COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)

HC Deb 13 November 1967 vol 754 cc36-165

3.39 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

I beg to move, That this House takes note of the Fifth Report and of the First and Second Special Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute dated 8th November 1967 on those Reports (Command Paper No. 3441). It is somewhat unusual in these days, but none the less refreshing, to be using a day in Supply for discussing a matter which has very close relevance to the question of Supply. It seems to be a very good precedent.

My first duty is to welcome the new Financial Secretary to the Treasury to these debates. I always find his speeches entertaining, because I never know what he is going to say next and I have a happy feeling that he sometimes shares my disability. The hon. Gentleman has never in his Parliamentary life been dull, and we certainly look forward to his reply, which normally comes at the end of this debate.

As the Motion shows, the Public Accounts Committee has had a heavy year and has produced not only the main Report now before the House, but also two special Reports, to which the Motion also relates. This placed a very heavy burden on the members of the Committee and I hope that it is not presumptious on my part to thank my colleagues on the Committee for the immense amount of work that they have put in.

It might not be wholly inappropriate at this stage if, in moving this Motion, I indicated how the Committee works, and what I think its strength is. The reasons why its reports tend to be treated as having a certain measure of authority are threefold. First, it is wholly nonparty in its approach to problems. I have not, in three years, on the Committee, known of a division on party lines, and very rarely a division at all. Secondly, it proceeds with the aid, which no other Select Committee of this House has, of a complete Department working for it.

We are immensely indebted to the Exchequer and Audit Department, and to the very able official, Sir Bruce Fraser, who now fills the arduous job of Comptroller and Auditor General. Sir Bruce and his Department work inside and outside the Departments throughout the year and, if the Committee's reports have a certain effect, it is in very large measure due to the fact that we proceed on the basis of the researches and work undertaken by the Exchequer and Audit Department. I would commend to the House, in this era of expanding the work of the Select Committees, the suggestion that our experience indicates the necessity, if Select Committees are to be effective and do their work properly, for them to have a substantial skilled staff.

Thirdly, we proceed on evidence. We publish the evidence, with an exception to which I will refer in a moment. It is at least the fact that the House has now, as has public opinion outside, the evidence on which we have come to our conclusions. So that both the House and outside public opinion can judge whether we are right or wrong in our conclusions. The only exception is evidence which the witness asks to be excluded on grounds either of national security or of the commercial interest of the Department concerned.

I am extremely reluctant, as Chairman, to give permission for the exclusion of evidence and any requests for exclusion are very critcally looked at. As a result, the vast bulk of the evidence upon which we came to our conclusions is now before the House.

To deal, first, with the two special reports. As the House will be aware, the first relates to the submission of the books of the University Grants Committee and of the universities to inspection by the Comptroller and Auditor General. The Committee reported unanimously in favour of this earlier this year and on 26th July the Secretary of State for Education and Science indicated the Governments acceptance of this recommendation, and said that the new system would operate as from 1st January next.

On behalf of my colleagues on the Committee I can say how glad we are that the Government have accepted our unanimous recommendation on this, and have, therefore, brought to an end what has been a matter of controversy for a great many years. As paragraph 4 of this special Report brings out, the univiversities and the University Grants Committee have been the sole major exception to the general and salutory rule that bodies, the major part of whose income comes from public funds, should submit their books for inspection by the Comptroller and Auditor General.

The practice of excluding them grew up many years ago, in very different circumstances. Even after the war, Government expenditure on the universities—now running at the rate of £211 million a year—was of the order of £3 million to £4 million. The University Grants Committee dealt direct with the Treasury, whereas it is now part of the general educational world administered by the Department of Education and Science. The sheer increase in the size of the grants makes it more difficult to defend the exclusion of it and its spending from the normal Parliamentary safeguards.

As the House will know, the argument which was adduced against bringing in the Comptroller and Auditor General was that this would be detrimental to academic freedom. The Committee took this issue very seriously and, as our minutes record, heard a very large number of extremely distinguished academic witnesses on this point. It was a curious experience to find, when seeking academic witnesses of the highest calibre, that we had to resort in very large measure to obtaining the authority of another place to allow noble Lords to appear before us. No fewer than seven noble Lords attended and were the greatest help to us. This has of course, no reference to any current controversy.

We are greatly indebted to our witnesses, but we came to the conclusion that academic freedom would not in any degree be affected by the introduction of the Comptroller and Auditor General into this aspect of university affairs.

Mr. J. J. Mendelson (Penistone)

I hesitate to interrupt the right hon. Gentleman so early, but, as one who has sat under his chairmanship, may I ask him also to refer, before he leaves the subject, to the grave reservations mentioned by the Association of University Teachers in its submission?

Mr. Boyd-Carpenter

I was saying, and I hope making it clear, that not only did the majority, though not all, of the seven noble Lords, who appeared before us, indicate their fears in respect of academic freedom, but as the hon. Member has rightly pointed out, both the Association of University Teachers and the Association of Vice-Chancellors indicated a similar view.

I hope that I do not need to say that the Committee obviously gave great consideration to such an authoritative and impressive body of witnesses. But we came to the conclusion, first of all, that perhaps some of the witnesses had not wholly understood exactly how the Comptroller and Auditor General operates and how limited would be his function in respect of academic matters.

Secondly, we were undoubtedly influenced by the fact that there were a large number of academic institutions of the highest standing which have for many years been subjected to audit and inspection by the Comptroller and Auditor General, and the fact that there was no evidence whatever that academic freedom in these institutions had suffered in the slightest. We took evidence as to the position in other countries. In Australia and Ireland where the universities follow a similar procedure in respect of their books, there has never been any suggestion in either country that academic freedom has suffered in the slightest.

On the evidence, we came to the conclusion that these fears were not justified. Had we thought that academic freedom would be prejudiced in any respects whatever I am certain that my colleagues would not have come to the conclusion that they did. It is not for me to say, but I am perfectly certain that the Government must have taken the same view in accepting our recommendations. The truth of the matter is that if a Government set out to subvert academic freedom, the Comptroller and Auditor General and the Public Accounts Committee would be singularly inappropriate instruments for that purpose.

A Government who supply, as the present Government do, 70 per cent. of current and 90 per cent. of capital expenditure for the universities would find no difficulty, if they wanted, in interfering directly with academic freedom. It certainly would not be able to use the Comptroller and Auditor General, who is not its officer but an officer accountable to this House, nor the Public Accounts Committee, which is a wholly independent body, as some Departments have learnt from time to time, as its instruments. Therefore, if there is a threat to academic freedom, it certainly would not come in this way.

Nor does our recommendation indicate any criticism of what is called the "buffer" principle—that is, the use of the University Grants Committee as an intermediary between the Department and the universities. On the contrary, we were satisfied that it works extremely well, and, speaking as one who, when a Minister, had direct relations with the U.G.C. when it worked with the Treasury, I am convinced that this is one of the best possible systems of channelling public funds into universities which the ingenuity of man has evolved. There is nothing in our recommendation to criticise it. I am glad that the Government have taken the same view as we have and have accepted this recommendation.

There was a second recommendation coupled with this which was not, in the circumstances, without importance. It was that in the meantime"— that is, before the step we advocated came into operation— steps should be taken (a) to work out suitable conventions as to how his scrutiny will be conducted and how his queries will be handled; and (b) to ensure that the universities are fully informed about the nature and purposes of the C. & A.G.'s scrutiny, and what would be in practice involved". I am glad to see from the Treasury Minute on our Report that the Government accept this recommendation, but the House, which has been rightly concerned about this matter, would be very grateful if the Financial Secretary, when he replies, could tell us how this is going and what steps are being taken.

Mr. Mendelson

When the Committee decided to make this recommendation, and when the right hon. Gentleman himself accepted it, did it lay down that the scheme should not come into operation until the second condition, namely, the drawing up of the convention, was fulfilled?

Mr. Boyd-Carpenter

I do not think that the Committee expressed it in that way. If the hon. Gentleman looks at the Report, he will see that the Committee made two recommendations. The first was to bring the books within the ambit of the C. & A.G. and the second was that the steps which I have read out should he taken. I do not think that it would be appropriate or necessary to make the one conditional on the other. They were both recommendations of the Committee, and I am glad that both have been accepted by the Government.

I turn to the Second Special Report, that relating to the affair of Bristol Siddeley Engines and the overhaul of aircraft engines by that distinguished company. I note that the Government, in the Treasury Minute, make no comment on our Report except to indicate that they are awaiting the report of their own inquiry which they set up a little time ago. I hope that I may say without offence that I regard it as wholly deplorable that in the Treasury Minute, in referring to this inquiry, the appalling expression that it is "chaired" by Sir Roy Wilson should be used. This is an abominable misuse of the English language, and I cannot see the Financial Secretary of all people, in view of his own admirable use of the language, agreeing with it.

Since the Government prefer to wait for the report of their own inquiry, which I quite understand, I do not think that it is necessary for me to say very much on the issue. We made our Report. I hope and believe that our views were clear and that they were sensible. At any rate, they are before the House, and I think that all I need do is to say two things.

First, since it seemed likely that we should in our Report cast reflections on a company outside the public service, the Committee secured the attendance as witnesses of the Chairman of the company at the material time, Sir Reginald Verdon Smith and the Business Director, Mr. Brian Davidson. I should like to say how much the Committee was indebted to those two very able and distinguished industrialists for the way in which they gave evidence and for the information which they gave to the Committee. Of course, we also heard the Department concerned.

I thought it worth making that point because the P.A.C. normally confines itself to hearing witnesses who are more or less directly concerned in the public service—accounting officers and so on—but we thought it right that, when our Report might cast reflections on persons or institutions outside the public service, we should give those people the opportunity to be heard before we came to a conclusion. I hope that this is a practice which will commend itself to the House.

Secondly, even though the Government say that they are awaiting the findings of the Roy Wilson Committee, I ask the Financial Secretary whether they are contemplating early action on two of our recommendations which have a certain urgency in point of time. First, recommendation No. 2 relates to getting agreed the prices for the overhaul contracts for years which go back to 1963–64 and on to 1966–67. After all, these contracts have been in operation for some years and it seems urgent that prices should be agreed on a proper basis. Secondly, would the Financial Secretary tell us whether action is intended under paragraph 5 of our recommendations—that is, that the company and the Department should review, in the light of our Report, the profits disclosed in the repair of spares contracts for the years 1959–60 to 1963–64?

Both are matters of some urgency. Perhaps the hon. Gentleman would tell us when he expects the Roy Wilson report to be made and whether it will be published.

Mr. R. F. H. Dobson (Bristol, North-East)

I should like to ask the right hon. Gentleman a factual question about Recommendation No. 6. The Report shows the difficulty of the P.A.C. and the Auditor General in obtaining information. Recommendation No. 6 mentions this. What exactly does the Committee mean by … have in a suitable form, equality of information"?

Mr. Boyd-Carpenter

I am obliged to the hon. Gentleman. I am ready to deal with that issue, but as it arises in an even more pointed form on our main Report in connection with, for example, the Buccaneer contract, I should take up less of the time of the House if I were to deal with that issue later rather than in reply to an intervention in respect of the Bristol Siddeley Engines affair, on which I had concluded my observations. I promise the hon. Gentleman that I will deal with this issue, which he has rightly indicated is of great importance in connection with aviation contracts.

I come to the Fifth Report, a large part of which deals with matters relating to the aircraft industry and aircraft contracts. I begin this part of my remarks by making two general comments. First, not only this Report, but the Reports of the Committee in previous years, suggest that the old Ministry of Aviation, now incorporated in the Ministry of Technology, has not a particularly good record in handling public money. I do not want at this stage to allot blame. As we commented in our Report last year, they have suffered from excessively frequent changes in accounting officers. According to their own evidence, they have lacked technically qualified staff, and it was clear that this was because they were unable or unwilling to pay enough to obtain adequately qualified people. I should be grateful if the Financial Secretary would say what steps the Government are taking to improve the administration of this Department.

I turn now to the general question of these contracts and the question of equality of information, to which the hon. Member for Bristol, North-East (Mr. Dobson) referred. After some study of this matter—I speak for myself, but I think that my colleagues will agree with me—we appreciate the difference between a contract for the construction of a new aircraft or the manufacture of a highly sophisticated weapon and ordinary contracts for ordinary articles by Government Departments. In this case there is no market, there is no competition. There is basically one supplier, there is no ordinary machinery, no machinery of the market, for fixing prices. Only the manufacturer himself knows the cost of the article.

The work on these contracts often starts, as it did in the Bristol Siddeley case, on the basis of a preliminary agreement which includes what is called Standing Condition 43, as follows: Fair and reasonable prices shall be paid to the contractor …such prices to be fixed by agreement between the authority and the contractor. As far as the Department is concerned, however, that is largely a valueless provision if only the contractor knows the real costs of production.

In the Bristol Siddeley case, it was argued that that obligation to conclude an agreement for fair and reasonable prices related not only to the contract in question, but should be spread right across the firm's dealing with the Government Department concerned, presumably over a number of years. The Committee rejected that view and took what, I hope, the House will regard as the commonsense view that a condition of that sort in a contract relates only to that contract and not to matters extraneous to it.

If there is any doubt about that in industry, I hope that the Department will make it clear, if necessary by redrafting, that when it produces that condition it relates only to the contract in question. An obligation to fix fair and reasonable prices over a whole series of articles over a number of years is hardly worth the paper on which it is written.

For it to be valuable even in respect of a particular contract, one has to have what is called equality of information and post-costing. By "post-costing" I do not mean that one should reopen a fixed price contract at the end of the day to see whether an excessive profit has been made. I mean that when one fixes the price for a contract, one should know, as the contractor already knows when he is negotiating, the cost of the previous batch of aircraft under a previous contract.

That is the point which we make in case of the Buccaneer aircraft. It means that those, on both sides, who negotiate a fixed price should know the costs of previous items and should have similar knowledge of what the costs are likely to be. This has the advantage that it does not deprive the firm of the incentive by efficiency to increase its profits. If it can do better in the future, it will get—as, I submit, it is entitled to get—an increased profit as a result of its increased efficiency. It means, however, that those who negotiate do so on a basis of equality and an equality of knowledge of the facts on both sides. I very much hope that the difficulties in these cases will not drive the Government back to cost-plus, which is a wasteful and extravagant procedure.

I notice that the Treasury Minute contains a suggestion that the Government's negotiations with industry for getting an agreement for equality of information and post-costing are at a fairly advanced stage. I very much hope that the Financial Secretary will be able to tell us more about how these matters stand and what is happening in the interval before agreement is reached. Are contracts still being made for aircraft on a basis which examination of these cases suggests carries with it considerable dangers? What is being done in the interim? When can we expect a firm decision and agreement with industry?

The Government are in a very strong position in these cases. They are the major customer and sometimes the monopoly customer in most cases. I hope that the Financial Secretary may be able to tell us something about a change which, apart from saving a great deal of public money, may shorten the work of subsequent Public Accounts Committees.

There are two other matters relating to aircraft, one of which is the Concord. As hon. Members will see, the price for this aircraft is continuing to rise. As it has a great bearing on the likely financial return, can the Financial Secretary tell us what information the Government now have as to the likely restrictions on its supersonic operation over land by reason of sonic boom? Such restrictions could be decisive one way or the other in the financial success of this daring and imaginative venture. It would be helpful, certainly to me, to hear how the position now stands.

I hope that the hon. Gentleman will be able to say something also about the sharing arrangements with the French, because the Committee felt disquieted about many of the details. There is one particular aspect to which I would like to draw attention. Under the agreement, when a contractor in one country—say, in France—places a subcontract with a company in England, the cost of the work under that subcontract falls against the British rather than the French Government. The British Government, however, is not a contracting party with the subcontractor. They have no contractual rights in the matter, nor have they any direct means of knowing how the work is being carried out or whether it is being carried out economically, although as the result of the action of a contractor in another country they have to foot the bill for the work.

According to the evidence before us, that system has so far worked to produce an adverse balance for this country of about £6 million. Confidence was expressed that this would even out. Perhaps the Financial Secretary may be able to tell us. It is, I suggest, an aspect of the agreement which needs looking into, the more so because we are told that the Concord agreement is intended as a pattern for future Anglo-French sharing agreements, of which there are several in prospect or being negotiated.

Mr. Tam Dalyell (West Lothian)

Does not the right hon. Gentleman think that any other alternative way of doing it might make co-operation in a deep sense almost impossible?

Mr. Boyd-Carpenter

No. I do not think that the wit of the extremely able people who advise the British and French Governments could not work out a system. Indeed, once we have the system of main contractors, it is at least arguable that all the expenditure incurred under the contracts with a main contractor should fall to the cost of the country in which that main contractor is situated. Difficulty can be caused by the fact that a decision by a French company, over which the British Government have no control, could affect the apportionment of financial liability between the English and French Governments. This is unsound in principle even though it may well be that in practice it has not so far done a great deal of harm.

I disagree with the hon. Member for West Lothian (Mr. Dalyell). The alternative is at least worth exploring. Again, I would very much like to hear the comments of the Financial Secretary. The Treasury Minute is not very reassuring on the point. It simply states that Anglo-French officials are in close consultation about the matter. I am sure they are, but whether they can control contracts to which they are not parties is another question.

I am equally a little disturbed that, as indicated in paragraph 46 of the Report, British contracts for the Concord are, apparently, still on a cost-plus basis and no incentives have yet been introduced into the arrangements. It is curious—perhaps the Financial Secretary can tell us about this—that this important point in the Committee's recommendations and comments is not even mentioned in the Treasury Minute. I suggest to the hon. Gentleman that it is sufficiently important to demand a mention. Perhaps he will be good enough to tell us how this matter stands, too.

My final point on aircraft concerns the Belfast. The affair indicates the unwisdom of seeking to develop a large, elaborate and highly expensive aircraft when there is no apparent large market for it. This is an experience of which, no doubt, note has been taken.

I pass, at long last, from aircraft—

Mr. John Rankin (Glasgow, Govan)

Before the right hon. Gentleman leaves aircraft, has he nothing to say about the attempt, which would seem now to be being made, to foist on B.E.A. an aircraft which it does not want and to refuse it permission to build the aircraft which it wants?

Mr. Boyd-Carpenter

I will not refer to that—the hon. Gentleman is quite right—for the very good and sufficient reason that I should be plainly out of order when moving a Motion relating to the reports of the Committee of which I am chairman in which there is no reference to the subject, which has not yet even been reported on by the Comptroller and Auditor General. However, I do assure the hon. Gentleman that, although this is why my lips are sealed, I am not without personal opinions on the matter.

I therefore leave the airfield and turn to the more domestic circumstances of the Metropolitan Police. The House will recall that there was a good deal of public attention in the Press at the time of the publication of our Report on the financial aspects of the move of the Metropolitan Police into their large new headquarters in Victoria Street. Frankly, I am not surprised, because the story disclosed in the evidence is not a good one.

To begin with, there was plainly unnecessary panic that Scotland Yard would be pulled down, whereas, as the House knows, it is still there to this day. The Treasury Minute makes the best of it by referring to the buildings as being rather old. In fact, with only one exception, they are, I believe, the newest buildings in the immediate vicinity of Whitehall.

It is clear that financial approval for this project was obtained on estimates which were very seriously misleading. I will quote only one figure. The figure for adaptations was submitted to the Treasury for approval at £425,000, and the actual expenditure was £1,850,000. This story suggests a real lack of financial control by the Home Office and by the office of the Receiver of the Metropolitan Police.

There appears also to have been very little attempt to find, within the area operationally suitable for a police headquarters, an alternative and more economical site. I refer to the one entry in the Treasury Minute which caused me considerable surprise. Commenting on his choice of this very expensive site, it states on page 4, referring to paragraphs 26–34 of our Report: Within the limitations of the area of search imposed by the operational requirements of efficient policing of the metropolis, the Receiver considered a number of sites and buildings, including three south of the river. That is not consistent with what the Receiver told the Committee, and in this case only—I promise not to do it in others—I want to read to the House the evidence given to us and on which our comments were based and then to ask the House to consider whether what is said in the Minute is consistent with it

The witness was the Receiver of the Metropolitan Police, Mr. Cornish, and I begin at Question 2682 on page 302. The Questions were being asked by the Chairman and were as follows: 2682. The Commissioner's operational requirements I think, Mr. Cornish, are to be within one or two miles of Charing Cross? — (Mr. Cornish.) Well, he prefers to be within one mile. I think he would accept two. 2683. Why was it only then a quick survey of sites south of the river? —I think, Sir, we thought we were working under great pressure here. If I might add to what Sir Philip has said"— referring to Sir Philip Allen, the Permanent Under-Secretary of State at the Home Office— we were at that time given to understand that the Bridge Street site was going to be demolishe by 1967. We understood that was the Ministry of Works intention at the time and we ourselves were tenants of one of the buildings there and had had notice that we might expect the building to be demolished in 1967. 2684. How long did this very quick survey take?—I am sorry, I cannot answer that. 2685. In fact, was any alternative site looked at?—I did not personally do this, but my officers told me they had looked around and there was no site which could be acquired, no acceptable site on which we could build in the time which we thought we had available. 2686. What I am really asking you is whether any serious attempt was made to find an alternative and more economical site for these headquarters?—I think I have said as much on that as perhaps I can. 2687. The impression, I must confess, you leave on my mind is that only perfunctory efforts were made. Is that unfair?—The position is that my estates people know what sites are available. This is their job in life. They know precisely what is available in all Central London. It is their job to keep themselves informed about it, and what they would do too would be to look at their records and take out any sites that seemed possible. 2688. What did you ask them to do?—I cannot remember asking them myself to do anything on this. 2689. The truth is that the Metropolitan Police were set on this site in Victoria Street, were they not?—We thought it would meet our needs and we thought it would meet the requirements. I hope that the Financial Secretary will reconcile that clear statement by the official concerned with the statement made in the Treasury Minute, that the Receiver—that is, the official concerned— … considered a number of sites and buildings, including three south of the river. It may help the Commitee's further consideration of the Treasury Minute, which will be undertaken as soon as the Committee is set up and resumes later this Session, if he could reconcile what appears to be difficult to reconcile—

Mr. Anthony Royle (Richmond, Surrey)

My right hon. Friend mentioned the great deal of public comment which arose, rightly, on the Committee's report about the Metropolitan Police. There was some comment then about the behaviour and the activity of the professional people involved, including the architects and surveyors. Would he make it plain that this Report makes it clear that there is no criticism levelled at the architects and surveyors involved, who carried out their work honourably, but mainly al the Receiver's Department for the failure which my right hon. Friend has rightly stressed?

Mr. Boyd-Carpenter

This is perfectly true. There was no evidence before us on which we could possibly criticise any of the professional men concerned. The only criticism I recall apart from that of the Receiver's Department was a possible criticism of the Ministry of Works which supplied an estimate for what would have been the cost of adaptations for ordinary offices, without discovering that these were to be the rather special premises required for a police headquaters. Certainly, the criticisms were directed at members of the public service and only members of the public service gave evidence to us. I am glad to make that clear—

Mr. J. T. Price (Westhoughton)

The right hon. Gentleman is making some interesting comments. In considering this matter, did he and his Committee draw any comparison with the history of the State House case, at Holborn, which some years ago, stood empty for two years and was then farmed out to several Government Departments at fantastic rents and costs of adaptation? Surely that was a sufficiently salutary lesson to prevent any Government Department from ever repeating that kind of mistake.

Mr. Boyd-Carpenter

The hon. Gentleman is entitled to make that comment, but as I have explained, this is not the way in which the Committee works. We proceed on the basis of the Comptroller and Auditor General's report and our examination of the witnesses, in which we confined ourselves to the facts of the particular matter. If we were to go back over the previous errors of previous Departments at previous times, our labours, which are already sufficiently prolonged, would be inordinately long, and so would my speech. It has already taken too long, I think.

I should like to hear from the Financial Secretary about the General Post Office purchase of exchange equipment and telephone apparatus. I think that he will agree that a somewhat unhappy situation is disclosed, that it is clear that prices have been paid for apparatus higher than would have been paid if the costs had been known at the material times and that the working of the "ring" system has resulted in prices being paid somewhat higher than would otherwise have been necessary. I hope that he will confirm that, as we have been told, it is intended to bring the "ring" agreement to a close in March, 1968, which is, I understand, the earliest possible moment. I understand that the General Post Office tried to terminate it earlier but were held to the terms of their contract.

The Ministry of Defence attracts very little comment this year in our examination, although in previous Reports we have had a good deal to say. There are a number of points to which hon. Members may wish to refer. I will refer only to one, and the amount of public money involved is trivial. This is the example of chronograph wrist watches. It was revealed that owing to an inadequate system of record keeping, which had never been looked at by those higher in the Department, a solemn record was being maintained of chronograph wrist watches—the type of wrist watch used by pilots of aircraft—so that they were being held to the charge of officers who were no longer in the Service and who were alleged to be serving at aerodromes which had long since been closed.

This is an indication of what can happen inside a Department of State if those responsible for administration in the senior branches of the hierarchy are not constantly looking through it to see whether there are branches which have got completely out of date and have ceased to perform any useful function.

Finally, I would comment for a moment on the question of the Tay Road Bridge. It appeared on the evidence that public funds had lost some amount, which was thought might be up to £750,000, although I believe that the Financial Secretary may be able to give some lower figure, as a result of the failure of the Scottish Office to put into the original Order a provision for capitalisation of interest. As the local authorities, who were the partners in the enterprise, had properly arranged to have their interest capitalised, the result of the Departmental lapse was that the Exchequer did not share the advantage which the local authorities, with their greater vigilance, gained. This is a question of bad administration. I hope that the Financial Secretary and those who advise him at the Department will take steps to obviate it in the future.

I have taken a good deal of time, and if I had covered the whole of the Report I should have taken a good deal longer. I thought that as our work had been heavy it was my duty to the House to try to outline at any rate some of the major issues. This is the one occasion in the year on which the work that we do upstairs is brought to the Floor of the House for the approbation or disapprobation of our fellow Members. I think that all my colleagues on the Committee, the Clerk who serves us so well and the Comptroller and Auditor General and his staff, who also serve us extremely well, feel that this one occasion in the year is one on which it is right that we should present our work to the House so that the House knows what we are doing and, if it does not like what we are doing, can tell us so.

4.23 p.m.

Mr. Robert Sheldon (Ashton-under-Lyne)

It is a great pleasure to follow the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). One of the privileges which I have enjoyed has been to be under his chairmanship in the Public Accounts Committee, and one of the minor disadvantages, even grievances, which I should like to recall is that, after the questioning by the Chairman, one is left only to dot the i's and cross the t's. The knowledge that he deals so well with so many of the important aspects which we investigate gives us great satisfaction in having him as our Chairman.

I want to raise a more general point about the work of the Public Accounts Committee. It has been brought to my notice a number of times that it is said that there is fear and misunderstanding by civil servants of the work of the Committee. Knowing the way in which we conduct our business, in what to us is a careful investigation for the public wellbeing, that reaction to our work perhaps comes as a surprise. It has been suggested that because of this fear and misunderstanding there are some unhappy consequences of our work.

It is said that we tend to dampen enterprise in the Civil Service, that we are concerned with candle-end saving, and that the scrutiny of accounts which we perform leads to a timidity and lack of enterprise, so that the loss is rather more than the gain. Because of this, it is sometimes asserted the Public Accounts Committee even considering the advantages which it brings to the public service, has a markedly harmful effect. It is important to be able to put this view forward, because it has been represented to me on a number of occasions.

I believe that these are misunderstandings. The scrutiny of accounts in the public service is no greater and no more intense than that which is performed in industry. It is very difficult to make a comparison as to the level of scrutiny of accounts, but it is fairly clear that the degree of trust in industry is probably less than that in the public service. If we know about this—as some of us do—and know of the minute examination which takes place in industry, I think that we can say that the public service suffers no more than does industry. What is important is that although there may be a minute examination by the Public Accounts Committee and the Comptroller and Auditor General, it must always be seen in the broad context of what the Government Department is attempting to do.

As I have said, it is sometimes represented that the work of the Public Accounts Committee dampens the spirit of enterprise in the Department. The danger of blame being attached to an action by a Department is held to be gravely damaging to that Department. If it shows itself more enterprising, no reward accrues to that sort of enterprise. In other words, it is said that it can only be blamed and can never be rewarded by the Public Accounts Committee.

We saw a similar approach to that in the Special Report on Parliament and Control of University Expenditure. I do not want to quote very much on this point, but it is rather important. I refer hon. Members to Question 489. Lord James seemed to call for a rather positive approach. He said that he was supporting the case for a greater disclosure of what a university does with its money. He said: Really, the whole of my case rests on the fact that I think that by and large the universities have a good story to tell and I would not mind that story being told, if people want to know. That is a positive approach by those who want to publicise the good that is done in the public service as well as condemn the bad.

We know that the Public Accounts Committee is in the position of condemning the bad and that it is only in passing that it is in a position to praise what is good. As Departments become more complex, as time goes on, there comes a need to check efficiency and to approve and promote certain measures which are valuable, and they will not come before the Public Accounts Committee because there is no blame. There may well be some who feel that the Public Accounts Committee could come into that new field, but I am not sure.

I think of the engineering situation, of which I have some experience, and the position of the inspector who is never allowed, and in my view never should be allowed, to produce his own goods, because of the bias that arises when it comes to inspecting his own products. If the Public Accounts Committee found itself in the position of making certain positive recommendations of a continuing nature, it might be in a position of prejudicing its own work of scrutiny. In any case, it is too large a task for the Public Accounts Committee. However, there is a need for a body to make these sort of comparisons and recommendations and to publicise the good, as we—of course, for other reasons—must publicise what is wrong.

Another misunderstanding of the rôle of the Public Accounts Committee concerns the penny-pinching, the saving of candle ends. Our historic rôle was checking that funds were used for the purposes for which Parliament had intended. That was the prime work of the Committee. Because of misrepresentation this may appear to those who are subject to the scrutiny of the Committee to be an excessive concern with the minutiae of what is spent.

To my knowledge of the Public Accounts Committee, any member of it who concerns himself with these minor matters would not get far in obtaining the support of his colleagues on the Committee. The general need for economy is obviously accepted, but also accepted is the need for value for money, and I believe that the Committee puts this first, above all else.

It is important, however, that we understand that the misunderstanding of the work of the Committee leads to an excessive restriction of expenditure, worth while or not. For example, I strongly believe that the criteria on which things like office equipment—electric typewriters, etc. —are purchased are far tighter than the criteria applying in any well-organised company in the private sector.

It is because of this fear of the Public Accounts Committee that decisions on value for money tend to be subordinated to the total amount spent. This fear of appearing before the Committee must always be understood by us and we should try to explain rather more than we have done in the past just what is our main concern.

The danger to the public service of making the Public Accounts Committee appear a bogy is, I believe, spread by those in high office who may be insufficiently sure of themselves and who may, therefore, act within the strictest confines of the rules. They tend to be those who have achieved responsibility possibly above the level of their ability. The publicising of the way in which the Public Accounts Committee works, as against what may have happened before, would show that nowadays the Committee does look at the broad objective and tries to get the best value for money. The publicising of these facts would do nothing but good.

Without going into too much detail, on the Reports before us I want briefly to consider aviation. There can be little satisfaction at the way in which public expenditure on aviation has gone. The Second Report of the Public Accounts Committee for the year 1963–64—in the evidence given on 18th February, 1964—contained this Question, No. 585, to Sir Richard Way concerning the Ferranti case. The question was: But it is a case which has disclosed deplorable weaknesses in the system, is it not? The answer was, "Yes".

The next question was: And you are in no position to say to the Committee this afternoon that there are not similar cases? He gave the reply: I am in no position to say that I am sure that there are no similar cases. The next question was: Because the weaknesses which are disclosed could well apply in other contracts; this is the case, is it not? He replied, "This is the case". Yet in the current Fifth Report from the Public Accounts Committee, Question No. 1546 was: Do you feel up till now you have been able to properly control the exercise of the work?". The answer was "No, Sir". This is three years later. And Question No. 1594, on page 184, was: You are satisfied, in fact, that the present machinery is giving you adequate information, apart from what you have told the Chairman? The answer was, "I really am satisfied".

We see that in three years the position has changed—that now at least they feel themselves satisfied, although through the whole of that three-year period they were not satisfied. I remain dissatisfied.

I do not believe that, as yet, we have either the men in the Department or the organisation; and there may be further cases yet to come. Until we are in a position to have men in the Department as good as those in the industry concerned—until they are themselves situated in the factory, with full access to what is going on, in exactly the same way as those who are costing and producing have knowledge of what is going on—we may be fooled again and again and still receive optimistic reports.

The situation in the aircraft industry is, in many ways, a precursor of the sort of arrangements that are likely to be made more and more in the future as industry takes on jobs which it is unable to do on its own and for which it requires Government support. If we are to have a partnership of the sort that we have in the aircraft industry, that partnership will be fraught with dangers. The only way to have a real partnership is to have one based not only on information being available in the same way to both, but both being directly concerned on the job and in the factory.

5.36 p.m.

Sir John Vaughan-Morgan (Reigate)

I agreed with very much of what the hon. Gentleman the Member for—[HON. MEMBERS: "Ashton-under-Lyne."]—Ashton-under-Lyne (Mr. Sheldon) said. I apologise for momentarily forgetting his constituency. I get a little confused between the Tweedle Dum of Ashton-under-Lyne and the Tweedle Dee of Heywood and Royton. However, I hope that, as we are both colleagues on the Public Accounts Committee, the hon. Gentleman will forgive me for forgetting the name of his constituency.

I agreed with much of what he said, but before elaborating on his remarks I wish to pay a warm tribute to the chairmanship of my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). This is the first term that I have served on the Public Accounts Committee and it has been a wonderful experience. My right hon. Friend, as Chairman, is the most benevolent but hawk-like of grand inquisitors. I can understand why the Public Accounts Committee is sometimes held in awe. I know that, to many of the officers who have served it so admirably, it is an awe-inspiring body.

Hon. Members might be interested in this anecdote. I told a friend of mine, who was a former Permanent Secretary to a Ministry and an accounting officer, that I was a member of the Public Accounts Committee. I asked if he had ever appeared before it. A look of horror passed over his face, and with a shudder in his voice he replied, "Tuesdays and Thursdays at 4 o'clock". He added, "I never appear without first having two large gins". I told this story to one of the witnesses who appeared before the Committee—I told him this privately, of course—and he looked shocked and replied, "I cannot understand that. I never allow myself more than one small whisky".

The Public Accounts Committee does a magnificent job and I suggest that some of the fears to which the hon. Member for Ashton-under-Lyne referred exist only in the minds of those who have not always been as careful as they should have been. After all, we are very careful not to blame the accounting officer for any wrong decision which can in any way be attributed to a political decision by a Minister. No one, therefore, should have any real fear of the results of appearing before the Committee.

It was a most interesting experience to be on the Committee when it produced its Special Report on university accountability. I was away for some of the earlier meetings, but I was able to study the evidence. I should not think that any Select Committee has ever had before it such a roll call of noble "eggheads" as we had. Had I been an undergraduate, I would have been more than overawed by the distinguished figures who appeared before us.

I started on that Committee with a strong prejudice in favour of the universities not being accountable—the doctrine of university unaccountability, I suppose one might call it—but as I listened to the various witnesses I came to the conclusion that they rather overdid their protestations and their fears of the unknown. Re-reading the evidence, I find a certain stridency with which the same themes are repeated time and time again, but on the basis that these were sincere fears I tried to puzzle out some of the motives lying behind them.

A paramount fear was that of publicity. Sometimes, reports of the Public Accounts Committee—and my right hon. Friend referred to one—receive a great deal of publicity. Lord James, in evidence which has been quoted, said that they had a good story to tell, but I sensed that going through the minds of some of the vice-chancellors was the feeling that one day they would waken up and find an awful headline which said that the Public Accounts Committee had complained of whatever it might be—that the warden of Judas had had his lodgings decorated twice in the last five years; the sort of triviality that tends to hit the headlines. These witnesses would be understandably afraid of that sort of thing. I do not think that it will work in that way at all, but that Special Reports concerning the universities will deal only with generalities and not with minute details.

A second fear expressed was that there would be a bias towards the administrative interest as opposed to the academic interest. I concede that there is some danger of this, but even this fear can be exaggerated. One of the witnesses whom I questioned, Lord Franks, had also been the chairman of a teaching hospital, and there is the same danger, so to speak, in hospitals, and particularly in teaching hospitals. I am sure, however, that there is absolutely no evidence that at any time the work of the Comptroller and Auditor General has in any way affected the clinical freedom of doctors. We should bear this point in mind when considering the position of the universities. There is in hospitals a slight leaning towards more power for administration, but not in clinical matters, and for other reasons.

I was more impressed by those others, such as Lord James, who were willing to experiment or who had had experience of the work of the Comptroller and Auditor General in, for example, the sphere of the colleges of advanced technology. But their fears are justified to the extent that I think that the Public Accounts Committee ought to review this matter in another Special Report in due course.

Another matter that came out of our discussions is the curious non-statutory position of the University Grants Committee. We are all filled with admiration for the way in which the Committee works and for the marvellous and characteristic British convention by which it does not really exist and no one ever interferes with it. It is entirely independent. Nevertheless, in view of the fears of the universities, I wonder whether the time has not come for the University Grants Committee to be set up as a body with its own charter and its own accounting officer. That suggestion is, perhaps, rather wide of the General Report of the Public Accounts Committee, but I think it is worth considering.

Sir Edward Boyle (Birmingham, Handsworth)

I should like to ask one question on that very interesting suggestion. Would it be my right hon. Friend's idea that the University Grants Committee should be made in some sense a statutory body? If so, the difficulty about that being too precise about its functions. In a sense, half its value is that its functions have developed over the years but have not been laid down too precisely.

Sir J. Vaughan-Morgan

I appreciate that view. To be perfectly frank, I have not worked the idea out in any detail. I merely threw out the idea, and I would not object if, for various reasons, someone shot it down. I do not think that objection is insuperable with the U.G.C. as either a statutory body or one with a Royal Charter. There are plenty of bodies with charters which have changed their function over the years.

Turning to the other Reports, I want to pick up the story of the Metropolitan Police Fund and the very sorry story of the newer New Scotland Yard. I think that I speak for other members of the Committee when I say that this second matter got more under our skins than probably any other before us. I am probably slightly biased, because that building in Victoria Street irritates me every time I walk down that street, as I do very frequently. I was about to say "that white elephant in Victoria Street sticks in my gizzard", but that is not a very wise metaphor.

I am even annoyed with its revolving triangular sign. One face says "New Scotland Yard"; the second face says "New Scotland Yard", and the third face, I will reveal to the House, also says "New Scotland Yard". The thing revolves, and it strikes me as an irritating gimmick.

A gross error was made by the Receiver of Metropolitan Police Property in advising the Ministry of Public Building and Works of the real cost of adaptation. I will not dwell on that for too long, because contrition has been expressed, but it is a case of locking the stable door after the horse has gone. I hope that in this case there will never be a newer New Scotland Yard and, therefore, no other horse in that particular stable.

What also perturbed me was the casual way in which the whole question of the siting of the headquarters had been approached. The Treasury Minute, in which the Treasury dissociated itself fairly carefully from what was stated, was unsatisfactory on this point. It is said that as a result of the Holford Report, 1963, it was thought that displacement was imminent. I cannot believe that the Receiver of Metropolitan Police Property ever thought that New Scotland Yard would find itself evicted one day, with all its furniture scattered along the Embankment.

It is quite ridiculous to have taken this decision on such slender evidence without the most complete instructions from above that the Metropolitan Police would have to be out by a certain date. It is stated that conditions in the building were already serious. It is also stated that no thought was given, I understand, to transferring to a new site altogether. My assumption is that the Holford Report came as a heaven-sent excuse to take on this extremely costly building. Home Office approval shows that in this respect it was very lax indeed.

I should like to know whether we must accept that "operational requirement" do require the Metropolitan Police headquarters to be within one or two miles of Charing Cross. The Receiver said that the Commissioner of Police demanded that it should be within one, or two miles, but presumably the Home Office is in a position to say whether this should be accepted or not. It is, of course, highly desirable in the eyes of all Government and para-governmental Departments that they should be in the middle of Whitehall, but we have progressed beyond that and now have Government Departments situated at the Elephant and Castle and in Southwark—a very good thing, too.

Is it actually necessary for New Scotland Yard to be in Victoria Street? It is not in the centre of the Metropolitan Police area. I looked at the map of the Metropolitan Police area this morning, and it would seem that the centre would be about half a mile north of Notting Hill Gate. It is true that the Commissioner has duties in relation to this House under the Sessional Order, but those are minor operational duties and the headquarters, I understand, is mainly administratively concerned with the control of transportation and with communications.

The General Post Office, which I should have thought equally important, has managed to live for centuries as far away as St. Martins-le-Grand. I cannot believe that these operational requirements were not too easily accepted and have, therefore, limited the area of search. This matter of New Scotland Yard and its over-expenditure is small, of course, in proportion to the totality of Government expenditure and even of the totality of what the Committee examined, but it has been a classic example of failure to respect the condition of good government.

4.54 p m.

Mr. R. F. H. Dobson (Bristol, North-East)

It is a pleasure to follow the right hon. Member for Reigate (Sir J. Vaughan-Morgan), who had the dubious pleasure of following me when I made my maiden speech. If I may take a word from him, I congratulate him on the way in which he spoke about the work of the Committee. I do so sincerely and I add my congratulation to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the Chairman of the Committee, on his work, and on his very interesting and detailed speech.

I wish to talk about aircraft matters in totality in relation to these Reports and not to deal with anything else. I shall refer to only two aircraft matters and I hope not to take up much of the time of the House. I have to declare an interest in relation to aircraft matters which I think pertinent. First, as a ratepayer I am particularly concerned about the way in which Government money is spent on this subject. Secondly, in my constituency many thousands of aircraft workers live. They are particularly concerned with B.A.C. and Bristol Siddeley. J have a special interest in the work they are doing and the cost to the nation, which comes out very clearly in the Reports we are discussing.

I deal first with the Concord project, which is mentioned in the Reports. One of the most difficult problems about Concord is the almost continual Press speculation made about its future. This seems to occur regularly about twice a month and it causes great distress, not only to management but also to those who work on the shop floor in the industry. In many ways it is far worse at that level than at the level of top management because at management level, presumably, Sir George Edwards can telephone someone at the Ministry and ask if there is anything in such speculation. Because of his working knowledge, from the people at the Ministry he can set a clear understanding that there is nothing in the speculation, but that is not possible for those who work on the shop floor. They read and digest speculation in the Press and sometimes they do not realise that it is completely wrong or that it is a mixture of fact and fiction. That does not do any good.

This speculaion does even worse damage. Sometimes it is grossly ill-informed and it causes a great deal of difficulty in other ways. At the best it causes tension between management and employees on the shop floor, and at the worst it causes almost a feeling of non co-operation. It gives the men the impression that whether they work or not their work is not appreciated, "Whether or not we work hard we are not saving the Government money because they will cancel the project in the end." This is the worst possible way of encouraging those on the shop floor to work harder and to enter discussions about the project on which they are working.

This came to the fore in August when there was so much Press speculation that workers on Concord in Bristol saw me and my hon. Friend the Member for Bristol, North-West (Mr. Ellis) and stressed their desire that the project should continue. They had faith in the project and they said they were "worried sick" about rumours concerning Concord's future. Their jobs, their livelihood and their homes were all at stake. I am pleased that the Minister of State for Technology, whom we saw, was able to give such reassuring news to those who were concerned.

In everyone's mind there is concern over costs. I was also pleased to notice that Sir George Edwards, speaking at a meeting of the Western Section of the Institute of Directors on 4th October 1967, said that the problem with the industry was one of cost and one of living on headlines. In relation to the cost he said that there was rightly concern, but there was another side to the ledger. He went on to say what that was. I hope that from time to time if the Public Accouns Committee gets hold of the costs of Concord it will have the opportunity to examine the other side of the ledger.

When I was checking the figures in another connection recently I found that if we spend a total—it is an enormous total—of £500 million on Concord between now and 1973 it is possible to recoup these large sums. If we can recoup by the sale of very advanced aircraft something like £1,000 million—which is more than possible in export potential—that will give a fair return for the amount of money which goes into the aircraft. Concord gives us a world lead in an advanced aircraft of a type the country has not seen before.

Mr. John Biffen (Oswestry)

The Committee of Public Accounts is much more concerned with figures than with aspirations. We were told that it was unlikely that more than one-third of the development costs would be recovered, on even the most optimistic of forecasts.

Mr. Dobson

The hon. Gentleman is right. The figure was one-third of research and development, which is not the same as I am talking about. Research and development figures are referred to as £18 million.

Mr. Biffen

That is only the beginning of the extent of the public commitment to this project, because the evidence given to the Committee makes it quite clear that the public sector expects that at least part of the operating costs will also be borne by the Exchequer.

Mr. Dobson

I accept that. I want to correct a figure I gave. The amount of research and development is £28 million, not £18 million.

Mr. Edwin Brooks (Bebington)

This is the intramural expenditure. The figure of £28 million must be added to the £500 million of extra-mural research and development. That takes no account of production financing costs.

Mr. Dobson

I do not dispute that. My reply with regard to research and development is based on the assumption that there are many indirect benefits from the £28 million direct research and development costs. The aircraft industry is the most technically advanced in research and development of all our industries. Anything obtained by research and development on aircraft benefits other industries in hundreds of different ways. It is no good trying to balance the book of research and development charges in the aircraft industry, because so much is recovered in other ways not directly attributable to the costs incurred in the aircraft industry.

I was speaking about the need for Concord so that we keep ahead of the world in a very advanced technical field. It is possible to argue that we do not need to fly at supersonic speeds. It was possible to argue that we did not need the motor coach because we could get by comfortably with the horse and cart. We are well into the second half of the twentieth century and we need to speed up communications between countries and between towns. Whether we like it or not, the object of Concord is that we should have a very advanced aircraft, one which is so far in advance of anything else in the world, so that we shall be able to maintain our technical advance and achievements ahead of those of many other countries.

The production of Concord will make use of the full resources of our manpower, factories and airfields. It will make use of technical advances in electronics and hydraulics. There is a world market for Concord. We should carry on with the project. I hope that nothing that the Committee of Public Accounts thinks that it has discovered so far will be taken as proof that the Government should scrap the project. That would be most unwise. The Government must, however, ensure that they have some direct control over the costs.

Sir Douglas Glover (Ormskirk)

I do not think that is the point. The Committee, of which I was a member and which is concerned with finance and with costs, found that over the years to which it gave its attention the project had doubled in cost. The Committee does not say that Britain should not continue with the project. The Committee's job is to draw attention to the escalation of costs.

Mr. Dobson

The hon. Gentleman is right. I cannot say much about the escalation of costs, except that either they escalate because the first costings were wrong or they escalate because factors intervened which pushed the costs up. The best way of tackling this is that which the Ministry is now adopting, which is more effectively to control the costs of projects. The right hon. Member for Kingston-upon-Thames mentioned this and tried to find the solution. I could not understand exactly how his suggestions would enable us to control costs on the Concord.

I believe that the way to control costs on the Concord is to ensure that they are regularly checked. This should be done on a milestone basis. In addition, the Government must have access to all the information which is in the hands of the company beforehand. I would not be satisfied with the Government's having access to the information this year and being sure that the costs were correct this year and then allowing an escalation of costs—this, I gather, is what the right hon. Member for Kingston-upon-Thames was suggesting—in every other year thereafter based on what the company could argue.

The right hon. Member for Kingston-upon-Thames referred to sonic booms and said that the noise problem relating to Concord could affect its sales. I see no difficulty, except one of an argumentative type, in accepting the need for controlling noise in Concord and for having international agreements which either allowed, within limits, or disallowed supersonic flight over land. If the Ministry made a start on securing such international agreements, instead of leaving the matter until Concord is flying, either as a prototype or as a production aircraft, we should be able to get the agreements we wanted and the supersonic aircraft of other countries would be affected thereafter. If we do not start on this course now, this will be a major problem.

Very few people come well out of the Second Special Report on Bristol Siddeley Engines Limited. The Ministry comes out of the Report very badly, because it has the poorest possible cost control estimates. The D.T.C's estimates must have been inadequate over many years and continue to be so. The very cursory way in which questions were asked when Ministry people made visits to the company left much to be desired. The Ministry was also at fault in the almost inexplicable way it failed to get information from the company. The Ministry people were on the right track, but they started suddenly to digress and were put off and did not even write a letter saying, "We want the cost accounting figures for 1960, 1961, and so on". It is incredible that this was not done.

Having said that the Ministry and those who work there were at fault, I must say some harsh words about those who work in the company and who have been representing it. I believe that the company was determined right to the end to avoid any disclosure of figures to the Minister which would make any sense to him and his Department. This was a mistake. The company's first reaction, when the Ferranti affair came to light, to cancel its then contracts and replace them by lower ones was good. Its complete failure then to give detailed information along the lines requested was bad and deserves to be castigated.

I get the impression from the Report and from some of the cross-examination that those concerned were trying to avoid repayment of the full amount. I cannot judge whether this is true, but I get the impression that they were settling for a low figure and were seeking to avoid, to as large an extent as they could, paying back their overpaid costs. But I thought that the worst failure of the lot was that the board and the people who work in the company failed to realise that almost all the costs—in fact, all the costs which they were dealing with in this case—came from the public purse, and that to put public money into the pockets of a private company in this blatant way should not have been allowed.

I feel I should remind the House of the Plowden Committee. If the Government take note of what I am saying, the matter need not come before the Public Accounts Committee again. The Plow-den Committee suggested that the Government should take a majority shareholding in the companies. I would go further and say that the companies should be nationalised. Here we have a basic and thriving industry which should be nationalised, which would then mean that all the profits would come back to the country concerned. Government money is used for risk, and the country is entitled to the results from that risk—

Mr. Cranley Onslow (Woking)

Is the hon. Gentleman suggesting that, whatever merits or demerits nationalisation may have, it would entirely eliminate the need for cost control?

Mr. Dobson

No. The hon. Gentleman knows that I am not suggesting that. The need for cost control will always be there. The profits would come back to the country in some way or another. I should have thought that, in any case, all cost control matters, and certainly nothing that I have said suggests otherwise. I am suggesting that if the industry were nationalised, as I hope it will be, at a date not too far distant, we shall get away from the sort of Reports which have come from this very good Public Accounts Committee.

5.12 p.m.

Mr. John Biffen (Oswestry)

I am glad to follow the hon. Member for Bristol, North-East (Mr. Dobson) because I want to devote most of my remarks to the Concord project and, in so doing, I think, generate a modest amount of good natured discussion, if not controversy.

I assure the hon. Gentleman at the outset that he is wrong in thinking that the Public Accounts Committee does not concern itself with these wholly State-owned activities that are concerned with military procurement. In fact, the Public Accounts Committee examines Royal Ordnance Factories and it considers the conditions of Royal Naval Dockyards. Therefore, it would not be true to say that a change of ownership in the aircraft industry would necessarily take it outside the purview of the Public Accounts Committee. However, it is a small point.

Mr. Dobson

It could be looked at by the Committee concerned with nationalised industries. That is the point that I was trying to make.

Mr. Biffen

I think it is a fairly modest difference. I do not think that our disagreement over this point will weigh much in the scale, compared with what I shall be saying in a few moments.

I should like to open my remarks by paying a tribute, as others have done, including my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), to our Chairman, my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd Carpenter). I should like to say what a pleasure and privilege it was for those of us on the Committee to be served by Sir Bruce Fraser and his staff, and I should like particularly to pay tribute to our secretary, Dr. Taylor, and to Mr. Platt who represented the cautious and calculating eye of the Treasury throughout our deliberations.

I think that most of our discussion this afternoon inevitably will turn around the vitally important subjects of university accountability and the Bristol Siddeley Engines Report. In particular, the Bristol Siddeley Engines Report will occupy a great deal of the attention of the House at a later stage, and I think, therefore, I should like to confine my remarks briefly to one topic which was considered in the Fifth Report, namely, the Concord project.

In this case the value of the Public Accounts Committee is fully demonstrated, because in the more general hurly-burly of politics it seems to me that we have now reached a position where technology has become the superstition of our age, where we suspend our critical faculties and desert our economic judgments, and we are in desperate competition to show that we spend more on the somewhat intangible subject than our opponents do. Therefore, a project like the Concord does not, on the Floor of the House, get anything like the astringent political comment that I believe it surely deserves. One has to go to the Public Accounts Committee really to see a specialist committee doing its job and probably to the best advantage.

I much regret that undoubtedly the only conclusion one can reach is that in doing our job we have to do it without the advantage of the Press being present. This is because of the highly confidential nature of the evidence we require, and which is freely given. The nature of the confidentiality can be ascertained by anybody who cares to look through the minutes of proceedings where they will see a very large number of answers sidelined "Not for publication" at the request of the civil servants concerned. This means that the members of the Committee came away much better informed and without the unhappy inhibiting influence that a Press presence would have had upon our deliberations. I say this with very great reluctance because I am by instinct very much in favour of the Press being available to record all our proceedings.

Mr. Sheldon

I am sure that the hon. Gentleman would not wish to go entirely unchallenged his assertion that public money is being sacrificed on the altar of technology. I am sure that he will recall that there was a great deal of discussion about whether we should go ahead with the Concord, until finally the announcement was made that the French would not cancel it and, because of the contracts entered into some years ago, it was quite useless to discuss the matter further.

Mr. Biffen

I do not dispute that for one minute. I agree that what I am now going to say certainly will not get a great deal of approval from some of those on the benches behind me. I am already under the disapproving eye of my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings). I do not think my hon. Friend the Member for Belfast, East (Mr. McMaster) will be happy and, although my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle) has now left the Chamber, I am not certain that what I am going to say will meet with his approval either, for what I am going to say will not follow the neat symmetry of party politics.

The original agreement negotiated on Concord was an appalling arrangement which no British Government or Treasury can be perfectly happy about. Why on earth we entered into it I know not, unless we thought the French were going to rat on us. It defies every elementary principle of economic prudence, I would have thought. However, that is to some extent past history, although at the same time it is a continuing challenge. When we are told that this is to be the prototype, so to speak, for future agreements, before we are completely bemused by all the immense evidence that is produced that this is keeping us at the forefront of technology, we ought to say "Stop", and, to quote the words of the hon. Member for Bristol, North-East, we should ask "What is fact and what is fiction?".

In the Committee, we found a lot of facts, disagreeable and costly facts, but the fiction—perhaps I ought not to say fiction—the intangibles which are put against those facts are the presumed benefits. They are wrapped up in modern terminology—"spin-off" and the rest—bu[...]ney are not evaluated in any meaningful terms of pounds, shillings and pence which we can measure against the pounds, shillings and pence which we know are being spent.

We were told that, with the development of technology, the whole science of measurement would be that much improved. It seems a modest request, therefore, to ask that, in our deliberations, we should have some idea of the benefits we should receive, and that that idea should be in measurable terms to set against the sums which have been expended on Concord. Is not that what cost-benefit analysis is all about?

I do not want to get into a long generalised tirade on this matter. I want to deal with the issues which were revealed by the Fifth Report of the Committee, and to do so briefly. I take, first, the development cost of the Concord, the actual figures—we are still trying to get at them—and the financial disciplines which we think are being operated in the development costs and the economic consequences of those development costs.

Paragraph 41 of the Fifth Report tells us that the figure for developments would come to £500 million. Just to assure the hon. Gentleman the Member for Bristol, North-East that I fully understand the points which he also has in mind, let me refresh the memory of the House on what the £500 million will cover. It will finance the research and development phase, which comprises the construction of two prototypes, two preproduction aircraft, one static test and one fatigue test specimen, jigging and tooling, and about 60 engines for ground bench and flight development work; and there is a certain amount of post-airworthiness certificate work included in the £500 million. But, as the hon. Member for Bebington (Mr. Brooks) pointed out, that was not the end of it. We have now discovered a further £28 million, which is for intra-mural work, as I understand it, that is, research and development work being carried out in British research establishments entirely and exclusively devoted to the Concord. It does not include any work which may have been partially attributed to the Concord being carried out in British research establishments.

If someone then draws the conclusion that the cost of the Concord is really not £500 million but is £528 million, the answer is "No". We are told that the French are doing something like it as well. How much are the French doing? We do not know. The figure is not made available.

If we were talking about someone fiddling social security to the tune of 10s. or 15s. a week, there would be vast Press coverage, there would be talk of scandalous exploitation of the National Assistance Board or Ministry of Social Security as it is now, and there would be Questions in the House. All that attention would be devoted to relatively trivial sums. This seems to be the lesson. Once things escalate into hundreds of millions of £s, an additional £10 million or £20 million gets lost. This is the fact and the fiction which the House must consider when discussing the Fifth Report.

Mr. Stephen Hastings (Mid-Bedford- shire)

rose—

Mr. Biffen

Yes; I knew it was coming.

Mr. Hastings

I am sorry to disturb my hon. Friend from a seat behind him, but one question must be posed at once. He has referred to the £28 million for intra-mural costs. Did the Committee succeed in discovering that the scientists, technologists and others were recruited and the capital equipment was bought solely for the Concord and that the money would not have been spent on something else if the Concord had not been under development?

Mr. Biffen

I know not whether the money and the resources would have been devoted by a Government to other activities which they wished to pursue, but we were told definitely that this was money which could be attributed wholly and exclusively to the Concord. I do not say, and I hope that my hon. Friend would not argue, that there is an inevitable rise in public expenditure and, for this reason, we should never ask for any economy anywhere, because what we would save would be spent in some other direction. That would be a most imprudent doctrine to advance.

My first question is: What assurance can we have that the British contribution to the research and development of this project, taking into account the intramural work, will not be significantly in excess of that of the French, and do we have to rely on their word for it? Do we have any independent point of check to see that the figure which is quoted as our contribution of £28 million is matched by a French contribution?

One of the great myths which has developed is that this has been a highly successful project, engendering close cooperation between Governments and friendship and light everywhere. Yet, if one reads the Reports produced by the Committee, one does not gain the impression that there is all that much close and happy co-operation between the two Governments at governmental level. We know the reasons. The British Treasury is not very happy about the scheme and the Ministry of Technology is pushing it, and exactly the same sort of thing is happening in France. There is a sort of four-way stretch, so it is hardly surprising, in the circumstances, that there is some coyness.

My second point on the financial discipline; bears that out very well. We want to see incentive contracts applied as much as possible to the Concord project. The sheer sums involved demand it. Yet little progress has been made in arriving at an incentive contract system This, also, is referred to in the Select Committee's Report. We are entitled to ask whether it is the French or the British contractors who are holding things up and making it difficult to arrive at a satisfactory conclusion on the question of incentive contracts.

Mr. Frank Hooky Sheffield, Heeley)

What conceivable interest could the French Government have in allowing costs to escalate beyond what was reasonable? Why should they not exercise adequate control on their side of the Channel? Second, is it not the essence of the whole scheme that the total costs, however arrived at, are divided half and half, so that, whatever intermediate balances arise, there will in the end be a settlement on a 50–50 basis?

Mr. Biffen

The hon. Gentleman was a member of the Committee. With respect, he should have appreciated this point. I am sure that the hon. Member for Bebington (Mr. Brooks) will support me when I say that the intra-mural expenses are outside the 50–50 sharing agreement. Furthermore, when the hon. Member for Sheffield, Heeley (Mr. Hooley) asks why the French should not be regarded as having a vested interest in maintaining the most rigorous cost control on this project, I reply that the French Treasury has, just as the British Treasury has, but we are not dealing with two sets of Treasury Ministers. We are dealing, also, with two spending Departments backed by two sets of commercial interests, one private and one nationalised.

This is a fact of the situation which every schoolboy knows. It is no good pretending that the same rigorous attitude to cost control is exercised by a spending Ministry as by the Treasury. If the hon. Member for Heeley doubts that, I am sure that the Financial Secretary to the Treasury will settle the matter for him when he winds up. The French and British Governments have clearly been at loggerheads over the issue. Paragraph 46 of the Fifth Report says: … despite intensive discussions with the French and negotiations with the firms, very little progress towards achieving incentive contracts had been made during the past twelve months. The House will be interested to know what the difficulties are, and when they are likely to be resolved.

Mr. Charles Mapp (Oldham, East)

Can the hon. Gentleman recall that we found in the Committee that the British Government were working with private firms and that the French Government were working with a nationalised industry? Am I not right in thinking that from that curious mixture we have precisely the set of arguments that can be used on either side of the House to prove a particular case, and that it is somewhat misleading to draw conclusions unless we realise that on the French side immediate action can be taken, whereas here, in the mixed economy, one has to go through a long circuitous channel to reach a decision?

Mr. Biffen

I have not for one moment sought to turn the discussion into an argument about free enterprise or otherwise, and I made the point that backing the Ministry of Technology was a privately-owned aircraft industry whereas in France there was a nationalised industry. I do not think that for the purposes of the present argument there is any significant point of substance in whether the aircraft interests are private or are publicly-controlled. They will both want their spokesmen in Government to push for as much money to be devoted in that direction as they can, using all the arguments about technological advance which will flow from such public expenditure.

We have been told that possibly one-third of the £500 million development costs may be recovered. There is hope, though no one would underline it too vigorously, that it may be higher. The Fifth Report says: …the extent of recovery would depend on what the traffic would bear… Commenting, the Treasury says, in the Treasury Minute on the Reports: The efficiency and economy of the Concord project are under continuous study. That is nice to know, because they certainly were not under study when the programme was initiated.

We now know that there was no attempt at market research to determine what level of consumer demand there was for the Concord. Are we to understand that these studies have proceeded independent of the tests of sonic boom and assessment of whether it will be possible for the aircraft to fly over land as well as over seas?

I return briefly to my second point concerning the operating costs. Until now, the public have been led to believe that the expenditure on Concord is essentially research and development expenditure, and that once that is over the operating costs should more or less be self-contained, self-balancing. Yet paragraph 50 of the Fifth Report suggests that we are approaching something like a sinister open-ended commitment. It says: The Ministry also informed Your Committee that the arrangements for financing production were under negotiation. It was the Ministry's intention that the contractors should commit and risk some of their own money but it was inevitable "— this is what the House may like to take account of— that further substantial sums of Government money would be involved over and above development costs. They hoped that decisions would be taken by mid-1967. The word "substantial", when placed alongside a known commitment of well over £500 million, fills me with concern. Practically every week I receive through my post some communication or other from the British Aircraft Corporation. I am waiting for the communication which will tell me that the Corporation, as an investment, is prepared to put some of its own money into the project rather than wanting the taxpayers to underwrite it all the time.

The House would be interested to have the Government's latest view of the extent to which they now feel that arrangements will be successfully concluded for the financing of production which will limit, or—one hopes—entirely eliminate, the necessity for further substantial sums of Government money to be involved. The House would like an answer on that.

It seems to me that the discussions in the Committee of Public Accounts over the past year have enabled the Committee to be the custodian of critical examination, which it properly must be wherever vast sums of public money are being spent.

Mr. Dobson rose—

Mr. Biffen

No, I will not give way—this is the peroration. The need for the Committee is that much increased whenever both Front Benches are committed to what historically must seem to have been a highly dubious decision. I know that as long as the hon. Member for Bebington sits on the Committee the powers of scrutiny will remain in very good hands.

5.37 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I should like to make one general observation and to comment on three points raised in the Reports of the Committee of Public Accounts. I ask the hon. Member for Oswestry (Mr. Biffen) to forgive me if I do not pursue the line he has taken. except to say that I think that it can be as dangerous to be mesmerised by a project's accounting figures as to be mesmerised, as he said, by technology or science in general. If anything, the mistake this country and his colleagues have made in the past has been to be mesmerised too much by the figures in the account book, to appreciate too little the importance of new scientific and technological ventures and to be too timid in entering them.

My general comment is to endorse strongly what the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the Chairman of our Committee, said about the importance of the powerful and skilled staff which supports the Committee's work, and without which the work could not be done. I particularly endorse what he said about the enormous value and great skill of the Comptroller and Auditor General.

I hope that the experience of the Committee will be taken as an example and in some ways a basis for the work of the new Select Committees which we are creating, and which I hope in five or 10 years will enjoy the same authority, prestige and influence in the country and the House as the Committee of Public Accounts now enjoys.

The three specific matters on which I should like to comment briefly are the question of university finance, the Bristol Siddeley matter, and the question of the new headquarters for the police, on which the right hon. Gentleman touched. I believe that the Committee was absolutely r ght in coming to the conclusion that the Comptroller and Auditor General should have access to the books of the University Grants Committee and the universities. The argument is clearly and succinctly summed up in paragraph 18 of the Special Report, which points out that he is an independent officer who examines public expenditure on behalf of Parliament and reports to Parliament. Perhaps some of the academic world is not altogether clear that he and his staff are not the servants of any Government but are the servants of the Committee and this House—in other words, of Parliament—and that they report to Parliament.

The paragraph is worth quoting in extenso. It points out that the Comptroller and Auditor General is an independent officer whose main duty is to examine public expenditure on behalf of Parliament and to report to Parliament as he sees fit. He has no power to issue instructions to Government Departments or other organisations whose accounts he audits or whose books he examines. He exercises no control over them. He is not subject to direction by the Government.

If the Government of the day did not wish to exercise closer policy control over universities, neither the Comptroller and Auditor General nor the Public Accounts Committee could make them do so. If, on the other hand, the Government wished to do so, neither the Comptroller and Auditor General nor the Public Accounts Committee could prevent it, nor would either of them function as the agent of that closer control.

Whether or not there is intervention in the affairs of universities which might one way or another seem to affect their academic freedom rests in the hands of the Government of the day, but in so far as there is scrutiny of their accounts it is the business of Parliament. The work of the Comptroller and Auditor General is simply to assure Parliament, as the elected body controlling the affairs of the country, that public monies are being properly and reasonably spent.

I believe that, as the Report points out, the academic community can profit from the fact that Parliament can be assured by this kind of independent investigation that the monies that universities have at their disposal are being properly applied. I have not the slightest doubt—I spent all my working life before coming to this House in university administration—that these monies are properly applied, but I am equally certain that Parliament has a right to the kind of independent investigation which the Comptroller and Auditor General can apply.

On the general issue of academic freedom I would urge that one cannot divorce academic freedom from the general question of political freedom and that one's political freedom is guaranteed only if one has a Parliament with full authority to investigate all the areas in which there is a reasonable and proper public interest. Therefore, I welcome the fact that the Government have accepted and acted upon the recommendations of the Report, and the fact that discussions have already been initiated with the Committee of Vice-Chancellors and others to see how the actual operation will be conducted.

I now touch briefly on the affair of the headquarters of the Metropolitan Police. A colleague of mine on the Committee has already said that we found this item most disturbing. I gained the impression—I think that my colleagues on the Committee did so, too—that someone in the police authorities said "We want that building in Victoria Street. Get it," and so it was got.

I endorse entirely what the right hon. Member for Kingston-upon-Thames said about the discrepancy in the evidence about sites on the South Bank and the Treasury Minute which now suggests that there were three sites explicity looked at on the South side of the river. That was not the impression given to us in the evidence that we took and which the right hon. Gentleman quoted verbatim. The impression that we had was that there was absolute determination on the part of somebody to have the building in Victoria Street, and that what followed afterwards was merely the most perfunctory looking around to see whether there was a good alibi for having that building rather than whether there was some other site.

I suggest that there is a general consideration of public policy arising. I feel that in the senior echelons of the Civil Service there is such a powerful tradition of being in or near Whitehall as the place where the machinery of Government is located that the idea that one can disperse successfully does not seem to cross their minds. Although we have had good examples of important parts of the Government machine being dispersed, I am sure that within the senior levels of the Civil Service there is an automatic feeling that if one has a new department or an extension of an existing department to locate one should if possible put it in Whitehall or within a stone's throw of Whitehall. That is the impression that I got in this matter.

The second disquieting aspect of the case is the total failure of the Receiver to give an independent or accurate specification to the Ministry of Public Building and Works when he asks for the costs of adaptation. I cannot see how one can ask what the cost of adapting a building will be without saying what one is going to use the building for. If all that happened was, as I gather, that the Receiver said to the appropriate person in the Ministry of Public Building and Works, "We want a block of offices", that was the grossest carelessness on his part, because it is abundantly evident, even to the lay mind, that the equipment and layout required in a modern police headquarters is not just that of a block of offices.

Somewhere along the line there was the most appalling casualness, to put it mildly, in the specification of what was required. Following that, there arose, naturally, the discrepancy between £425,000 and £1,850,000 in the cost of adapting the building for this purpose. The whole exercise reeks of incompetence, and I hope that it will be taken further than is indicated in the Treasury Minute.

My final comments relate to the Bristol Siddeley exercise. My impression from hearing the evidence is that there was not on the part of the company any desire deliberately to defraud the public purse. What I am more concerned about was the apparent incompetence in conducting its affairs so that for many years it did not even know that it was charging the taxpayers twice for doing the same work. This in many ways is more disturbing than any deliberate attempt to misappropriate public funds. However, the key to this trouble lies in the failure of Government Departments to do what they have been urged by the Public Accounts Committee for a long time to do, and that is to take effective powers, or to use existing powers, to ensure equality of information and post-costing.

A curious thing is that towards the end of our discussion the Committee asked the Ministry what powers it possessed to demand information about costs. In a Memorandum dated 11th July, 1967, from the Ministry of Technology, we had some information about this. Apparently the power available to the Ministry on costs is covered by Standard Condition No. 43 in contracts. This gives the Ministry … rights to estimate or ascertain costs of production and to demand particulars of costs… The Memorandum added, however: In practice…Standard Condition 43 has been widely interpreted as giving the Ministry a right either to estimate or ascertain costs, but not both. It is not clear to me why the Ministry has not the right to do both these things. I believe that if this right were exercised, and exercised rigorously, some of the troubles which have occurred, not only with Bristol Siddeley but in other aspects of aircraft contracts, might not have arisen.

There appears to be general power under Section 10 of the Ministry of Supply Act, 1939, for the Ministry of Technology to obtain details of actual costs incurred in a contract, but the Memorandum says: It is considered that Section 10 gives the Department a further right to obtain information as to costs under past contracts for the purpose of fixing prices on new contracts for similar articles. This seems a most important power but. as far as I can discover from the evidence, it is not used or at any rate is not effectively used by the Ministry. We and the Ministry are still asking for post costing whereas, so far as I can see, under the statute power exists already and I do not understand why it has not been widely and effectively used in order to prevent some of the mishaps which have occurred.

In the course of his evidence, I understood the witness from the industrial side to say that they would object to post costing as a basis for revising an already agreed contract, and to some extent I have sympathy with that view. If one agrees a contract and then there is within it an incentive to be more efficient, and the firm concerned does become more efficient and makes more profit than originally thought, up to a point that is not unreasonable. It could be argued that if an automatic right of post costing existed, with a view to revising what had been agreed, there would be no incentive to greater efficiency because the increased profits from increased efficiency might be cancelled out in post costing operations.

But I do not accept that the Ministry should not have a right to post costing to see whether its original calculations were reasonable so as not to allow a firm in a subsequent contract for some article to make an inordinate profit on it. As I understand the Memorandum from the Ministry of Technology, under Section 10 of the 1939 Act the power has resided with the Government for a long time but they do not appear to have made use of it.

We are entitled to an explanation of why Section 10 has not been used more widely and more powerfully and why, indeed, it exists at all if it was not intended to be used. The Memorandum simply says: The Department has not considered it expedient to exercise these rights while negotiations with industry have been proceeding in order to secure general rights to equality of information and post costing. These negotiations in a sense only came about because, in earlier years, the Ministry does not appear to have exercised the powers it undoubtedly possesses. The existence of the negotiations should not be made an excuse for not using the power, and why it is made an excuse is not clear. I am satisfied that until there is equality of information between Government and contractors, and until there is effective post costing of contracts, the sort of difficulties which arose in the Ferranti, Bristol Siddeley and other cases will recur. I shall be interested to hear from the Government why this statutory power has not been invoked.

5.55 p.m.

Mr. Stephen Hastings (Mid-Bedfordshire)

I listened carefully to the thoughtful speech of the hon. Member for Sheffield, Heeley (Mr. Hooley) and agree with him that we shall continue to risk the sort of difficulties which we have had with Bristol Siddeley and Ferranti until the present system of Government contracting can be improved. It is a depressing aspect of the Reports and of the Treasury Minute that apparently no progress has been made in spite of these experiences. I would not go so far as to say that the answer lies simply in post costing, which is a highly complex affair which can be interpreted in many ways, but otherwise I agree with the hon. Gentleman. I hope that he will forgive me for not following him further, because the aspect I wish to deal with is not one on which he touched deeply.

In this debate last year, my hon. Friend the Member for Oswestry (Mr. Biffen) said, with some disappointment and irony, I thought, that most of the hon. Members who were taking part were members of the Public Accounts Committee and that no one else seemed to be taking much interest. So if my remarks do not meet with his approval in any other sense, I hope that at least he will accord me some credit for paying attention to the Reports. In that connection, I should like to pay tribute to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and to his colleagues on both sides of the House for the prodigious amount of work which has gone into the compilation of these three Reports.

What might perhaps be thought almost a disproportionate amount of time in the debate so far has been concentrated upon the aviation side. But perhaps it is not disproportionate, and if it is not there must be a reason for it. I think that there is no need for me to declare my interest in the aviation industry again. I have no connection with the British Aircraft Corporation or with the contracts in question, but if I seem to be putting up a defence of the aviation interest this is, of course, to some extent the reason

I plead this in mitigation if one looks at the subjects which the Committee has been examining, there is really a most tremendous contrast between the section on aviation on the one hand and almost everything else on the other—for example, overseas development policy, the police and the difficulties in Victoria Street, roads, agriculture, housing, local government and so forth. With respect, they do not compare in terms of financial analysis with the problems of the aviation industry. This is probably the reason why so many hon. Members have tended to concentrate on aviation.

My hon. Friend the Member for Oswestry, with his usual skill and force, attacked the whole basis of financial thought behind the Concord. That is how I would interpret what he said but I would take up one point with him because I am sure that he would not wish to leave a false impression. More than once he referred to this "vast sum of money of £500 million" and so which is to be expended. But I remind him that it is actually half that sum that concerns us —£250 million. The French are paying the other half.

Mr. Biffen

I am grateful to my hon. Friend for enabling me to correct any misunderstanding which may have arisen from my remarks. Of course our share is half of £500 million, but I remind my hon. Friend that when the project was only supposed to cost £170 million that was thought to be beyond our resources and was the reason why we had this as a joint exercise with the French.

Mr. Hastings

I am grateful to my hon. Friend. He would be the first to admit that there is a considerable difference between £500 million and £250 million. I only make this point because opponents of Concord many of whom have not studied the position as he has, have also, and perhaps with less respectable intent, made use of this same figure.

Mr. J. T. Price

The hon. Member is on a valid point but I do not want him to get it out of perspective. He has got the figures correct, but the point made by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was that the P.A.C. was becoming very concerned about the escalation of the Concord costs. This is exactly the same position as we had with the TSR 2, which led to any unholy bust-up in this House when my right hon. Friend discovered what was happening. This is the same kind of criticism.

Mr. Hastings

The hon. Gentleman does not need to tell me anything about the difficulties that we have had over TSR2. I spent a year researching on this, and I fully realise that the P.A.C., not for the first time, is concerned about what it regards, in some senses, truly, but not entirely to my way of thinking, as well-founded criticism over Concord as well. The phrase used by my right hon. Friend the Member for Kingston-upon-Thames when he moved the Motion was that the cost "appeared to continue to rise", or "continues to rise."

If one takes the Report—the relevant paragraphs in the Fifth Report are 41 and 42—it will be seen that he was concerned, and others have been since, with this figure of £28 million for intra-mural expenditure, by the Royal Aircraft Establishment in particular. And this must be balanced by a figure in France which we do not know. I would accept this, but it is fair to point out that this mistake, if it be a mistake, or an act of negligence, is on the part of the Government, of the Ministry of Technology, not of the industry.

The position in industry, so I believe, and B.A.C. would be quick to correct me if I am wrong, is that, from the point of view of estimating, the situation is not bad in this sort of range.

My hon. Friend the Member for Oswestry described what was covered by the figure of £500 million for developing expenditure. My own impression is that he is correct. He set it out absolutely correctly. I believe that all of this, at 1966 prices, is still well within the limits of the original estimate. It is more. It is well within £450 million.

Therefore, as of this hour, one has a figure, a margin of around £50 million which is still spare. In this range of technology, and bearing in mind the scientific problems it involves, that is already a not inconsiderable achievement. It leaves £50 million, into which if necessary this £28 million of intramural expenditure might be fitted without looking too terrible.

Now I want to highlight some disturbing rumours which were recognised by the hon. Member for Bristol, North-East (Mr. Dobson) in what I thought, until the latter part of it, was a well-informed and important speech on this aspect. I refer to the damage being done by reports in the Press, and talk outside it, about the likely escalation of costs. I hope that what I have said, if it be correct, will be enough to show the House that, so far as the industry is concerned, there is no escalation, and costs are well within what it was said they would be, even by £50 million and more.

There was a report in the Daily Express not so long ago to the effect that the figure of £500 million would be exceeded; that it would rise to something like £620 million. There were a number of supporting figures. I wonder where this comes from? I hope that it is nothing to do with the "news management service" operated by Whitehall. The Financial Secretary would I hope be the first to deny this if it were not so. Could it have something to do perhaps with the proposition that although today the figure is all right—well within £500 million, by 1973 it will have risen to £620 mil; ion because of inflation?

This may be so, but neither the British aircraft industry, nor B.A.C., in particular, control inflation. All that they can do is to try and the themselves to the 1966 figure, which they were told to do and so far they have made a very good job of it. I hope that the House and the Committee will continue to be aware of this particular danger. So long as the industry is told to apply 1966 costs rigidly there must be a risk of apparent escalation, and a very large element in that will be clue to inflation—certainly at the present rate of inflation.

I say that with some emphasis, because I am aware, as other hon. Members will be, that there are quite a large number of people, in the country and in Whitehall, who would still like to see this project destroyed in spite of the fact that £150 million has already been spent on it, and in spite of the achievement to date, to which I shall come.

Mr. J. T. Price

This country has spent a great deal more than that modernising and mechanising the coalfields of Britain, and now we are to throw them down the drain.

Mr. Hastings

With respect, this is a little outside the range of the debate, and I cannot quite see the connection. I want to turn to one other point in the speech of my hon. Friend the Member for Oswestry. Here we have an important distinction. He said that it is the business of the P.A.C. to analyse facts and figures, and not to go into aspirations. There is a slight danger here. In this, or any other business today, a management decision or an examination of any kind cannot make much sense unless one looks at it in terms of the market.

This is what should rule decision at the end of the road. I would grant what my hon. Friend says about the research and development costs. This is an investment with a long-term return, decades away, and in that sense a legitimate one for the Government to make. If one takes production costs, on the other hand, here there should be, and my understanding is that there is, a break-even figure. Where is it? How many options are there? At this stage is it an optimistic-looking operation in commercial terms?

I would commend to my hon. Friend a visit to Filton, so that he may look at these important figures. My understanding, and I was at Toulouse not so long ago, looking at the French end of the operation, is that the position—given that research and development will have to be written off in commercial terms—is by no means a bad one. No one will put in firm orders for a machine of this character before it has flown. But on the long-term view and in terms of options, the position is not bad at all. It will not be lost on the House that the American general, who is responsible for the American S.S.T. project has admitted already—and that project is nowhere near as advanced as the Concord—that it is back on its own programme by well over a year.

Mr. Biffen

My hon. Friend is making his case very temperately and urbanely. Do I understand him to say that, as a result of his negotiations with B.A.C. and the French he concludes on production costs, that it is possible to ascertain a market which means that there will not, in the words of the P.A.C., be a requirement for further substantial sums of Government money to be involved over and above development costs?

Mr. Hastings

No; that is not what I said. If the Government invest half the substantial sums required in production costs, it is because, one hopes, in their wisdom, if it is exercised, they see a future for it. In my company, we have a parallel case of an aeroplane of no complexity at all compared with Concord in which the Government have invested money. But, my goodness, we shall have to pay it back; there is no question about that. They get their profit. The extent of the write-off is simply on research and development and not on production costs. The Government will be looking for their pound of flesh when it comes to production aircraft.

I come to the final paragraph in this section of the Report, paragraph 53. It seems to me that there is a contradiction which is perhaps of some importance. The paragraph reads: Finally, your Committee express their disappointment that so little progress has been made in the matter of incentive contracts and that contractors appear to be reluctant to risk their own money on either development or production. If the basis of contract is one in which the industry has very little, if any, confidence, it is not surprising that it is not all that ready to invest large sums of money or cannot persuade the City to invest large sums of money. These two propositions are indubitably connected.

Contracting is a terribly difficult subject. Although I think that we should have made a little more progress. I suggest that one of the central problems is that it is not possible to "fix" a price for something as complex as Concord, or even half as complex, with what is known as a gestation period of seven, eight or ten years, because there is no fixed moment in time when that can be done.

There is a multitude of components and separate operations and they cannot all be worked out at once in terms of Wednesday, 9th July, or whatever it may be. During the period in which attempts are being made on both sides to work them out, for a number of different reasons the costs and prices are moving, so that by the time one gets to the end the beginning does not make sense any more.

Alternatively, I would venture to suggest that we might consider a two-price system. We might have a system in which we had a target price which admittedly would not be accurate, but which would not cost so much or take so long to work out as the present laborious fixed price. It would be agreed on both sides as a target and no more. At the end of the day, we should know how much had been spent, and on each side of the target price there would be a margin above which the profit would be unacceptable and below which the loss would be unacceptable. If the Government were prepared to face paying back the losses in the same way as industry would have to pay, and have paid, back the profits, we should begin to get a basis on which we could build sufficient confidence to get over this massive hurdle.

There are two other reasons why money from the City and from this industry is not readily available for contracts in which the Government are involved. The first is the chronic instability of the aircraft programme over the years, and particularly over the last two and a half years. If one never knows when a project is to be cancelled, one cannot have any confidence in the future. The lesson of the past is that cancellation rather than successful production has been the order of the day.

The second reason is the knowledge that the ultimate control of these projects lies in the hands of the Treasury, which is governed not by considerations of efficient project management but by a short-term view of the balance of supply and demand in the economy and with the image of sterling. I do not deny that that is the business of the Treasury, but I do deny that one can run with any safety projects of this complexity when the real financial control is being exercised by people who are not paying attention to management considerations.

Mr. John Ellis (Bristol, North-West)

Is the hon. Gentleman saying that if all the money on the production side of Concord could be found from private sources the Treasury would not be willing very quickly to step back? Then, of course, the project would go forward without Government interference because all the money would be found for the production side. I am sure that my right hon. and hon. Friends would like to get out very quickly if that were the case.

Mr. Hastings

I grant that the hon. Gentleman has a valid point, but at the beginning of my speech I tried to make a distinction between investment in research and development of an order which I think he would agree is beyond private resources, because one cannot measure the final pay-off. One cannot raise money for production until one knows where one is going and can fit the project to the market. The distinction should be the market. Where the market is measurable, I think that one has every right to look to private finance. But where the research and development costs are totally uncertain and related to a range of aircraft far in the future, it is a difficult matter. The result of this situation is that these projects tend to progress as a running battle against constant resistance in Whitehall, and, in the course of it, there are hold-ups. Every time there is a hold-up, resources and time are wasted. This is one of the basic reasons for the escalation about which my hon. Friend complained.

Mr. Dobson

The hon. Gentleman refers to hold-ups, which are an important matter. I have here issue No. 7 of Concord Newsletter in which it clearly says that there is no hold-up at all by the Government or anybody else in financing this project. I thought that the hon. Gentleman should make that point clear.

Mr. Hastings

I am glad to hear it. I was coming to something relating to the hon. Gentleman's point, and that is the performance of the teams working on this project. If money is available for the production line as opposed to the pre-production aircraft, that is also good. I am not aware of that, but I hope that it is true.

As I said, I was in Toulouse not so long ago. It is remarkable that of the two prototypes of this gigantic project—one at Toulouse and one at Filton—the French one is within a matter of days of being on programme and the British one is even ahead of programme. This is a fantastic engineering and technological achievement. It is the most extraordinary advertisement for the ability of this country and of the French to work together and to achieve who knows what in terms of advanced engineering. Surely that is something which should be welcomed.

I know that all the people involved in the project would appreciate from time to time some mark of thanks or appreciation from this House, even perhaps from the Public Accounts Committee, for what they are doing. The spirit and enthusiasm on this project has to be seen to be believed. [Interruption.] As my hon. Friend points out, my right hon. Friend is not a cheer leader.

Sir Douglas Glover (Ormskirk)

I was just talking to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). It is not the job of the Public Accounts Committee to be a cheer leader. We have to do something about criticising the accounts, and we carry out that job.

Mr. Hastings

I appreciate that and it leads me to my last point. The Public Accounts Committee is concerned purely with facts and figures. This is the job which it has been given. I have already paid my tribute to the way in which it has done its job. But what is all this about? It is about avoiding the waste of public money. There has been a good deal of talk today about the influence of the Committee. We are too wedded to purely financial ways of thinking: with the barren question—where did all the money go? Of course, the question of where all the money goes is important. I am simply suggesting that it is not the only question, or necessarily the most important we should ask.

Questions of equal importance are those concerning the market and those relating to production control; to value engineering and even to familiarity with the critical path of a project of this kind or the other aviation projects referred to in the Report. If this approach, which is essentially the managerial approach, is efficiently carried out by people who know enough about it, it would certainly go as far to save public funds as the somewhat restricted accountant's approach. With the greatest respect to the Committee, that is what it is restricted to doing, as members of the Committee have made clear. One cannot today any longer in terms of management separate that approach from efficient development and production control.

Mr. Boyd-Carpenter

My hon. Friend is, I think, on a false point. The function of the Public Accounts Committee is broadly, as he has described it, to analyse expenditures and see whether there is waste. We are not, however, an executive body. We are a body which makes its report to the House and to the Government and it is the duty of the House and of the Government, in the light of that, to take into account the other considerations to which my hon. Friend refers. It is a little unfair to the Committee if he blames us for not doing a job which we should be out of order in doing.

Mr. Hastings

My point is not that my right hon. Friend is not doing the job which he has been called upon to do. The Committee is doing it supremely well. I simply say that if it has the influence upon thinking in Whitehall which it is claimed to have, it may well result in some of the delays which I have tried to describe. That is what causes escalation and waste of money. Therefore, the approach should be dual if we want to save public funds in this way.

I heard a frustrated engineer the other day refer to Reports, not only of the Public Accounts Committee, but of the Estimates Committee as well. In a broad way he was talking about this control of the House of Commons as a whole; he said that "it was not a system of control at all but an expression of retrospective amazement coupled with some sound advice, most of which was either out-of-date or ignored." That was, of course, an exaggeration of what takes place. But it is, nevertheless, a proposition upon which we should reflect.

6.22 p.m.

Mr. William Hamilton (Fife, West)

As a member of the Estimates Committee, I am glad to have the opportunity of taking part in a debate on another and more powerful Select Committee of the House. I was interested in the opening remarks of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) when he laid claim, quite rightly, to the importance of the Committee, partly on the ground that it has at its side the assistance of a highly skilled Department, the Comptroller and Auditor General and his staff. The moral of that surely is that if this House is to ensure retaining a measure of control over the Executive, all Select Committees of the House which investigate the activities of the Executive should be armed with similar machinery and have skilled assistance at their disposal.

It is quite right that the debate thus far should have emphasised in large measure the expenditure on expensive aircraft projects. There is always a tremendous outcry in the House of Commons and outside when a project, be it the TSR2 or Concord is cancelled on the ground that the costs are getting out of hand or that, in the opinion of the Government, for one reason or another it is not a sound investment of public money.

My hon. Friend the Member for Westhoughton (Mr. J. T. Price) pointed out in an interjection, however, that vast sums of public money are invested in other industries which are in the nature of things being run down very fast indeed, as we will discover tomorrow. I wonder whether the people who make the outcry when an aircraft project is cancelled will make the same outcry tomorrow when we get the White Paper on the coal industry.

I wish to devote my remarks exclusively to the bulk supply agreements for telephone apparatus and exchange equipment because, as I hope to show, this is relevant to what will happen tomorrow. I have read all the evidence given to the Public Accounts Committee earlier this year, and I would very much like my hon. Friend the Financial Secretary when he replies to clarify the present position. The Treasury Minute dismisses the point in two lines. I would very much like my hon. Friend to give us more information at the end of the debate.

At the time of the giving of evidence to the Public Accounts Committee, a battle was clearly going on between the Post Office and the company supplying telephone apparatus and exchange equipment. Hon. Members who have read the Report will probably know that for many years the Post Office has bought this equipment under five-yearly bulk supply agreements with the group of manufacturers—the ring, as the right hon. Gentleman and the evidence describes them—consisting of A.E.I. and G.E.C., who will now be together, Standard Telephones and Cables, Automatic Telephone Equipment, Ericssons, Plessey, the Telephone Manufacturing Company, a Pye subsidiary, and Phoenix Telephones. Those firms between them—eight, now seven—get 75 per cent. of the Post Office orders, the other 25 per cent. going to firms outside the ring by means of competitive tender.

Within those five-yearly bulk supply agreements the prices are based on investigation of manufacturing costs. The right hon Member for Kingston-upon-Thames made the point about equality of information. He referred to the Lang Committee's recommendations on this point and sought to seek a relationship between the problem facing the Post Office in this regard and that facing the Government in aircraft contracts.

The Post Office made the point that during the period of each agreement the Department gets none of the benefit flowing from increased productivity and improved techniques. That is to say, any changes in price in the five-yearly period are based entirely on increased costs of materials and of labour, but any improvements in techniques or increases in productivity result in increased profits for the firms and no benefit whatever to the public. It is, however, clear to me that the security and magnitude of the market for the private manufacturers must enable the firms to improve their techniques. It is, therefore, eminently fair that those improved techniques and that increased productivity arising from a secure market by a public body should bring some advantage to the public rather than result exclusively in increased and unreasonable profits for private firms.

There is no doubt that there has been an enormously rapid increase in the demand for telephone apparatus. The figures quoted in the evidence show that the industry has had a threefold growth in five years. This makes it abundantly clear that the overheads of those companies must have been reduced considerably and, therefore, their profits increased proportionately. I believe that the Post Office is now determined—I hope that my right hon. Friend is—that some of this will come back to the taxpayer and to the Post Office.

The Post Office made it clear that its supplies of telephone apparatus through competitive tender showed that it could and should have got its supplies from the "ring" at prices well below what it was paying—I think about 13 or 18 per cent. less. The Post Office then sought to negotiate these lower prices with the "ring", although it did not have access to all the costing information to which it had a right. One company reorganised its accounting system; I do not know whether this was done to mislead the Post Office or to prevent it from getting the costs information on which it could negotiate.

Presumably as a result of these difficulties and differences, the Post Office decided, in May, 1965, to try to terminate the bulk supply agreement which is due to expire in March, 1968. The manufacturers refused to terminate, as they were entitled to do. This is the position now, and the Public Accounts Committee, quite rightly, agreed with the Post Office's intention not to renew the bulk purchase agreement for telephone apparatus. It is clear to me and to anyone who has read the Report that the Post Office has been taken for a ride for far too long by these private companies.

Much the same story can be told with regard to exchange equipment on the supply side. Substantially lower prices were negotiated with firms outside the "ring" than with those within it. The inability of the Post Office to obtain adequate costing information clearly resulted in excessive profits—I think that these were the actual words of the chairman of the Committee—being made by the "ring" companies.

The Post Office estimated, on the basis of such information as was available to it, that the prices for the second half of the five-year period—that is, from 1st October, 1965, to March, 1968—should be at least 10 per cent. lower than the prices paid in September 1965. That would have resulted in about £6 million being clawed back for the public from these private companies. But the private companies have not agreed and there is a deadlock on this. Consequently, the Post Office has proposed independent arbitration, and I should like to know from my hon. Friend what progress has been made in this direction since the Report was published.

Meanwhile, of course, the Post Office requirements in this field are growing at such a rate that the demand simply cannot be met by the existing companies. We have the absurd situation of an intensively technical industry, the Post Office, being compelled to buy what is called Strowger electro-mechanical equipment, which is either already obsolescent or which will be very shortly, over the next several years, simply because the modern electronic equipment is not available in sufficient quantities. It is also ordering quantities of what is called crossbar equipment to bridge the gap between the Strowger obsolescent equipment and the modern, electronic equipment which it hopes to get in a few years' time.

This whole problem has been referred to the Industrial Reorganisation Corporation which, I understand, will inquire into the telecommunications industry, with special reference to Post Office requirements. I think that the House will agree that it is a unique situation when a public corporation, the Post Office, is a buyer on a huge scale but has a supply market which is unable to meet all its requirements. Questioning by my hon. Friend the Member for Heywood and Royton (Mr. Barnett) in the Committee revealed that the Post Office was exploring possibilities of establishing its own factories to supply its needs, especially in electronic exchange equipment.

This field of industrial activity clearly has enormous growth potential. It is not a question of taking business away from existing firms but of adding to the industry's total potential. All the evidence available to me and to the Committee suggests that there is an overwhelming case, in the wider national interest and in the narrow interests of the Post Office, to seek to establish some of this new, exciting, scientifically based industry in development areas as publicly-owned establishments. This problem relates directly to what we will face tomorrow in the White Paper on fuel policy.

The Post Office record in placing orders in development areas is not a bad one. In answer to a Question I put on 14th December last, I discovered that, in 1963–64, the Post Office placed contracts in development areas to the value of rather less than £13 million and, in 1965–66, rather more than £27½ million. Thus, it has more than doubled in the last three years. In Scotland, with which I am particularly concerned, the figure was £3½ million in 1963–64 and £5¾ million in 1965–66.

However, the Post Office investment over the next five years will be about £2,000 million and, therefore, if the present trend continues, the development areas are bound to get a bigger amount than the figures which I have given. However, I hope that the Government will go much further. My right hon. Friend the Postmaster-General represents one of the worst hit development areas and I hope—I am sure—that he will exert all his endeavours to ensure that his development area and the others which will be hard hit by tomorrow's announcement will get an ever-increasing share of this vast public investment by the Post Office.

6.39 p.m.

Sir Edward Boyle (Birmingham, Handsworth)

I will not try to anticipate tomorrow's White Paper, which promises to lead to a lively and well-attended debate. I want to deal with the principal recommendation in the Special Report on Parliament and the Control of University Expenditure, namely, that, with effect from the beginning of the current quinquennium, the Comptroller and Auditor General should be given access to the books and records of the U.G.C. and the universities. This is an important recommendation, and while, as the House knows, from this bench I have already expressed our agreement with it, nevertheless we should not let this matter pass without a little thought about its importance and what it entails—

Mr. Mendelson

indicated assent.

Sir E. Boyle

I am glad to have agreement of the hon. Member, who raised a pertinent Question last July when this matter was announced, and to whom I shall refer later.

Universities, surely, are institutions of very great importance in our society. They have three functions. There is their teaching function, their function as powerhouses of learning and their function as the home of a ferment of ideas. Anyone who has visited some other countries, for example South Africa, should be in no doubt at all as to the value for any community of a free university system. Sir Eric Ashby put these matters in words which could not be bettered when he said some years ago, Universities have a dual loyalty. Everyone agrees that they must serve the society which maintains them; but those who understand universities know that this service cannot be fulfilled unless society grants them certain privileges so that they can be loyal also to the international brotherhood of universities. They are within the State, yet they must preserve an individuality apart from the State. They cannot exist except in the matrix of politics yet they must remain out of reach of politics. These words are true, and we should never forget how much we have owed to the present university system, to the work of the University Grants Committee and to the freedom which universities have enjoyed.

Nevertheless, having said that, I share the view of my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and also the view of the hon. Member for Sheffield, Heeley (Mr. Hooley), that the arguments for the Committee's recommendation are very strong, and I join most warmly in the congratulation to my right hon. Friend and to the whole Committee for the very thorough way in which they have examined the matter.

There are three arguments. The first is the sheer amount of money involved, the fact that the recurrent and capital grants now total well over £200 million. Secondly, there is a point which I have raised in the House before, that while the universities have a strong incentive to be economical, they may not always be so good at being economical. There is a need to encourage professionalism in all those activities in which universities have to engage in common with other institutions, of higher education.

There is also a third point which is important—that, after all, the universities now have their essential place within our national education system. The hon. Member for Heeley has rightly pointed out the extremely high rate of increase in the demand for university places which we shall see between the mid-1960s and the mid-1970s. It is a remarkable thing that, despite the very rapid increase in university places in the 1960s, competition for a university place has increased, is still increasing, and, on the Government's plans, will go on increasing in the years ahead. Perhaps I may sum it up in this way: while we all recognise the special concern and the special consideration which any society must accord to its universities, they cannot hope to remain a sort of roped-off enclosure in our education system. They have their place in the whole of that system.

Having stated those general reasons why I agree with this recommendation, I should like briefly to consider some of the anxieties which have been expressed. I thought that my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) put them very fairly in his speech this afternoon. He spoke of the fear of publicity. He thought that perhaps in universities there was too much fear of the unknown, and there I respectfully agree with him. He also talked about the fear lest the administrative interest should outweigh the academic interest. I accept my right hon. Friend's view that this need not happen—in other words, that this recommendation is in no way inconsistent with a concern for academic freedom, freedom of teaching methods, freedom to pursue research and, above all, freedom of appointments. I am one of those who regard freedom of appointments within a university as probably the most essential and crucial academic freedom of all, and it should go out clearly from the House that this is our view, too, and that none of us here has the slightest desire to interfere in the matter in particular.

But there are two other anxieties to which I would refer briefly. Giving evidence, the noble lord, Lord Butler, gave some arguments for suggesting anxiety about the timing of this reform. He pointed out that we are going through a period of unparalleled expansion and that the universities would regard this as one more imposition on them at a time when they are already strongly pressed. I respect this argument, but I am bound to say that one can always criticise the timing of most changes and, personally, I suspect that this argument might equally well have been used in a few years' time.

Mr. J. T. Price

A last-ditch argument.

Sir E. Boyle

If the hon. Member will turn to what the noble lord Lord Butler said in answer to Question No. 460, he will not just dismiss it as a last-ditch argument. Nevertheless, it is not one which should be decisive.

There is one other consideration which we should always bear in mind, and that is the fear that the effect of this change will be that certain rather fussy inquiries will be pursued over-zealously. This is where I find myself sympathising with the point made by the hon. Member for Penistone at the end of July. Let us remember that the universities are not only heavily burdened with teaching duties but that they are also carrying out a great deal of most exciting research, some of it in pure science and applied science and some in the social sciences, too—some of it of great value to us in the House. Far more hon. Members than ever before are grateful to the universities for help which they receive in their work. Let us not, therefore, permit this recommendation to result in universities being burdened by fussy inquiries which are not strictly necessary.

Mr. Mapp

I bear in mind the right hon. Gentleman's great knowledge on the subject. Those in the Public Accounts Committee heard Lord Butler confirm the fears about the future. Is not the right hon. Gentleman now expressing precisely the same fears for the future—that the activities of the Comptroller and Auditor General will lead to the problems which he has in mind?

Sir E. Boyle

I am saying that the fears expressed by a number of noble Lords do not in fact convince me that this change is a mistake. On balance, I am quite certain that it is right—and that the House is right—to accept it. I am merely saying that we should not completely dismiss all the arguments put to the other side by the Committee as of no account. Let us, above all, remember that universities are exciting places. They have not only a teaching function but they are places where new knowledge is developing and where exciting research projects are being carried out, and we do not want to put unnecessary burdens upon them by requiring them to answer unnecessary questionnaires on matters which may not seem of great relevance.

Mr. Mapp

May I make a comment both about what the right hon. Gentleman said about universities and about what was said earlier in the House? Are we to carry on indefinitely to allow some ad hoc body to spend over £200 million a year, with no supervision from the Comptroller and Auditor General? I would also add that what is proposed may be acceptable for the next period, but it must not be assumed, as the right hon. Gentleman did assume earlier this afternoon, that we believe that we are building some permanent fabric in the University Grants Committee to last for ever. This is a purely interim decision, and many of us reserve the right to think against about the future of the universities.

Sir E. Boyle

I am interested that the hon. Member has mentioned the University Grants Committee, because I shall now turn briefly to precisely that subject. We should consider the implications of this change for the University Grants Committee and its relationship both with the Department and with the universities. I notice that that was also the view of Sir Herbert Andrew when he gave evidence to the Committee. Answering my right hon. Friend, Sir Herbert said: I think the relationship between the University Grants Committee and the Department would have to be worked out again, and I think it would be difficult". This is an important subject because clearly the responsibilities today of the U.G.C. are greater than ever before. As I pointed out in the House when discussing universities in January, 1966: … in certain ways the U.G.C. must play a more positive rôle in future quinquennia."—[OFFICIAL REPORT, 26th January, 1966; Vol. 723, c. 272.] I said that the U.G.C. would have to concentrate resources more to rationalise the provision of costly equipment. The same is true of the Department. The Department of Education and Science on the university side must also today play a more positive role. It is important, therefore, that we should bear in mind the position of the U.G.C. and its future functioning. I strongly believe that we must keep the U.G.C. machinery. It would be wrong to try to take this completely into the Department; the U.G.C., as a buffer, still has an important part to play.

Two interesting suggestions have been made. My right hon. Friend the Member for Reigate suggested formalising the place of the U.G.C. in our scheme of things rather more precisely than has been the case in the past. I am sorry if a gave the impression in an intervention that I was totally against his proposal which I recognised to be an important one. However, I believe that there would be difficulties about this, because we might then have to be more precise than we wanted to be about the exact scope of the U.G.C.'s functions. However, my right hon. Friend raised a useful point and we should not lose sight of it.

On another suggestion I should like to be more definite. Paragraph 25 of the Report just considers the suggestion that, in future, relative expenditure should be accounted for not by the D.E.S. but by the U.G.C. That is a bad idea. To me, that would rather nullify the effect of having a single Department of Education and Science and I am glad that the P.A.C. did not pursue that matter further.

A corollary of this recommendation is that surely all those concerned will need to strengthen their professional infrastructure. The U.G.C. will need a stiffening of professional staff if it is to fulfil its rôle in the future. Exactly the same is true of the Universities Branch of the D.E.S. Even more important—and this is a point I wish to stress —this will be true of the universities themselves.

The time has come, I believe when the universities will need one really top-class full-time professional adviser. I very much wonder whether the relatively informal arrangements of the Committee of Vice-Chancellors—their relationship with the Department and the U.G.C.—should continue unaltered in future. We know that the teachers and that local authority associations have their own professional spokesmen. Much as we may at times find ourselves in disagreement about this or that point, this has, on balance, been a good thing for the education service and I believe that the time has probably arrived when the universities want a really first-class professional spokesman constantly to watch their particular interests.

When all is said, the successful working of the education service, as of so many other services, consists in harmonising genuine conflicts of interest which arise from time to time. It is, therefore, right that everybody's point of view should be expressed as vigorously and clearly as possible.

An anxiety which I have heard expressed in the universities is that while we in this House may start—they accept this—by being concerned for academic freedom and while, in the early days of its working, the P.A.C. will be particularly careful to keep to those functions which the universities carry out in common with other institutions—nevertheless there is the nagging fear that, having got its foot in this door, the House of Commons will pursue inquiries that go wider and deeper than any of us have in mind tonight.

I would answer that anxiety by saying that this is being too pessimistic. I am certain that hon. Members who know what we owe to the universities, and who have many friends among university faculties, understand where the shoe pinches for them—not least where it pinches in terms of resources—and that we realise just what are some of the essential freedoms which we must preserve if the universities are to go on making their great contribution to our society.

I conclude on the thought that this change is a right one. Anxieties were expressed to the Committee. Some of them were justified and deserve respect. However, I am sure that these new arrangements can work and that all hon. Members realise that if we, as a House, want to be listened to by the universities, we ourselves must, in turn, listen to their complaints and understand their point of view.

6.56 p.m.

Mr. Edwin Brooks (Bebington)

As one who spent his entire professional life in university teaching before entering this House, I have, as usual, followed with great interest the remarks of the right hon. Member for Birmingham, Handsworth (Sir E. Boyle).

It is fair to say that, like many of my colleagues on the Committee, I approach this important recommendation relating to university accountability with considerable caution. Many of my colleagues in the universities were fearful of precisely the point to which the right hon. Member for Birmingham, Hands-worth referred in his concluding remarks; the fear that this may be the thin end of the wedge and that there may be difficulties and hazards ahead which none of us in this House would now endorse, even if we were able to foresee them.

The investigations of the Committee and its conclusions as expressed in the Report left me in no doubt that this is a sound decision and that the Government were right to accept it. I do not wish to add to the arguments which have already been so well deployed by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), in addition to the right hon. Member for Handsworth—that is, except to say that it has never seemed to me advisable to defend freedom with mystery.

If it is the case that the decisions of universities are competent and above board, there seems no hazard whatever in revealing those facts to the public through Parliament. I should have thought that there may, in a sense, be an even greater defence for freedom by making the reasons which underlie decisions explicit—rather than giving the impression that there is some sort of special mystery, specific to the universities alone, which must never be tampered with or inquired into.

I do not wish to spend more time tonight on this matter, which has already been admirably discussed by other hon. and right hon. Members. I wish, instead, to refer to four general points which arise out of the P.A.C's Report. I can claim no originality for these general points because virtually all the correspondents of the responsible newspapers were putting forward these types of conclusions and were asking these questions in the early period of August, following the publication of the Committee's Report. They are matters which have been under discussion for many years.

First, there seems to be arising a general problem of the exercise of responsibility by the Civil Service, one of our great institutions of democracy which, perhaps, has for long exercised its benign powers precisely because it has been able to avoid the hurly-burly of public life and party political controversy. Inevitably, however, as we see from many of the problems which were raised during the Committee's investigations, it is difficult today to avoid the nagging fear that perhaps the chain of decision has become so attenuated and complicated that it is no longer possible to identify a particular personal weakness or incompetence which may cost the taxpayer many millions of £s.

This first point can be developed by reference to the famous New Scotland Yard escalation in costs. In The Guardian on Thursday last there was a short news item, which clearly stems from the Treasury Minute, stating that the Home Office is in general satisfied that the final cost of rehousing New Scotland Yard was necessary and reasonable. It said that the Home Secretary … was satisfied that the Receiver fully appreciated the need for economy and exercised careful oversight. It added that the Home Secretary … had no reason to think that the eventual bill was excessive in relation to what was needed and to the value obtained for it.' With the greatest respect, that seems to miss the point of the Committee's criticism. At the end of the day, following the expenditure involved, it may be said that the building, or whatever it may happen to be, was well worth while, but we have to ask whether the decisions would have been taken in the way they were taken had the full financial implications been known when the decisions were being taken. We are faced all the time with alternative courses of action, and it is very important to know, at the moment of choice, precisely what the courses of action will involve in terms of cost and in terms of benefit.

If it is the case that decisions involving the expenditure of hundreds of thousands of pounds or, in other cases, hundreds of millions of pounds, are being taken without any sort of accurate forecasting of costs, it is not an adequate answer to say that, nevertheless, this amount of money was in retrospect justified. There is far too much of this post hoc rationalisation, and far too much retrospective justification for reasons that can be provided only by hindsight.

There are many questions that should properly be asked about the Home Office attitude to this matter and, more particularly about the earlier attitude of the Receiver's Department. Why did not the Receiver's Department tell the Ministry of Public Building and Works precisely the sort of building needed, and what sort of equipment would be involved? Why, for that matter, did not the Ministry of Public Building and Works ask for what sort of building it was being requested to supply cost estimates?

We then come to the crucial question: why was there so much haste in trying to find a new building? The Treasury Minute states: Consistent with the need for an urgent move and within the area open to consideration, no site or building could be found, other than the proposed premises in Victoria Street, which would have provided the accommodation required. The important phrase in that statement comes at the beginning: Consistent with the need for an urgent move …". There was no need for an urgent move.

This is not now a question of trying to justify a remark of hindsight, because on 1st August, 1963, the then Minister of Public Building and Works described the Holford Plan as: A preliminary Report … a valuable starting point … will not represent a firm plan for development of the site, let alone a design. He added: We have not decided to carry out a particular scheme at any particular estimate of cost. So August, 1963, should have been a very important moment in the whole history of this project.

Meanwhile, what sort of search was made south of the river? That question has already been asked by the right hon. Gentleman the Member for Kingston-upon-Thames, and I will not develop it. But, again, my reading of the evidence, and my reaction to it as I heard it in the Committee, squares entirely with his interpretation. I am not at all happy that the Treasury Minute does justice to the. nature of the Committee's criticism.

Let us return to the chronology of events, because it is here that we must ask whether the Treasury Minute fairly exonerates those whom the Committee was, in effect, criticising. According to the evidence we were given, the Holford scheme for the Bridge Street site appeared in July, 1963, and then in October—or as later corrected, in all probability, November 1963—it was decided that the old site would not suffice, so the Home Office was asked for permission to negotiate for the lease of the Victoria Street building. That was after the statement made by the Minister of Public Building and Works that there was no great urgency whatsoever.

Several months after, the Home Office was asked to take a decision. The Home Office did not take the decision quickly, for which no doubt it could be forgiven, but it would be more understandable that it made a mistake if under great pressure of events. Authority to acquire the Victoria Street site was not granted by the Home Office until April, 1964. Was there any careful check before April, 1964, on the nature of the building which might have enabled the Home Office, or those responsible for these decisions, to arrive at some fair idea of what was involved?

I refer here to question 2793 in the Minutes of Evidence of the Committee's Report. The question was put by me and was, basically, the question I have just been discussing—the nature of the investigations carried out between late summer 1963 and spring 1964. At the end of the question I said: … it was, surely, all the more imperative that before the concrete was poured there should be some preliminary assessment of the details of adaptation which would be required?—Except that we had no right of access to the building until we signed the lease. This was a contract between the Westminster Trust and the builders. We could only peer over the hoardings as we walked down Victoria Street. We had no means of looking in detail at the building or examining the plans. With the greatest respect, that seems to me a most lamentable way of conducting the sort of inquiry that should have been necessary.

The Home Office was given many months in which it could ponder whether or not there was any urgent need for the acquisition of this site, and whether, if it still felt that there was, it was necessary to proceed in the way it did. At that preliminary stage, the Home Office should have made inquiries about the nature of a building that was to go up so rapidly, and which has, we now know, involved such a considerable cost burden later.

I want to refer to my second general point quite briefly because it has been dealt with by the hon. Member for Oswestry (Mr. Biffen)—though I always feel on this unique occasion of the year that I should refer to him as my hon. Friend the Member for Oswestry, because he and I share so much common ground on the Concord project. He has said a great deal about Concord, and has very fairly put the basic issue. I want to focus upon the particular matters which came to the Committee's attention this year.

It would be superfluous to go over once again the well-tried arguments over the original decision, and so on, but once again we see how this ambiguous treaty cast a shadow, and still cast a shadow, over a sensible discussion of what is involved. There was a little altercation earlier this afternoon, in which the hon. Member for Oswestry was involved, as to whether or not the French accepted the principle of sharing intra-mural expenditure. On this, we find the following exchange in question 1357: Do you take this expenditure"— that is, intra-mural expenditure: into account from the point of view of cost-sharing with the French?—At present, no. We certainly think that we should although it would be fair to say that the Treaty is ambiguous on this point and it can be read either way if you look at the small print and if you want to be difficult. That point applies to the whole treaty: there is surprisingly little small print in the treaty and there is not enough large print, which is one of the problems.

If intra-mural work sharing was conceded this might involve a penalty, since specialist facilities are not evenly distributed between the two countries. I will quote a section of the answer to question 1364. we might be able to do it, but it would almost certainly be a penalty that would not be worth paying because what you want to do is to get the right Research Establishment doing the work for which it is properly setup. I fully agree, but surely this general principle of using the specialist facilities which the country has to optimum advantage applies not only to intra-mural research and development but right across the whole project. This is one of the facts which the hon. Member for Oswestry had in mind when he said that this must not be the prototype for further joint developments with the French. We must negotiate on a different basis.

On the Concord the Committee's Report says that the Committee was told for the first time that £28 million of extra expenditure specifically geared to Concord was to be added to the £500 million given last year. There was in fact during the investigation some exchange over whether or not the Committee had been kept in the dark last year. The answer given on this point during the current Session indicated that on previous occasions, including last year, the Committee had been given to understand that there was intra-mural expenditure incurred which had not been aggregated in the £500 million.

Out of curiosity, I looked at last year's Minutes. At the sitting on Tuesday, 21st June, 1966, Sir Richard Clarke, the Permanent Secretary, was at pains to point out that there was intra-mural expenditure entailed quite distinct from extra-mural expenditure, but the exchange refers only to infra-mural expenditure at the R.A.E. He said that up to 1966–67 it was just short of £11 million—£10,955,000. In Question 641 he said: The previous estimates that were quoted, I think, in last year's Comptroller and Auditor General's Report were for R.A.E., £3.9 million to 1970–71. We are now looking forward to 1976–77 to which the estimate is, or I say nearly £11 which shows that as the Concord work develops the cost becomes greater through this period. Even accepting this, it leaves out of account altogether the extra intra-mural expenditure which the Comptroller and Auditor General's Report indicates is incurred for Concord research at the National Gas Turbine Establishment. There is a discrepancy here. Last year the Committee was told that the total intra-mural expenditure at the R.A.E. would be of the order of £11 million, yet this year that expenditure is given as £15.4 million, and the costs are for the same period up to 1976–77.

It is not good enough to have the Committee told one thing one year and another thing in the following year, and to be told that it should know about all this because it has been given the full facts. We have not been given the full facts. It is about time that the British public knew the full facts. There is obviously considerable confusion about this. With respect to my hon. Friend the Member for Bristol, North East (Mr. Dobson) it is certainly not the case that we are concerned with only £28 million which will be one-third recouped on sales. What the Committee is concerned about is that there will be only one-third of £500 million plus recouped on sales. There will be a subsidy from the British and French taxpayers together of at least £400 million. This is something which the British public should know and they should then decide whether or not they want to go ahead with this project.

Mr. Dobson

I do not dispute what my hon. Friend is saying. His figures are accurate, but is it not also a fact that the development is over a 10-year period, which alters things considerably?

Mr. Brooks

I suppose one could say that from 1962, when the original treaty was signed, to 1973 is the period under review at present, but there is no terminal date given in the treaty. There is no guarantee whatever that if the French decide that they wish further expenditure to be incurred on later versions of Concord subsequent to 1973, we would not find ourselves involved in considerable further research and development charges. It is this ambiguity about the terminal date which is one of the problems which those of us who have grappled with this treaty have been aware of for a long time.

Thirdly, I refer to the Buccaneer project. That has not been mentioned to a great extent today. I am not sure whether it has been mentioned at all. There was a great deal of Press publicity given to hints that there may have been something very odd going on. Members of the Committee were baffled at the account, given in the interrogation, of the Ministry's behaviour when it rather appeared that the Ministry had been given information which, if it only knew how to use it properly, would have led to a far more favourable cost for the follow-on order for the Buccaneer. At a time when we are pressing for equality of information on the ground that this would help the State in negotiations with private enterprise over these very complex technological matters, we are apparently offered information yet look a gift horse in the mouth.

Reference has been made to the sidelining of information. One appreciates that, particularly on commercial problems dealing with commercial firms, there must be an element of discretion in revealing facts and figures. The Committee would wish to honour that obligation, but at times we are quite illogical in the way in which we in Parliament keep information from the public. One of the Committee's problems in dealing with this type of contract is that of finding and revealing the production statistics of the Buccaneer on which the Ministry of Defence is quite discreet. We have elaborate figures given of the F111 order and the number of proposed Anglo-French swing-wing planes, yet when we are dealing with our own projects the public must not be told.

My final point concerns the Chieftain tank. Again this has not been referred to in the debate, but it was a matter which the Committee investigated in some detail and there are one or two general points of interest which can be derived from it. The increase in the cost of the Chieftain in the development area—where the private contractor was producing part of the split order which had been placed for the Chieftain—was put down to an increase in wages. Broadly, the split order was justified on the grounds that work should be brought to the development area and, far from involving £1 million extra as originally anticipated, in the event it led to an extra £2 million being involved. This was said to be due to wage escalation in the contracting firm of 65 per cent. in two years following the placing of the contract.

It was said that this enormous escalation in wage rates overtook the calculations of costs on which the original contracts had been founded. One could conclude from this that placing the order in the development area revealed a considerable shortage of skilled men in the area, and unless there were simultaneous training schemes this would lead to wage inflation. On the other hand, one could have the unworthy suspicion that the contractor had relaxed with the feeling that the public would foot the bill anyway. It is important that we do not accept social or defence reasons as a justification for relaxing cost effectiveness.

Having said all that, the Ministry may properly be challenged on what it has since decided. In the light of an examination of comparative costs as of now between the original contractor and the Royal Ordnance Factory, whose costs have been a good deal lower, it has been decided that the follow-on order shall be met entirely by the R.O.F. It may well be that there is this differential in costs, but it is a rather odd policy that once a firm is tooled up for production of the tank in a development area, one then cuts back at the half-way stage.

In any case, I am not entirely sure that the contractor was given a fair crack of the whip by the Government. For example, Question 3400 reads: How is it, then, that the contractor fell behind even on this? This was in relation to delays in the supply of the tanks. The answer was as follows: When the power pack began to come in, to dribble in, it was held that the Leeds factory"— that is, the Royal Ordnance Factory— was better equipped to deal with production and they tended at that stage to be favoured in getting such engines as there were going. Who favoured them? If the Government are deciding that there is to be this preferential treatment for Royal Ordnance Factories, it seems to me that the contractor can rightly object. Indeed, the contractor in this case did object and claims in a document sent to members of the Committee of Public Accounts—I will not mention the name of the firm, because it has been put in the Report with asterisks—that the firm concerned were involved in increased costs because of delays imposed upon them by the Department. The Royal Ordnance Factory was allowed to make faster progress: for example the firm concerned had to wait for sealed drawings, and free issue items in short supply were diverted to the Ordnance Factory. These are serious allegations to make. I hope that an answer will be given to them. It begs the question of what sort of relationship we want to establish between the Government and private industry. As one who has a good deal of confidence in the rôle of Government in principle. I am bound to say, after 18 months service on the Committee of Public accounts, that I have far less confidence in its rôle in prictice. We know that the corridors of power have led many proud projects to the pauper's grave. I hope that in the years to come we shall have a far more rigorous sense of cost accounting on the part of those who have relations with private industry.

Several Hon. Members rose—

Mr. Speaker

Order. I would remind those whom I call that Members have been waiting all day to attempt to get into today's debate.

7.23 p.m.

Mr. Stanley R. McMaster (Belfast, East)

Mr. Speaker, in view of that remark by you, I will not follow the hon. Member for Bebington (Mr. Brooks), who is a member of the Committee, into the details of his criticism. I want to deal with one particular point mentioned by the Committee and in the Treasury Minute and which has been mentioned by hon. Members during the debate.

I want, first, however, to add my voice to those of other hon. Members who have congratulated my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and my colleagues who served on the Committee on the very good work they have done and on the care they have taken in preparing the Report.

I want particularly to refer to those sections of the Report relating to the Ministry of Aviation and to Short Brothers and Harland Ltd. My right hon. Friend said that perhaps it was wrong for the Government to place an order for the Belfast when it had so little support from customers. I draw the attention of the House to the fact that many aircraft—I have a fist of them—are ordered when there are very few orders placed initially and in some cases when there are no orders at all.

In the case of British aircraft, I give the following figures: Avro 748, no orders when the decision was originally taken to produce the aircraft; the Argosy, no order, the BAC 111, an order for only ten, as with the Belfast; the Comet, an order for 20; the Trident, an order for 24; the Handley Page Herald, no order; the Hawker Siddeley 125, no order; Vickers Vanguard, an order for only 20; and for the Viscount, a very successful aircraft, there were no orders either.

For overseas aircraft, the following figures refer: Boeing 707, there were no orders when it was originally decided to produce it; Boeing 737, no orders; Canadair CL44, an aircraft not unlike the Belfast, orders for only 12; DC8, no orders; Lockheed Jet Star, no orders; and the Sud Caravelle, no orders.

In all those cases, as in many others that I could quote, there were no orders at all when the decision to commence production was taken.

Sir D. Glover

The slight difference is that in nearly all the cases my hon. Friend quoted, although there were no orders at the time, the companies concerned thought they could sell some. In this case the company concerned thought that it might sell 20 but in fact sold none.

Mr. McMaster

I accept that point. I shall deal with that in a few moments. I am now answering the point that initially there were no firm orders when the decision was taken to go ahead with many aircraft such as the Hawker Siddeley 748, the 711, the Jet Stream. Where there was a large order book to start with covering a large percentage of the aircraft's development cost—the VC10, the Vanguard and the Trident—these aircraft have lost a lot of money for the companies which produced them. It appears from recent experience to be no test of the success of an aircraft that there should be a full order book when production is commenced.

In the case of the order for the Belfast, I very much regret that no voice was heard from the company giving evidence before the Committee. This is a somewhat unsatisfactory procedure, because, when it comes to giving evidence before the Committee, the Ministry concerned and its officials who have to negotiate with the company when placing the contract, and who therefore are in the opposite camp to the company, have to make not only their own case but also the company's case. Arising from this, the company believes that some of the comments in the Committee's Report are, perhaps, not as fair and just to the company as they might be.

Mr. Boyd-Carpenter

As I told the House earlier, it is always a difficult question to decide whether to summon witnesses from outside the public service. The criticisms contained in the Report are directed solely to the Department and not to the company. It is also material, perhaps, that the company is predominantly Government-owned.

Mr. McMaster

I am much obliged to my right hon. Friend for that intervention. I intend to deal with the Report and some of the points in it. I admit that many of the comments are directed to the Treasury Bench, but there is a certain implication, as anyone who reads the Report and the Treasury Minute will realise, that this company is not as efficient as it should be.

I regret this on two grounds. First. the company is engaged in many private profitable ventures, collaborating with other countries. These ventures include collaborating with Fokker on the F28, producing Phantom parts, and successfully selling missiles abroad. Criticism, even if not direct but only implied, can only damage the company's prospects in such collaboration. Indirectly it damages the entire British aircraft industry, because it implies that the British aircraft industry is not as efficient as it might be.

I back up what I say by pinpointing one or two points in the Report. I shall endeavour to keep this part of my speech as brief as possible. On page 19 of the Report, paragraph 67, it is stated: The Government's decision to place some of this work with Shorts, notably that relating to the Belfast and V.C.10, was based primarily on the need to assist the economy of Northern Ireland. One can assume that there are other cases where the Government have sought to help Shorts. But the other work performed by Shorts has been won against ordinary competition outside. This work includes the production of Skyvan, work on the U.S. Phantom aircraft and also on the Fokker short-haul jet airliner. All this work has been won in fair competition. It is only fair to the company that this point should be made.

Mr. Boyd-Carpenter

I do not want to keep interrupting the hon. Gentleman, but it is not right to make this criticism of the Report. As to the example of the Skyvan, my hon. Friend knows very well that that aircraft was only produced because the Government made financial aid available to that firm and financed the production of this aircraft.

Mr. McMaster

There are arrangements whereby the Government will support, up to 50 per cent. of the cost, any British aircraft company manufacturing aircraft for sale abroad, and Shorts has not received this type of assistance. It is clear that the Government can advance up to 50 per cent. and has done—

Mr. Boyd-Carpenter

Can, not must.

Mr. McMaster

My right hon. Friend says "Can". In fact, in very many cases, some of which I can mention, the Government have contributed to the cost of developing other aircraft. The development of the Skyvan falls under this head. Short Bros. has a profitable record. Before 1959 it was making a profit on its capital comparable to that earned by other firms in the aircraft industry. Between 1950 and 1959 there was an average profit of 15 per cent. on capital. This profit came back to the Treasury which owned 70 per cent. of the shares. A dividend was declared.

I agree that the order for the Belfast has proved disastrous to Shorts but I would point out that when the Belfast was originally ordered there were high hopes that it would be sold abroad. The development costs were spread over 30 aircraft. Interest in the aircraft was shown in the United States, Pakistan, Afghanistan and in the United Kingdom. If the development costs could have been spread over 30 aircraft instead of only 10 aircraft, it could have been sold competitively. It is the largest of its type in the world and it has good operating costs. This is accepted by the Government. If one refers to HANSARD of 11th and 23rd February, 1959, 16th July, 1959, and 25th July, 1960, one sees there that the Minister accepted that there were prospects for sales of the Belfast. It was ordered because of its unobstructed fuselage and its volumetric capacity. It met R.A.F. requirements and there was an expectation that further aircraft would be ordered by the R.A.F.

We already know that the R.A.F. is ordering, or the Government are ordering for the R.A.F., 66 Hercules transport aircraft to meet a tactical requirement and an additional four Hercules to meet a strategic requirement such as is provided by the Belfast. The reason why the directors of Shorts felt that they could sell more than the initial 10 aircraft to the Government was, first of all, that 10 were inadequate. When one allows for the number used in training and the number damaged—allowance is always made for that consideration by the R.A.F.—10 are totally inadequate to meet the strategic transport requirements of the R.A.F. It is the first end-loading air freighter of its kind in the British Forces. It contained such weapons as Blue Streak, for it was at that time found necessary to have an aircraft capable of carrying this very large missile.

Obviously the Hastings and the Beverley were coming up for replacement and there was a prospect that the Belfast might be used. It is only fair to say that strenuous efforts were made to sell this aircraft in the civil field and to exploit its military potential. These prospects were badly damaged when the decision was made not to go ahead with further development of the Tyne engine. Most aircraft benefit if their performance can be stretched, and this was a new engine with greater capacity, giving greater range and lift. This company has also collaborated with other companies, including Boeing, Lockheed, Bristol, McDonnell and Canadair.

It is suggested in paragraph 70 of the Report that the wage rates paid by Shorts are high in comparison with wages paid generally in Northern Ireland. Again this does not seem to stand up to examination. The wage rates paid by Shorts compare with the general wage rates in Northern Ireland in much the same way as wage rates paid by aircraft-producing firms in the north of England compared with other wage rates. if one compares the wage rates carefully—the figures are available from the Ministry of Technology—one finds that throughout the United Kingdom wage rates in the aircraft industry are slightly higher than other skilled wage rates. When one compares the figures in Northern Ireland one sees that the comparison is exactly the same.

The company has been successful in other fields, particularly in the development of the Seacat, and it has won wide commendation and praise for this work. Therefore, the company feel that the use of such words as "assistance to Shorts"—to quote from paragraph 70—is hardly fair to the company. The company does not need assistance. The Government ordered these 10 Belfast aircraft and refused to follow up with an order for more. Of course, one would like to see this loss, written off. But in its other work the company is fully competitive, and it would be damaging to the company, with its great history of aircraft manufacture, if as a result of this Report anything were done which damaged Shorts' ability to remain in the aircraft industry.

The Report specifically mentions in paragraphs 71 and 72 the late delivery of the Belfast and the shortfall in performance. I should like to draw attention to the undoubted fact that modifications have been carried out on the Belfast which have almost solved the problem of this shortfall in performance, or drag. I think the Government have appreciated this fact. The only way in which the Short Belfast falls behind the original requirement is in a 4 per cent. drop in speed—that is, a drop of 12 knots in an operating speed of some 300 knots. A drop of 4 per cent. in speed is negligible in an aircraft of this size. There is no drop in the range or in the load-carrying capacity. This was discovered as a result of tests, and modifications were carried out as long ago as January, 1966. I believe the Government were made aware of this, and it was only after that that they decided to order the four Hercules aircraft. It is unfair to charge Short Brothers with the cost of this order for Hercules aircraft for Strategic Command when it was known that the Belfast would be fully up to performance after the modifications had been carried out.

Five of the Belfasts are now in service with the R.A.F. The other five have been built and will be modified. The Government might very well have decided, as they were ordering 66 other Hercules aircraft, to use some of these aircraft rather than order four more new Hercules and then, as is mentioned in the Treasury Minute, suggest that the extra cost of the purchase should be made good to the Exchequer. This is totally unfair to the company. Once the modifications had been carried out, there would be no ground for any penalty to be exacted from the company for the original shortfall in the Belfast.

The same considerations apply in regard to the automatic landing equipment, paragraphs 73 to 77 of the Report. This point has been made earlier and criticism advanced about it, particularly by my hon. Friend the Member for Oswestry (Mr. Biffen). It raises an important question in this connection. Is it right that the Government should go ahead and back expensive schemes like the Belfast autoland system although the final cost may work out to be a great deal higher than the original estimates? This is a clear example. Again, I feel that there is a certain amount of erroneous criticism of Short Brothers in the Report. The automatic landing equipment was not the company's prime responsibility it was being developed independently. The figures quoted in the Report relate to two or three different types of estimate.

It looks, from the Report, as though the original estimate was £1 million, that this escalated to £8 million by December, 1964, and ultimately the company was beaten down from a later estimate of £9 million to a final figure of £8 million. I understand that, in fact, the initial estimate of £1 million was totally different. It did not include profit and it did not include incorporation of the elaborate system which was later proved to be necessary for such automatic landing equipment. If the company is to go ahead with automatic landing systems like this, it is unfair that a Committee such as the Public Accounts Committee should then suggest that the costs are disproportionate or to imply, perhaps,that development of this kind should not take place. In paragraph 76, the Committee says: They were glad to receive this assurance and they trust, should any further development or modifications become necessary to achieve a higher standard of performance, the cost will be carefully weighed against the operational advantages secured. The autoland system is to be used in many different types of aircraft. In the case of the Belfast, the criticism is particularly cruel for Short Brothers. There was a high escalation because the autoland system was tried out initially on this one aircraft of which only ten were ordered. Why should the high cost, the £3.7 million for research and development, be attached only to the ten Belfasts? If the system were installed in more aircraft, the cost would be more evenly spread. It is a system which is of great benefit, and it is much to Britain's advantage that such systems should be developed.

I feel, therefore, that the burden of the evidence presented in the Report is unfair to Short Brothers and Harland, a company with a fine history of aircraft production. In recent years, it has successfully produced the Seamew, the vertical take-off SC1, the Skyvan, the Belfast and the Seacat, which is our largest single missile export earner. It is, therefore, unfortunate that the burden of the evidence and the tone of the Report in the paragraphs relating to Short Brothers should be so critical of the company when, in fact, the company is successful. It had every hope that the Belfast would be sold widely, and the Government shared that hope.

I trust that the Government will take note of the comments which I have made and will assure the House that the Report will not reflect upon or in any way damage the future of Short Brothers and Harland.

7.45 p.m.

Mr. J. J. Mendelson (Penistone)

I imagine that the hon. Member for Belfast, East (Mr. McMaster) does not expect me, and would not necessarily wish me, to follow him in the intricacies and details which he has put to the House, so that I can dispense with the usual apology in saying that I intend to deal with an altogether different subject, which, I hope, is of a little more universal application.

I shall confine myself, in view of the late hour, to one subject, and that subject in itself, like the others covered by this meaty Report, is of considerable importance. I refer to the Special Report dealing with the new arrangements between the Comptroller and Auditor General and Public Accounts Committee, on the one hand, and the universities, on the other. I regret that the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the chairman of the Committee, has just left the Chamber, though he has been such a good attender, being present all day. I make no complaint at his absence, but I mention it because my first point refers to him.

I thought that the right hon. Gentleman made life easy for himself when he said in an aside, throwing the point away by making the aside, that if the Government wanted to subvert the universities, the worst possible way of going about it would be by introducing the Comptroller and Auditor General and the Public Accounts Committee into the process of control. That was only to erect a classical "Aunt Sally" in order to knock it down at once. In view of that observation by the right hon. Gentleman, I shall clear the ground by saying, first, what I am not worried about. It is no part of my case that I believe that this Government intend to subvert the universities. It was, therefore, irrelevant for the right hon. Gentleman to erect that "Aunt Sally". That is not the issue, and neither has anyone who spoke on behalf of the Association of University Teachers ever made the suggestion.

I make the point because the right hon.Gentleman referred to the experience which people have had in South African universities. So he really meant it. In South Africa, there is a totalitarian police State. Like the right hon. Gentleman, I have visited that country and I have been in contact with university circles there. The position is utterly appalling, and the universities are fighting hard against the deliberate encroachments of a police State. But in this debate it is irrelevant, and ought to be removed from the discussion altogether, to suggest that anyone who has, as I have, great misgivings about the new procedure has any such suggestion in mind. Further, I do not believe it of my Government, and I do not believe it of any conceivable Government here either.

What concerns me is something much more subtle and more difficult, something which might develop over the years and which, having developed, will become part and parcel of the texture of our administration before we know that it has become so. This is a Question which must be discussed in a different way, discussed in the context of our administrative and governmental experience.

I begin by saying that I, like the right hon. Gentleman, am delighted to find my hon. Friend the Financial Secretary to the Treasury in the position of having to reply to the debate. Like the right hon. Gentleman, I enjoy all his speeches, not only those from the Treasury Bench but the ones which he made from the back benches, too.

Sir D. Glover

Far better then.

Mr. Mendelson

That is a difference of taste. I enjoy my hon. Friend's speeches from the. Front Bench just as much as the others, I am glad to see him in his place. But I h ape that he has been well briefed by my right hon. Friend the Secretary of State for Education and Science, because this is a very complex matter and not merely one of presentation.

In its Memorandum to the Committee, printed in the Report at Appendix 9, the Association of University Teachers makes a number of very important points to which I wish to refer. First, on page 262, the Association produces a series of propositions which it considers to be a definition of academic freedom. It states: Academic freedom' is not the same thing as unfettered autonomy. We would regard as essential components of academic freedom:—

1. (a) that the university should fix its level of entrance requirements in the light of the standard to be achieved by the end of a given length of university course;
2. (b) that each university and department should select its own staff in the light of its particular requirements;
3. (c) that each university and department should develop its own character and curricula so long as these are accepted by other universities as of university standard;"

That is a very important point.

I want to go on to one that deals with the priorities. It says: (e) that Senate"— that is, of the university— should determine, after considering the priorities fixed by the Faculties, the overall priorities within the money available to the university as a whole; I want next to quote the following: (g) that each university teacher should pursure his own line of research, within the limits imposed either by departmental or personal finance. He must be free both to refuse to follow a particular line of research and to investigate any line he wishes, irrespective of whether to anyone else it seems promising or 'useful'; I regard that as of the greatest possible importance; wherever there is any tampering or attempted interference with that provision, for whatever motives, the freedom of the university goes out of the window. I am not referring here—

Mr. Mapp

I was a member of the Committee and the point about academic freedom and the freedom of the universities closely engaged our attention. We listened to all the evidence and asked if any of the witnesses could point to any instances of interference with their freedom. There was no effective evidence of any kind, so that I would be much more impressed if rather than talk about fears my hon. Friend and his colleagues who are arguing the point based their arguments on evidence which gave cause for those fears.

Mr. Mendelson

My speeches are my own. They may be a poor thing, and I do not set out to impress my hon. Friend the Member for Oldham, East (Mr. Mapp). I set out to make a case. My hon. Friend says that the members of the Committee, having listened to a great deal of evidence, came to a certain conclusion. I draw his attention to the Motion on the Order Paper, which is that: That this House takes note of the ߪReports from the Committee of Public Accounts ߪ If we were merely listening to the views and opinions of members of the Committee, the Motion should read: That the Committee of Public Accounts takes note of the Reports of the Committee of Public Accounts ߪ But that is not the Motion, and I am addressing myself to the Motion before us.

The point which I have just mentioned, that every university teacher should pursue his own line of research and must be free to refuse to follow a line of research which he does not wish to pursue, is at the very centre of academic freedom. Later, in paragraph 6 of the Memorandum, the Association says: By control we mean direct or indirect Parliamentary or Government intervention in matters of detail, for these are often the product of the interplay of varying academic factors. Here it introduces the term, "control", but in an earlier paragraph it contrasts control with accountability. I consider that this is the second most important point that I am submitting, because in paragraph 4 the Association says: Provided the above freedoms are left genuinely intact, we would see no major objection to accountability as such. We make here, however, a vital distinction between accountability and control, to which we now refer separately. That decisive distinction is at the base of the fears expressed in university circles, and it is about that distinction that we need to be reassured.

As the right hon. Gentleman said, the Committee came to two conclusions and made two recommendations, on the implementation of which I want to question my hon. Friend closely. The first is: that, with effect from the beginning of the next quinquennium (that is, from 1st August 1967), the C. & A.G. should be given access to the books and records of the U.G.C. and the universities; If I am correctly advised, this came into effect on 1st August, and is in effect now.

The second recommendation is: that in the meantime steps should be taken (a) to work out suitable conventions as to how his scrutiny will be conducted and how his queries will be handled; and (b) to ensure that the universities are fully informed about the nature and purposes of the C. & A.G.'s scrutiny, and what would be in practice involved. The Government have announced that certain meetings have taken place between my right hon. Friend the Secretary of State for Education and Science and the heads of the universities and principals of colleges, and that a meeting has also taken place with the representatives of the Association of University Teachers. But what has not been announced is whether any convention has been drawn up, and I should like my hon. Friend to address himself to the question. If conventions have been drawn up, are they in practice now? My information is that none has yet been drawn up, and that therefore none is in practice at present.

When I asked the right hon. Gentleman in an intervention whether the Committee made it a condition that both recommendations should be implemented at the same time, he replied, somewhat diplomatically, that it did not put it in that way. The fact is that it obviously did not make it a condition, and was remiss in not doing so. If one supports the policy, which I do not, one must consider that the two recommendations should be implemented at the same time, because they form a whole. The right hon. Gentleman did not agree with me that the Committee put it in that form, but was most meticulous in pointing out that it had made both recommendations at one and the same time. But obviously it would be a different matter whether they were implemented at the same time.

This is of material importance because everybody is now saying in the universites, Government circles and the House that it depends entirely on practice whether the fears are justified. That is a reasonable point of view, but if that is so the conventions which will govern the practice should be ready and implemented at the same time as the major provision in the first recommendation comes into effect.

I am not worried about the understanding and the approach of the Members of the Committee. I have served on the Committee and have a very high regard for it. But when I am told, as the right hon. Gentleman and others have put it, that the people who came before the Committee full of fears and forebodings suffered from the great defect that they did not have a full and detailed understanding of how the Comptroller and Auditor General and the Public Accounts Committee did their work, I am equally filled with fear that, estimable though they are, there may not be many Members on the Committee who know how universities work. This might be an equally justified fear. The one does not reflect on the Association of University Teachers or the Committee of Vice-Chancellors and the other in no way reflects on the Members of the Committee.

That being so, and it being generally agreed that practice will determine any reasonable estimate of what is to happen under the new arrangement, we have a duty to list our fears, concerns and reservations at the very beginning so that it should not be said later "But when this matter went through the House of Commons there was not an hon. Member there who did not agree with it or who said that these were grave dangers which made him feel that on balance he was more against it than for it."

A question to be settled before the matter starts is the limits that are to be set by the Government in the administration of the new scheme. The Government's attention to these matters is very important. There are examples in other countries of many famous universities where people, with the best of intentions, are interfering in the affairs of the universities in such a way that academic freedom is being threatened and actively interfered with all the time. I refer to the United States—

Mr. Ellis

What concerns me is not really a question of academic freedom. If we are putting the whole of our resources into people doing research, if someone is doing a research into Brer Wolf have we not a right to say that we should have research sensibly spread over what we regard as the priorities? Does not my hon. Friend think that we in Parliament have a right to know what is going on, and is not the line that he is taking a little intellectually arrogant?

Mr. Mendelson

The intervention puts on record what I am most afraid of. My hon. Friend has been very useful to my argument. I am afraid precisely of the danger that eventually well-meaning hon. Members will take it upon themselves to discuss these matters and then begin to determine the priorities of research for the universities. I regard that as the greatest possible danger, and I am inviting the Government and the House to guard against it

. The universities have two functions. The function of their teaching responsibilities is much more open and much more clearly visible to most people, but it still contains an element which must be within the discretion of the teacher. Their second main functions, research, particularly pure and advanced research on the frontiers of knowledge, contains a very large element which the rest of us do not understand and must not be called upon to judge.

In the heat of the moment my hon. Friend referred to "intellectual arrogance". I know as little as he does or as most right hon. and hon. Members do about research on the frontiers of knowledge. We had an excellent example of that the other day when two of our eminent scientists received the Nobel Prize. One of them was interviewed on television. The interviewer, Mr. Allsop, pressed him to explain why he had got the Nobel Prize. The professor was very well-meaning and wanted to do it, but in the end he had to conclude that he could not communicate it. This is a condition of.he most advanced science. It is not something which has to do with our capacity of understanding. It has to do with the nature of the subject under discussion.

Mr. Ellis

Is my hon. Friend really putting forward the proposition that we have now reached a stage in our joint society where a certain small percentage of us, because of the depth of our intellect, cannot have explained to us what the researchers are doing, a stage where we who are finding all the money are not even to have the courtesy of being told what it is all about? My hon. Friend is pushing a very extreme argument.

Mr. Mendelson

That may be my hon. Friend's opinion. This will be read and discussed tomorrow. Some people may think that it is not an extreme argument, but my hon. Friend is entitled to his point of view.

In reply to my hon. Friend's further intervention, this is not a new problem. It is a very old one. Individuals at work on the frontiers of knowledge have always had this problem. There have been many attempts by the churches, the kings, the barons, and all sorts of people to assume the capacity and ability to know all that the researchers are doing and to tell them what to do and what not to do. This has been done over many centuries, and it is being attempted now.

In my opinion there are many important fields of research in which we must have confidence in the universities and must protect them so that they may be able to do this job. If we do not do that, in a very short period of time we shall fall behind many other countries where advanced scientific research is being carried on. I quote an example from the Soviet Union to prove that this is necessarily so. One of the most interesting developments there in the last 30 years is the following. They have a State of rigid control, a State in which the party assumes the right to tell people what research to do and what research not to do. Professor Lysenko went so far as to tell their scientists what their conclusions must be. But wise people within the Soviet administration found that they would be a backward nation in research if they allowed these people to go on interfering with their scientists. So they made a radical change, which they did not announce. They now give their scientists in the field of pure research a completely free hand. They use applied research when they ask for certain things to be done, but on the frontier of knowledge the Soviet scientist Kapitza was as free to do his research when he returned to the Soviet Union from Cambridge as he was when he was in this country. That is the path of wisdom. Therefore, in the new arrangements condition (g) in the memorandum from the Association of University Teachers must be fully honoured. My hon. Friend will know that it is particularly heads of research teams and people in charge of important research on the frontier of knowledge who have great fears that this might be the beginning of an interference which they must not have.

I was about to refer to the universities of the United States where we have no dictatorship, no overall one party that sets itself up as the dictator to all universities or all States, but where we have a great deal of autonomy. But we also have a great many people on university boards who think that they ought to tell the faculties what they ought to be doing in many fields.

I leave pure science and the natural sciences here and turn my attention to the social sciences. In the social sciences we have an additional problem. The social sciences are also concerned with matters that immediately and visibly influence the political scene and the economic scene. The field of pure research takes a long time to percolate, and the results are sometimes long in coming. So the interference is mainly based upon his understanding and not being able to know what these scientists are doing.

But in the social sciences there is a more immediate danger which is equally important. In American universities, we find a lot of outside people—the regents, local bodies or people close to the governor of the State—directly interfering with the kind of social research being carried on at university. I will not use the privilege of the House to name an American university although I would do so outside, and have done on occasion, but one knows teachers in the United States who say, "I could not go to that university because I could not carry on with my work there. I shall go to another where I can."

That being so, it is important to guard from the beginning against any suggestion that, on ground of scarce resources, and where choices have to be made in attitude or approach outside universities, either a committee or a board of regents or people in the Government or the House of Commons should have the right to decide, "This seems to be unnecessary research. What will it lead to? You had better not engage in it. Are you spending wisely?" This must be left to the universities and their staffs.

My last point concerns administrative needs. This aspect is very much to the fore in university discussion. The administrator has an important place in the life of a university. Administration starts at Governmental level, of course, but we have developed a system of autonomy. Built into that system is the University Grants Committee.

I was interested to find that my hon. Friend, with his usual clarity and without hesitation—this characterises all his contributions—said frankly that he had not by any means finished thinking about the place of the U.G.C. in the system. But he may cavil about this as time goes on, and that is the danger.

The U.G.C. has been deliberately built into the system because universities are different from other institutions. They are different from factories and from banks. They are different in the way I have described them. The U.G.C. is a buffer in order to safeguard the work and life and decision making within the universities. The great advantage of those who sit on the U.G.C. is that they have a great deal of intimate knowledge of how universities work. I turn now to the evidence of the Association of University Teachers to the Committee, which said: By control we mean direct or indirect Parliamentary or Government intervention in matters of detail, for these are often the produce of the interplay of varying academic factors. Many academics remain unconvinced that the ultimate intention of accountability is not a massive increase in Government control. The memorandum of the Comptroller and Auditor General does not dispell that fear. We note that he would wish to examine the methods adopted by the University Grants Committee to assess the universities' requirements and to determine the subsequent allocation to them of recurrent grants. This can have little point unless there is the possibility that he will then be able not only to propose changes in the methods but to enforce them, when he cannot bring to the task that experience of university needs and priorities which guides the University Grants Committee. Nor can the members of the Public Accounts Committee. Therefore the danger is not eliminated by the assurances that have been given.

When people say, "Practice will show", it is essential that the Government should heed the warnings submitted by the A.U.T. that these dangers should not be allowed even to make a first beginning. This is a difficult task and I for one am full of forebodings and fears and reservations as this new system begins and I shall take the opportunity time and again of reminding the Government of their own attitude and their own responsibility, as well as those of the House, in seeing that our free universities, which are in many ways the best academic institutions in the world, shall not in any way be hampered or endangered in their freedom by any new administrative devices introduced in the interests of accountancy.

8.15 p.m.

Mr. W. R. van Straubenzee (Wokingham)

There was a moment earlier in the debate when I was afraid that it would concentrate exclusively upon matters to do with the aviation industry. The House is therefore much indebted to the hon. Member for Penistone (Mr. Mendelson) not only for bringing us back to what is, as my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) reminded us, a major recommendation in one of the Special Reports but also for his great service in putting before the House the opposite, or what appears to be the minority view, trenchantly and with his usual determination.

It is not for me to seek to defend the Government's actions for them. The Financial Secretary is more than capable of doing that for himself and on behalf of the Government. But I suppose that it is true to say that in conforming with what otherwise will be a reasonable request that the convention should be established at the same time or before the new arrangements come into effect, there is the difficulty of doing it before the quinquennium begins. As one who supports the recommendation, I think that it would be fair to say to the Treasury Bench that the anxiety about the expression of the convention is not limited to the hon. Member for Penistone. Nor is it limited to those hon. Members on both sides of the House who are against the recommendations.

The hon. Member's speech highlights a difficulty. He relied heavily upon the impressive memorandum from the A.U.T. He rested a substantial part of his case upon one section of it, paragraph 3(g) which reads: that each university teacher should pursue his own line of research, within the limits imposed by departmental or personal finance. He must be free both to refuse to follow … and to investigate any line he wishes, irrespective of whether to anyone else it seems promising or 'useful'"; In general principle the hon. Member and I are at one. Let me put the sort of difficulty that the House is increasingly finding itself in.

Quite recently, the hon. Gentleman knows, being closely in touch with all this, there was an inquiry into the number of departments of agriculture in our universities. In consequence, there were recommendations that the number of departments of agriculture should be reduced. This caused considerable controversy at Leeds University because its Department of Agriculture was one of those recommended for the axe.

As I see it, although I may have misunderstood the hon. Gentleman, that number, arrived at by consultation within the ambit of the U.G.C. contravenes the requirements of the memorandum upon which he relied so heavily. My point in reply to his impressive speech is that, when we are spending the amounts of money we are spending, and in increasing amounts, when the number of universities, to our rejoicing, has increased so much, there must surely increasingly be a certain amount of consultation as to the work undertaken at universities and that this impinges in part upon the requirements laid down by the A.U.T. Memorandum.

I go on from there to say that this will require this particular genius which we possess, for sensible compromise between detailed supervision on the one hand and complete and absolute licence on the other. I will develop this briefly from this point of view. I am quite certain that this process of consultation under the aegis of the U.G.C. will be an increasing process, not a diminishing one. We know that it is happening. Some of it we know confidentially, and we do not mention it even in the privilege of this House, but much of it is perfectly public. I am quite sure that modern expenditures, modern costs, under any Government will be an increasing process.

If it is to be an increasing process, and I think that I have carried the hon. Gentleman with me so far on this particular aspect at least, the universities have surely to decide whether it would be better that that consultation, which must by definition mean a certain element of control, should be under the aegis of the U.G.C. or whether it is preferably supervised overall by the kind of method suggested in the Special Report. Here it is worth underlining that the Comptroller and Auditor General is a servant, not of this or any Government but of this House. This needs repeating. I feel that what is suggested here, modest as it will be, is of value to the universities and will be of value to the nation.

It is right to make one other point upon it. There has been a tacit assumption throughout our debate so far that we shall never discover anything wrong. The argument is that it is quite all right, universities are splendidly administered in every particular up to now and we have total confidence in them. It is said that what we are really discussing is a matter of comparative form.

I mean no possible disrespect to the universities when I say that I am not so sure. We will have to face the facts that we may, by occasionally turning the searchlight on to an individual university, uncover something modest in proportion to the sort of size many hon. Members have been talking about in aviation but, proportionately, nevertheless of some considerable importance. We do not help ourselves or the universities if we suggest that this will never be so, because if it is never to be so there seems to be very little point in doing it at all.

Mr. Hooley

It is a fascinating irony of the present debate that in one Report there is an account of how the sum of £1 million somehow became mislaid by the University of London.

Mr. van Straubenzee

In fairness it must be remembered that the University of London authorities fairly trenchantly questioned the basis upon which that argument was put forward. I know that the hon. Gentleman knows that. Unless and until it is under the closest scrutiny, perhaps under this procedure, we ought, both of us, to be a little careful before we enter judgment. I am well aware that the case has been made.

The point that is sometimes overlooked is this immense expansion of the universities which has placed a great strain on personnel. We frequently talk in this House of the strain on the academic personnel. What we do not always say, because it is not a very polite thing to say, is that for example, it is becoming increasingly difficult to find men of real stature to be vice-chancellors of so many universities, and it is certainly becoming difficult to find men of a really competent character to carry out the senior administration.

I am very doubtful whether there will not be some occasions when we shall find uncovered some unhappiness or other which will raise in the minds of everyone all the arguments put forward by the hon. Member for Penistone. If I believed that we were here discussing a serious erosion of the U.G.C. principle I should be very unhappy about it indeed. I always remember the passionate way in which Lord Robbins, to whom we owe so much for advising us, gave evidence to us, quite publicly, at the time of the publication of his Report. Then he defended the principle and said how the evidence from all over the world was given to his Committee, as it then was, was in support of the system which we had built up with this remarkable genius of ours. It is a remarkable tribute to it that it has survived, among other things, the immense expansion which has followed upon his Report.

As with so many other things which have to develop, now that the figures have become so infinitely greater than anyone would have supposed a few years ago, it is surely no longer reasonable to ask the House to be responsible for vetting them without any possibility of scrutiny or control over them. If this debate were about detailed, personal and everyday departmental scrutiny, then many of the fears of the hon. Member would be wholly justified. Only time will show whether the hon. Gentleman is right, but I feel that, taking into account the extension of these figures, this is a logical growth of the principle of the U.G.C. In that light I hope that we can move forward without grave anxiety.

8.27 p.m.

Mr. Charles Mapp (Oldham, East)

First, I would pay tribute to the chairman of the P.A.C. the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). What he said on behalf of the Committee was frank, fair and proper.

It seems that this House has two weak spots. It loses its critical values when it is talking about aviation, and as we have now heard, with some reservations, from the contribution by the hon. Member for Wokingham (Mr. van Straubenzee), it loses a good deal of its critical values in terms of universities. The hon. Member was walking alongside my own thinking in this matter. I want to say frankly to those on either side of the House who have fears of the future, that there was no evidence in the Committee of interference with academic freedom in any respect, right through the whole of the educational spectrum. I still feel that, though it may be resented by my hon. Friends, in very lovely language we are hearing an argument for academic privileges and wanting to contract completely out of educational democracy. If there was some evidence to support those fears I would have been impressed. Indeed, when I had the circular from the university teachers, I distinctly recall running through it and saying, "There is nothing wrong with any of these six conditions, subject to one overall comment, and that is about the problem of the budget."

When I make inquiries about the committees which run our universities, I am told that there is within them a reservoir of business knowledge. Yet it is difficult to find to what extent a knowledge about business and finance is exercised in these committees. If, on the other hand, we have, as I know we have in Manchester and York, knowledgeable businessmen, it may be that we shall not have reproduced this argument about the complete purity of research. In one case which was put to the Committee it was shown conclusively that a piece of research was going on indefinitely until someone happened to call attention to what was ultimately the purpose of it. Then it ceased.

I do not think that Governments should try to influence the Comptroller and Auditor General. He made it clear to us that he would examine the finances of the University Grants Committee and the universities in view of the knowledge he has acquired and the authority he has from this House to discover whether modern methods are being applied. If hon. Members read the evidence given to the Committee, they will see that most of the universities, barring York and Manchester, were being dragged forward to the 1960s and 1970s by virtue of an increase in their staff over the last two or three years. The evidence of the principal of the former Manchester Technical College, which is now being given university status, shows that there was never academic interference by an elected corporation of the City of Manchester. The new universities have been dragging the old ones forward, rather unwillingly, into the present century.

In paragraphs 1 to 7 on pages v and vi dealing with air navigation services accounts, we find the other side of the penny. Throughout the day we have been hearing about public money going into the aircraft industry, but here we are told that in commercial flights, and indeed the military flights, across this country two forms of service are given to the industry: one is at the aerodromes in respect of air traffic control, telecommunications, meteorological and aeronautical services, and the other is en route. We find that in November, 1964, there was a broad instruction that charges should be made at the aerodromes for these services. We find from the Report that in respect of the four London international airports there has been a small surplus on the appropriate charges which have been raised. On the other hand, all other airports have made a loss of £1.6 million. Some airports make no charges at all. Commercial airlines of this country and other countries are being subsidised at airports to the tune of £2 million. If we look at the en route services, we find another £8 million which is not being asked for from the airlines.

In Committee, it was put to us that it might be out of harmony with the prices and incomes policy if we asked, as I believe we should ask, airlines to pay their share. Now I see from the Treasury Report that this is to be borne in mind. I repeat what I said in Committee, and I think that hon. Members on this side, in particular, should address their minds to this problem. In my view, subsidies for alleged social services or services which creep in indirectly for patronage or prestige purposes should be identified and the services which benefit in that way should directly carry those subsidies, even if they are shown separately to the House of Commons so that we know what is being done.

In effect, therefore, as with so many other forms of transport, we are in the position of starting the new flying industry—like railways, canals and roads—with a lot of built-in subsidies so that today we are unable to distinguish who subsidises whom. The plain fact of flying is that those who fly, including myself and others, can well afford to fly. If £10 million or £12 million is being paid by the taxpayer to enable people to fly, that is an unfair burden to place upon taxpayers, probably 19 out of 20 of whom have not flown and are never likely to fly. The passengers who fly could well pay their share and I see nothing wrong in that. A start could be made with this in our internal flights.

The next point which I should like to raise, although it has been dealt with fairly exhaustively, is the question of the Metropolitan Police. Both sides of the Committee reached the conclusion that there was something very remiss. All I will say which has not been said is that as a member of the Committee, I was surprised to hear of the statutory position of the Receiver. It would appear that the financial operations of the Metropolitan Police are in the hands of a statutory person through the office of the Receiver. This may partly have helped in what has been a very tragic story. I merely ask whether in these modern days, as the police forces across the country have a totally different kind of financial control quite different from that.in London with a Receiver, the office of Receiver might be made redundant and incorporated in the arrangements which are known throughout the country.

I refer next to fees paid to planning consultants. Anyone looking at the evidence produced to the Public Accounts Committee will realise that there is a limited number of firms engaged in this work. They are tightly bound by their own association. It is a challenge to this House and to any other spending bodies that they erect their own charges, as do many professions. The point was raised in Committee whether that kind of question should go to the Monopolies Commission. I believe that it should and that it should be taken completely out the realm of the discussion which, the Minister states in the Treasury Minute, is taking place.

My last point is one which has engaged the House nearly all day. I refer to the problem of trying to marry up the public anxiety in regard to costs in the aircraft industry. This applies also to other industries in which there are only one or two suppliers, usually based on scientifically required supplies, who are in a position to supply the Government. I recall the talk about Ferranti. I know a little about that firm and I take this point of view.

Until both sides of the House remove the political content of the argument and say, in effect, that there is inevitably a conflict between the boardroom and the Treasury, which is inevitable in any event. If we look at what happens in industry where that kind of thing takes place the net result is that big business invariably does one of two things. If they deal with one supplier, they put people on the board or they buy it out. There is nothing wrong in doing this to ensure supply, efficiency and correct pricing.

Most of the arguments leave me cold. We must face the central point, that there is nothing wrong with the Bristol Siddeley board seeking a massive profit, since this is its rôle, but if I were a purchaser, as the Government are in this case, I would have to ensure that I got the best article at the best price, and this is where the conflict arises.

The heads of major industries are not hostile to the idea that where there are half a dozen or so firms on the periphery of science, there would be no objection to Government taking 50 per cent. of their equity—I do not wish to start a political argument: the appraisal would be to recognise that the firms are efficient and to cut out costing and accountancy arguments—which could be done with reasonable negotiations and could lead to the Government bringing on to the board two or three scientists and accountants. We might thus be able to cut out one set of people checking details, resulting in a common set of criteria, so that firms and Government would be substantially better off.

8.42 p.m.

Mr. Kevin McNamara (Kingston-upon-Hull, North)

I did not want to enter the controversy over university accountability, but I was rather surprised at some of the things said by my hon. Friend the Member for Penistone (Mr. Mendelson). A Government have a right to declare the grounds of policy which they want followed by the educational world. If we want more scientists, technologists and doctors, the Government must guide universities into that sphere.

I was glad to hear my hon. Friend the Member for Oldham, East (Mr. Mapp) say that there was no infringement at Manchester C.A.T. by the local authority. I have spent a good deal of time teaching for local authorities and have had no restrictions placed on my teaching methods or academic freedom. None of my colleagues in similar positions has had restrictions on his research other than those mentioned by my hon. Friend.

I found the argument of my hon. Friend the Member for Penistone strange, as though he were claiming for himself a privilege which he would not allow to a rear admiral who wanted another 10 Polaris submarines—that the reason was that he felt he needed them. The Government must decide where money will be allocated, but a balance must be struck so that the essential academic freedoms of teaching methods and individual ideas and research are preserved.

My hon. Friend also said that, except for two, all our universities had to be pulled, yawning and weeping, into the 20th century. This is not so in my university, which is in my constituency, where the complaint is that it is not getting enough money to do all that we want—to establish courses, carry out research and get a new medical school—so as to achieve our aims in the second half of the 20th century.

I wish to deal with the Committee's Report on Class 1, Vote 8, Inland Revenue, National Insurance Funds, particularly paragraphs 16 to 20, dealing with the National Insurance Fund contributions and their effect on labour-only sub-contracting. In his absence, I would thank the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the Chairman of the Committee, for his courtesy in dealing with the correspondence which I sent him on this problem during the Recess.

Paragraph 16 sets out the situation, but in my opinion it does not set out the problems which can arise to the families and dependants of people who engage in labour-only sub-contracting if some misfortune befalls the men employed in that way. Misfortune can fall upon the family of a man employed in that way, and he will have lost, because of that form of employment, rights to which he is entitled under legislation. It could be argued that it is his own fault for entering that form of employment, but there are cases in which people in some trades, particularly in the building industry, can get employment only if they are labour-only sub-contractors. The Committee. should have paid more attention to the detail of this problem.

For example, in the evidence in the Report it is pointed out that between 1961 and 1966 there was an increase of 25 per cent. in the number of people employed on labour-only sub-contracting in the building industry—a considerable increase. The Committee went on to say that they could not state that this was due to the Selective Employment Tax because the numbers had grown before the introduction of that tax. But if one looks at the type of legislation which has affected that industry—Contract of Employment Act, Industrial Training Act, Redundancy Payments Act and S.E.T.—one sees a correlation within that period between the increase in the number employed on labour-only sub-contracting and the type of legislation which has imposed burdens upon small employers in that industry. These are burdens which I feel that they should accept, but in an industry which is prone to a great number of bankruptcies, people have been led further to engage in this type of employment.

I am particularly concerned about the position of the Ministry of Social Security in this respect. In paragraph 17 of the Committee's Report we read: The Ministry explained that they had no legal locus to take an initiative in regard to dubious classification as employed or self-employed, and if the persons concerned agreed to a self-employed classification there would often be nothing to stop the continuation of that arrangement. In the light of Selective Employment Tax they had told their inspectors to be very much on the alert for changes in classification from employed to self-employed. This is a rather complacent attitude on the part of the Ministry, and I find it disconcerting.

May I refer to Industrial Court Award No. 3107 and quote from a letter which I received from the National Secretary of the Union, which is rather appropriately named A.S.T.R.O. — Amalgamated Slaters, Tilers and Roofing Operatives? This is what he said: My society presented a case to the Industrial Court on Wednesday, 15th June, 1966 stating that an employer operated his business with approximately 80 self-employed labour-only sub-contractors whereas my Society claimed that these workers were employees and that the employer cited in the case was in fact the recognised employer. The Industrial Court Award stated that the term 'self-employed' was a mis-description of the true position and in fact the men concerned in the case were employees of the employer named in the case. However, because of the need to make certain basic changes by the men and the employer, in order to meet the Industrial Court Award, the Award did not become operative until Monday, 7th November, 1966 and my society fully subscribed to this operative date. This seems to be fairly straightforward and one would have assumed that the Ministry, knowing all about it, would accept the Industrial Court's award.

The plot thickens— At my Society's request the Ministry of Social Security carried out an investigation into affairs of the employer and his workers named in the case submitted to the Industrial Court as to the particular classification of insurable employment according to the National Insurance Act and the Ministry decided that the workers were class 2; i.e. self-employed persons. This decision was given prior to the hearing of the case by the Industrial Court and the Court was informed of the Ministry decision and yet in spite of this the Court insisted upon saying that the term 'self-employed' was a mis-description of the true position". Having that sort of award, one would have felt that the Ministry would gracefully accept the position, but no— Representations were then made to the Ministry of Social Security for a re-examination of this particular case in the light of the Court's Award. My Society presented a prepared statement claiming that even in light of interpretation of the National Insurance Act 1965, the workers cited in the Ministry's decision were in fact class 1 insured persons and such views and interpretations were supported by the Industrial Court Award. The Ministry of Social Security refused to reverse their decision and declined our suggestion that at least the Ministry should re-examine the situation, we were told that any difficulties arising from the differences between the Ministry's decision and the Industrial Court Award should be referred to the Minister of Labour as the most appropriate Minister responsible for conditions of employment". That is a nice case of passing the buck— This suggestion of approaching the Minister of Labour was given verbally to us at the Ministry of Social Security, 10, John Adam Street, London, on Friday 16th September, and on this same day Mrs. Shirley Williams, M.P., Parliamentary Secretary to the Minister of Labour wrote to me saving that any difference arising from the Industrial Court Award and the Ministry of Social Security decision should be addressed to that Ministry because it appeared they were responsible to causing such difficulties". So the buck was passed back before the buck had even arrived.

At this stage the General Secretary of the Union was not satisfied and took the case to the Royal Commission on Trade Unions, whereupon, after certain remarks had been made by the noble Lord Lord Donovan, the Minister of Social Security agreed to re-examine it, but did not allow the union to become a party to the inquiry. However, after representations had been made, the General Secretary was allowed to attend and answer questions if any were addressed to him. At the conclusion of this inquiry the Ministry of Social Security again refused to alter its decision—and the men involved in that case are still regarded and classed by the Ministry of Social Security as self-employed.

Several points arise from this situation. The Ministry explained that it had no locus standi in this case, although it is obvious, from the way in which it behaved, that it had in that it was prepared to examine the case, but only after being directed to do so, or giving an undertaking to do so, before the Royal Commission.

This question immediately arises: why did the Ministry put out its decision before the court award was made? Or, when it was made, why did the Ministry try to ignore it? Why, in the same way, did the Ministry ignore industrial agreements which had been interpreted as being something different by the N.J.C. for the industry and the National Federation of Building Trade Employers? This is a serious situation and these are vital questions.

Because of the time factor and because a number of other hon. Members wish to speak, I will not go further into this case, except to ask some of the important questions that arise. What procedure exists for an operative to change his status from employed to self-employed? How does the Ministry inquire into such matters? How many cases have been taken by the Ministry to the law courts for adjudication?

It has been estimated that up to 2 per cent. of National Insurance contributions are lost in the building industry because of this problem. It has also been estimated that cases of tax evasion concerning the building industry number about 30 per cent. of the total number of cases of tax evasion.

It is very important that something should be done. It might well be argued that the Phelps Brown Committee is looking at the problem and may conclude that there should be decasualisation in the industry or that there might be a register of recognised builders. These would be important recommendations for the industry in the future, but we are concerned with the present position, and with what the Ministry will now do.

Among other things, the Ministry should consider having different insurance cards for employed and self-employed persons rather than, as at present, having different stamps. Again, too, it might put a heavier duty on the contractor to keep proper records of the itinerant workers employed by him, and the method of payment.

What concerns me most is the rather complacent attitude the Ministry seems to be adopting. I hope that it might consider either adopting something similar to the Continental Shelf Regulations of the National Insurance Act for the registration of labour-only contractors and their employees or, more particularly, might find some way of putting across to people who are considering becoming self-employed in this way the grave risk they run and the problems attached to their taking upon themselves this new status.

In particular, I trust that the Ministry will not take lightly the concluding sentence of the Report which states that the Committee trusts that the Inland Revenue Department and the Ministry of Social Security will not relax their efforts in dealing with the problem pending the outcome of the enquiry. I, too, hope that Departments concerned will not relax their efforts, but will do something positive.

8.57 p.m.

Mr. John Ellis (Bristol, North-West)

I join with other hon. Members in congratulating the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and the other members of the Committee on their hard work. I say at once that the Bristol Siddeley engine case was a grave national scandal and page ix of the Report portrays shocking figures of profit made on individual engines. Profits of 168 per cent. were common, and even in the lean year 1961–62 83 per cent. was the lowest figure on the Sapphire Mark VI.

This is a very serious state of affairs. This was not a case … of covering the company against unforeseen risks on unfamiliar work, or of aiming at a price which would yield good profits if the company achieved a high standard of efficiency. Enormously high profits were a matter not of hope but of certainty. Going through the Report, one could quote similar instances.

When we compare this case with the Ferranti affair, the Report makes the case that certain costs even after repayment of £3.96 million allowed additional costs not allowed to Ferranti. There were in addition private ventures and research which were not allowed in the other case. The Committee state: Thus if it was decided in negotiation that the parties could agree a figure of £3…96 million for the refund this should properly be expressed as leaving the company with a profit of 32 per cent. on costs. If it was decided that the company ought to be left with a profit of no more than 20 per cent. on costs the refund should have been £5…13 million, not £3…96 million. If the Government are to congratulate themselves on being able to get back £3…96 million, we should remember the point made by the Committee that on a comparable basis with Ferranti the amount should have been more like £5…13 million.

When this matter started I had discussions with my right hon. Friends about it. As long ago as the second report of the inquiry into the placing of Ministry of Aviation contracts the Lang Committee, which was appointed by the then Ministry of Aviation, reported: The Minister of Aviation already has the power under Section 10 of the Ministry of Supply Act, 1939, to direct a contractor to produce 'any books or documents of any description specified in the directions'. There was a strong recommendation which could be used. As the weeks went by and we did not get the information which we were demanding—having regard to the Ferranti affair, and the Laing Report—on the question of Bristol Siddeley engines, I cannot understand why the Minister did not ask for an Order as he would have been justified in doing.

It is still open to us to make use of these orders. The Ministry has been criticised for not employing on its costings more efficient staff on the accountancy side. This may be true, but when operating in the aviation industry at the frontiers of knowledge it may be that there is a shortage of very eminent scientists and researchers and it would be wasteful to try to duplicate them when we are making actual product which we seek to sell abroad. I urge on the Government that we cannot go on in this way. There are measures which could be used to get equality of information. Both before and after the books should be open so that the general public, the Ministry and the Government of the day could satisfy themselves that this scandalous state of affairs does not obtain any more.

This whole business has portrayed a lamentable lack. What can we do to put matters right? We are enormously concerned about the future of the aviation industry. It is said that over a quarter of a million men are engaged in one way or another in it. When I have spoken about these excesses I have been asked, "Why did you say this when you represent many who are working in the industry in Bristol?" It is because of this concern that I have spoken in this debate and in times past in this way. I believe there is a future for the industry in this country. I believe there is a future for Concord in this country, but the industry must be efficient. We must produce the right aircraft at the right time and the costs must be right. Otherwise there would be no future for the aircraft industry either for those who run it now or for those on the shop floor.

The Fifth Report of the Committee of Public Accounts on Concord said: The Ministry also informed your Committee that the arrangements for financing production were under negotiation. It was the Ministry's intention that the contractors should commit and risk some of their own money but it was inevitable that further substantial sums of Government money would be involved … We have now reached the stage where private enterprise so-called does not suggest that it is prepared to put up a penny for production of Concord.

The argument appears to be that we must put up the money and take the risk. If there is a profit private enterprise will enjoy it, but if not the Government are to stand the loss. It appears that private enterprise is not prepared to put up a penny, but this has to be done by public money. This demonstrates the case for public ownership. We have a duty to those in the industry. This would be the solution that, in the short term, it is absolutely vital to get equality of information on all contracts and an agreement for financing the production side. The Committee said that this should be arrived at by mid-1967, but we have already passed that date. There is necessity for firm talking to the industry, about the future. I hope that my right hon. Friend will be tough in negotiations and that we shall not commit public money and take all the risk and merely pay out profit.

9.5 p.m.

Mr. Tam Dalyell (West Lothian)

I just ask a few questions of which I have given the Treasury Bench notice. On the Tay Road Bridge, I think that eight lines in the Treasury Minute is an insult to the Committee of Public Accounts. Why did not the Scottish Development Department raise the question of capitalisation of unpaid interest during its negotiations with the local authorities? There is no explanation as to why this happened. Secondly, why did the Scottish Development Department fail to recognise that the effect of the late amendment to the draft order would upset its plans and calculations?

I think that the House of Commons is entitled to the courtesy of a full explanation and not a barren eight lines. What is the Scottish Office doing to ensure that this does not happen again? What has been learned by the Scottish Office? There seems to me to be yet another argument for a Select Committee of Scottish Members of Parliament looking into the affairs of the Scottish Office because, frankly, this appears to me to be totally incompetent.

On universities, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) may remember, when I was a member of his Committee I was one of those who perhaps pressed hardest for this investigation. Stating it briefly, I think that the prejudices I then had have not been confirmed by reading through this mass of evidence. I have been extremely impressed by the evidence of Professor Dainton, particularly in answer to question No. 212, and in the point he made in answer to Question No. 229 by my hon. Friend the Member for Aberdeen, South (Mr. Dewar).

Briefly, what bothers me is that some of us had thought that the Committee of Public Accounts and the Comptroller and Auditor General could make the universities more efficient. Having read through a great deal of this evidence, and in particular 'what the vice-chancellors said and what Lord Butler said, I rather doubt whether the measures suggested will in fact achieve the object of efficiency. My fear is that by doing this we will not achieve efficiency and at the same time we will put an extra burden on university administrators.

Finally, I would like to ask some rather sharp questions on the new headquarters for Scotland Yard. How precisely did it come about that by the time the lease was signed the building had started? Has this happened since? What precautions have been taken to ensure that such a situation does not develop in another Government Department? What have Government Departments learned from their New Scotland Yard experience about the need to search for cheaper sites? The right hon. Member for Kingston-upon-Thames dealt fairly fully with this point.

What action is being taken against those responsible for the inaccuracy of the information supplied to the Treasury in support of the application for authority to proceed with the Scotland Yard scheme? It seems beyond belief that the Receiver's Department was incompetent to a degree which would have lost someone working in industry, politics or in the professions his job. It is all very well for the Treasury Minute to say that the Receiver expresses his regret. This is totally unsatisfactory. Just what did happen?

I become very critical, too, of the Ministry of Public Building and Works. Would one be unfair to censure certain officials of the Ministry for an incredible lack of curiosity? In a situation where actual costs turn out to be four times the estimate, is everyone here going to get away scot free? Someone, somewhere, must carry the buck.

I think that the public are getting fed up with mistakes seeming to be made by those in authority, of a kind for which people outside the public service would be severely reprimanded or punished. If the Government accept what the P.A.C. says about New Scotland Yard and acknowledge the need for accurate estimates as the basis for policy decisions, what do they intend to do about it? Who is to carry this can? If this is not a public scandal, some Minister ought to tell us why it is not. It seems to me that the Treasury Minute is wholly inadequate. My hon. Friend the Member for Bebington (Mr. Brooks) dealt very adequately with the question of post hoc justification. I believe that part of our job, as Members of Parliament, is to see that public money, which is raised from every taxpayer in this country—not just from the rich but from everybody—is properly administered. I for one, as a former member of the Public Accounts Committee, am profoundly concerned at what those who have served this House so faithfully have uncovered. It needs to be looked at.

9.10 p.m.

Mr. Michael Alison (Barkston Ash)

I should be accused of tedious repetition if I were to reiterate once more the indebtedness which the whole House feels towards my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and the Members who served with him in producing this series of Reports which we are considering today.

My right hon. Friend deserves the title of the "arch extractor." He seems to me to be like a dental surgeon. He has the art of getting pearls of wisdom out of people without causing them any pain, rather like a clever dentist. Indeed, so skilfully did he do it that some of these pearls of wisdom seemed to pop out almost on their own.

I was particularly struck by the skill with which the Public Accounts Committee succeeded in getting the details about the Bristol Siddeley repair of spares contract and the rate of profit on it. I do not think enough stress has been laid on the success of that operation. And although the Chairman of the Public Accounts Committee did not dwell at any length on the failure of the Treasury Minute to comment on the Bristol Siddeley Report, I feel that it is a little sad that the Committee has postponed comment on this until the Wilson Committee has reported. If the Public Accounts Committee took the initiative—which it did—in setting up its own inquiry on B.S.E., it would surely be appropriate that the Treasury Minute should likewise have made reference to some of the points even in advance of the departmental inquiry which is going on.

We are also indebted to the enormous wealth of information which is contained in the Report about the University Grants Committee and its relations with the Treasury and the Government. Some of the memoranda presented in the Report are of historic interest and are in themselves profoundly educational. In sum, we are most grateful to the Public Accounts Committee for what it has done for the House in the past few weeks, leading to these Reports. There is a mass of material and I have some sympathy with the Financial Secretary. All has been gold; there has been no dross, so he will have to deal with practically every point that has been raised.

I wish to concentrate on a matter which seems to me to be of primary importance because of the repercussions which appear to stretch further than the immediate issues, namely the Bristol Siddeley Report to which many hon. Members have referred. It would be very easy, on a superficial reading of the Report, to gain the impression that the image of that company is a great deal more tarnished than it deserves to be. The hon. Member for Bristol, North-East (Mr. Dobson) said quite fairly that no one comes out of this very well, and, quite rightly, the Public Accounts Committee apportions blame in both main directions. I believe that the weight of the blame which attaches to the company must be tempered by reference to the issue—about which, with very great discretion and restraint, the Public Accounts Committee merely gives the evidence but does not draw a conclusion—as to which of the parties concerned took the initiative in bringing this matter into the open for the first time.

It seems to me to be incontestable that Bristol Siddeley took the initiative. But we should like more information and light on the matter. The passages in the Report about exchanges by word of mouth between representatives of the Ministry and Bristol Siddeley are unsatisfactorily vague, and I hope that the Wilson Committee will pin down a bit more explicitly what is meant by the allegation of the Ministry of Technology that it sought information at the end of the summer of 1964 about profits on past costs.

The crucial factor in favour of the company, however, must lie in the words of Sir Ronald Melville himself, when, at question No. 261 in the evidence, he said: I think it is right to take into account a number of other factors, although it is difficult to know quite what weight to attach to each of those factors. For example, one way in which this case differs from the Ferranti case is that the firm came to us and told us that they had been making excessive profits. This is an explicit admission that the initiative came from the company, but I hope, nevertheless, that the Treasury and the Government, when they receive the Wilson Report, will be able to corroborate and underline it. It alters the whole complexion of the company's responsibility and its standing in public esteem, and I believe it to be of great importance that the company's initiative in bringing the matter to the attention of the Ministry should be clearly established once and for all.

Certain somewhat more detailed points arise from the Bristol Siddeley Report upon which I seek clarification from the Financial Secretary, the more so because the Treasury Minute does not deal with them. I turn, first, to page 115 of the Report, the Memorandum by the Comptroller and Auditor General, and I ask the hon. Gentleman specifically about paragraph 20 on that page. We read there that The Ministry have informed B.S.E. that they intend to settle these contracts"— that is, overhaul contracts— on the basis of actual costs. Settlement on these terms would provide the Ministry with accurate knowledge of actual costs; this will be of value if forward fixed prices are negotiated in future. What is to be the policy regarding forward fixed prices for these overhaul contracts in the future? The hon. Gentleman will recall—my right hon. Friend stressed this in his opening—that recommendation No. (2) of the Public Accounts Committee was that prices order overhaul contracts for the years 1963–64 to 1966–67, and possibly also those for 1967–68, should be agreed on the basis of actual costs". Are we, in respect of overhaul contracts, to follow the recommendation of the Committee that it should be cost-plus, at least for 1967–68, or is it expected that we shall return to fixed prices for the future?

Paragraph 22 on the same page deals with the contracts for repair of spares: I understand that since April, 1965"— writes the Comptroller and Auditor General— repair of spares contracts placed with B.S.E. are being priced on the basis of actual costs and that this will continue". In other words, cost-plus seems now to be established firmly, de rigeur, and as a matter of principle for the repair of spares. This is not necessarily the course which the Public Accounts Committee referred to in recommendation No. (5).

These matters might have been cleared up if we had had a Treasury Minute, but we hope that the Financial Secretary will now tell us explicitly what the policy is for contracting arrangements on overhauls and the repair of spares for the future.

Third, still on the question of the Bristol Siddeley Report, can the Financial Secretary cast any light on the strong submission of evidence by Sir Reginald Verdon Smith in the item on page 119 of the Report headed, The industrial attitude towards price-fixing and the profit formula"? There is clearly great unrest and dissatisfaction in industry with the 7½ per cent. steady Government rate for such contracts. In the Report concerning the Buccaneer, we read that an acceptable profit level was negotiated as being 17½ per cent. on cost, and that was written into the contract. It seems a long way from the standard 7½ per cent. formula, and it is not surprising that industry is a little dismayed, in the light of the Buccaneer margin of 17½ per cent., that the starting point in an ordinary Government profit assessment should be so low as the basic figure of 7½ per cent. to which Sir Reginald Verdon Smith referred.

Is this a satisfactory state of affairs? Should not the Government hasten the conclusion of discussions, which I believe are going on with the C.B.I., about a formula for reasonable profit levels in Government contracts with private industry which satisfy industry? Might there not be, as my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) interestingly suggested, scope for an upper and lower limit, a figure on which real recompense will be made if losses are incurred, in exactly the same way as an upper level has been fixed, in the Buccaneer case, after which excess profits must be returned? If the upper limit is 17½ per cent., why should there not be a loss limit, as my hon. Friend suggested? I hope that the Financial Secretary will tell us somethinig about a reasonable profit level.

I must make some allusion to the wider implications of the Bristol Siddeley Report, the extraordinary twilight area of uncertainty which surrounds the information available to a private firm in carrying out a contract, and the hit-and-miss way the Government arrive at a possible or likely cost figure.

The Report stresses, at any rate to me, the impossibility of in any way satisfactorily pinning down, by what might be described as a bureaucratic method, a true correlation between the costs of which a private firm has knowledge and the idea of costs at which the Government might arrive through the investigations of their officers. One of the most striking things about the whole business of trying to determine costs objectively by investigation as it were, is that even when the Government have their own Royal Ordnance Factory under their direct control, as in the case of the Chieftain, with full access to all the manufacturing procedures, it is still impossible for them to get anywhere near an accurate idea of the costs in which a private firm will be involved when transferring production to, admittedly, a development area.

One feels that there is at stake the question of what is going on elsewhere in public corporations where large sums of taxpayers' money are involved in orders placed with private industry. Against the background of the Reports one shudders to think what must be happening in the whole realm of public corporation contracting.

One thinks of contracting discrepancies in great bodies like the National Coal Board, the Central Electricity Generating Board and the Post Office when it becomes a public corporation, with substantial public funds at their disposal, and client-supplier industries, like the electricity plant suppliers in the case of the C.E.G.B. Before the Treasury ever get a sight of the negotiations which have been going on behind the scenes there might have arisen the sort of margin of profit in a private undertaking which we have seen with Bristol Siddeley. Conceivably it has been happening for years in the case of the suppliers of electrical plant for the C.E.G.B. or suppliers of specialised coal-cutting machinery to the Coal Board. But the Treasury has no machinery for establishing it. Its scrutiny comes simply in terms of whether or not the actual sum requested for capital investment is strategically or economically valid, but the sum estimated for the purpose must be accepted by the Treasury as something which represents fair and reasonable cost with fair and reasonable profit at an earlier stage.

The repercussions of the Bristol Siddeley Report are most far-reaching and hold out very little hope of there being real confidence in the public mind about the outlay of taxpayers' money by Government Departments or public corporations in the absence of real competition and a free market between suppliers and buyers.

I turn to one or two more specific points raised by some of my right hon. and hon. Friends and one or two small points which still strike me as needing clarification.

I am particularly concerned about the decision in respect of the Chieftain. It is specifically referred to on page 12 of the Treasury Minute in relation to paragraphs 134–138, where it states that in 1967 it was decided not to split the follow-on order for Chieftain in the light of the very substantial extra sum, which the Public Accounts Committee criticised, which fell on public funds as a result of the original split order going to a development area firm. The latter incurred very high labour costs. The hon. Member for Bebbington said that it was an increase of 65 per cent. over the original estimate.

It seems curious that 1967 should have been taken as the year in which the follow-on order is diverted from a development area and returned to R.O.F., Leeds, for completion. It is precisely in 1967 that the Government have introduced specific subsidies for labour costs in the form of the Regional Employment Premium and the premium on the Selective Employment Tax. The justifiable criticism of the Public Accounts Committee having been incurred—before we had S.E.T. or R.E.P.—for diverting an order to a development area—which cost the taxpayer £1 million more than the original estimate—is 1967 the right year to end the process? Surely now the cost in terms of extra labour costs has been subsidised in the development areas by S.E.T. and R.E.P. Can the switching of the follow-up order for Chieftain away from the development area and back to the, admittedly, grey area of R.O.F. Barnbow be justified?

Another point which my hon. Friend the Member for Oswestry raised with very great effect is the question of Concord costs. I am a little dismayed by the uncertainty to which my hon. Friend drew attention in what he described as the further substantial sums of Government money which will be involved. I hope that the Financial Secretary will find time to say something about this. In a way our disquiet is increased by the real uncertainty of the Treasury Minute on the question of Concord. In the last few lines on page 5 it states: A further review by French and British officials of the sharing of costs supports earlier views that expenditures in the two countries are likely to remain broadly in balance. The phrase "are likely to remain broadly in balance" is not exactly the starting point in confidence in the 50–50 arrangement which we were led to understand is the basis. If there is already this extra £6 million arising from sub-contracting which is the point at issue here, does "broadly in balance" allow this extra expenditure to fall on Her Majesty's Government simply because £6 million is a small proportion of £500 million? I hope that the Financial Secretary will be a little more explicit about the prospects of Concord.

I take respectful issue with the hon. Member for Fife, West (Mr. William Hamilton) in what he said about the Post Office. I thought he made an unfair reference to the Strowger instruments and equipment which, he alleged the Post Office is to be compelled to produce for many years. He suggested that this is a sign of the backwardness of the technology and enterprise of supplying firms, I would remind him that the specifications and the orders come from the Post Office itself. It is the Post Office's responsibility if the Strowger equipment continues to be foisted on the telephone users. It has nothing to do with the supplying agencies. It is the fault of the Post Offices's ordering and specification policies.

The Financial Secretary has been landed with an enormous amount to reply to. I am certain that he will cover nearly all the points, however. But he will be sharply impaled on the horns of an awkward dilemma in some of the fundamental principles we have been debating. What the P.A.C. has suggested is that the fixed price basis of contracting for supplies from private firms is liable, and in the past has led, to unfortunate cases of excessive profits, even if those profits have been admitted to by the private suppliers.

At the same time, however, the hon. Gentleman has to reassure us that the Government's philosophy of public purchasing, as set out in the interesting White Paper on Public Purchasing and Industrial Efficiency, is to follow the course of maximum scope for the private suppliers in allowing unspecified methods of production, alterations in techniques and tenders for contracts which are not too detailed in requirement so they may have opportunities for innovation and opportunity to develop new ideas.

We want a reassurance that we shall get good value for money and no burden on the taxpayer. The hon. Gentleman must make certain that the incentives inherent in the fixed price system—letting the supplier improve his performance and getting a bigger profit—is safeguarded. I hope that the hon. Gentleman will comment on the suggestion of my hon. Friend the Member for Mid-Bedfordshire that there should be an upper and lower limit and that if excessive profits have to be repaid then losses should also be recompensed

9.32 p.m.

The Financial Secretary to the Treasury (Mr. Harold Lever)

If I am accused of devious repetition, Mr. Speaker, I hope you will not order me back to my seat on that account, because it would have unfortunate results.

In congratulating the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), I also congratulate the rest of the House in having so able a Chairman who is prepared to make so much effort and make a great deal of sacrifice from which both House and country benefit. He has had many distinguished predecessors in his office as Chairman of the Public Accounts Committee, which was founded in 1861. He bears the years of his Committee and his own years with considerable grace and youthful spring.

When Mr. Gladstone first introduced the Committee, he was pressed to include an Irishman and a Scotsman among its members. He referred to the duties of the Committee as being "dry and repulsive"—presumably not suited to either an Irishman or a Scotsman. Whether the nature of the duties or the resisting power of Scotsmen and Irishmen have altered since then, no such limitations are now placed upon the Committee's membership, and I congratulate the right hon. Gentleman on this uninhibitedly appointed Committee's work and on his own brilliant chairmanship.

My right hon. Friend the Prime Minister, when he occupied the distinguished office of Chairman of the P.A.C., one of our most important Committees, said: … the Public Accounts Committee is the only blood sport which is sanctioned by Parliament and which is enjoined upon a select number of its hon. Members as a parliamentary duty."—[OFFICIAL REPORT, 30th November, 1961; Vol. 650, c. 641.] All I can say is that the hunt has been conducted with great efficiency but with a good sense of equity, which is what we would expect from the right hon. Member for Kingston-upon-Thames.

I am embarrassed always by the excessive kindness of the House in welcoming me afresh and in delivering what is for me almost a maiden speech from this Box. Indeed, the kindness of the House and right hon. and hon. Members is so excessive that I sometimes feel in the enviable position of reading the eulogies in my own obituaries without putting myself to the inconvenience of dying. I can only say that I do appreciate this great generosity.

I now turn to what is the most important subject of this debate. Although there were many subjects of great importance none can be more important than the recommendation in relation to the universities. I hope that he does not think that this is a case of compliment returning, but the House is considerably indebted to the hon. Member for Penistone (Mr. Mendelson) for bringing this debate into focus. I do not blame the right hon. Gentleman the Chairman of the Committee or any of the zealous Members of that Committee for repudiating what really is not an apprehension in anyone's mind, that any Government in this country would wish wholly to subvert universities to their purpose That is not the danger which happily presents itself to us as proximate, either from the intervention of the Comptroller or Auditor General or from any Government that we can see, fortunately, coming into being.

The question really is what will be the effect of the Government's acceptance of the Committee's recommendations? Will it lead to any diminution in academic freedom? I have not had the opportunity of consulting my right hon. Friend the Secretary of State for Education and Science and I hope that I do not place him in any embarrassment by my off-the-cuff comments about my concepts of academic freedom. Let me say here and now that academic freedom for me is not an academic matter. It does not imply an ability to define in the abstract what that academic freedom consists of. To me the academic freedom that I am talking about is the freedom here and now enjoyed by universities.

If I thought that this recommendation diminished by one iota the freedom now enjoyed by British universities I would feel obliged to oppose it. I certainly would not be prepared to stand up at this Box and defend it. I will not reassure my hon. Friend by saying let him wait and see—but if it works badly and freedom is diminished we will all apologise to him. The duty of this House is to ensure by its vigilance that what is undoubtedly the express intention of this Committee and every Member on it, namely, that this recommendation should be entirely consistent with 100 per cent. preservation of existing academic freedom enjoyed by British universities, is carried out.

I hope that the House will notice that I have not descended into the realms of complicated abstractions to decide to what extent, even now, university freedom is limited by the practical realities of pleasing the Government and making them contribute money. I am not interested in that. I know that academic freedom now enjoyed is at a satisfactory level, and of a very high standard, very much cherished by the people who work in universities. It is very much to the advantage of the people of this country that this freedom should be preserved.

I am confident that in accordance with the intentions of the Committee the Comptroller and Auditor General, when the comes to consult with the appropriate university authorities, will not be consulting with them in order to draw up conventions—this is not a time to sign peace treaties with the U.G.C. or the university authorities. This is a time to reach understanding by discussion between the parties about what kind of examination of the books and the financial systems can be undertaken by the Comptroller and Auditor General without in any way whatever prejudicing university freedom. That was the express and plain intent of the right hon. Gentleman and his Committee.

These discussions are going forward. I ought to make it plain that in the last analysis the Government must take responsibility for deciding the kind of examination with regard to each agreement. We have decided that it is not impossible to wholly preserve academic freedom, and at the same time to have some examination by the Comptroller and Auditor General of the financial systems employed in relation to these matters. It has been suggested that one of the things we might do is to make the U.G.C. a statutory body. That would be a wholly retrograde step and would reasonably reinforce the anxieties of the universities and the fears of my hon. Friend.

Although I shall not attempt to offer this as guidance, it seems to me that the Secretary of State for Education and Science would echo the concluding words of the Association of University Teachers when they say: We feel that if the constitutional arrangements to secure the independence of the universities from Government control are to be changed it should be the result of a redefinition of them by Parliament in formal terms and not be brought about by a side wind in the form of a change in auditing procedure". To that I say "Amen". I cannot believe that the House would want to change the basis of university freedom simply because we were altering something in our auditing procedure. I am sure that we would want to discuss the matter very fully. These are the purposes of the Committee, whose recommendations we have accepted, and they are the purposes of the Government. I think that we will fulfil the implied pledge given to the university people that they will not have, subtly or in part, their freedom taken away.

I had better not comment on the arguments of some of the supporters of the Committee's recommendation because I am not too sure that they on reflection will not decide that, unless they were put up to it by my hon. Friend the Member for Penistone, they chose the wrong grounds for their support. However, I must make it clear to the House that my concept of freedom is not freedom to do what pleases me, but freedom to do what pleases the university authorities when it comes to academic policy. To have academic policy debated in the House—and if we say that we object to the excessive teaching of Beowulf, however much I might agree about the uselessness of that teaching in a particular area at a particular time this is what we are doing—is the very infraction of academic freedom that we should guard against.

Sir E. Boyle

I should like to ask the hon. Gentleman a practical question rather far removed from Beowulf which affects the Treasury. Surely one implication of this recommendation is that the professional infrastructure of the University Grants Committee and the Department of Education and Science and the universities will almost certainly need to be strengthened. May we have an assurance that the Treasury will be sympathetic to requests for that strengthening as they are made?

Mr. Lever

The right hon. Gentleman is kindness itself. He sets me an easy one when he asks for sympathy from my Department. There is nothing so freely available from my Department as sympathy. Indeed, many of those who have not had their demands requited to the full have always felt that it was readily available. But, leaving aside any jesting, I think that the Government, in pursuing this policy, must and will bear in mind that they are dealing, not with the spare parts of an aero engine, but with the universities. I do not say this in any snobbish, anti-democratic sense, but simply to differentiate between two things: one the process of academic learning and the other the fabrication of metal for a mechanical purpose. Although I share the view of my hon. Friends who are critical of the Executive—I think that they should be very touchy, sensitive and jealous of the freedom of the universities and should be anxious to preserve it—

Mr. Ellis

The point which I was trying to make was that we should know in the House how much was being spent on Beowulf or on research into cancer. It may be that we should like to say to the universities, "We note this" and leave it to them.

Mr. Lever

I do not want to pursue this matter in too great detail because I dare say that most of my hon. Friends and I, like most hon. Members—I should say every hon. Member I know—are very concerned to preserve the freedom of the universities. But it may be that my hon. Friends are too apt to misinterpret the touchiness as being a revolt against educational democracy, as somebody said. I beg my hon. Friends not too rashly to assume that because even though, as I hope, I have made it clear, the Government are absolutely determined that their fears are not justified, we do not belittle those fears or think that they come from an improper motive or cause.

The second matter which seemed to disturb hon. Members greatly was the Metropolitan Police headquarters. I do not know whether there is not a reflex reaction to Scotland Yard showing a certain ambivalence by some hon. Members towards the efficiency of the police, entirely unconsciously no doubt. The whole of this story, however—although I do not wish to question the accuracy of the Committee's Report about this; it is absolutely right—is not as bad as some hon. Members have put it.

It has been rather suggested that certain work was estimated at one-quarter of its true original cost. That is not really a fair picture of what happened. What happened was that there was confusion in describing the actual work which was to be undertaken. When the cost of ingoing was estimated at one-quarter, the cost which was then taken into account was the cost of normal preparation of an office for normal user. I see that a number of members of the Public Accounts Committee are getting restive, and I will give way presently, but I think that the true interpretation of the whole weight of the evidence, if it is fairly taken in relation to the Receiver, is that what was estimated was the cost of conversion for ordinary office purposes.

I am not complaining about the accuracy of the Committee's conclusion. When the cost was so estimated, it was estimated in a way which led the Ministry of Public Building and Works to take it, understandably and rightly, that what was being estimated was the cost of converting the building as a police headquarters.

It is not the case that the Receiver thought that the cost of conversion for use as police headquarers would be one-quarter of what it ultimately turned out to be. That is a quite different matter. It is a serious shortcoming, and the Committee rightly censured it and the man has rightly apologised for it, but it is rather different from a man being so grossly incompetent that he cannot estimate within four times of the amount what it would cost to convert the building for use as a police headquarters.

Sir D. Glover

Is the hon. Gentleman really telling the House that with all the facilities available to the Ministry of Public Building and Works—and, presumably, this matter was dealt with by somebody fairly senior—he did not realise that to convert a building to a police headquarters would be slightly different from making it into simply a block of offices?

Mr. Lever

The hon. Member is saying in rather more critical words what I have already said. Of course, the man is to be censured for this incompetence, but it is not the even worse incompetence of not being able to assess within one-quarter of its cost the cost of going into a police headquarters and equipping it as such.

There was an error of apprehension. The man was gravely negligent, as the hon. Member and the Committee has pointed out, and he was seriously and rightly censured by the Committee. The man has accepted the censure—that is, the late Receiver and not the present holder of the office. The former Receiver retired from office in the ordinary course.

I do not want to suggest that he was punished, because my hon. Friend the Member for West Lothian (Mr. Dalyell) was anxious to know what punishment had been inflicted upon him. The answer is that no punishment, as far as I know, was inflicted upon him. Nor do I think that in the circumstances it is within the competence of this House, in incomplete knowledge of the man's record and achievements in other respects, of the history and of which officials were responsible for it, to assess fairly, as my hon. Friend, above all, would wish to assess, what is the right treatment for a man in that situation. It is enough from the point of view of the House that a Committee in which the House has the most complete confidence came to the conclusion that the man or his office was guilty of serious negligence and has censured him for it, and that the appropriate action which follows cannot be in the form of an action by this House but must take the form normal in those circumstances.

I note that, although the Receiver is criticised for not having looked at any alternative sites, no hon. Member has suggested tonight where an alternative might have been. With great respect to the Committee, I do not think that it would he within their area of jurisdiction to asses whether or not these headquarters should be within two miles of the centre of London, because this is a matter of policy for the Home Office, based upon proper advice and technical assessment of the position of the headquarters. It is not, with great respect, for hon. Members to examine in the Public Accounts Committee whether it could be within two, ten or twenty miles of the centre. The Committee is not equipped to do it, nor do I propose to give my personally untutored view of the subject.

I think that, on reflection, hon. Members may feel that this is a matter best confided to the appropriate authority, which is the Home Office, advised by its police experts. Until some evidence is put before me to show that they are incompetent to assess where their police headquarters should be sited, I cannot, on casual comment in debate, hold it to be a fault in the Home Office or the Commissioner of Police that it was decided that two miles from the centre was the proper place.

There seems to be some confusion among some hon. Members. They are confusing this dispersal policy with aid to development areas. I hope that no one imagines that the Metropolitan Police headquarters could be conveniently situated, with its staff, in the grey or black areas or other parts of the development areas. Dispersal policy in that respect is a totally different concept from the possibility of moving the police headquarters a few yards or a mile or two. I do not think—I do not say this at all critically of any speaker in the debate—that it is in our capacity to site the police headquarters within a particular distance from the centre of London—

Mr. Boyd-Carpenter

While the hon. Gentleman is dealing with sites, can he help the House by explaining the disparity between the statement in the Treasury Minute that three sites south of the river were looked at with the Receiver's manifest failure to inform the Committee of such inquiry by him?

Mr. Lever

I was coming on to that. I will not run away from any question, because this is a non-party matter. The right hon. Member for Kingston-upon-Thames is criticising decisions taken under an Administration of which he was a member and I am defending them as far as is right and proper and no more: I am not here today to do any special pleading on this matter but solely to inform the House, and, in doing so, to put the points in favour, as it happens, of the previous Administration.

The receiver did not expressly say what the right hon. Gentleman has taken his evidence to mean. I am not complaining that he has put a gloss on it. The fact remains, however, that, as I read it the evidence meant that the Receiver was saying that he did not look at any sites but that his officials had looked at some sites. That is what he said. If the right hon. Gentleman will reflect on the totality of the evidence—I agree that one part of it gives the impression which he has—he will have to reconcile his impression with what the Receiver said in evidence, that his officials had looked at other sites.

My information is that the Receiver did not look at the other sites but that his officials did look at at least three sites on the South Bank and other sites in other parts of London. I do not want to list the sites which were actually looked at, but I am instructed with great firmness by the Home Office that three specific sites were looked at on the South Bank and that the reconciliation with the apparent and immediate meaning—I accept this—of the Receiver's evidence is simply that he was speaking for himself at that point and not for his officials.

Mr. Boyd-Carpenter

This is important, or I would not intervene again. The hon. Gentleman will appreciate that, before the Public Accounts Committee, the Receiver speaks for his Department. Can the hon. Gentleman really explain why, if three sites south of the rivet were looked at, the Receiver, when specifically asked about sites south of the river, failed to give the Committee any indication whatever that that had been done. Can he explain how that happened?

Mr. Lever

It is obvious that he was very inadequately briefed in his duty to give the maximum information to the Committee on this point, otherwise he would have said that although he had not looked at these sites, his officials had looked at three sites. The examination of the sites has not been dreamed up. It has been confirmed to me, and I have no reason to doubt it. I was not there when they inspected the sites. I am merely passing to the House information which I have been given by the Home Office, which I have no reason to doubt is the truth and which is firmly insisted upon. All I can say is that the Receiver did not do himself justice in his briefing before he got to the Committee so as to give the explicit information.

I am suggesting that a fair explanation is that, when he gave evidence, the Receiver had not thoroughly briefed himself on the whole area about which he would speak in relation to the questions likely to be asked. Probably what was foremost in his mind was the gross error of calculation which had been made on the ingoing costs and he did not think that these sites would be the centre of discussion and argument. For that reason he may not have briefed himself fully. I merely offer that to the House as an explanation.

Sir D. Glover

I do not criticise what the hon. Gentleman said, but he was not in the Public Accounts Committee to hear this evidence. I am sure that every member of the Committee who listened to the evidence would agree that it was not put into his mind in any way that three sites had been inspected. I do not ask the hon. Member to do it now, but I am sure that the Committee would be grateful if he would give the names of the three sites to the Chairman.

Mr. Lever

If the House wishes me to read them out, I will discover them among the mass of notes which I have.

Mr. F. V. Corfield (Gloucestershire, South)

Surely the Receiver came to the Committee knowing full well that he would have to justify the choice of site and to do that he would have to show that it was the only site, having considered alternatives. To say that he knew nothing about the alternatives means that he came along without knowing anything about the principal questions that he was bound to be asked.

Mr. Lever

I moved from exact comment to speculative interpretation of the Receiver's evidence and the reasons for it. The exact comment which I have to give the House is that I am firmly instructed that three sites south of the river were looked at, and I will give particulars to the House.

I am asked to explain why the Receiver did not say so. The only answer which I can give, since the devil himself knoweth not what is in the minds of men, even when the circumstances are known which are being discussed, is that the Receiver did himself and his Department less than justice, and the speculation which I make is that foremost in his mind was not the question which the hon. Member for Gloucestershire, South (Mr. Corfield) thought was uppermost in his mind. I suppose that what was foremost in his mind was the gross financial miscalculation which had been made about the cost of ingoing. I suggest that this would have been dominating his thoughts to the extent that he did not see that he had been adequately briefed. He was probably very uneasy about it all and his mind did not focus properly on what his officials had done.

But the fact remains—and the Home Office so inform me, and I so inform the House, though I cannot pretend to have been a witness to this interesting event—that his officials considered these alternative sites South of the river: the Vauxhall Gasworks site, the Esso-owned site at Vauxhall and a site South of the river by Bankside. Various sites North of the river were also considered.

Although I was not present when the evidence was taken, I have read the evidence with some care and, looking at it fairly, although I see the immediate apparent contradiction, I do not see the flat contradiction which is suggested by the right hon. Member for Kingston-upon-Thames. I do not say that it is impossible to take a view different from my own. But I can assure the House that I have given it the information at my disposal, and I cannot carry the matter beyond that.

I want to come back finally to a point about defence—

Question put and agreed to.

Resolved, That this House takes note of the Fifth Report and of the First and Second Special Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute dated 8th November 1967 on those Reports (Command Paper No. 3441).