Clause 13

Budget Responsibility and National Audit Bill [Lords] – in a Public Bill Committee at 1:45 pm on 3 March 2011.

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Question proposed, That the clause stand part of the Bill.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The clause is about the remuneration arrangements for the Comptroller and Auditor General, and how those arrangements are to be made. Will the Minister put on record the CAG’s salary? Why are the remuneration arrangements to be made between the Prime Minister and the Chair of the Public Accounts Committee, rather than with that Committee itself? I understand that the PAC used to have a role as it is a Committee of the House of Commons, but that has now been limited to the Chair.

There are a number of interesting provisions in the clause. Subsection (6) seems to suggest that the pension arrangements are wholly under the Treasury’s control. That seems slightly at odds with the salary arrangements, but I may have got that wrong and be misreading the legislation. A reasonable recommendation was made by, I think, the Public Accounts Commission that the CAG’s salary be tied in law—pegged—to the salary of the Permanent Secretary of Her Majesty’s Treasury. That seems a reasonable provision, but it did not make it into the Bill. Will the Minister explain why?

The provisions were debated in the House on 4 November 2009, before the general election. They were pretty much in the form in which they exist today, with a couple of small exceptions. The current Exchequer Secretary to the Treasury, then in opposition, proposed an amendment. Given the attention that had been paid to the CAG’s allowances and expenses, he moved an amendment proposing that all remunerations and allowances should be published monthly online so that there would be more transparency about them. That amendment was put to the vote in the House, and the Minister, as she now is, voted in favour of it during that debate. Unless I am missing it, however, that provision does not seem to have made it into the legislation before us. Will the Minister explain why just over a year ago she thought it was necessary for the CAG’s remuneration and allowances to be placed online on a monthly basis, and why she has now changed her mind? Will she explain why the arrangements in subsection (8) are subject to the negative procedure rather than the affirmative one?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

The clause provides for the determination of the CAG’s remuneration arrangements. Those provisions have been prepared with a view to the overriding requirement of preserving the independence of the office, in order not to constrain the CAG’s operational decisions. The hon. Gentleman raised a number of questions, which I will come on to in a moment.

On what is contained in the clause, it provides that the remuneration arrangements have to be agreed in advance by the Prime Minister and the Chair of the Committee of Public Accounts; that it can include an automatic uprating during the term of the CAG’s appointment; that it precludes performance-based incentives, in order to preserve the CAG’s operational independence; and that, as of now, it is to be charged on and paid out of the Consolidated Fund, with no need for the resources to be voted on annually by Parliament. The main change to the current arrangements relates to the requirement for the remuneration arrangements to be agreed between the Prime Minister and the person who chairs the Committee of Public Accounts. There will no longer be a direct link to a particular salary or salary range.

The hon. Gentleman asked about linking salary with that of permanent secretaries, but there are a number of them.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I referred to the Treasury.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

The hon. Gentleman says that, but as and when the Treasury has a new permanent secretary, they may be paid less than the current one. There is, therefore, no rate for the job, either across Departments at the moment, or in roles going forward. We try to get over that by ensuring that we set the salary at an agreed level, at the beginning of the CAG’s employment, and alongside that we have a suitable uprating mechanism so that any incoming candidate understands what the remuneration will be.

Turning to some of the detailed provisions, subsections (1) and (2) provide that the CAG will have remuneration arrangements that may include an annual salary, allowances,  provision for a pension and other benefits. As I have said, the remuneration arrangements have to be agreed by the Prime Minister and the Chair of the Committee of Public Accounts before the CAG is appointed.

The hon. Gentleman asked about the salary of the present CAG, Amyas Morse. Mr Morse is paid a salary of £210,000 per annum. That will be uprated each year on the anniversary of his first day of office, in line with the consolidated pay increase of the senior civil service. As the senior civil service will not receive consolidated pay increases for the next two years, Mr Morse’s salary will remain at that level. The hon. Gentleman asked about the pension. I understand that Mr Morse has opted not to receive a pension.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The Chancellor has, on a number of occasions, voiced his disquiet about salaries in the public sector that are higher than that of the Prime Minister. Is the hon. Lady content with that level of salary?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

The rate that has been set is one that has been agreed by all parties. The hon. Gentleman wanted to link the salary rate of the CAG to that of permanent secretaries. Permanent secretaries receive between a minimum of £140,000 and a maximum of £273,000, which is clearly a wide range. He makes a good point on salary levels, which is one reason I made the point to him that maybe over time, as we get incoming permanent secretaries, that range will narrow.

It is right to have transparency. The hon. Gentleman asked about publishing details, but I think that he would recognise that this Government have pushed Whitehall and local government to publish more details about spend. I hope that at some point in the future he will be able to encourage his local council, Nottingham, which is the only one in the country that refuses to publish details of its spend, to do so.

On broader CAG spend, that is published regularly on the NAO website, as are the expenses of senior officials. I think those are published half-yearly, so there is transparency there, and I urge the hon. Gentleman to achieve that transparency with his local council too, because it is important, as he points out. Maybe it will be prepared to publish all those details on a monthly basis—we will see if he has the powers of persuasion to get it to do that over the coming weeks.

I have probably answered many of the hon. Gentleman’s questions. Subsection (4) provides for the CAG to continue to be eligible for a civil service pension, although we have heard that the incumbent has elected not to. Subsection (6) allows the Treasury to make regulations for purposes that are supplementary to any agreed pension arrangement.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 2:00, 3 March 2011

I asked the Minister to explain why arrangements under subsection (8) would be made under the negative statutory instrument procedure.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

To reassure the hon. Gentleman, that process is exactly the same as it was before; there is no change. It was set out in the Superannuation Act 1972, so it is of relatively long standing. I commend the clause to the Committee.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I shall not rise to the bait thrown before me about Nottingham city council. Obviously I do not run it; nor is it featured in the Bill as far as I can see. I have no problem with transparency in public funds; I only wish that Government Departments would also publish all spending above £500 online, but they will not. I think about £25,000 is as far as they have come down.

I do not want to labour the point about the salary of the CAG, because obviously we can come back to this at another time, but it seems unusual for this Administration—having made such a great fanfare about tackling high salaries in the public sector—to be actively legislating, but not taking the opportunity to do something about high salaries when they are before us in the clause. The Minister did not say whether she was content with this particular salary level, so I am none the wiser as to whether the Chancellor is going to haul the CAG before him. He seemed to suggest before and after the general election that he would do that before he granted permission for any public office to have a salary higher than the Prime Minister’s. We will wait and see whether the CAG will have to come and account to the Chancellor because he is to be paid more than £142,000. Obviously the Chancellor has some say in the remuneration arrangements. However, while we may return to this matter at a later date, I think we have debated it sufficiently.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.