and it would allow their breadth and depth of expertise to play a part in the strong and proper scrutiny of the system. However, I do not want to establish the proposal in statute. Ultimately, it would reduce the flexibility and discretion of Parliament to set up the arrangements that it saw fit and to refine them in light of experience.

At the outset this morning, the hon. Member for Sevenoaks reminded us that statistics legislation is rare in this place, and that the last major statistics legislation was debated 60 years ago in 1947. So, to set arrangements for the discharge of the scrutiny and accountability functions of this House and Parliament in primary legislation would risk introducing a counter-productive degree of inflexibility.

Photo of David Gauke David Gauke Conservative, South West Hertfordshire

I note the Financial Secretary’s comments about giving greater flexibility to Parliament. If we were ever to give a veto power on appointments to Parliament, it would need to be contained in statute. I return to a question I raised earlier: whether he was objecting to Parliament ever having a veto role on executive functions. Does he not accept that in many countries, the United States in particular, using a veto is precisely what the legislature is able to do?

Photo of John Healey John Healey The Financial Secretary to the Treasury

As we are talking about an executive function, I have explained that it is right that Ministers play the role in the appointments process that we are proposing.

In conclusion, Parliament’s role will be central. Unless I have missed significant discussions that have been going on, Parliament has still to come to a considered view on how best to approach this. Legislating for a commission would prevent the sort of developments that have been seen in recent years in Parliament: trialling certain arrangements, reviewing them in Parliament and then refining, strengthening and reinforcing them. Including such an arrangement in this Bill would prevent precisely that sort of approach in the future.

It is important for the proper and strongest possible discharge of Parliament’s scrutiny function that it can adapt and develop further in the light of experience. I hope that the hon. Members who have tabled these amendments, new clause 2 and new schedule 1, and proposed setting up a commission for official statistics, will consider the matter further, having listened to the debate, and will not press them to a Division.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

May I thank the Financial Secretary for the way in which he explained his perspective on the amendments and for the way in which the parliamentary scrutiny of the board will be conducted? He was right to say that he expects Parliament to play a central role in holding the statistical system to account.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I am grateful to the Financial Secretary for correcting my grammar. I do not think that there can be more than one centre.

In a sense, part of the problem with our debate on this group of amendments, new clause 2 and new schedule 1 is that we are having half a debate, because we cannot, in primary legislation, set out the detailed arrangements for Select Committees, for example. That is a House matter, so it will be debated on the Floor of the House. We almost need to have a debate running in parallel to this one to tell us how parliamentary scrutiny should work and how Members should expect it to take place.

While it is not in the Bill’s power to determine what parliamentary scrutiny there should be beyond the proposals in this group of amendments, in a sense, by speaking against new clause 2 and new schedule 1, the Financial Secretary is setting a limit on the way in which Parliament can deal with the funding and the appointment of the board. He is effectively saying that Parliament will not be able to appoint the board or to determine the funding. The way in which Parliament will hold the board, its members and the way in which it performs its functions to account is being constrained by the Bill.

The Financial Secretary was right to say that we seem to have a Bill on this matter once every 60 years. I am sure that if more detailed arrangements were put in place, such Bills might be more frequent, to allow us to adjust to circumstances. This Bill sets a limit to parliamentary scrutiny. We ought to have a parallel debate in the House to the one that is taking place in this Committee. I suppose that that is a good argument for not pushing the amendment to a vote at this point, because it is important to see how the debate on parliamentary scrutiny develops over the coming weeks.

The Minister set out clearly in his opening remarks the various functions of the board and highlighted its responsibility for the production of statistics, which is the executive function. He also highlighted the monitoring and auditing role that the board will play, although we shall come to the detailed arrangements for that in later clauses. One of the Minister’s arguments—which I shall characterise to make a point—for why the proposed route is not the best route to go down is based on the existence of those executive responsibilities within the board. Some have argued that if a different structure had been proposed, whereby the board’s oversight role was separate from the production of the statistics, the NAO model would be appropriate, in respect of the board exercising its oversight role. The way in which the people whom the board appointed to exercise that auditing and monitoring function would be employed and the way in which that oversight role was funded would lend themselves more readily to the NAO model.

It is partly because of the confusion of roles within the board that we have an unsatisfactory means of holding the board to account. The Minister highlighted examples of how the executive function is held to account elsewhere and of how it is funded in other territories and jurisdictions. It is almost because of that confusion of roles that we cannot move to an NAO model to fund the scrutiny and oversight role.

We shall return to that issue, but it is important to recognise that the way in which the two roles have been fused in the board makes it more difficult to come up with a more satisfactory way of having the funding and  appointing of the board National Statistician at arm’s length from the Treasury. My hon. Friends will talk about that issue later, but that confusion works its way through the Bill and will affect the practical way in which the board will be held to account. I hope that there will be more opportunities for discussions about how Parliament should hold the body to account, as the Committee debates the Bill and as it goes to the other place. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.