Clause 58

Statistics and Registration Service Bill – in a Public Bill Committee at 1:15 pm on 25th January 2007.

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

I beg to move amendment No. 175, in clause 58, page 28, line 14, leave out from beginning to end of line 16 and insert—

‘(1) Subject to the provisions of this section, the expenses of the Board shall be paid out of monies provided by Parliament.

(2) The Chairman of the Board shall, for the financial year ending immediately after this Act has been passed and for each subsequent financial year, prepare an estimate of the six year rolling use of resources by the Board; and the Commission for Official Statistics shall examine that estimate and lay it before the House of Commons with such modifications, if any, as the Commission thinks fit.

(2A) In discharging its functions under subsection (2) above, the Commission for Official Statistics shall have regard to any advice given by the Board and the Cabinet Office.

(2B) The Commission for Official Statistics shall appoint a person to be responsible as accounting officer for preparing resource accounts for the Board for each financial year; and that officer shall discharge such other duties as the Commission may determine.

(2C) The Commission for Official Statistics shall appoint the Comptroller and Auditor General as auditor for the Board.’.

The amendment is linked to an issue on which my hon. Friend the Member for Fareham commented earlier. It deals with the crucial matter of how the new arrangements put in place by the Bill will be funded. We propose to put the funding decisions in thehands of a parliamentary commission of the sort that was described and discussed in relation to earlier amendments. Two other bodies are funded in a similar way: the Electoral Commission and the National Audit Office.

It is obvious why the clause and the amendment are important: it is possible for funding arrangements to undermine measures that ensure genuine independence from political control. Therefore, the problem to be addressed is how to ensure that there are proper limits on and scrutiny of the budget, while preventing the ministerial interference that the Bill is designed to deal with.

We in the official Opposition believe that the best way to tackle that conundrum is to put the fundingin the hands of Parliament and have a direct parliamentary vote on it. That would create the necessary independence from the Treasury, while securing value for money for the taxpayer. Doing so would give the board the opportunity to work closely on its funding arrangements and have them scrutinised, agreed and determined by the commission that we want to set up.

The concern about funding arrangements possibly undermining true independence for statistical services was addressed by a number of stakeholders who contributed to the consultation and, probably, to the  evidence taken by the Treasury Sub-Committee, which is chaired by my hon. Friend the Member for Sevenoaks. Certainly, the British Society for Population Studies emphasised that

“Arrangements should be made to avoid concerns about political manipulation.”

The British Urban and Regional Information Systems Association stated that

“the initial level of funding should be determined by a joint review involving Parliament”.

A similar comment was made by the fire and rescue statistics user group.

We tabled the amendment to answer the concerns of the stakeholders in the statistical community, who want greater parliamentary involvement in the funding process. Essentially, there is concern that the Treasury’s involvement in determining funding will lead to the Government determining the scope of additional work done by the ONS. The Economic and Social Research Council, for example, was anxious that the Government might push funding for statistical series that they wanted, but not emphasise funding for statistical series that they were not so keen on.

Photo of John Healey John Healey The Financial Secretary to the Treasury 1:30 pm, 25th January 2007

I want to understand the principle on which some of the hon. Lady’s ideas are based. Does she accept that statistics, as a general public good, should be principally funded by general taxation? If so, does she not accept that the Treasury, as the Government’s finance Department—particularly with its responsibility for value for money and accounting for the public good use of that money—should be involved in setting the budget, albeit on different terms than those suggested by the hon. Lady, as I haveset out?

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

I do not accept that the Treasury is exclusively qualified to carry out that task. The powerful joint commission of both Houses of Parliament that we propose could be equally tough in safeguarding value for money for the taxpayer. The Bill leaves such questions unanswered. It does not tell us about the special funding arrangements—to which the Financial Secretary referred on Second Reading—that should be determined by Parliament.

Although the Financial Secretary has made it clear that he is not prepared to accept our overall parliamentary model for the whole scope of the new structures, would he be prepared to consider other alternatives to increase Parliament’s involvement in scrutinising the funding and budget process?

Most importantly, the Financial Secretary has an opportunity to clarify how the five-yearly review to which he referred on Second Reading will operate. He could also reassure us that measures will be taken to avoid the politicised interference in the budget that, for example, the ESRC fears. We need a clear indication of how the new arrangements will work and how they will secure the genuine independence of the statistical services.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I have a couple of questions for the hon. Member for Chipping Barnet. First, will she say which other body has the sort of funding and scrutiny arrangements proposed in the amendment? Secondly,  she said that politicised interference in the budget process is a risk that she is concerned about and that the amendment is intended to address it. Has the ONS or the Statistics Commission, to her knowledge, ever complained about such politicised interference in the setting of their budgets?

Photo of David Gauke David Gauke Conservative, South West Hertfordshire

At a time when senior politicians of all parties are trying to rebalance the relationship between Parliament and the Executive, the amendment would give the Financial Secretary yet another opportunity to make his name in history as a great champion of the rights of the legislature by giving greater powers to Parliament. That would achieve the objective of rebalancing that relationship set out by the Chancellor in his recent interviews. Given that the Financial Secretary has let other such opportunities slip through his grasp, I hope that he might take it.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

I should also like to support the amendment, tabled by my hon. Friend the Member for Chipping Barnet. I will be interested to hear what the Financial Secretary believes is wrong with the proposal, because increased parliamentary scrutiny can only be a good thing in increasing public confidence in statistics. What is wrong with removing such powers from the Treasury? Unfortunately, whether the Financial Secretary likes it or not, there has been a perception in the past 10 years that the Treasury tends to be somewhat meddlesome. Would it not be good to increase the public’s confidence in the new body by supporting the amendment?

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

There is a need for the amendment, and I wish to speak in favour of it. I am not sure whether it would be needed if the Government had provided much more detail and clarity on how the funding arrangements will operate. The Financial Secretary will know that that was a matter of serious concern tothe Treasury Committee, because he appeared in front of it.

The Treasury Committee stated in recommendation 21:

“It is important that the Government consider the detail of the process whereby the new statistics office’s budget will be set... We look forward to the Government producing detailed proposals, and recommend that it outlines these proposals in its response to this report.”

The Government did not do so. We also commented in recommendation 22 that there was little detail in the Green Paper and that

“the Government was unable to provide us with any further detail or clarification.”

Importantly, we went on to share not our concerns but those of the Statistics Commission—the Government’s own watchdog—and other statistical authorities around the world, particularly the chief statistician of Canada, that

“the proposals, as they stand, could undermine the new independent statistics office’s ability to determine its own work programme.”

That is why it is a matter of some regret that we have not yet heard details of how the new budget arrangements will be set. [Interruption.]

Photo of Bill Olner Bill Olner Labour, Nuneaton

Order. Will the person who is responsible for the device that is bleeping please stop it doing so?

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

It has been a long time since the Green Paper, but all that we have heard so far is thatthe budget will be set according to a five-year programme—that is pretty sketchy detail to go on. For example, we do not know what will happen if the statistics board is unhappy with its budget. It is not clear who would negotiate with the Treasury on its behalf. That is one of the weaknesses of the Treasury retaining residual responsibility. The Financial Secretary could virtually argue with himself, rather than give authority to a different Minister to argue on the board’s behalf.

If the statistics board is unhappy with the budget allocated, it will be unhappy for the next five or six years—or for whatever the duration of the budget—during which time it will have little recourse. It might also be unhappy more generally, as we have indicated in earlier amendments, with the budgetary resources allocated to departmental statistical work. The Financial Secretary rejected our amendments that would have given the board more direct oversight of funding and staffing within different Departments.

I support my hon. Friend the Member for Chipping Barnet, but I would not have do so if we had not been given such thin detail on how the budgetary process will work. The amendment is very useful because it gives the Financial Secretary the chance to provide that detail, for which we have waited almost a year.

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

Once again, the hon. Member for South-West Hertfordshire tempts me, but I must say that my principal purpose in serving my constituency and in government is not to find a place in history. That is a matter for others.

I say to the hon. Member for Braintree that what is wrong with the amendment in the name of his hon. Friend the Member for Chipping Barnet is precisely what was wrong when we discussed the matter in detail earlier. His desire to increase parliamentary scrutiny of the system should be satisfied by the provisions in the Bill. They give Parliament the potential to play a much more active role. Again, we have discussed that at some length.

On the idea of a parliamentary commission for official statistics, I have said before that statistical production is essentially an Executive function and most appropriately located within Government, rather than Parliament. Statistics are a public good and serve a wide range of users. That view was supported during consultation and by the Treasury Committee report earlier this year. In addition, we considered and rejected the proposals published by the Conservative party. We looked to international experience and systems, and the only country in the world that we could find where the statistics system is the responsibility of the legislature, not the Executive, is Mongolia.

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

But that model was promoted and supported by the Leader of the House in 1995.

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

In 1995, we had virtually no system for securing the quality and independence of statistics, nor any reform of the system for decades. It was only in 2000, as part of this Government’s reform process, that we created a basis on which to build. In fact, that was the most thorough reform of the statistical system for nearly 30 years; it completely changed the system and the views of the way in which it needed to develop. If the hon. Lady wishes to take the matter up with the current Leader of the House, she will find that he is one of the strongest supporters in the Government of the Bill and its provisions.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 1:45 pm, 25th January 2007

My hon. Friend mentioned Mongolia. Quite often in the Committee the evidence of the chief statistician of Canada to the Select Committee has been prayed in aid. Is my hon. Friend aware of any of the 14 legislatures in Canada employing a model akin to the one proposed in the amendment?

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

I well know my hon. Friend’s expertise and experience. He has lived in Canada and may even be a British and Canadian dual citizen, so he may know Canada better than any other member of the Committee. He is quite right that Canada has a distinct federal structure, but the federal responsibility of the statistician in Canada is quite different from the central statistical service function in the United Kingdom. As I have explained to the Committee before, there is no appropriate universal model when considering the reforms. Any country, with its different circumstances, history, forms of government and policy, will rightly and inevitably require a statistical system suited to itself. In the legislation, we are setting up an innovative system that is breaking new ground, and there is simply no automatic precedent anywhere else in the world.

On the proposal of the hon. Member for Chipping Barnet, we have discussed why both the National Audit Office and the Electoral Commission in principle are not appropriate comparators. I did not merely refer to plans for a new way of funding the statistics board in the future, as she suggested, but gave a commitment on how the Government would do that. I gave a commitment to the House on Second Reading, on the Floor of the House.

The hon. Member for Sevenoaks rehearsed again for the Committee the view on funding taken by the Treasury Committee. He will accept, I think, that the proposals for funding as they stood when the Select Committee undertook its inquiry, the Canadian chief statistician gave his evidence, the Committee reported and the Government gave their formal response are different from the ones that we have before us. Only on Second Reading, after the Committee reported and the Government formally responded, was I able to set out in more detail the commitments on funding.

For the benefit of the Committee, I shall clarify those commitments. To meet the key requirementsof the new statistical system of independence, transparency and flexibility, we will guarantee the board funding certainty over periods of five years, in direct contrast to the normal spending review period and process of setting such funding commitments. In addition, that certainty will be guaranteed through the  setting of a transparent formula, so that annual resources are given to the board in each of the five years. Furthermore, funding for the census will also be set for a five-year period and integrated into the overall budget of the board. Parliament must then hold the board to account for the way in which it allocates and controls its resources, in the same way as Parliament holds the Government to account for decisions such as resource allocation. As I said, the role of Parliament in scrutinising the new system will be central, including in matters of funding and resources for the board. On that basis, I hope that the hon. Lady will not press her amendment to a vote.

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

I shall turn first to the questions asked by the hon. Member for Wolverhampton, South-West. As I said in my opening remarks, I believe that the nearest funding parallels are the Electoral Commission and the National Audit Office. The parallels are not exact, but they are useful precedents, having something in common with what is proposed here.

The hon. Gentleman asked whether I could give specific examples of alleged political interference using the budget process. No, I do not have such examples and I made it clear that I was referring to the anxieties that people had expressed about the potential for such interference. My hon. Friends may come up with such examples, but I have not heard of any, although my hon. Friend the Member for Sevenoaks is right to make it plain that the Treasury Committee and many people who gave evidence to it were very anxious about the issue. Again, it is a matter of perception; if people believe that there is potential for interference using the Treasury’s powers over the budget, it will diminish the strength of the Government’s proposed reforms.

I am grateful for the Minister’s comments, but he still has not responded to all the concerns of my hon. Friend the Member for Sevenoaks, particularly about what the board will do if it is not satisfied with its budget, how the negotiations will take place and who will speak up for the board in negotiating with the Treasury. The Minister says repeatedly that Parliament will have the strongest scrutiny role in respect of the new structures. I welcome the rhetoric but I cannot see how Parliament’s role will be different in that context to scrutiny of any other non-ministerial department.

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

The case for a greater role for Parliament in scrutinising the operation of the new system is not just rhetoric; it is contained in and provided for in the Bill.

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

I should be grateful if the Minister would explain again how Parliament’s role is different in that context from its scrutiny of the activities of any department.

Photo of Brooks Newmark Brooks Newmark Conservative, Braintree

We have rightly heard much from the Financial Secretary in praise of the tremendous leadership of my hon. Friend the. Member for Sevenoaks in the Treasury Sub-Committee. My hon. Friend raised a number of pertinent points and recommendations made by the Sub-Committee, on  which a number of us served, on this issue. Hasthe Financial Secretary followed up any of those recommendations?

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

I, too, look forward to hearing the Minister’s response to that question.

The Minister’s final point to counter the amendment was that statistics are an executive function of government. They are certainly important for the operation of government, but regardless of whether one sees them as strictly part of an executive function, that in itself is no reason why a parliamentary Committee cannot be in charge of the budget, whether or not statistics are part of the executive functions of government. How is that relevant in deciding which organisation should determine the budget and what the structure should be?

The Minister was disdainful of the model we propose, which he said had no precedent anywhere in the world apart from Mongolia. Although the Leader of the House advocated that model, a couple of minutes after referring again to the Mongolian example, the Minister went on to say that he is breaking new ground. When we challenged him on the structures proposed earlier in the Bill about the mix of executive and scrutiny functions he said that there was no parallel and that the Government were doing something completely different. International models to match our proposal may be limited, but he was unable to find any other model, either in the UK or across the world, that matched the structure that he proposes.

I am still disappointed that we have not had more detail on how the five-year funding formula will work. The Minister said that there will be a transparent formula, but who will set it? When will Parliament know what it is? Will it be subject to variations and modifications? Will it be subject to parliamentary scrutiny and, if so, what sort of parliamentary scrutiny? Many questions are left unanswered, and I shall seek to divide the Committee on the amendment.

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

The longer the debate continues the more important my hon. Friend’s amendment appears. She has been making the case that it is not apparent how Parliament’s role will be strengthened by the Government’s proposals. Indeed, it is fairly evident that Parliament’s role in the statistical function of the budget process could be weakened.

Parliament’s job is not only to scrutinise the money; it is to vote the money. We will be confronted with a proposed sum that is fixed for five years. It is not clear how that will be increased year by year, but we have been told that there will be some form of indexation. Parliament will therefore have no role at all in modifying the amount to meet any new requirements that might emerge, to respond to the unhappiness of the board about its funding for the discharge of a particular function or to implement recommendations that might be made from one year to the next. The purpose of Parliament is to vote the money. If the Minister is proposing that that expenditure is taken outside the normal process of parliamentary approval and locked away for five years, it is incumbent on him to give us more detail as to how the budget will change year by year.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 11.

Division number 15 Nimrod Review — Statement — Clause 58

Aye: 6 MPs

No: 11 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 58 ordered to stand part of the Bill.

Clauses 60 to 64 ordered to stand part of the Bill.