COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)

HC Deb 20 November 1969 vol 791 cc1532-81

4.12p.m.

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

I beg to move,

That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4191).

This is the annual occasion on which the Committee of Public Accounts submits its report to the House and we ask our colleagues for their judgment on it. Paradoxically, perhaps, the fact that this is not one of the more congested of parliamentary occasions is a matter of sober satisfaction to the Committee. Those who are familiar with commercial practice will know that a scant attendance at the annual meeting of a company generally indicates happy contentment with the way it is being conducted, whereas a crowded attendance on such an occasion generally bodes ill, particularly perhaps for the chairman. I hope that I may assume that it is in that spirit that the attendance this afternoon is comprised mainly of those who are particularly concerned with our committee's work, including many of my colleagues.

I begin by expressing my own very sincere thanks to my colleagues on the Committee for the very large amount of work that they have done and the concentration of effort which they have provided, the results of which are embodied in the substantial volume which is on the Table. With the very heavy commitments which we all know all hon. Members have in these days, it is very creditable to the Committee, not only that its members have got through all this amount of work, but that it has been possible to carry through a very extended programme of sittings without ever having to cancel one by reason of the absence of a quorum. I want very sincerely to thank my colleagues for the great assistance they have given in this way, and in other ways.

In mentioning the members of the Committee, I know that they would all wish me to express the feelings we have on the death of our late colleague, Sir Gerald Wills. Sir Gerald was appointed to the Committee whose report is before is. Failing health compelled him to withdraw from it later in the year. All of us remember affectionately his bearing and conduct in the Committee and the quiet perspicacity of his questioning of witnesses. In the fine words which Mr. Speaker uses on these sad occasions, we are very conscious indeed of the loss which we have sustained.

I would also like at this stage to express our immense indebtedness to the Comptroller and Auditor General and his staff. Parliament and the nation are very lucky to be served by an official of the high intellectual quality and capacity of Sir Bruce Fraser. The fact that our reports appear to have a considerable impact upon the conduct of government is due in very considerable measure to the work which he and his able and devoted staff put in.

We are also greatly indebted to our new Clerk, Mr. C. J. Boulton. He has moved so effectively into the Clerk's seat that it is almost an effort of will to remember that this was, in fact, his first Session. He fully embodies the high standard of service to the House and ability which are characteristic of the Department headed by the Clerk at the Table.

I turn to our general functions before proceeding to deal with specific items. It is a very long-established Committee. It celebrated its centenary several years ago. By way of preparation for the debate. I turned up the reports of the Committee of precisely 100 years ago Except that they are far better printed, if I may touch on perhaps a delicate subject, than our contemporary reports, they provide an astonishing example of continuity.

There is a complaint 100 years ago of excessive spending by the Inland Revenue and by the General Post Office. Also—this perhaps marks the time that has passed since then—there is a sad little account of additional expenditure on the wars in New Zealand and Ethiopia, both of them east of Suez—just east of Suez at that moment, because it was in that year that the Suez Canal, now closed, had been opened. This is an example of the continuity of the Committee's work and its link with the Treasury.

I am very glad to see present the Minister of State, Treasury, who, I understand, is to reply. As he and the House know, his colleague the Financial Secretary is an ex-officio member of the Committee. I would like, on behalf of the Committee, through the Minister of State, to welcome the Financial Secretary to our midst. It is, as my colleagues at any rate know, the longstanding custom that the Financial Secretary attends as a matter of courtesy, when he can, the first sitting of the Committee and only subsequently if the Treasury is in trouble with the Committee.

I therefore imagine that the Minister of State will share my hope that, though we shall hope to see the Financial Secretary at our first sitting, we shall not see very much of him thereafter—but only, of course, for that reason. He and his Department are our close link with the Government. We are greatly indebted for the assistance we receive from the Treasury, particularly from Mr. A. J. Phelps, the Treasury Officer of Accounts, who is a regular witness. I should be grateful if the Minister of State would convey that expression of gratitude and appreciation to his Department.

The continuity of the Committee's work, as also its strength—which is that its recommendations do seem, sooner, on the whole, rather than later, to be accepted by the Government—is evidenced by another volume to which I invite the House's attention, because I understand that a new edition is in preparation. This is the epitome of the reports from the Committee which has been periodically published and laid on the Table. It has been described as the "accounting officers' Erskine May". The original volume covered the period from the 1850s to 1938; this was carried further by a volume laid in 1952, summarising the Committee's conclusions between 1938 and 1950.

I observe at this moment that the volume I hold in my hand was laid in 1952 by the then Financial Secretary to the Treasury, a holder of that office of whose limitations I have an unrivalled knowledge. I understand that a new volume is in preparation, bringing the story down from 1952. We shall welcome it, as, I imagine, will the officials concerned in Whitehall.

The Motion asks the House to take note of the three reports but I shall not say anything myself about the first two, which deal with excess votes and virement. As the Committee points out, the old doctrine that an excess Vote is a terrible thing is not now so strongly held by the Committee. It is accepted that, in certain areas, particularly, perhaps, those involving research and development, where it is quite impossible to foresee the complete position and what expenditure will arise in a particular year, it is contrary to good and taut estimating to be obsessed with fear of an excess Vote. It is better to risk an excess Vote occasionally than persistently to overestimate because the Department concerned is scared of having to come before the Committee about the excess Vote. The Committee expresses this view in its First Report, but the matter has certain public importance and, therefore, I thought it well to mention it today.

I come now to the contents of the Third Report, which covers a very wide scope. Obviously I should talk this Motion out if I tried to deal with all of the matters contained in it, and that is not my purpose. But I shall pick out one or two matters which may help the debate and about some of which the Minister of State may be able to say something in reply.

We refer, as our predecessors have done for the last four or five years, in paragraphs 39 to 42, to the development costs of the Concorde project. It will be a happy day for the Committee when the Concorde comes off its menu. We point out some serious defects in the system of control of expenditure and in particular make a point of some general parliamentary importance. We take the point, as the Minister of State will recall, that the escalation of costs from the £500 million figure given to us in 1966 to the figure of £730 million, with an intimation of possible further escalation, is very substantial and that it would have been better if Parliament had been kept informed in the interval of the degree to which the costs were escalating.

I am not seeking now to give a view one way or another as to whether the Concorde project is one which the Government would be wise to continue, but the House cannot form a sensible view, still less impress it on the Government, if it does not know the facts, and I ask the Minister of State to say that, in future, with other projects which may suffer similar experience, greater efforts will be made to keep the House informed of the way the costs are going.

I am not ignoring what is said in the Treasury Minute, and I appreciate that, in an international project tied up with a foreign country, there are greater difficulties than in a domestic project. But we are spending large sums of public money here, and if the House is to be effective in the control of public expenditure, knowledge of the way expenditure of this magnitude is going is an essential pre-condition of its effective work.

Mr.Joel Barnett> (Heywood and Royton)

Perhaps the right hon. Gentleman will allow me to reinforce that point and join him in the hope that my hon. Friend the Minister of State will expand on the somewhat short answer contained in the Treasury Minute, which says: The Treasury and the Ministry of Technology accept that Parliament should be informed at the earliest practicable opportunity should there be any further substantial increases in development cost estimates. We would like to know from my hon. Friend what the Treasury means by the words … earliest practicable opportunity … because, in questioning, we learnt that although the Treasury had known seven or eight months about substantial increases in costs, the House was still not informed.

Mr. Boyd-Carpenter

I am obliged to the hon. Member for Heywood and Royton (Mr. Barnett)—I nearly said "honourable Friend", because upstairs I so regard him. I am obliged to him for reinforcing that point. No doubt the Minister of State has taken note of it.

The Committee is bound to spend a good deal of time on aviation matters and in our Third Report we also draw attention, particularly in paragraph 52, to what seems to me the somewhat amateur system which has been adopted for a good many years for the pricing of aircraft engine spares. The system consisted of taking a price list for these spares compiled in 1960—not even then of the actual costs but of estimated costs for 1960–61—and simply making an arbitrarily determined percentage pricing-up of that price list each subsequent year.

There was no evidence, as I must say in all fairness, that this system resulted in any appreciable loss to public funds, but 1 am bound to say that it struck the Committee, as I think it will strike the House, as a somewhat amateur way in which to lay out considerable sums of public money. And the argument adduced before us in favour of it, to the effect that, if a company has overall not made an unreasonable profit, it can therefore be assumed that the prices quoted for particular items are reasonable, is not, frankly, an argument that anyone who has sat on the Public Accounts Committee in previous years would be prepared to accept.

It seems to me that the worst example of failure of financial control and, I am sorry to have to say, personal failure of individuals, occurred in respect of the multiple hiring of married quarters in Germany, which is dealt with at some length in paragraphs 89 to 102. The matter is complicated and I shall not weary the House with the background. But, briefly, to deal with the- real need to provide married quarters for the Army in Germany, a complicated system was worked out under which the German Government arranged for the construction of blocks of flats on a leasing system and then leased them to the British Government for this purpose.

One of the most serious aspects of this matter is set out in detail in paragraph 92 of our report and we there specify three separate ways in which there was a direct violation of the Treasury authority given in three specific cases which are quoted. In two of them, some hundreds of thousands of pounds were involved, and perfectly clear and specific Treasury authority was violated and the limits laid down therein transgressed. As the witness for the Ministry of Defence fairly said, this was an example of serious financial laxity.

As he also admitted, it goes to the root of the system of Treasury control. I hope that I am not influenced by the fact that I have had two tours of duty at the Treasury, but any system of handling public expenditure is rendered nugatory when departments spend public money contrary to the conditions on which they have been authorised by the Treasury to do it.

What makes the situation the more unhappy is that the senior civil official in Germany concerned., the Command Secretary, who is an officer of the senior rank of assistant secretary, knew nothing about it, and it is clear that no proper prior instructions were given to those carrying out the negotiations. It is further the unhappy fact that the accounting officer before us claimed that it was impossible to bring home personal responsibility to any individual for a state of affairs which had been continuing for a number of years. This seems to raise not only questions of the efficiency of the Army Department, but perhaps broader questions affecting the personal responsibility of civil servants.

Since the Fulton Report, we have had discussions about the doctrine of accountable management. The Report of the Select Committee on Procedure is full of such references. I sometimes suspect that "accountable management" means unaccountable management. It is an extraordinary state of affairs that we should be assured by the accountingofficer that it has proved impossible to bring home to any individual responsibility for a prolonged breach of Treasury authority in matters involving many hundreds of thousands of pounds.

I want to read the relevant questions and answers on this issue. I begin at Question No. 5281: So the Ministry's policy and finance divisions did not know what was happening at the time that the commitments were made? —Unfortunately not. Is that not again an example of serious laxity of financial administration?—It is. You have a Command Secretary in Germany?—Yes. Is he not supposed to deal with precisely this sort of issue?—I have questioned such of the Command Secretaries and their Deputies mainly concerned, and they are very astonished that this happened. I have not been able to see all the individuals of course, because there have been such shifts of staff and people have retired. But everybody who was in Germany that I have spoken to considered that they were within their authority. They did not knowingly exceed it. It is in fact quite plain that they were outside it?—It is certainly. What rank does the Command Secretary in Germany have?—An Assistant Secretary. Is there any disciplinary action being taken in respect of this?—The man to blame, I think, would be the man who actually had the instructions and carried out the projects. There is no evidence that the Command Secretary knew what was going on and failed to do anything about it. But is not the point of having a Command Secretary on the spot that he should know what is going on?—Yes. And he did not do so?—The individuals thought they were doing so. They thought they were being fully informed. Has any disciplinary action been taken against any single individual or individuals in respect of this?—No. Has this been considered?—It has been considered, but, if I may say so, unfortunately there are so many people involved and over such a long period of time that I think if one wanted to allocate individual blame one would have to have something like an inquiry, a judicial inquiry, and it would involve people who had now retired and some who are living abroad. I do not think that the House will regard that as a satisfactory state of affairs, any more than the Committee did. It seems to suggest a failure of organisation in the Ministry at the relevant time. Incidentally, it is the kind of occurrence which supports very much the modern thinking that we have perhaps carried the doctrine of Ministerial responsibility too far. None of the Ministers at the relevant time can possibly have known or be reasonably expected to have known about it. It was the failure of individuals inside the system.

When there are failures of this kind in a system it cannot be healthy that there is no person who can be held to have individual responsibility. I appreciate that, owing to changes which have taken place, the Minister of State is no longer in the Department responsible for the organisation of the Civil Service, but I hope that those who are responsible for organisation in the new Civil Service Department will treat this as an example not of a matter in which no one wants to indulge in criticism of individuals, but as an indication that real improvements can and should be made in the organisation of what I regard as the finest Civil Service in the world.

I turn now to one or two other matters to which I wish to refer briefly. One has a lighter touch, and it concerns the purchase of upholstery cloth for furniture in military quarters. Here we see a good example of the extraordinary situation which can grow up in Departments if they are not firmly administered from the top by senior officers.

The task was to choose upholstery cloth for furniture used in the quarters of officers and other ranks in the Army. It was laid down, rightly or wrongly, that there should be a superior specification for officers' cloth and an inferior one for the cloth to be used for the furniture in the quarters of other ranks. Solemnly assembled were 20 individuals round a table to look at various specimens of cloth, and they were expressly excluded from knowing the prices of the cloths concerned. Those 20 distinguished persons doing the job selected two cloths. The one to the inferior specification designed for the quarters of other ranks turned out to be appreciably more expensive than that of the cloth to the superior specification designed for officers' quarters.

That is perhaps an illustration of the situation which can develop in Departments if there is not a ruthless determination from the top to maintain modern and efficient systems of management and administration. The principle of allowing such a* committee to make choices of this kind without the information which we would all ensure that we had if we were purchasing goods for our own houses—the price—is quite extraordinary. It is fair to add that we have been told that the situation has now been put right and that this considerable committee has been disbanded. No doubt the members of it have been "redeployed" to other useful occupations. We understand that those who will now take similar decisions will be told the price of what they choose.

Another matter to which I would refer is the fact that, for the first time, we dealt with the report and accounts of the Land Commission and, for the penultimate time, with those of the General Post Office.

I know that my colleagues felt that the lack of experience in the administration of the Land Commission naturally meant that we could not apply the same rigorousness as we might have been disposed to apply to more experienced Departments. The fact remains that there was serious over-estimating of the workload which resulted in the recruitment of excessive staff running into hundreds. This has now been corrected, but there was some waste of money and manpower due to the failure at the beginning to understand the quantity of work involved.

I have no doubt that the Land Commission has taken to heart what the Committee said, and that it was probably a useful experience for its officers to come before us on this matter, even if they may not have enjoyed it as much as they might have enjoyed other ways of spending an afternoon.

We had the General Post Office before us for the last time but one. Subject to my colleagues' wisdom and decision, we shall have an opportunity to give it its final examination before the Public Accounts Committee in the present Session. As the House knows, under the Post Office Act, the functions of the Post Office are being transferred to the new corporation which, being a nationalised industry, although still formally within the ambit of the P.A.C., does not have the advantage of the examination of its accounts by the Comptroller and Auditor General. I express an an individual the feeling that, whatever advantages the new system may have in other directions, this is a disadvantage.

My colleagues, with the aid of the Comptroller and Auditor General, have examined the Post Office's affairs in most recent years. There have been very large purchases of equipment by the Post Office involving considerable sums of public money and at one time the system of purchasing called "the ring" excited considerable criticism. The steady pressure of this criticism has, I believe, resulted in considerable improvement.

There are, however, very large sums involved in the operation of the Post Office and I very much hope that those concerned with its administration and those in the Treasury concerned with the normal overseeing of the system of administration will seek to devise an alternative method of securing supervision of its expenditure and financial management to replace that of which it will be deprived after the coming year.

The strength of the Committee, if I may be so presumptuous as to assume that it has strength, is based on two things. First, it is wholly non-party and non-partisan in its operation. During my years on the Committee I do not recall a Division on party lines. Indeed, I think that in the Session to which the report we are discussing relates we did not have a Division at all. Our reports, therefore, come forward as objectively framed as they can be by fallible human beings.

It is perhaps as a consequence of this that our second strength arises. There is an acceptable and agreeable willingness in general on the part of Whitehall to accept the recommendations. This Session we shall be discussing in the Committee what is said in the Treasury Minute replying to the report which we are discussing. I do not want to foreshadow what will arise, but, in general, the Treasury Minute complies with the tradition that the Government take a good deal of trouble to try to meet the recommendations of the Committee, and I should like, on behalf of my colleagues, to express our appreciation of that.

This is a job of work which has been done now for over 100 years by a Committee with a wide range of membership and an even wider variety of chairmen. But it is work of some importance in supervising financial management and financial control. It is perhaps interesting to reflect that the Select Committee on Procedure, which has proposed wide and radical changes in other directions affecting Committees dealing with financial matters, has left us severely alone. I express my gratitude for that.

The Motion is simply one to take note. I do not suppose that every hon. Member will agree with everything that we have said or done. However, we feel that they should be asked to take note of the report.

4.45 p.m.

Mr. A. H. Macdonald (Chislehurst)

It is very flattering to be called to speak so early in this important debate. I have never had the good fortune to take part in a debate on a Report of the Public Accounts Committee before. I am glad to be called early because it gives me an opportunity to echo the remarks generally made on these occasions in expressing appreciation to the Chairman and members of the Committee for the work which they do. I see that I am one of the few Members present who is not a member of the Committee. None the less, I pay tribute to the Committee with some feeling.

I wish that the work of the Committee received not just more but better publicity. Only a month or two ago I was greatly taken by a letter in the Financial Times from which it was evident that the writer was under the extraordinary delusion that the Committee was a creature of the Government. I wish that the Committee's work were more widely publicised and better understood.

I hope that my remarks are not taken as a load of preliminary "flannel", because they are meant sincerely. Nonetheless, I wish to make a criticism of one of the recommendations in the report. I should like to refer to paragraphs 187 to 193 dealing with a case in which £3 million in public money was advanced to a concern which soon afterwards folded up and went into liquidation. I understand that the liquidator is declaring a dividend of only 4s. 6d. in the £ and that £2½million of that public money will have to be written off. Clearly, this is a serious matter, and, equally clearly, it was entirely right for the Committee to make a close and careful examination of it.

I notice that in its report the Committee endeavours to draw some lessons from this case. With due respect, I wish to differ from those lessons. In its examination of this case, the Committee noted that the equity capital provided by the promoters of the scheme amounted to only 16 per cent. of the total capital involved. It further notes that the present practice of the Board of Trade when making loans of this nature is to look for equity participation of 33⅓per cent. or even more. In paragraph 193 of the report it suggests that even 33⅓per cent. equity participation is too low for wisdom and safety and implies, though does not actually say, that equity capital of 50 per cent. would have been more reasonable. It is with this recommendation that I wish to disagree.

I think that the Committee is arguing from the particular to the general. For a soundly based and wise lesson to be drawn from this case, if that were possible, it would have been desirable to examine all the loans made by D.A.T.A.C. to determine how many of them had ended in failure and how many had involved equity participation of less than, say, 20 per cent. In that way it would have been possible to determine what co-relation, if any, exists between low equity participation and high failure rate. All we know is that this one case with an equity capital of only 16 per cent. has failed. I am not sure whether this loan, although large, was unusually large, but it does not appear from the report, the supporting evidence or the appendix that this is a typical case and I do not know, therefore, how far this can be taken as a pattern.

Secondly, it appears from the report and the evidence that this was a particularly bad case because, even if equity capital at 50 per cent. had been provided, and even if, as the Committee recommends in another place, it had been secured—may I say, in parenthesis, how much I agree with the recommendation that security should be taken in every case—if the promoters had put up, say, £3½million out of the £5½million and B.O.T.A.C. had provided £2 million, there would still have been a loss incurred because the liquidator was able to raise only £1 million from the sale of the assets.

Mr. Barnett

Is not my hon. Friend missing precisely the point which applies in industry generally, that there might have been no loss, because the organisation might not have been able to put up 50 per cent. and, therefore, there would have been no abortive project?

Mr. Macdonald

My hon. Friend has anticipated the point I was coming to by perhaps rather laborious stages.

I was about to say that this had been a poor proposal. It might have been more realistic not to suggest that it could have been accepted with different or tighter terms, but that it should not have been accepted at all. If we imagine coming before B.O.T.A.C., or D.A.T.A.C. as it then was, a scale of proposals becoming poorer and poorer, it is possible within certain limits to make those proposals acceptable on tighter terms, but, inevitably, the point comes when no amount of tightening of the terms can make them satisfactory, and the correct decision to make is that the proposal must be rejected. At some time that point must have come, and I would have thought that it had been passed in this proposal.

Thirdly, I gather from the Committee's report that other considerations were taken into account. The Government took a particular interest in this proposal possibly because of the amount of employment which it might have been likely to generate. This appears in question 2684 and the answer thereto. Also, the loan was negotiated by D.A.T.A.C. which was expressly the lender of last resort, whereas these matters now come under the auspices of B.O.T.A.C., which is not necessarily the lender of last resort. With due respect, therefore, I doubt whether that case can be considered as typical or whether lessons can be drawn from it.

If I may briefly sum up the first leg of my argument, I doubt whether it is possible to take this case as one from which we can draw lessons. It must be admitted that it was a poor case. It was accepted by the lender of last resort and considerations other than commercial ones were present when it was being considered.

I now want to argue about the desirability of drawing lessons at all in this way. First, if we take it that B.O.T.A.C. now is not the lender of last resort and operates in some measure on commercial principles, the optimum failure rate is not nil. I do not know whether I am capable of determining what the optimum failure rate would properly be, as this must depend on a number of variables but, if there were no failures, it could be argued that this was a sign that B.O.T.A.C. was being far too cautious.

If we assume, as we must in the context of this debate, that it is proper to put public money into projects of this kind, we must also recognise that every loan involves a risk of some magnitude, and it would be unrealistic to expect there to be no failures. It is proper to make every effort to minimise the number of failures but, if we were to insist that there should be no failures, we should be saying that B.O.T.A.C. should not do any business.

Secondly, even if the close analysis to which I referred earlier were carried out, it is a mistake for the Public Accounts Committee to advance from that and suggest too rigid guide lines for B.O.T.A.C. The Committee's implied suggestion of 50 per cent. equity capital being desirable is, in my view, far too high. I would regard 331 per cent. as entirely normal —not that I am saying that such proposals should automatically be accepted, or rejected, because other factors would be taken into account. I would go further and say that a proposal with only 25 per cent. equity capital is not necessarily to be damned on that account. If other factors are good, it might be perfectly legitimately considered.

The business of making loans in which B.O.T.A.C. is engaged is more of an art than a science. It is useful to draw lessons from past failures; it is also useful to draw lessons from past successes. There is nothing about past successes in the Report—naturally, that is not a subject of complaint. Even when lessons have been drawn from past failures and past successes, ultimately a wise loan is a matter of judgment, and I respectfully suggest that it may be a little unwise to advance too rigid rules in this matter.

I may be misjudging the Committee, but I fear that this is what it has tried to do. It is possible that the judgment may have been wrong in the case considered by the Committee. We do not know that it was wrong, but it is possible. Even if it were wrong, I have argued that this was a special case which should not be taken as a pattern from which lessons can be drawn. Even if it were not a special case, but a pattern, I respectfully deprecate any attempt to draw rigid guide lines from the consideration of one case.

My first intervention in a debate of this kind has been rather critical, I hope not too critical. As I have said, it is proper for these bad cases to be examined. All I am anxious to ensure is that, once they have been examined, we shall not be quite so positive, as I think the Committee was, about guide lines on this difficult matter of making loans.

5.0 p.m.

Sir Douglas Glover (Ormskirk)

Despite what was said by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), I find it disappointing that so few members of the Opposition are present for this debate on the Reports of the Public Accounts Committee. I should like to take the opportunity of congratulating the hon. Member for Chislehurst (Mr. Macdonald) who appears to be the only person interested in our Report, or the one dissatisfied shareholder. I do not propose to detain the House long. Hon. Members who have obtained the evidence and produced these Reports should not take up too much time in talking about their own conclusions. They produce these Reports for their colleagues to read.

I agree with all that was said by my right hon. Friend about the Comptroller and Auditor-General and his staff and Mr. Boulton. I believe that the Public Accounts Committee is a successful Committee. In saying that as a member of the Committee, I admit that I must disclose an interest. One of the reasons for the success of the Committee is its chairman to whom we must be grateful. My right hon. Friend the Member for Kingston-upon-Thames is adept at asking the right questions, and insisting that witnesses, however much they wriggle, finish up by coming clean with the truth. It means that we get much more value from our deliberations. He is held in high regard and the Reports owe much to his efforts.

As my right hon. Friend said, it is over a hundred years since the Public Accounts Committee was formed. I agree with the hon. Member of Chislehurst that it deals only with the disasters and failures and not with the triumphs. There is sufficient evidence in the report to show that the administrative machine can run off the rails unless a watchdog exists to see that it stays on the rails.

I have been a member of the Committee as long as anybody, and it is fascinating to see the progress we have made in the matter of Customs and Excise. Some five years ago there were nothing but extra-statutory concessions by the Customs and Excise Department. It will be seen that we have got the number of items down from 94 to 38 and are establishing a system of Statutory Instruments. This shows that the Committee has done a useful job.

Reference was made to the occasion when 20 wise men sat round a table discussing a piece of cloth. I used to be in the clothing business, and it is the sort of cloth I would have chosen. It cost 22s. 9d. a yard originally, but when a further contract was to be placed there was found to be an error and it was a better piece of cloth than was thought originally. That is what I was always looking for when I was in business. Eventually the State paid 28s. id. a yard for that cloth. Criticism must obviously be made of a Department which solemnly brings together round a table 20 men to pick out a piece of cloth, with no specifications or costings to go by, and when all the firms involved were asked to submit cloths of a similar texture and identity. It is beyond my comprehension that those wise men could discuss the matter when they were completely in the dark about what was required. I hope that as a result of our somewhat amusing remarks to the Department it will reorganise the whole system of cloth procurement. It is a disgrace that the system should be run on those lines.

It can be seen that we dealt with many matters and kept an eye on many things which otherwise would have gone wrong. I refer particularly to the lettings in Germany. I personally finished that discussion in a rage that something so appallingly bad could have happened. Yet, after great research and questioning, not a single person has been held responsible for an outrageously bad set of circumstances.

I make it clear on the Floor of the House, so that it might receive some publicity, that if the sort of circumstances disclosed in the Report exist, then somebody's head ought to roll because of a flagrant breach of Treasury instructions. If a Department that is spending vast sums of money is allowed to spend sums without any control at all, then it should be stamped on hard. Otherwise, in two or three years' time there could be absolute chaos in Departments. Therefore, I hope that the Treasury has issued a firm directive to the Department concerned, and I hope that other Departments have read the Report. I hope they have been told that if this ever happens again, the person nominally responsible will be held physically responsible and, if necessary, lose his job. The matter is serious enough for that sort of directive to be issued.

I do not agree with the hon. Member for Chislehurst in his criticisms of the Committee, but I must admit that as a member of the Committee I am prejudiced. It strikes me as a little nonsensical that when the House discusses Reports of the Public Accounts Committee as well as Reports by Select Committees the only people who take part in the debates are the members of the Committees. Other hon. Members of the House not members of the Committees should be getting un and criticising our Reports. The investigations are a continuing process, and in the light of criticisms by hon. Members the Committee may well take a different view the next time it is faced with a similar problem.

We do not get that sort of advice from our colleagues in the House because the Reports are debated only by the people who have produced them. This is not a sensible way to run our affairs. There is a great deal of material in the Reports for hon. Members to delve into, and if they were to take part in this debate they could elicit much more than is disclosed in the published document. I am surprised that some of my colleagues do not smell a better story behind the documents and come to the House to use their debating powers to discover whether they can pin it down.

I and other hon. Members on the Committee have gone through all the proceedings and elicited information by our questions, and then produced the Reports and agreed to them, so there will not be much that we can criticise. My right hon. Friend said that we did not have a Division in the Committee during the whole of the last Session, so there is not even a minority report. We are in favour of the Reports, which make a first-class document that hon. Members should study. It gives not only a great deal of guidance on the problems with which we dealt but general guidance on how some of those faults could be eradicated. I thank my right hon. Friend. It was a pleasure to serve under his chairmanship, and I commend the Reports to the House.

5.11 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I endorse what the hon. Member for Ormskirk (Sir D. Glover), said about the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) as Chairman of the Committee. All members of the Committee will agree that his chairmanship has been incisive in the extreme, without ever departing from the standard of courtesy and reasonableness which must always be shown to those who appear before us. I have been greatly impressed by his conduct of our proceedings, and I hope that he will go on for many years in that office, if he is willing to do so.

By a kind of uncanny telepathy the right hon. Gentleman seems to have chosen to mention those aspects of our reports about which I wanted to say something, as has the hon. Member for Ormskirk. I made no apology for going over some of those points again, because they are extremely important. We should write into the record of the proceedings of the House some points which the public at large, or Members, might not have the time or energy to pick up for themselves from the original texts.

I was especially concerned about the estimating failure of the Ministry of Technology with regard to expenditure on research and development of moneys made available by the House to private industry. Over the year; there has been a fantastic error of estimating under the sub-head relating to expenditure on research and development. The House should be aware of these figures, not merely in terms of cash but as a percentage of the money requested by the Department and granted by Parliament for the purpose.

In the year under study, the error was £19½million; the Ministry of Technology asked for £19½million more than it required on the outturn of the account. This was an error of estimating of 11.5 per cent. The previous year, the error was £12 million, 6.6 per cent.; the year before it was £15 million, 7.4 per cent.; the year before that, £24¼million, 12.3 per cent.; and way back in 1963–64 there was an error of £18¼million, 9.3 per cent.

I gather from hints in the Committee that in the current year there will be something of a bonanza, and that there may be an over-estimate of £24 million, though I cannot say what percentage that would represent.

This seems to me so reckless as to make a nonsense of any pretence that those are sensible estimates. It is true that in other Departments and under other Votes and sub-heads there are errors of estimating, but they are usually in the range of 1 to 2 per cent., or perhaps occasionally 5 per cent. Errors of estimating ranging from 6.6 to 12.3 per cent., repeated year after year, seem to make a nonsense of any argument that proper financial control is being exercised. The Treasury virtually accepts that in its Minute, because it says on page 4: …the Treasury and the Ministry of Technology accept that persistent over-provision in annual Estimates must necessarily adversely affect both the control of public expenditure generally and the efficient management of the economy ". I am glad that that is explicitly accepted by the Treasury, and I hope that the Department will do something about it.

It may seem a little odd on the face of it to worry about under-spending. It might be thought that if over-spending had occurred we should become anxious, but that if there is under-spending the money comes back, or is not expended, and that is all. But what I am concerned about—and I am reinforced in this view by the Treasury Minute—is that errors of this kind on Estimates, as compared with the outturn of the Vote, indicate lack of proper control over the finances and public money made available by the House.

There is another serious point. It is clear that in working out annually what he can permit different Departments to spend the Chancellor of the Exchequer must set the claims of one Department against those of another. If a Department demands, and succeeds in obtaining, substantial sums running into £10 million or £20 million which it does not need and cannot spend, that is clearly to the detriment of Departments which might very well have found a perfectly good use for such large sums of public money had they been allowed to have them. One cannot accept with complacency one Department making errors of that magnitude year after year after year. I have quoted six years in succession without the matter being probed into and a remedy being found.

Sir D. Glover

If I understood him correctly when we were arguing this matter, the accounting officer's view was that the money concerned is the same rolling 10 per cent. In other words, the research programme is perpetually six weeks behind. I thought that the total was about £150 million, and tried to find that out, but it is not. It is the same £10 million rolling on each year.

Mr. Hooley

With respect, the accounting officer produced a number of intriguing arguments as to why he could not marry up his estimates with the appropriations. I do not want to go into the whole matter. Anyone who is sufficiently interested to probe in detail will find all the evidence annexed to the reports. This is a serious matter, and I hope that it will be brought under control in future.

The right hon. Member for Kingston-upon-Thames touched on an important consequence of this argument, namely, that the Department should not be terrified of an excess Vote, but that it is much more important to make Estimates sensibly and correctly, and within the normal range of probabilities. In other words, they should do what I think is called "taut estimating", and not be terrified by what I think in the past has been Treasury mythology, that somehow an excess Vote is a terrible thing that must be avoided at all costs.

The Committee and the House will accept that we want close estimating, plus or minus a reasonable amount, but certainly I do not want to see, and hope that the House would not want to see, a continuation of extravagant estimating which in effect is not estimating at all.

I want to make one or two remarks about the Concorde aircraft. The general problem of the escalation of the project's cost has been ventilated enough in public, and the facts are pretty well known. The original estimate seven years ago was £170 million, and the latest estimate is £730 million, but most of us believe that we are nowhere near the end of the road. What has disturbed me is not so much a blatant lack of control over expenditure, or a lack of sensible estimation of costs, by the Ministry as by the aircraft manufacturers.

From the evidence before the Committee there seems to have been a vigorous effort on the part of the professional officers of the Ministry of Technology and, previous to that, the Ministry of Aviation to keep proper surveillance over the rise in the cost of this project, but they have been defeated by a total lack of control by the aircraft manufacturers.

This Session we were presented with two studies in depth of two aspects of this project. One concerned the estimates for the manufacture of the prototype and pre-production aircraft. The other concerned estimates of the cost of the fuel rig.

On the first point, it appeared that the British Aircraft Corporation's top management told the Ministry that they had not known the real extent of the cost increase. In other words, the top level management of the firm concerned did not know the figures and had to be pressurised by Ministry officials to produce exact figures about what was happening in terms of the cost of this important and complicated project.

Investigation into the fuel rig showed that there had apparently been an escalation in cost of 200 per cent. in three years. I gather that the fuel rig is a complicated piece of apparatus—it involves all kinds of complicated integration with the general design of the aircraft—and it is reasonable that the first estimate of its design and so forth would need to be revised considerably.

Extremely alarming is the evidence provided by the Comptroller and Auditor General, that control of costs on this particular task had been inoperative for a considerable time. In other words, manufacturers were merrily going ahead dealing with this section of the aircraft without any control or real knowledge of the cost. This is an incredible reflection on the British aircraft industry. I should not cast any reflection on the technical skill of that industry, but technical skill in this modern world is not enough. We must produce things with sufficient technical skill at a price that people can afford. It appears that in this important project the control of costs, so far as the manufacturers are concerned, has been thrown out of the window. They have concentrated on going ahead with solving the technical problems irrespective of the money they were spending. The point is that this is public money, voted by Parliament, which the manufacturers are using on this project. There seems to be an impression in the aero-space industry that when it is spending public money it can spend it ad lib.

Comments were also made in the Comptroller and Auditor General's Report on other aspects of aircraft production. The right hon. Member for Kingston-upon-Thames has already commented on the theory that if the profitability overall of a firm is all right, then it is assumed that the profitability on particular contracts is not out of order. That is a theory which a study of the Public Accounts Committee's Reports will not substantiate.

There was also a disquieting comment by the Comptroller and Auditor General that, when a study was made to find out whether overheads on Government contracts were correctly calculated, there was evidence of considerable over-manning in the firms carrying out such contracts. All these things give cause for disquiet. They may also lead us to examine at some future date whether our techniques for control and surveillance of the expenditure of public money in commercial or quasi-commercial operations, especially in the sphere of advanced technology, are right.

I have referred to Concorde and aircraft procurement generally. It might also apply to other technological spheres such as the purchase of, or research on, pharmaceutical projects. As the Government become more involved in the industrial and commercial world, we need to reinforce our technique of scrutiny over the expenditure of public funds. The Committee has scored important victories on equality of information and post-costing, but we may have to look at the problem in more depth.

Traditionally, the Public Accounts Committee has examined the men directly responsible for spending public money—accounting officers. But the senior civil servants do not really spend money on projects like Concorde. They try to exercise control and surveillance over the firms spending the money. MINTECH is making available large sums of public money to private corporations, which are the real spending agencies. This kind of spending on advanced technological hardware seems to throw up new problems of control and examination.

It might be argued that the Public Accounts Committee ought to detail smaller sub-committees to look at these complicated technological spheres of expenditure. It may be that the Committee should have the right to examine not merely the accounting officers, but also some of the senior management of the firms spending the money. This has occurred in practice where grave public scandals were suspected. But it would be unfortunate if the idea grew that we were concerned only to call to account the management of aircraft firms if an obvious scandal was suspected.

I do not see why, in principle, the Committee should not have the right, expressly through Statute or by Order of the House or by a convention, from time to time to summon senior management to give evidence and to examine them specifically on what they are doing to see that public money made available to their firms in huge quantities—hundreds of millions of pounds—is being dispersed and used with due care.

These suggestions are not conceived essentially in any spirit of hostility to the private corporations. There may be problems concerning the control of research and development expenditure with which the Public Accounts Committee is not fully conversant. It may be that we have gone as far as we can with the proper control of this kind of spending, but I suspect that rather more could be done and that it would not merely be in the interests of the taxpayer, but also in the interests of industry.

I should like now to make some comments on the hiring of married quarters in Germany, to which the right hon. Member for Kingston-upon-Thames referred. This was an outrageous scandal. There was a flagrant and blatant disregard of conditions specifically laid down by the Treasury. I endorse entirely what has been said from the other side of the House about nobody being responsible. It is a thoroughly unsatisfactory state of affairs and there should be a rigorous probe to make sure that it does not recur. It is the more unfortunate because the expenditure has been incurred across the exchanges at a time when the balance of payments has preoccupied this House and the whole country and where any laxity in spending Government funds in terms of foreign currency is the more reprehensible. I have suspected for a long time that there is considerable waste in our expenditure on maintenance of the British Army of the Rhine. I shall be surprised if that was the only example of failure to control expenditure in respect of that operation.

I hope that as a result of this investigation the Treasury will institute a rigorous inquiry into all aspects of the control by the Ministry of Defence of the expenditure being incurred, day in day out, month in month out, in maintaining the Rhine Army. I do not say that because I am inherently hostile to the idea of keeping that Army there, I am not, but because for a long time I have believed that the costs are grossly excessive in relation to the role which that Army is expected to play.

I have only one more comment to make, and that is on what appears to be a rather curious situation in the National Health Service. There does not appear to be any knowledge of, or any clear guidance on, the right level of nursing staffs in hospitals. The Committee accepts that different hospitals need different levels of staffing, but there are many hospitals of the same type and there does not seem to be any recognised norm or establishment for nurses in hospitals under the control of the Health Service.

In universities and schools it is accepted that, within certain ratios and limits, staffing is laid down. We take great care, or should do, to see that the deployment of expensive and highly skilled staff is made in accordance with certain broad principles. We do not decide that universities must have an absolute ratio of staffs to students, or that schools must have an absolute ratio of teachers to pupils, but there are some broadly accepted principles on which the staffing of these institutions is carried out.

No such rules appear to exist in respect of nurses in hospitals under the control of the Health Service. I think that some research has been done on the subject, but it is by no means adequate, and in view of the cost of training these important and skilled people, and the importance of seeing that our hospitals are properly served in terms of staff, I think that further investigation is needed into this matter.

I suppose that it could be construed as a compliment to the Committee that so few Members are interested in its report, in the sense that they take it for granted that we have done our job properly, and that any further comment is superficial. On the other hand, it may be that the House thinks that our whole proceedings and technique are antiquated and out of date. If that were felt in any quarter, I should be interested to hear the arguments advanced for it. I think that it is somewhat regrettable that the House should not be prepared to take rather more seriously a Report of this kind, which surveys the whole field of public expenditure, and does from time to time make recommendations which are not only important in detail, but which involve important questions of principle.

Sir D. Glover

What I am sure the hon. Gentleman will agree with me is so tragic about this is that the Report is so wide that all hon. Members, if they wanted to, could speak on almost every subject, but they are in the Smoking Room and cannot be called to take part in the debate.

Mr. Hooley

I should not care to pursue that argument too far, because I think that there are some hon. Members who are prepared to speak on every subject already. It is unfortunate that we do not have a better attendance. I hope that our future debates on the Committee's Reports will attract rather more interest.

5.34 p.m.

Mr. Edwin Brooks (Bebington)

I do not dissent from the concluding remarks of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), for, like him, and like the hon. Member for Ormskirk (Sir D. Glover), I feel that it is a pity that on this occasion the House should be so thinly attended. Nor do I dissent from my hon. Friend's opening remarks when he paid generous and only too well-deserved testimony to the skill and patience, and often forbearance, of the Chairman of the Committee of Public Accounts in the immense labours that he undertakes on behalf of the House during the course of the year.

This is a time of some importance in our discussion of accountability and parliamentary control of expenditure.

Hon. Members have referred to the Report of the Select Committee on Procedure, which, I understand, is soon to be debated in the House. This is a time when the House needs to re-establish what has been termed. the "circle of control". It is perhaps therefore a sign of the frivolity of members of the P.A.C. if, after a year's intensive effort, I seem to depart from the general and fundamental, and turn to a matter of apparent insignificance, but I am fortified in this choice of opening theme by the attention which has been lavished on it by earlier speakers.

I am, of course, referring to the curious and almost bizarre circumstances which surrounded the purchase of upholstery cloth. The right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the Chairman of the Committee, gave the House the basic facts, and I shall not repeat them, except to emphasise the obvious and extraordinary phenomenon that six types of upholstery were being ordered, three for officers, and three for other ranks, and at the end of the day, as we now often say, the officers' cloth turned out to he cheaper, despite the higher specification, for it, than did that purchased for the other ranks.

It is true that the Public Accounts Committee, during the course of its interrogations, was to learn that specifications cannot apparently be written with any high degree of accuracy, but this knowledge appears to have been unrecognised at the time of the original tendering and selection of materials. Indeed, the joint committee which finally selected six brands, ranging from two-tone tan to lacquer red, appears to have been lacking a great deal of other information, also. As has been said, only its chairman seems to have known the prices of the tenders, and as he was only 5 per cent. of the total committee, it seems that aesthetic rather than price considerations must have dominated their deliberations.

The P.A.C. was told, in what I think was rather a splendid simile, by the accounting officer: Just as in a club, Sir, your guest is given a menu with no prices so that his choice will be uninhibited by worries about his host's expense, there is something to be said for saying, 'Look, all these fabrics are acceptable. Your job is to choose the best '. I think that that is splendid, but it is not usual—and the House need not be reminded of this—for the taxpayer to be regarded as such an open-handed entertainer.

Another peculiar aspect of the whole matter is that the teal blue material was originally accepted, as the hon. Member for Ormskirk said, at a price of 22s. 9d. but subsequently it was found that the firm had made a mistake and that the real price should have been 28s. I d. But that price was, nevertheless, endorsed by the joint committee, and the P.A.C. was told that subsequent investigations revealed that the firm was making no profit on the deal.

Why the firm bothered to seek such a contract in those circumstances escapes me, but the joint committee apparently was satisfied that all the materials represented in the 90 samples examined were "good value for money". Although they may have been satisfied in principle that anything they were looking at would be good value for money, it appears strange that there should be such a range of prices—from 13s. to 34s.—for these materials, and yet, apparently, all 90 samples were good value for money.

As I meditated over this strange story I felt that somehow I had to find an explanation or philosophy behind what appeared to be happening. I turned, as I often do to rejuvenate myself, to Parkinson's splendid law and I found that it held the key to what happened. I wish to develop this point in relation to some other episodes described by the Public Accounts Committee. During the course of Parkinson's work, which was based upon the most erudite and fundamental statistical analyses, he discussed the coefficient of inefficiency of committees. He discovered that the coefficient of inefficiency must lie between 19 and 22.

This is based upon the formula—

X = mº (a — d)/y+p[...]b —where a represented the average age of the members; d the distance in centimetres between the two members sitting furthest from each other, and v the number of years since the committee was first formed. As a result of this scientific assessment one discovers that the coefficient of inefficiency is always found to lie between 19.9 and 22.4. The joint committee numbered exactly 20 and, therefore, lay clearly within the coefficient of inefficiency. But we were told that the committee has now been reduced in size.

We were curious why it should have been reduced to a certain size. Again, Professor Parkinson provides part of the key. To him, the golden number for a committee is about eight. He says: The interesting theory has been propounded that this number"— the golden number— must be eight That may be the case, or it may be six, but if it were a case merely of looking at one example and finding some apparent proof of what many regard as no more than a witty summary of our present ailments in committee structure there would be little point in pursuing it. But we find that there is throughout the whole of our report a constant reiteration of some of the more fundamental points which Parkinson's Law tried to illustrate.

We found that—and we were told this, again, on the upholstery matter—that every number you thought of got multiplied by three". This was because the various rationalisation procedures for the Services had not been completed at the time that this joint committee was sitting. This multiplication by three is also relevant to the examination of the work of the Land Commission because, as paragraph 167 of the Public Accounts Committee indicates, the Ministry of Land and Natural Resources, for the purpose of determining the office accommodation and number of staff the Land Commission would require, had estimated that the work load in four or five years' time would be 300,000 cases annually. The Commission were unable to explain how the Ministry had arrived at this figure, but the Commission's comparable estimate of the work load in four or five years' time was between 100,000, and 150,000 cases"— a ratio of between two and three times the original.

However, not only was there ambiguity and uncertainty as to how the original estimate of 300,000 had been made—a figure which was seriously over estimating the work load—but there was considerable under estimation, or so we were told, by the Ministry of the complexity of the levy work and, therefore, to some extent these two together would cancel out. This is simply a cancellation of errors and we should not be too sanguine or complacent about the situation which these errors revealed.

The Public Accounts Committee went on—as the chairman had emphasised—to draw attention to the difficulties of estimating the staff requirements for work of a novel kind. I was certainly concerned that the likely load of levy work should have been so greatly overestimated, with the result that excessive numbers of staff were recruited.

It is rather difficult for those of us, even on the Committee, who have access to accounting officers for interrogation to be altogether satisfied with the explanations that we are given about the problems brought before us. One of the surprising statistics that we were given in relation to the Land Commission was that by December, 1968—the date on which we took evidence—only 46.2 acres of the whole country had been handled by the Commission under its land dealing functions. Indeed, by March, 1969 about two years after vesting date—only about one square mile of the whole country would have been so acquired by it for its various purposes.

It may be argued that this is quite understandable—that it is complex and difficult work, and uncharted. Nevertheless, in my view it might have been wiser for staff to have been built up more slowly rather than excessively quickly, and to have avoided the inevitable problems which were subsequently brought out by our Committee.

I want to quote the good Professor Parkinson again. He refers to organisation strangling itself at birth. Examples abound of new institutions coming into existence with a full establishment of deputy directors, consultants and executives, all these coming together in a building specially designed for their purpose. And experience proves that such an institution will die. It is choked by its own perfection. It cannot take root for lack of soil. It cannot grow naturally, for it is already grown. When I think of the institutions which, during the course of the year, we were to examine and which come under this general criticism, my mind turns to the Board of Trade. We referred to the Board of Trade in our Report, and in some strong language. Professor Parkinson has an account of a building where an institution such as that which he was discussing, which has overgrown functions The outer door, in bronze and glass, is placed centrally in a symmetrical façade. Polished shoes glide quietly over shining rubber to the glittering and silent lift. The overpoweringly cultured receptionist will murmur with carmine lips into an ice-blue receiver. So it goes on. The impression given is that this is an organisation of vast efficiency.

Professor Parkinson says: In point of fact, you will have discovered that this is nothing of the kind. It is now known that a perfection of planned layout is achieved only by institutions on the point of collapse. We have to bear in mind that many functions of the Board of Trade—that splendid building in Victoria Street—have now been absorbed elsewhere.

But we were not concerned with the fundamental problems of the structure of Government. We were concerned with the problems of the canteens, especially in Scotland. There is a section in paragraph 201 of our report in which we point out that The Committee of Public Accounts of Session 1952–53 were informed that, although some of these canteens were being run at a loss which fell on the taxpayer, it was not the Board's policy to subsidise them; but losses continued and the Committee of 1961–62 were told that the Board were still making enquiries into how to deal with them. The Estimates Committee of Session 1962–63. recommended that intensified efforts should be made to transfer the responsibility for running the canteens to the tenants who use them. But although the years roll by and committees go on making the same point, and the Department apparently accepts it, this year we still have the same problem brought before us. As we say in paragraph 204:

Your Committee notes with concern that it is 16 years since a previous Committee of Public Accounts were informed that it is not the Board's policy to subsidise canteens on industrial estates. This is splendid progress. After 16 years, we are now getting somewhere apparently on this one.

I feel that Professor Parkinson can be quoted here on canteens: Just as for a quick verdict we judge a private house by inspection of the W.C. (to find out whether there is a spare toilet roll), just as we judge a hotel by the state of the cruet, so we judge a larger institution by the appearance of the canteen. There is a truth here about the Board of Trade's functions. The point is a serious one.

There was also criticism of the Board of Trade over the leases for factory rentals. This is certainly a much more serious point, in that it involves substantial sums of public money. Indeed, in paragraph 197, we find the following: The Board informed your Committee that a study of a sample of cases showed that the deficit of f-6 million on Income and Expenditure account in 1967–68 would have been substantially reduced, if not eliminated, if rent revision clauses had been included in leases since 1953. The Board of Trade had explanations for the delay since 1964 in introducing such clauses, as had been suggested by the Treasury at that time, but, for the reasons which are given in detail in the Report and which I will not read, the Committee did not accept those excuses. The House will be able to study this in detail and judge where our critique of the Board was justified or not. I certainly think that it was.

We say in paragraph 205 that there is a lack of vigour in dealing with financial questions by the Board of Trade, but on the costs of Concorde there was not only a lack of vigour but, I think, a lack of candour towards the House. Parkinson made the point long ago. He called it the "Law of Triviality", which means that the time spent on any item of the agenda will be in inverse proportion to the sum involved. This has been repeated so often that we regard it as an obvious truism and no longer even bother to smile, but it is a fundamental point when considering the saga of Concorde.

I have spoken in the House perhaps a dozen times on the Concorde and I suppose that there seems little left to say. Yet there is surely much left to say about a situation such as now faces us.

When I entered the House, and was on the Public Accounts Committee in May of 1966, we were told that there was an escalation in costs to upwards of £500 million for total research and development. This in itself was a staggering increase in the figures which, until then, had been before this Parliament. It also included £50 million for contingencies. So at least there was an assumption that this calculation of £500 million was based upon some sensible forecasting of the costs which were likely to be incurred for following years. In fact, nothing of the sort has happened.

I know that we are now punch drunk with statistics, and that an extra £230 million on top of £500 million leaves us befuddled: it does not matter any longer. I find, talking to hon. Members and particularly to members of the public, that we have now lost all sense of what this means. But what the escalation means is that, for every week during the last seven or eight years, an extra £1 million and more has been added to the research and development bill of Concorde—an average annual escalation of costs of well over £50 million.

This is surely serious. We are spending a great deal of time on the problems of upholstery and all sorts of other no doubt worthy causes, but when we get on to these huge sums, it then seems that perhaps two or three minutes is all that we can devote to them, bewailing the fact that we have no control over the Executive and also, I suspect, the fact that the Executive now has little control over the project.

But there are serious matters in our report this year which the House should have brought to its attention and which have not yet been mentioned. Until this year, we were under the impression that upwards of a third of the total research and development expenditure would be reclaimed by the British and French taxpayers via a levy on sales, so that, of the £500 million, we could have expected perhaps £160 million back. I am talking now of the two countries, of course.

Now, however, not only has the research and development cost gone up by about 50 per cent., but the estimated one-third recoupment is not nearly likely to be realised.

Mr. Terence L. Higgins (Worthing)

Would the hon. Gentleman clarify that for me? Is that because of the increase in costs or because there is expected to be no fully realised revenue so far as sales are concerned?

Mr. Brook

I could put my dilemma in trying to answer that simply in this way: we have not yet—perhaps my hon. Friend can clarify this—been given any precise figures about the actual cost at which Concorde will be sold. We have no idea, in other words, what levy would be chargeable or, indeed, could be chargeable so that the plane could be sold widely. Clearly, the more the levy, the lower the market. Estimates of the market themselves vary enormously. Some are of 200 and some go up to about 300. So there is a number of built-in variables on which there is, perhaps inevitably, a good deal of ambiguity. But it seems fairly clear that the likely levy per aircraft cannot exceed £2 million.

If this is so, of course one can start doing various sums. These have been made by Mr. C. B. Edwards, a lecturer in economics at the University of East Anglia, who has produced to my knowledge the only detailed cost-benefit analysis of the Concorde project. But when we on the Committee are given broad general answers in the course of our interrogation, we are never able to probe in the way that the hon. Gentleman now seeks to probe—or if we do, we simply cannot get precise answers.

The difficulty again is that the £730 million itself will certainly not be the last word, the final figure. The report says that if the development costs were to go up by more than some 15 per cent., a fundamental redesign of the aircraft would probably be involved. Maybe so, but this seems to imply that we can absorb—and probably will have to absorb —an increase of about 15 per cent. A 15 per cent. increase on £730 million is a lot of money—over £100 million.

If we add that on, we have a total of about £840 million on our R and D. So if we recoup a full third, nearly £600 million would still be down the drain. But this, we are now told, is most unlikely to be realised, so the total subsidy from the English and French taxpayers to the Concorde could be at least £700 million and possibly, when the final bills come in, nearer £800 million.

So much has been said about this that one feels almost helpless to add to what seems to me one of the most scandalous and disgraceful episodes in the whole history of parliamentary control of expenditure.

This cost-benefit analysis by Mr. Edwards was carried out as a private initiative. The conclusions he reaches may be unsound, ill-founded and incorrect but they are valuable since we in this House have never been given any alternative authoritative cost-benefit analysis of Concorde.

Before the M1 was built a complete study was carried out and it showed, in cost-benefit terms, that it would be a healthy investment. The same sort of detailed analysis, encouraged by officialdom, proved the same before the Victoria and Euston line was built. Since Parliament has never been given an analysis worth talking about for Concorde, it is interesting to note Mr. Edwards' words. Although this may be the last occasion on which I shall speak about this matter, there are many detailed figures in the document produced by Mr. Edwards—I will not state the statistics because they would be burdensome to the House—which should be examined by the Government.

1 Mr. Edwards states, on page 8 of his report: Working with the benefit of the hindsight which we have on the project so far, what is the net cost to the British economy of Concorde likely to be? On the assumption of a total research and development cost of, say, £900 million, a jigging and tooling cost of £100 million, a development period from 1962 to 1973, a profit per aircraft of £2 million, and a sales figure of 200 aircraft between 1973 and 1980, the net loss of the project at a discount rate of 8 per cent. p.a. is shown to be … £483 million … there is a loss to the U.K. economy of about £240 million from Concorde assuming sales of 200 aircraft and a `surplus' per aircraft sold of £2 million; with a sales figure of 140 and the same ' surplus ' the loss to the U.K. economy would be about £260 million. Clearly, if there are greater sales, the loss will be correspondingly less. There are countervailing arguments such as the benefit to the balance of payments and the technological spillover, but these too have never been spelt out in detail.

I am in favour of output budgeting, an accounting technique by one which defines goals and has a breakdown in costs in terms of that target. However, we have had the Concorde target for a long time and we have been completely unable to control the costs involved. The problem must be profoundly one of management accountability, involving both Governments and firms.

May I conclude with a final reference to Parkinson. My hon. Friend the Member for Heeley regretted that it was apparently impossible to work out what the right level for nurse staffing in hospitals should be. I have some reservations about this and about the Committee's strictures on the subject, for there are inherent difficulties in working out such a level and perhaps one is asking for trouble in trying to work it out. It may be not only possible but perhaps undesirable to imply that there should be some sort of straight forward calculation which enables us to tell whether a hospital is under-manned or over-manned; or, since we are speaking of nurses, over-womaned.

It is curious to note that if one looks at the increase in full-time nurses between 1964 and 1968—for which figures were made available to the Committee—one sees that the increases correspond almost precisely to Parkinson's Law. Parkinson says that the calculation which gives the number of new staff required each year in any service is given by the formula

100 (2 k^m +1)/Yⁿ% Expressed as a percentage, it would be between 5.17 and 6.56 per cent., irrespective of any variation in the amount of work, if any, to be done. One is tempted to smile at such a formula, but 1 am not sure that one should because 1 have found that a simple calculation reveals that the number of nurses increased during the period 1964 to 1968 by 5.5 per cent., which is within Parkinson's calculation.

I have suggested that there is a continuing problem facing the House and that we must take what is occasionally regarded as a jocular matter more seriously. I refer to the problems of bureaucratic extravagance which Parkinson's Law tries to identify. We must take these problems more seriously.

This is a time when it is easy to be complacent and say, There is a large volume of evidence and many complaints to support the theory of extravagance, but this evidence and those complaints relate only to what went wrong. Volumes could be published showing all the things that went right. But when I study the evidence before us—notably that applying to Concorde, the saga over the canteens and the business of the upholstery ordering—I wonder whether we are seeing only the tip of the iceberg and whether we need more effective surveillance and more rigorous management accountability than we have been accustomed to hitherto.

6.6 p.m.

Mr. Terence L. Higgins (Worthing)

This is essentially a parliamentary, rather than a partisan, occasion. By tradition, however, it is usual for a speech to be made from the Opposition Front Bench, and it is with pleasure that I make that speech.

I have had the pleasure of listening to the entire debate and the speeches have revealed the importance of the matters before us. I am particularly glad of the opportunity to express my personal thanks—I am sure that the whole House will join me—to the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) for the tremendous amount of work that he did and the success which the Committee had in looking after our affairs under his chairmanship.

In his speech, which was full of charm and elegance, my right hon. Friend stressed the great work which the Committee had done and particularly the fact that there had always been a quorum. Given the size of the Committee and its comparatively large quorum, that showed how well the Committee undertook its work.

I share the feeling of the hon. Member for Chislehurst (Mr. Macdonald) that I am, so to speak, an ordinary shareholder in that I am not a member of the Public Accounts Committee. I assure him, however, that it has been refreshing to listen to the debate.

It is sometimes said in the Press-1 was glad that the Press paid considerable attention to these Reports when they were first published—that there are certain hair-raising examples of expenditure examined by Committees of this sort. To mix metaphors. 1 suggest that the Committee was in the position of looking for a needle in a haystack because there was a vast area of public expenditure to be examined.

The Committee had the difficult task of pinning down areas where some abuses might have occurred and commenting on them. It was a difficult task, considering the small number of abuses in relation to the total amount of Government expenditure. It is vital that this work should be done and perhaps my right hon. Friend the Chairman of the Committee, as a former Treasury Minister, has been in the position of gamekeeper turned gamekeeper. We welcome his expertise and effectiveness in this matter.

It was clear from the example which my right hon. Friend gave that stringent cross-examination took place over the question of the multiple hiring of married quarters in Germany. When a defect of this kind is found it is right that it should be brought out by the Committee, then on the Floor of the House and that the Government should take every possible step to prevent a recurrence. This can be done only if every case is considered with great care and if every point that needs pursuing is pursued.

On 14th August, The Guardian had this to say: The worrying feature common to most of the mistakes is not that there are many of them or even that they are very large but that they are the mistakes of a kind that ordinary businessmen would never make. That is not invariably true. In the case of the multiple hiring, the failure was not one of commercial judgment but one of administration, and it is on the commercial aspect that I now want to speak.

My right hon. Friend pointed out that the Public Accounts Committee has now been in operation for more than a hundred years, but the economic environment in which it is operating is very different. Whereas in the last century it was just a question of sticking to clearly understood accounting techniques, in an age of inflation and in a period when we have had a very much faster rate of economic growth than we had in most periods of the 19th century, different economic methods are applicable. Moreover, we have today many financial techniques which were not available then, and the computer has given us greater powers of calculation.

That being so, I should like, first, to take up the point that emerged from my intervention in the speech of the hon. Member for Bebington (Mr. Brooks). The reference to the Public Accounts Committee in Standing Orders is: There shall be a select: committee, to be designated the Committee of Public Accounts, for the examination of the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit…". to examine, and so on.

It will, I think, be the general view of the House that it would be wrong for the work of the Committee to be concentrated purely on the cost side, because many of the matters into which it looks inevitably have not merely a cost aspect, but a revenue aspect in those circumstances, and looking at it from the commercial point of view it:is very important that both aspects should be brought out This was clearly recognised in the Committee's Report in page xxii. Incidentally, I must say that I find it difficult to switch to and from Roman numerals when going through such a long report.

The Report states: Your Committee were also informed that in consequence of the present cost escalation, the proportion of total development costs of Concorde which could now he recovered in the production price would probably be a good deal less than the one-third previously contemplated. It is important in this context that we should look not merely at the cost side but at the revenue side.

I make no comment at all on the desirability or otherwise of the Concorde project—we are not concerned with that today—but it is relevant to look at the debate we had in Standing Committee on the Industrial Expansion Bill in March last year. Pursuing this point about the revenue likely to arise from the Concorde project, the Minister of Technology replied to a point I had made about market research which had been carried out.

The right hon. Gentleman said: This is a complicated and interesting question. The market here is the airlines, and it is not for us to interrogate their passengers about whether they would prefer to go rapidly to New York in a big aircraft or more slowly in a ship. The co-ordination of passenger demand is an airline responsibility, and the customers for Concorde are the airlines themselves. Therefore, if one is looking at the market point of view, one looks at it in terms of airline options and possible orders, and it is not possible for the Minister of Technology to do an analysis of passenger preference."—[OFFICIAL REPORT, Standing Committee E. 19th March, 1968; c. 432.] Those words bring out the very important point that if we are to appraise whether or not public money is being properly spent, we must look at projects which are essentially commercial in nature and make sure that we get a reasonably accurate view of what the money is being spent on, and what we can expect from it. It is these two sides that are very important and which come out implicitly in much of what the Reports say with regard to the Concorde project.

In addition, the Committee has shown its concern with the objects of the policy. Here, again, I must say that it is not always entirely clear whether one is concerned with prestige, economic development, balance of payments, buying foreign exchange at a premium, technological spin-off, or whatever it may be, and while the Committee is primarily concerned with the cost side it is quite right to emphasise the point about the one-third coming back. It is important to look at these things in commercial terms.

A more general point is that, generally speaking, because we are in an inflationary situation, it is right that we should look at all these matters in terms of replacement value rather than historic cost—if I may use a little technical jargon. It is no good looking at a project in terms of what it cost originally: it is necessary to allow for the effect inflation has had on the actual value of the asset expressed by means of a constant measuring rod. Here I want to take up two particular points to which the Committee has referred.

The first refers to regional policy, and one can take as an example of what 1 have just been saying the break clauses in the factory leases in regard to development policy. The Committee has rightly brought out the fact that this is a quite extraordinary situation where, apparently. the Board of Trade, in particular, has sought to use the historic cost approach rather than look at what the influence of inflation is likely to be in order to further policies of regional development.

If one reads the interesting passages on this point in the reports one sees that gradually it is recognised that because there are other regional policies, such as investment grant policy, or R.E.P. policy, it is felt necessary to use this historic cost device to achieve an object of policy which was not really the original intention of Parliament. Therefore, in an inflationary situation it is very important to look at the thing in this way, rather than in purely accounting terms. I am very glad, if I may say so without presumption, that this point is well taken in the example I have just quoted.

Similarly, with many projects it is very important—and the same example will serve me—to look at the project over the expected life of the asset. Here we have factories which are expected to be leased for, at any rate, 21 years. We now have many new capital budgeting techniques involving discounted cash flow, and so on, which have had the effect of making many commercial concerns look at the rate of return they are likely to get over the life of the asset. Adopting that approach, one cannot get into a muddle with regard to these factory leases. If it is that sort of project, it must be looked at in commercial terms of the life of the asset, rather than just taking the picture at an individual moment of time.

One general point may be made here, because it is becoming increasingly important in both commercial life and Government service. Given that we have a relatively high rate of economic growth compared with the last century, one needs to see the other side of the coin, which is that the relative cost of labour compared with capital is rising. That means that if one is investing in a particular project, the right thing to do is not to take the relative cost of capital and labour at the time of making the investment decision, but the relative cost of capital and labour to be expected half way through the asset's life. This is increasingly done in commercial life, but has not become as widespread as, perhaps, it should when ordinary Government decisions are taken.

This brings me to another major point which has come out of this debate. Time and time again people have said, "We do not have the full information"—or what, in commercial terms, would be a capital proposal. I seriously wonder whether it should not be the case that at any rate, the Public Accounts Committee, or perhaps Members of Parliament themselves—perhaps the documents could be put in the Library—should not have, where it is relevant for projects, the normal form of capital proposal showing the cost side and the revenue side which is expected. This I know is a somewhat revolutionary viewpoint, but perhaps it should be considered.

Inevitably one jumps from paragraph to paragraph in reports such as these. I now wish to discuss the Local Employment Act, 1966—loan for the drydock. I listened to the contribution made by the hon. Member for Chislehurst and I take the point he made in endorsing the view of the Committee that in future any loans should be secured. I had a little difficulty in fully understanding the point, however. He had a difficult task and he explained it very clearly, but I had difficulty at one stage of the argument. I understood him to say that it would not be the case that loans of this kind would involve a nil failure rate. I can understand what he was arguing, but if one links that with what he said about full security for the loan I am not clear whether he suggested that a nil failure rate should not result in loss for the Government.

Mr. Macdonald

I understand the point the hon. Member is making. On reflection, it is possible that I did not make myself quite clear. I was arguing that in all cases it is proper to take security, but I do not think it possible, even by having security, in every case to be so careful and meticulous that we can ensure that the Government never lose any money, nor do I think we should aim at that high degree of certainty.

Mr. Higgins

This is a complicated point. It may be that with pleasure one could discuss it with the hon. Member outside the Chamber. I understand that the Committee's view was that generally there should be full security for loans of this kind. This is not unreasonable because there is a clear distinction between loans on which the Government do not expect to lose the capital sum and the existing system of grants. These should be brought into closer relationship. I found this point fascinating as concerned with the percentage of the total investment which should be put up by the operators of the scheme.

Recently for development areas we were in a situation where with a 40 per cent. investment grant, 40 per cent. of the total cost was paid by the Government, and this means that a number of projects are undertaken which otherwise could not have been undertaken. On the basis of that cash flow it may be possible for those receiving the grant to raise a considerable sum of money and, given that that is the situation in a development area, the tendency will be for the total equity contribution put up by the promoters of this or that project to be closer to the limit of one-third, which the Committee thought an unsatisfactory level, than the one half which it thought would be the right and proper level for any individual entrepreneur to put up. This raises some very interesting points. I thought the study which the Committee has made of this case a stimulating one which hon. Members should consider very carefully.

I make a final point with reference to over- and under-estimating. This is a difficult area because, as my right hon. Friend pointed out, traditionally there has been the feeling that a Supplementary Estimate is in some sense a terrible thing and ought not to happen. I am sure my right hon. Friend was right in saying that this is something which is not regarded with quite such horror as it was in the past. When one is looking at the Estimates and saying, "We think this is the amount of money which ought to be spent on a particular project", in some areas, particularly that of overseas aid, we seem to have got into the position in which the estimated figure is never actually achieved. That is because, although the ceiling is put at that point, for various reasons projects fall out and the total always falls below the estimated figure.

As my right hon. Friend said, there is a case perhaps for changing our thinking a little, though not to a great extent, about whether one under-estimates or over-estimates. The hon. Member for Sheffield, Heeley (Mr. Hooley) pointed out that we need accurate estimates and that one should get as close to the true expected figure as possible.

Those of us who were not members of the Committee are glad that this debate has taken place. It has emphasised the important work which the Public Accounts Committee does. The tribute which my right hon. Friend paid to the Comptroller and Auditor General for the important work he does was wholly justified. We shall look forward with interest to the comments to be made by the Treasury Minister. The Treasury Minute is very abbreviated and a number of points which have been raised in the debate are not covered by it.

I hope that the Minister of State will be able to give some answers to the highly complex but nevertheless most important questions that have been raised.

6.26 p.m.

The Minister of State, Treasury (Mr. William Rodgers)

I shall do my best to help the hon. Member for Worthing (Mr. Higgins). Coming to this kind of debate for the first time, I have been struck by the extent to which hon. Members have commented more on the report of the Select Committee than on the Treasury Minute. I would detain the House unreasonably if my main contribution this evening was merely to repeat what is said in the Treasury Minute if there was nothing of additional value to be said. What I think is clear to the House is the tremendous importance which we attach to the work of the Committee and the attention which its report is given.

The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in introducing the Report, with the advantage of having been on the inside, said that he was sure it had had a considerable impact on the conduct of government. I noted what was said by my hon. Friend the Member for Bebington (Mr. Brooks), especially about Concorde. I respect his impatience in so far as there has sometimes seemed to be delay in getting full information. That notwithstanding, I think it still true to say that the P.A.C. Report has a very considerable impact. I should like to feel that the Treasury Minute on this occasion has been acceptable and shows an agreeable willingness to take account of the views of the Committee. My feeling is that it is forthcoming and conciliatory because we recognise that in a number of cases the Committee has put its finger on important points and made criticisms which are justified.

This is, of course, the most distinguished and important of House of Commons Committees. As a very new Treasury Minister, it is interesting to me to see how the role of the P.A.C. very much chimes with what the Treasury is often trying to do. An unusual aspect on this occasion for a Treasury Minister is that normally Treasury Ministers are blamed for things for which they are not responsible and held accountable for the collective decisions of Ministers. On this occasion there is little criticism of the Treasury, except perhaps where it has not been tough enough. So it is pleasant so early in my experience at the Treasury to find that people are sometimes on my side.

Whereas the Treasury performs its important function with regard to government as a whole, and sometimes has its own criticisms of other Departments, which perhaps may be read between the lines of the Treasury Minutes, it is most important that the Select Committee, and, therefore, Parliament, if I may say so without disrespect, should stand behind the Treasury, prodding it forward, giving it support, but occasionally, if the Treasury leans too much one way or the other, pushing it back into line. If I were to speak of a partnership in this respect, again I hope I should not be disrespectful to a Committee which, being a Committee of the House, is, at the end of the day, sovereign.

I add my own tribute to the Committee's work and to its members, both past and present. Its Report can be read with fascinated interest by anyone. To say that it is bedside reading is perhaps an exaggeration, but some of the exchanges, including some which the right hon. Gentleman quoted, are fascinating. Although the debate has not been very fully attended, those who read HANSARD may thereby know what they have missed and perhaps remedy it by reading the report.

As for the Chairman, inevitably anything that I say will in a sense be a poor thing compared with what members of the Committee have said of him. He is held in the very highest regard by the House. When I was preparing for this debate and thinking what might be said and being reminded that the epitome of reports was to be brought up to date, I found the right hon. Gentleman's name on the front of this copy— Ordered by The House of Commons to be printed as long ago as 5th February, 1952. It is a very long and distinguished record, and we are greatly in the right hon. Gentleman's debt.

Then there is the Comptroller and Auditor General, who, again, has a very special relationship. He is, I think I am right in saying, the servant of the House and of the Committee. Yet he has a Department under his own control. I do not know whether this is unique in the accounting methods of Parliaments. Whatever may be said about the need for further sophistication in the methods of the control of expenditure, his role is a very important one and his own personal service is most highly esteemed by the House.

Considering what was said earlier, and perhaps the slight feeling expressed by members of the Committee that their own labours were not always fully noted, I was interested to see the very considerable comment there was at the time of the publication of the Report. For example, the Financial Times said that the report was as absorbing and salutary as ever. Having made some comments on the question of the control of public expenditure and the system of public accounting, it went on to say this:

It is very hard to see how there can be any substitute for the psychological value of a high-powered parliamentary committee which can cross-examine senior officials and cause them to justify the minutest details of their public transactions. On the day that that leading article appeared, there was a great deal of comment in the newspapers, which shows that the report was taken note of and is highly regarded outside the House. In that respect, because we all like to look for some reward or recognition of our labours, I do not think that the Committee should have any worries.

I do not intend to detain the House for long, because much of what has been said today has been comment on the report. I shall not repeat what has been said in the Treasury Minute. The matters which mainly concern the House and upon which there have been repeated comments are: first, the purchase of upholstery cloth; secondly, the Land Commission; thirdly, the Board of Trade; fourthly, multiple hirings; and, fifthly, Concorde.

On the first of these I have nothing to add. In so far as the Committee failed —I would not admit that it did—to make clear its criticisms, and in so far as the Treasury Minute may have implied that we did not in very large part accept it, the comments made today have emphasised the shortcomings which the Select Committee saw, and I can again say that the points have been noted.

The Ministry accepts that the selection process must obtain the best value for money. Having listened to what has been said, I appreciate how the Committee came to wonder whether former procedures were the best for that purpose. As the House knows, and as the Committee now knows, there has been a change of procedure. The further comments made on both sides, if one can speak of both sides of the House in a debate of this kind, will have been noted.

The very difficult task with which the Land Commission was faced was appreciated by the Committee. Had transactions reached or exceeded the level which might have been expected, the staff which it had in mind might have been inadequate for the purpose. In the last resort, in this sort of sphere when it is a matter of implementing the wishes of Parliament as embodied in legislation, it may be better to be on the safe side.

As I think the House knows, and certainly as the Committee recognised, the peak number employed by the Land Commission—this was in January, 1968 —then still fell considerably short of the total staff planned for at the beginning. The Treasury Minute points out that the number of staff has since been reduced. I would not say that this makes a great deal of difference, but from 1st October to the end of October there has been a further reduction of two. I am sure that in the light of what the Committee said every step will be taken to ensure that further reductions are made as far as possible and as far as is reconcilable with the proper work which the Commission continues to undertake.

On the question of the Board of Trade, again I think that the House will know that this was a matter upon which there was a difference of opinion between Departments, as from 1954 onwards the Treasury was suggesting to the Board that there was a case for introducing rent revision clauses into the leases for factories on the Board's industrial estates.

In defence of the Board, it should be said that it was anxious that the terms of these leases would represent an effective inducement to firms to go to development areas and also an assurance to those areas of a continuity of employment on those estates.

Now is not the time to enter into the argument. I simply say that because I think that the House will recognise that, on the one hand, the Treasury was carrying out its proper duty, as I think that the Select Committee has recognised, and, on the other, the Board had in its mind an important policy reason for not moving as fast and as far as otherwise we would like.

On the question of the multiple hirings, I have noted very carefully all that has been said today and the strong words that have been used. Some interesting points have been made about the much wider question of placing responsibility and the extent to which we have, by the creation of the Parliamentary Commissioner, abandoned in part a practice which the right hon. Gentleman referred to as Ministerial accountability.

It is now recognised that such is the detail of government that sometimes, if a Minister is properly responsible to this House for policy, he cannot be involved in a day-to-day way in all the details of his Department. I think that this is a very important and interesting point which I am sure hon. Members may wish to develop on future occasions.

For the moment, I simply say that the question of disciplinary action against individuals was considered carefully by the Department but, because of the number of people involved and the lengthy period of time, it was not possible to allocate blame to individuals on the evidence available. It has, however, been made clear to all concerned that an extremely serious view is taken of what has happened. A new and strict instruction has been issued to remedy the weaknesses in financial and administrative control which allowed the failure so rightly condemned by the Committee to occur.

As the right hon. Gentleman and his Committee will appreciate, this is something where the Treasury is greatly concerned. It is not only an administrative failure, if I may put it that way, but respect for proper procedures that is involved, and unless these procedures are followed there can be no control of expenditure of the kind which the House and also the Treasury require.

I turn now to the question of the Concorde. Here again, I think that I can express some sympathy for most of what has been said about this today. I respect, in particular, the strength of view expressed by my hon. Friend the Member for Bebington. He has expressed his view often and I know how strongly he feels about the escalation in costs of this project. He had some wise things to say and some points, upon which the hon. Member for Worthing has also reflected, about those who might or might not appear before Select Committees, but this has wider implications than those of the Concorde project.

But we are quite clear as to the need to keep the House of Commons informed of increases in costs. I was asked by the right hon. Gentleman about what is meant by the words, "earliest practical opportunity" for informing the House. I understand that they mean as soon as the facts are clearly established, making proper allowance in the public interest for the problems which arise from this being an international project and from the commercial considerations involved.

I think that the right hon. Gentleman himself went out of his way to make the point that his Committee fully understands the complications of a project such as that of the Concorde, and in that context I can certainly give the assurance which the House wants and for which the Committee has asked, and which I think we gave, although perhaps in guarded terms, in the Treasury Minute. It is a fair and important point and I am sure that, in particular, my right hon. Friend the Minister of Technology has taken note of it.

As the House knows, my right hon. Friend told the House on 10th November that the agreed Anglo-French estimate of £730 million is being reviewed to take account of the devaluation of the franc and certain adjustments to the programme. He undertook to inform the House as soon as practicable—to use the familiar phrase—of the results of this review. The House will appreciate that this would not be the time—and I am not in any case in a position to do so—to add to what we said or to anticipate his statement. But I can repeat his undertaking to keep the programme under review and to balance the estimated development cost against the estimated return on our investment.

Mr. Higgins

Presumably, also, the estimated production costs at the earliest time they are available.

Mr. Rodgers

I take that point, which the hon. Member for Worthing himself took from my hon. Friend the Member for Bebington when he referred to the possibility of recouping some of the development costs from the sale of the aircraft. Very complex calculations are involved here. If I had the information, I do not think that now would be the time to give it to the House. But, as it happens, I do not possess it, so it would be right to wait for my right hon. Friend, who, I am sure, will note what has been said. I undertake to draw to his attention the matters he raised about Concorde and also to draw the attention of other members of the Government to the other matters raised in the debate.

This has been a short debate but a most useful one, and I know that the right hon. Gentleman and the Committee and the House, from wide experience, can take it that all that has been said in the report and in the debate is of the greatest importance to us in the Government and that we shall take full account of it.

Question put and agreed to.

Resolved,

That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4191).