PUBLIC ACCOUNTS

HC Deb 09 December 1976 vol 922 cc645-761

4.17 p.m.

Mr. Edward du Cann (Taunton)

I beg to move, That this House takes note of the First, Second, Third, Fourth, Fifth and Sixth Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute and Northern Ireland Memorandum on those Reports (Command Papers Nos. 6654 and 6653). My second happy duty on behalf of the Committee is to render our thanks, and no doubt those of the House as a whole, to the Clerk for his imperturbable conscientiousness and to the Treasury witnesses, of whom the principal is Mr. McKean, for their valuable co-operation. I am sure that I carry the House when I say that the Treasury and the Public Accounts Committee are, and always should be, natural allies. I also thank the present Comptroller and Auditor General, Sir Douglas Henley and Mr. Sykes, who are most willing and able servants and guides to the Committee. If there is merit in the Committee's work, much of the credit should be theirs, and also that of their staffs, on whose skills we so much rely.

By no means least, I wish to express my own gratitude and, I am sure again that of the House to my fellow Committee members. They have gone through a heavy programme of work. The six reports have dealt with no fewer than 43 main subjects and the work was completed this year before the Summer Recess. I have to thank them for their conscientiousness. I have much admired their incisive questioning of witnesses. By no means least, I must thank them for their personal support and their many kindnesses to me.

As in former years, the Committee has carried out its work in an entirely nonparty spirit, even when politically contentious subjects have been examined. Whatever divisive views there have been on the Floor of the House, in Committee we united in our aim to contribute to the better management of the country's resources. Heaven knows, that is an aim which determinedly needs to be pursued.

The House may like to know that in our probings of the quality of departmental administration we had no difficulty in agreeing on the terms of all our reports, without any division in the Committee formal or informal. Right hon. and hon. Gentlemen will therefore understand if I say, perhaps in parenthese but none the less with emphases, how proud I am to be the Chairman of the oldest and most senior of the Select Committees. It is indeed a very pleasant duty.

I told the House in last Session's debate how the Committee had made progress in publishing reports at shorter intervals, so that the volumes would be smaller and, I hope, easier to digest. We made a little more progress during the past Session by publishing four main reports instead of the three main reports made in the previous Session. I hope that it will be possible to improve again on this performance during the coming Session.

This depends exclusively on the competence of the printing facility that is available to us. I wish to record the Committee's dissatisfaction with the present position. I propose to raise the matter with the Leader of the House. In my opinion, the competence of the printing facilities available to the House in terms of punctuality has been unsatisfactory for some time. I believe that the House would do well to insist that its business, including that of its Select Committees, be expedited and not impeded in any way by the services available to it. There should be neither carelessness nor delay at any moment in the pursuit and service of democracy as represented by this House.

I want to mention some of the particular issues raised in our work last Session. Our First and Second Reports deal, as usual, with cases of excess expenditure in Great Britain and Northern Ireland, respectively. The Committee, supported by the Treasury in this respect, as in many others, has always encouraged taut estimating as a help to sound financial discipline. I suppose that from a purely statistical point of view, if one tries conscientiously to get as near as possible to the eventual outturn, in 50 per cent. of the cases one will have a shortfall and in 50 per cent. an excess. I do not advocate quite that approach; but when minor excesses are incurred which are constitutionally wrong but for which no one can be held culpable, the Committee imputes no blame.

Last year, although we reported to the House that we saw no objection to the sums needed being provided by Excess Votes, we voiced our concern about accounting failures and thus an apparent lack of expenditure control in the Home Office in recent years. We were assured that further steps had been taken to ensure adequate financial control in the future. We shall be watching closely to see whether those hopes are fulfilled.

Our Third, Fifth and Sixth Reports record the greatest part of our work arising from our formal duty of examining the accounts laid before the House. Our examination concentrated, as usual, on questioning departmental accounting officers and their senior staffs on subjects that had been drawn to the attention of Parliament in the reports of the Comptroller and Auditor General on the 1974–75 Accounts, and on subjects on which we were following up the comments in the Treasury Minutes on the Committee's reports in the 1974–75 parliamentary Session.

In parentheses, again I emphasise to the House that continuity of survey strikes the Committee as an important need. I hope that the House will endorse that approach.

The contents tables in the reports show again what a wide variety of subjects was examined. As I have said, we thought it necessary to report on over 40 subjects altogether. However, I ought to say at once, and not least because I have made some astringent public comments on certain matters, that not all these reports were critical of departmental administration. The PAC is so firmly established as an inquisition that it must be a gratifying surprise when it is able to report that it has no criticisms to make of particular transactions that it has examined. The Department of Energy's special purchase of crude oil from Iran was one example. Another that I could add is that after examining the Public Trustee on the administration of his relatively small but interesting office, we were able to express a warm welcome for the considerable staffing and other economies that he had made and for his further plans for improving office efficiency. I hope that other Departments will follow that sensible example.

If the Committee is critical, it is, I hope, always constructive. If it is searching, I hope that it is also fair. If complaints must be made, we shall make them, as is our responsibility and duty, plainly and clearly. But the Committee is happy also to praise, if that is justified. I do not think that anyone, especially a superficial observer writing, let us say, about the work of this House, should suppose that because our reports are usually overwhelmingly critical, all Government administration, or even the major part, is incompetent. That would be a foolish and an inaccurate deduction. Our responsibility is to put a magnifier on the minority of failures, actual or potential. It has seemed to me sometimes that we are looking always at the tip rather than at the bulk of the iceberg.

I go on with particular matters. The necessity for economies in the Civil Service and other public sector staffing looms large in the minds of all of us in the House—well, nearly all of us, perhaps. I am sure that it will continue to do so and I am certain that it should. The Committee is always conscious of it, though it is an elusive objective, and sometimes I think that it needs pursuing with blunt instruments. However, the House must understand that it cannot have more administration, as a result of more tasks being placed upon public servants, without adding still further to the number of administrators, unless greater administrative efficiency can be achieved. As the Financial Secretary to the Treasury pointed out in last year's debate, in the context of the cost of effort devoted to combating tax evasion, this is a question of deciding where the balance needs to be struck.

This is particularly brought home to us when we look at the tax collecting functions of the Customs and Excise and Inland Revenue Departments. The Customs and Excise Department, for which I had some happy responsibility as a Treasury Minister some years ago, told the Committee—this seemed at first sight to be a shocking admission—that it was failing to collect about £30 million in value added tax each year. It then went on to say that it would need to spend an exra £25 million on staff to recover it.

The Inland Revenue told the Committee that as increasingly large numbers of higher-rate income tax payers, whose affairs are necessarily complex—as the affairs of all of us seem to be these days—are brought within the net, a disproportionately large number of staff had to be employed. It forecast that during the two years from April 1975 to March 1977, numbers employed in the Inland Revenue would increase from 74,000 to 90,000—an increase of more than 20 per cent.—if there were no changes made in tax allowances. That prospect speaks for itself.

Following the cuts in the rate support grant, which we shall be debating shortly—and how difficult they will make life for local authorities—and the consequent worries for the local authority administrations, many of us in the House are perhaps becoming more aware than previously of the huge burdens which legislation that we have passed in this House has imposed upon them. It seemed to me appropriate, in the context that I have already mentioned, of which I have given two examples, that I ought to give a word of warning to the House.

The problems that local authorities have at present and the problems of the Customs and Excise and Inland Revenue are just three examples of the need for a more careful counting of the cost of legislation in this House before we enact it. In my view, we have been much too careless in past years in that respect.

I have one minor proposal to make on behalf of the Committee which I hope will be of assistance to the House in this regard. The PAC has recommended, and the Treasury has accepted, that when Finance Bills are presented to the House in future the staffing implications of taxation proposals should be brought to the notice of Members of Parliament at the same time.

I have a further recommendation of my own to make, namely, that the Treasury should instruct the Inland Revenue and the Customs and Excise to discover and to publish comparative statistics for all the developed countries, including the United Kingdom, showing the numbers employed for revenue collection and the amount of revenue collected, the cost per pound of revenue, and so on. The reason for making that suggestion is that, in my opinion, much of our modern taxation legislation is unnecessarily complicated and, therefore, unnecessarily expensive.

I dare say that that remark applies to other facilities of government, and I believe that the House would do well to make a start on examining this particular matter. Indeed, I wish that Governments would take as a maxim for all future action and legislation that simplification should be the norm and the ambition.

Your Committee was also much concerned about the very large increases in costs of the Manpower Services Commission. A 37 per cent. increase in staff from 33,000 in January 1974 to 46,000 in May 1976 was—I quote from the Sixth Report—attributed mainly to higher unemployment and expansion of the training programme". However, there was also an increase in general administrative services.

Nor were we in the Committee clear about the real advantages of substituting for the old employment exchanges, perhaps in the back streets of towns and cities, over 1,000 brand-new and garish jobcentres in expensive High Street locations. The expenditure here increased from under £100 million a year, two years ago, to more than £400 million in the next financial year. That seemed to me and to the Committee to be a very large increase indeed.

We have therefore recommended that the Commission should urgently develop realistic criteria against which the cost-effectiveness of the present expansion programme can be determined. It is not just a matter of being frightened by those figures that I have detailed—the huge increase in staff and the huge increase in cost, seemingly without a proper examination of its value. When we examined the work of the Professional and Executive Recruitment Service, for example, we were far from convinced that in 1975–76 a placing of one candidate per office for each working day represented good value for money. I am sure that I speak for all members of the Committee in saying that we strongly support all worthwhile efforts to improve skills and training and to place people in jobs, but that makes it surely all the more essential to do it economically and not to equate greater expenditure and bigger staffs with a more effective effort.

Mr. W. R. Rees-Davies (Thanet, West)

Did my right hon. Friend's Committee take into account that there is a very large number of private agencies which are able to place professional and executive people in adequate and proper jobs without the need for any public assistance from the Manpower Services Commission?

Mr. du Cann

Yes, we took that into account. This is one reason why it would be reasonable for me to say that we shall look forward to seeing the results of the surveys that the Manpower Services Commission is now undertaking. We shall discuss the subject with the Commission further and report again to the House.

Another major field of our examination was the varied and rapidly expanding one of assistance to industry. This includes assistance to the shipbuilding industry—the Fifth Report refers—where we considered assistance to Govan Shipbuilders Limited and Cammell Laird Shipbuilders Limited and the financial consequences of what appears to be almost open-ended support, although the Department of Industry reaffirmed that the assistance was not open-ended.

The House should be made aware that the figures are very large—in the case of Cammell Laird Shipbuilders Limited about £40 million and in the case of Govan Shipbuilders Limited about £60 million. When such huge sums of taxpayers' money are involved, it is no pleasure to record, as the Committee felt bound to record, that productivity in the Govan shipyard at any rate had not grown—if anything, it had fallen—and that the losses were greater than expected.

When large amounts of public money are voted by the House for the support of industry, it is reasonable in return that the House should expect the highest possible standards of commercial performance. Nevertheless, all of us in the House are aware of the current difficulties for our shipbuilding industry and of the urgent need for a realistic and comprehensive strategy for it. I am glad to see that the Treasury Minute recognises this, but I think that it would be better if that strategy could be established sooner rather than later.

Your Committee also examined the Department of Industry's new criteria for selective assistance to industry. I should like to think that it was probing by the Public Accounts Committee that led to the establishment of these new and wiser criteria. We welcome these criteria, in contrast to some earlier experiences. We welcome them as a constructive approach to the development of sound and businesslike procedures. We endorse the broad philosophy that selective assistance should invest in success and potential success, and should not just prop up failure.

We looked at several examples of the way in which assistance had been given but where the results had been, predictably, I would say, disappointing—Kearney and Trecker Marwin Limited, a machine tool manufacturer, and the three worker co-operatives—the Meriden Motorcycle Co-operative, Kirkby Manufacturing and Engineering Company Limited and the ill-fated Scottish Daily News, where we were especially sorry to see that the workers themselves seem likely to lose substantial sums which they have subscribed privately. That was something that the Committee greatly regretted.

I happen to be, and have always declared myself to be, a supporter of the idea of workers' co-operatives. It has seemed to me, if I may state a personal view, doubly important that these early essays in this interesting field of sociological experiment should be well conceived if the idea is to prosper and survive. I believe that those who force those ideas forward without proper examination of the financial and other considerations do themselves and the workers they purport to serve a disservice by so doing.

We voiced our concern about the need for proper parliamentary accountability for the large public funds under the management, direct and indirect, of the National Enterprise Board, established in November 1975 and now responsible for the oversight of the activities of British Leyland and Rolls-Royce (1971) Limited, among other enterprises. We shall no doubt be looking further into that matter in the coming Session.

I think I should say this to the House on behalf of the Committee in regard to that matter. Again, huge sums are involved. At the minute there is no proper, recognised and understood, and clearly defined method by which full parliamentary scrutiny of the affairs of the National Enterprise Board can take place. That is not right. This, I believe, is a task for the Public Accounts Committee, and I think we would do well on behalf of the House as a whole to insist on developing a modus operandi.

To be fair, I should say that I have had the opportunity to discuss this point with the Secretary of State for Industry, who could not have been more sympathetic or more alive to the problem. He has offered every co-operation in that regard. I appreciated that, and so will the Committee.

Now to another matter, again involving large sums. Your Committee again spent some time in examining the effectiveness of purchasing arrangements in large capital projects where problems seem to recur with unwelcome familiarity. I have no doubt that various members of the Committee will want to comment on some of these individual matters and I will not take up too much time with them therefore.

I should like to mention the case of the RARDEN gun, which is dealt with in the Third Report. It is no doubt by now an excellent weapon, but substantial losses ensued in respect of this weapon from starting production before satisfactory development had been achieved. This is a perennial feature of defence projects and, in the view of the Committee, is inexcusable.

In the same way, the major projects of introducing a new class of destroyer—the Sea Dart Type 42—and a new class of frigate—the Type 21—ran into exceptional dislocation when construction was started on the basis of incomplete designs, resulting in serious additional costs. Then there was the additional complication of continual variations in order as the work proceeded. All this is referred to in the Fifth Report.

The House will understand that, because of my interest in maritime affairs, it causes me particular disappointment again to record that the purchasing authorities of the Navy are by no means as competent as they should be. We are talking about delays of up to two years in deliveries of these ships. To take one matter of detail, the cost of one ship—HMS "Sheffield"—increased during this process by no less than 59 per cent.

As the Committee emphasised in its report, the tragedy of all this is that it is the Services themselves which are ultimately the main sufferers, because higher costs must adversely affect the scale and timeliness of re-equipment programmes if the overall defence budget is necessarily limited. When money for defence is as short as it seems to be today, there is all the more duty upon the Service Departments to see that what money is available is effectively and not carelessly spent.

In this last Session, as in the previous year 1974–75, we examined some major computer projects, this time in the National Health Service and in other areas. In the National Health Service an experimental programme had been planned for exploring computer usage in hospitals. This is referred to in the Sixth Report. This again showed shortcomings in carrying out feasibility studies and in the preparation of reliable cost estimates.

The exact objectives of each experiment were not always clearly determined from the outset. It seems a remarkable idea to start out on a voyage without clearly knowing where one intends to go. There seems to be something socially OK about having a computer—"Let us have a computer. Never mind what we shall do with it. Let us have one." Nor is it only that. We found that results were not always adequately monitored during progress, and as a result various projects had to be terminated and others modified, without very much so far achieved in return for nearly £7 million spent.

We sincerely hope that these fairly elementary lessons have now finally been learned, or, as the Treasury Minute says, in its unflamboyant style, they will be taken into account in future planning. In other words, let us hope that such mistakes do not occur again.

The Committee expressed concern also about the need to report critically on a whole range of health matters in successive years. Again, I refer to the Sixth Report. We recognise and sympathise with the difficulties of the Department of Health and Social Security in seeking to ensure that the £4,000 million spent on the National Health Service, with its complex organisation and virtually limitless demands, is providing value for money for the taxpayer. The trouble is that we are by no means convinced that it is providing value for money for the taxpayer, and we shall therefore continue to take a close interest in the administration of the service.

I dare say that other members of the Committee and other right hon. and hon. Members will wish to comment on individual matters, and I say just this in parenthesis. I do not know how others find the situation in their constituencies. In my constituency, where we have waited for a new hospital ever since the National Health Service began, someone wanting an operation not of an emergency nature may now have to wait for up to four years to get it. There is something very wrong in the administration of the National Health Service. It seems most unfortunate that we should be looking at a whole series of matters in respect of which there has plainly been failure to account properly, slackness in administration and the rest at a time when every penny needs to be wisely spent in that great Department of State. If we continue to have criticisms about that Department, I hope that we shall do our best to be particularly constructive.

I have already referred to the Committee's Second Report, dealing with Excess Votes for Northern Ireland. As the House knows, Parliament continues to have responsibility for Northern Ireland, and the Committee examined the Northern Ireland accounts on the basis of the reports of the Comptroller and Auditor General for Northern Ireland. We took evidence from accounting officers for the Northern Ireland Departments in the normal way, and we made reports on nine separate subjects. I see that the hon. Member for Antrim, South (Mr. Molyneaux) is here, and I imagine that the right hon. Member for Down, South (Mr. Powell) and the hon. Member for Antrim, North (Rev. Ian Paisley) will hope to take part in the debate. I shall leave it to them to comment on these various matters.

I wish, however—on behalf of the House as a whole, I am sure—to pay a tribute to the Comptroller and Auditor General and his staffs in Northern Ireland, with a special reference to the great difficulties which they have in carrying through their administration in that part of the United Kingdom at this time.

So much for the specifics; I now turn to more general matters. As the House knows, the Public Accounts Committee has traditionally examined the financial administration of Departments on the basis of particular case studies, some specific and some a great deal wider. These studies are usually prepared by the Comptroller and Auditor General and his staff. In some cases, the Committee has taken an initiative of its own and has then been able to rely upon what has always been first-class support from the whole Exchequer and Audit Department.

I have already indicated the sort of areas which we examined last Session. If anyone doubts that such areas of departmental administration, involving in total the management and control of very large sums of public money, are worthy of the painstaking examination which the Committee tries to bring to bear I can only suggest that he or she reads some of the Committee's recent reports. I saw it suggested in The Times that the aggregate of the sums of extra expenditure to which reference can be found in these reports—in other words, deriving from particular matters into which we had inquired—was no less than £1,000 million. I do not know whether that is the right figure, but it seems to me that, when one talks of a sum of money of that magnitude in the context of the discussion currently going on in this country with representatives of the International Monetary Fund, the House may well reach the conclusion that it must be very valuable to have a Public Accounts Committee, and that it might perhaps be right to consider expanding its work in order to see what else might be found if more investigation were undertaken. I shall return to that point in a moment.

Taking the run of recent years, I think that the reports of the Public Accounts Committee will be found to cover most of the main activities of the Government and not a few of the smaller ones. To show how apolitical we attempt to be, I recall something once said by Harold Laski—not someone often quoted by Conservatives—that the price of economy, like that of liberty, is eternal vigilance. I am sure that that is right.

It is now widely recognised, as it has seemed to the Committee as it examined Permanent Secretaries and their senior colleagues week in and week out, that even when Departments are reasonably well managed it is in the nature of large bureaucratic organisations that waste and extravagance keep on creeping in, and that a strong and continuous external check is essential to keep them in check. I have no doubt that most of the Permanent Secretaries and other accounting officers who ultimately have to answer for shortcomings of this kind would agree that the system of operational audit—given, I hope, a sharper cutting edge by our Public Accounts Committee hearings—is both necessary and salutary.

So far, so good, if the House agrees with me thus far. The Public Accounts Committee does useful work, but how can the House as a whole play a part? In the first place, it seems to me that some of the issues which are raised in reports of the Public Accounts Committee deserve attention from somewhat broader points of view than the Committee can, or perhaps should, give in the course of its detailed examination of official witnesses. I have referred already to various subjects of this kind which arose last Session.

The use of manpower both for revenue collection and for administering a vast range of social and environmental services is, surely, one issue to which we must give serious and continuing attention. It would, of course, be absurd to expect the House to conduct a complex study of an operational research nature into specific areas of manpower utilisation, but we could at least express views about, for example, the relative importance of achieving complete equity as between one taxpayer and another or the desirability of collecting every last pound of direct and indirect taxation as against the manpower costs of so doing.

I believe that this would be a valuable exercise for the House. The House could debate, even if we were not able to reach a unanimous conclusion, the merits of ensuring that various types of fees and charges for public services were brought more closely into line with ever-rising costs. Here is an area of real debate about expediture control in the Welfare State.

We could perhaps consider not simply the ideological arguments for or against the setting up of such controversial bodies as the National Enterprise Board or the British National Oil Corporation, but the way in which, if they are set up, they can most effectively be made accountable to the House for their large and expanding operations, based entirely on Exchequer credit.

We could consider, for example, on the basis of experience with the Manpower Services Commission, the advantages and disadvantages of setting up hived-off bodies of this kind to conduct operations formerly under the direct control of Ministers and Departments. Those hon. Members, including myself, who are interested in our defence effort, might even wish to express views on the planning and control of some of the major defence procurement projects on which the Committee recently reported. That is an area that the House could well spend time discussing.

Another of my favourite suggestions has long been that Parliament should specifically discuss the proportion of gross national product which the State now takes. When Plowden first reported it was agreed that this matter would be considered annually. The former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), used to say that such a debate would be of significance. I endorse that. I am trying to find out whether, in terms of expenditure, we ask the right questions and debate the right things.

Mr. Ian Lloyd (Havant and Waterloo)

I have been listening with great interest to my right hon. Friend and I am sure that the whole House will agree that his is a profoundly important analysis. Does he not agree that before the House can give the time which these extremely important subjects deserve and require, we shall have to change the balance of time that we accord to legislation and debating important issues affecting the life of the nation?

Mr. du Cann

I agree very much with my hon. Friend. However, I would go a great deal further than that. The whole nation is heartily sick of the frantic way in which we continuously legislate. Most people do not understand what we are doing and have neither the time nor the inclination to follow it. The real sadness is that this plethora of legislation, which all Governments tend to encourage, brings the law increasingly into disrespect.

I also think that the House could, with advantage, go yet further and consider whether, and if so in what way, our contribution to the control of expenditure and the many and varied uses of public funds could be made still more positive. I am no opponent of public expenditure. As the Prime Minister recently said, there are many aspects of public expenditure which are wholly beneficial. I am sure the whole House is agreed on that. I am not an advocate of swingeing cuts in public expenditure just for their own sake. I deeply regret that as a nation we are now in the foolish position where evidence of the Chancellor of the Exchequer's economic competence, in view of informed opinion at home and abroad, will undoubtedly lie in the figure by which the grotesquely huge public sector borrowing requirement is suddenly and painfully reduced.

It follows, therefore, that I am an opponent of the careless style in which public expenditure in this country has been allowed to grow. I hope the House will join me in that. I am an opponent too, of waste, extravagance and a lack of surveillance. I am an opponent, not least, of the way in which precedents in term of expenditure are so often regarded as more significant than a re-examination of their justification in modern terms. Equally, I am an advocate of value for money. I am an advocate of constant surveillance of the way in which Ministers and officials spend the taxpayer's mite. They truly are trustees for the taxpayer.

The question is how well do they, and how well do we, discharge that trust. Using an ordinary analogy, I believe that the Government's attitude is very different from that of all the families in this country who are obliged to temper their expenditure in accordance with their revenue and not the other way around. The Government do not behave in any way like ordinary people. The Government do not set examples with regard to budgeting, efficiency or cost effectiveness, and so on. It is a tragedy that the Government not only do not do that but do not appear to do it. The truth is that public expenditure is out of control. It has been for many years. It is the biggest inflationary influence in our economy. It is not just a mere embarrassment; it is a danger to our standards of life.

Alas, we Back Bench Members have failed those who elected us and who trust us to ensure prudence and economy in our national affairs. A Budget introduced in the House is never a budget in the ordinary sense of families' affairs. We pass expenditure of millions of pounds on the nod. Debates about supply are not careful discussions of expenditure but mere excuses for political knock-about and an exercise in party loyalties. No wonder the populace is increasingly critical and cynical and yearly more contemptuous of our party games.

A Back Bench Member has one principal duty, namely, control of the Executive in the tradition of our constitutional history and the history of this place. The best, easiest and most effective route is through control of the purse strings in the tradition of our constitutional history and the history of this place.

Our control cannot, on the whole, be effectively achieved in this Chamber. Here we should debate the great social, economic and philosophic issues. It follows, therefore, that the House should consider extending its processes of delegation. If the Chamber cannot do the job—very well, encourage someone else, some group of Members, to do it for the House as a whole. My ideas in this regard—I have published them before and I shall not repeat them—may not be perfect but has anyone else a better idea? If so, I should like to hear it.

I believe that Budgets should be absolute. They should be continually monitored by a Select Committee—a Public Accounts Committee or whatever. There should never be excess without prior approval. There should be no new expenditure without a compensatory saving. In other words, complex though the affairs of Government are, we should do our best to run this country's financial affairs in exactly the same way as any responsible corporation would.

I make one practical suggestion. We are at the outset of the idea of cash limits which would cover just about two-thirds of total Government expenditure. Annual and monthly reports will be made. There will now be an opportunity to compare outturn with forecast. I hope that the Public Accounts Committee will be able to discuss with the Treasury—and I hope the House will think it right that it should—ways in which the Committee may monitor this process and make regular reports to the House. That would be a small task, which is easily within compass, and it would help to reinforce the proposal I made at the outset of my remarks, namely, that the Treasury and the Public Accounts Committee are necessarily always allies.

The control of public expenditure is near the top of the charts recording popular interest. I hope that one day the same will apply in the House. We have this instrument, the Public Accounts Committee, and I am sure I speak for my colleagues when I say that if the House wishes to use that instrument more we shall be very pleased.

I come to my second suggestion, perhaps more fundamental. I make it after having thought about these matters a good deal and having amassed a remarkable volume of correspondence from those who follow them outside the House. I pay particular tribute to Mr. Normanton, with whom I have had most useful correspondence.

In Britain, the Comptroller and Auditor General and his office—the Exchequer and Audit Department—have for many years rendered, and still render, as I hope I have illustrated, invaluable service to the Public Accounts Committee of the House of Commons. They do so, however, within the limitations set by the Exchequer and Audit Departments Act 1866, which was slightly amended—which I doubt many hon. Members will recall—in 1921. That Act was designed to meet very different and much simpler requirements.

For instance, it is remarkable to reflect that in the financial year 1866–67 the amount spent on United Kingdom Supply services was a mere £39 million. That Act, in my view, is now obsolete. It restricts the State audit body in various ways and limits the field which it may cover. For this reason, Parliament has no access to inside information about the vast public expenditure which is incurred indirectly through local authorities, nationalised industries and subsidised bodies of all kinds. There was no such spending in 1866.

I strongly suspect—I do not know what right hon. and hon. Gentlemen feel, and in view of the absence of information one cannot be sure—that there is far greater waste and extravagance in these uncharted areas than that which is reported from the Ministries, which are, after all, accountable to the House through the State auditors. I have already suggested that it has been estimated that the figure from this year's report at which we are looking may be £1,000 million. Very well; we can add to that another speculative figure. We must find an apparatus for surveying this area in detail. I do not know how strongly right hon. and hon. Gentlemen feel. I happen to feel passionately on the subject, as hon. Members know.

If there is strong feeling in Parliament that our control over public spending should be revived and strengthened, the most effective measure would be to inquire into the 1866 Act and bring it up to date. We always think that we attend to matters here very much better than anyone else. Alas, that is not always so. There has been a great deal of progress and experiment in foreign countries during the past half-century. This provides a mass of comparative material which deserves examination.

For instance, some hon. Members may be surprised to learn details of the increasingly comprehensive services that are provided to the Congress by the Comptroller General of the United States and his General Accounting Office. I have had the good fortune to go into that office and to survey it for myself. For the sake of hon. Members who are not familiar with it, I just say that it is a State audit body which employs graduates in management, economists, lawyers, engineers, mathematicians and other specialists, as well as accountants, with which our body, the Exchequer and Audit Department, is exclusively concerned. That is an instance of what is happening, and it might perhaps happen here if we thought it right.

State audit services could be devised to meet almost any new requirements which Parliament might express or any revised Committee arrangements such as those I have advocated in the past which come outside the narrow constraints of mid-Victorian statute. We have thrown off many Victorian constraints; some I regret, most I do not. Here is one which I am as certain as I am standing here it is the duty of the House to throw overboard. It is time that we had a new look at this whole field.

Time has moved on, and the whole business of government has changed vastly, unbelievably and unrecognisably since the statute was passed. We must assess the new needs and adapt old institutions to satisfy them. We should find a way of inquiring into the whole subject of public accountability. I do not know whether the House would like the PAC to report. I do not know whether it would like to set up some other body, perhaps a Royal Commission. What I do know is that the job ought to be done, and it is urgent to make a beginning. That is a matter which is fundamental to the improvement of government. As such, it must be a matter of concern to hon. Members in all parties.

We have already drifted much too far. It is surely the duty of the Public Accounts Committee Chairman to warn his colleagues and friends of the real dangers. I hope that the House, in its wisdom, may resolve at long last to take these matters more seriously, to correct the situation and to set up proper methods of inquiry, supervision and control. In the meantime, I commend the reports to the House.

5.6 p.m.

Mr. John Garrett (Norwich, South)

I wish to take up the final theme of the speech made by the right hon. Member for Taunton (Mr. du Cann). Speaking in the debate on the Public Accounts Committee Report in January 1975, I felt obliged to draw the attention of the House to what I felt were some extremely serious shortcomings in our system of State audit as operated by the Public Accounts Committee and the Exchequer and Audit Department under the Exchequer and Audit Departments Act 1866. Those criticisms are still valid and worth repeating at intervals of every two years or so.

It is still true that compared with the State audit systems of other Western countries, ours is the least expert, the least comprehensive, the least independent of the Executive and the narrowest in coverage. It is also possibly the most eulogised.

In terms of the qualifications of our audit staff, there has been one improvement since I last spoke on the subject. Recruits to the Comptroller and Auditor General's Department now have to acquire an accounting qualification. Of the 622 members of our audit staff, nine are qualified accountants or chartered secretaries. Let us compare that with the level of technical expertise of the staff of the Comptroller General in the United States. He employs an entirely technically qualified staff of 2,500 accountants, 530 management specialists, 126 attorneys, 103 mathematicians, 36 engineers, 37 computer scientists, 177 economists and other social scientists and 186 other professionally qualified staff. American State auditors can in every way match the expertise of the departments and agencies they are auditing.

Our State audit staff are recruited as school leavers or promoted from lower grades. In every comparable body in other countries auditors are technically qualified graduates or have post-graduate qualifications. Our audit staff are graded in the Civil Service executive grades at middle and junior management levels, with the unfortunate consequence that they have a status inferior to that of the officials on whose actions they report.

Over the years, the Comptroller and Auditor General has developed the depth of his inquiries from merely establishing the regularity or propriety of expenditure to establishing whether there is waste or extravagance, although he is not in any thorough way concerned with the efficiency or effectiveness of spenders of public funds.

It is clear from the reports that we are considering today that the main thrust of the Comptroller's inquiries concern overspending, financial control systems, and administrative error—all looked at in hindsight and nearly all followed by a recommendation that the Department in question must do better next time.

Let us compare these reports with the standards laid down for the audit of government functions developed by the General Accounting Office in Washington and issued in 1972. The foreword to these standards said that Government auditing could no longer be a function primarily concerned with financial operations. Instead, Government auditing should be concerned with whether governmental organisations were achieving the purposes for which programmes were authorised and funds made available, were doing so economically and efficiently, and were complying with applicable laws and regulations.

The Government audit of the United States sees three main elements in its task. The first is financial compliance, which represents the traditional regularity audit. The second is economy and efficiency, and whether the agency is managing or utilising its resources (personnel, property, space, etc.) in an economical and efficient manner, and the causes of any inefficiencies or uneconomical practices including inadequacies in management information systems, administrative procedures, or organisational structure". The third item is programme results and whether the desired results or benefits are being achieved, whether the objectives established by the legislature or other authorising body are being met, and the extent to which the agency has considered alternatives. In Britain, our Government audit is still primarily concerned with the first of these tasks, and not the second two.

Next, only a small part of public expenditure is covered by the central Government audit in this country. The nationalised industries are not covered, the local authorities escape—so that Parliament has little information about their use of funds—and hundreds of private industries, and quasi-governmental or State-supported bodies which are users of State funds are not subjected to any test of public accountability for the use they make of those funds.

The principle of public accountability for the efficient and effective management of Government Departments has not been accepted in this country. This question is referred to the Civil Service Department, which is part of the Civil Service, and its inquiries are carried out at the invitation of, and totally dominated by, the Departments whose operations are to be investigated. In other words, the Civil Service examines its own efficiency.

Our Exchequer and Audit Department is far too closely allied to the Executive. It is nothing like as independent as other state auditors. The Treasury has an unhealthy influence in appointing the Comptroller. The form of the accounts is decided by the Treasury—and they are exceedingly uninformative—and the Treasury is also responsible for deciding which Departments will submit accounts to the Comptroller.

The Treasury—now the Civil Service Department—reserved to itself under the 1868 and 1921 Acts the regulation of recruitment, salaries and scrutiny of the Exchequer and Audit staff. So the Executive has a great deal of power over its own auditors. Such a situation obtains in this country, but does not obtain in any other State audit department.

Let us again compare this arrangement with that in the United States, where the Comptroller General obtains the budgetary appropriations for his department, the General Accounting Office, directly from Congress, after making up his mind what resources he needs. The Cour des Comptes in France and the Federal Commissioner in Germany enjoy a similar statutory independence.

Our system of State audit was a pioneering innovation in 1866, but it has hardly developed since, while the accounts to be audited have increased in value from £70 million to £35,000 million. We need a system which subjects all spenders of State funds to an independent, comprehensive examination, reporting and accountable only to Parliament. This would do more to lessen the dominance of the Executive over the legislature than any other single reform. The great pity is that so few Members of Parliament are interested. They believe that adequate control over Government can be exercised by debate and questions, but the truth is that it can be exercised only by powerful investigatory committees.

A number of reforms are needed and they are quite simple. We need a legal definition of public funds which is far wider than at present, and the statutory right to call all spenders of public money, whether in private industry or public service, to account to Parliament for their financial regularity and management effectiveness.

We need a State audit body with statutory independence from the Treasury and the Civil Service Department. We need a State audit body of professionally-qualified staff, seconded in teams of about 30, to approximately a dozen parliamentary committees which would combine the present functions of the Expenditure Committees and the Public Accounts Committee. Each committee would shadow a Government Department or group of small Departments. The Committee on Nationalised Industries would continue with its own audit staff.

In our PAC debates over the past 100 years, hon. Members have eulogised our system of State audit, apparently unaware of developments in other countries. It does a very useful job within its limitations, but these limitations are now so scandalously great that they are a major constitutional weakness.

Parliamentary democracy is lessened by the inability of the House to call the spenders of public funds to account. It is time for a change.

5.18 p.m.

Sir Timothy Kitson (Richmond, Yorks)

I do not disagree with many of the remarks made by the hon. Member for Norwich, South (Mr. Garrett). I thought when he began that he would criticise the Public Accounts Committee, but the Committee can work only with the staff provided for it, and it is true that our systems for watching Government expenditure are wrong. Often, the Committee can close the stable door only after the horse has bolted. This was what my right hon. Friend the Member for Taunton (Mr. du Cann) said in some of his opening remarks.

Looking back through the reports of Public Accounts Committee debates in this House, one finds that, time and again, members of the Committee and other hon. Members have asked for more stringent and effective powers to be provided for the Committee. I am sure that we would all welcome this. It becomes more necessary as public expenditure continues to rise every year.

During last year's debate on the PAC Reports, many hon. Members complained at the delay in holding the debate long after the reports had been published. Like other hon. Members, I am gratified that we are having this debate before Christmas. As this request was made by many hon. Members, we ought to thank the Leader of the House for meeting our wishes for once.

I am grateful for all the guidance and work of the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Taunton (Mr. du Cann), for the admirable way in which he chairs our Committee, for the way that he introduced the debate and for the full account of the Committee's work that he gave to the House. After my right hon. Friend had covered practically everything in the reports one could simply have said "Amen", because he had made so many points.

One of the main concerns of our constituents is the high rate of Government expenditure. They pay particular attention to poor budgetary control and dislike seeing Government money carelessly spent. They dislike waste. I often hear people say that if they ran their affairs or businesses in the way that Government Departments spend taxpayers' money, they would go broke. I am sure that is true. It seems that to some Government Departments, a few million pounds here or there, or even a few hundred million pounds, does not seem to matter.

The public have been made more aware, as a result of the efforts of both Press and television in pinpointing unsatisfactory findings, resulting from inquiries of the Public Accounts Committee. These have been brought to the attention of the media by the Press conferences that are held on the publication of our reports. I welcome this growing interest.

In our debate in January last year, many of us pointed out that we felt that if we were to do our work successfully, it was necessary for the House to have better information on Government spending programmes and for the Treasury to have far stricter control over Government Departments. It is encouraging to see that the Treasury is now calling for Departments to make monthly statements of their spending programmes. This must lead to better budgetary control and will surely give fresh opportunities to our Committee.

In many of our inquiries into overspending by Government Departments, we find that they come to the attention of the Comptroller and Auditor General only years after the event. With the new system in operation in the Treasury, I think that if the Commitee were able to examine the monthly reports it might be possible for us to pick up some of the overspending mistakes a great deal more quickly than we are able to at present. I support my right hon. Friend the Member for Taunton in his call for the Committee to be given an opportunity to look at the reports.

I am sure that hon. Members who have had time to read our reports will come to the same conclusion as that reached by many members of the Committee. As the years go by, the mistakes and errors become increasingly horrific. We hear so often in our cross-examination of Permanent Secretaries—who are accounting officers of Departments—that they have difficulty in explaining the mistakes because they were made years before, when the Permanent Secretary was not responsible for the Department.

If we were able to look at the monthly accounts rendered to the Treasury, this argument would not be valid. It is unfair for the Committee to take an accounting officer to task if the specific case it is investigating happened some time before he had responsibility for the Department.

Of course, I realise that even with the opportunity of examining these monthly reports, many of the cases that we consider would still not have come to light until the Auditor General had had the opportunity of investigating the accounts of the Department, but if we were able to examine the position monthly, the work of the Committee could become more effective and overspending by Departments might be curtailed to some extent. This would add teeth and strength to our work.

It will be clear to hon. Members who have considered our reports that budgetary control in some Departments is very much worse than in others. The Department of Health and Social Security seems to come under a great deal of scrutiny from the Committee every year. This year we looked at delays in rendering health authority accounts, trust funds of health authorities and special trustees, hospital staff catering, the National Health Service experimental computer programme, the closure of hospitals and disposal of surplus land, hospital works services and financial control of expenditure by the NHS in England. This is a large and diverse number of subjects to be considered from within any one Department, and the explanations we received from the Departments were highly unsatisfactory, to say the least, in many cases.

Paragraph 133 of our Sixth Report says: In recent years and again during this Session Your Committee have examined a number of matters where it has appeared to us that there have been defects in the financial control exercised by hospital authorities over expenditure from public funds provided through the Department of Health and Social Security. We have been disturbed by the need to report critically in successive years after our examination of the accounting officers of the DHSS, and we must again emphasise the importance of effective methods of financial control, and of according the highest priority on behalf of the taxpayer, to obtaining value for money in the NHS. I am sure that most members of the Committee will agree that at present we are not getting value for money from this Department.

It is apparent to many members of the Committtee that, following reorganisation of the National Health Service, effective methods of financial control have continued to deteriorate and, as stated in the above paragraph, we have had to report in successive years very little improvement in the methods of financial control. I only hope that next year the disturbing features which were drawn to our attention will not reappear.

One example occurs in the disposal of land. Although only small amounts of money are involved, the methods and systems for disposing and handling land which is surplus to the requirements of the Department are wholly inadequate. There seems to be no sense of urgency.

Where land was being held pending a sale, the authorities failed, in some cases, to get a reasonable return on land which was awaiting disposal. We found one example where the DHSS farmed about 300 acres of its land, and lost £3,000 a year. After doing this for a number of years, it let the farm for £18 an acre, which, in my view, would be a very low rent even in a mountainous area, let alone the good farming area in which it was situated. We discovered that the Department has about 2,000 acres awaiting disposal, but there always appear to be strong reasons for delaying the sale. Some of the reasons given were difficulties in establishing proper boundaries and rights of way, but these have to be established in normal transactions anyway.

In 1967, when the Ministry of Health started an experimental computer programme, the PAC was not impressed by its achievements. Indeed, in one case, as my right hon. Friend the Member for Taunton has mentioned, the scheme was suspended by a hospital in September 1972, but the DHSS did not discover the suspension, although it was a partner in the scheme, until nearly a year later.

I have the impression that in the Health Service we have more and more people on the administrative side and fewer working on the wards and looking after the patients.

The story of the reorganisation of the employment and training services is not much better. The increase in staff between January 1974 and May 1976, of 37 per cent., and the cost of setting up jobcentres, which were extremely expensive, convinced some of us that the country was getting a poor return for its money.

I think that most hon. Members would agree that as not only the proportion of GNP but the actual amount of public expenditure increases year by year, the work of the PAC becomes more important. There would not be enough time in a year if we sat all day and every day to scrutinise every problem drawn to our attention.

While Government expenditure rises yearly, the number of Members on the Committee and the time available to do our work remains constant. Not only that; the demands made on hon. Members from both our constituency and our constituents and the ever-increasing quantity of paper that falls upon us makes our job more demanding every year.

To help hon. Members who are not on the Committee, I should like an abbreviated report on our work to be circulated to every Member at the end of each year, taking just a small number of the points made in our six reports. This would make interesting and easier reading for our colleagues.

I know that most hon. Members are submerged in paper and when they receive six reports from the Committee they must throw their hands in the air and ask "Where do we start?". More of our work would be considered if we had these abbreviated reports.

As I mentioned before, I should also like the PAC to consider the monthly reports on expenditure programmes sent by Departments to the Treasury. I hope that our Chairman can discuss this with the Financial Secretary, so that when the House reassembles after the Christmas Recess these documents will be available to the Committee and that, with this information, the PAC will provide an even better service to the House of Commons.

5.30 p.m.

Mr. Andrew F. Bennett (Stockport, North)

Not being a member of the Public Accounts Committee, my knowledge of it comes merely from reading the Committee's reports and listening to debates on its works. Much of my concern is that while the Committee is supposedly looking into the efficiency of the work of Government, it does not seem to be operating in the most efficient way itself. It is interesting to hear criticism from members of the Committee of their own work. Perhaps they should have included a few firm recommendations as to how they might change their mode of operation and make themselves rather more efficient, possibly on the lines suggested by my hon. Friend the Member for Norwich, South (Mr. Garrett).

It seems high time that members of the Committee should review the way in which they operate. It is ironic that they are looking into the inefficiencies of Government, yet they themselves are doing so in a very inefficient way. One could ask how much money they have got back as a result of their investigations. It does not seem to me that they have achieved very much. Have they spotlighted any error or inefficiency which has resulted in a Minister's resignation? The problem is that by the time the Committee begins its investigation it is almost certain that a different Minister will be responsible. One could ask what effect the Committee's investigations have on civil servants. Does a black mark go down in a record against a civil servant who has been particularly negligent?

Mr. John Garrett

He is promoted.

Mr. Bennett

I am not certain that the civil servant is promoted, as my hon. Friend suggests.

When the report was being introduced by the right hon. Member for Taunton (Mr. du Cann) he appeared to be saying "We hope that it will never happen again." Circumstances change, so it is not likely that the precise circumstances will happen again, but it seems that year after year some particularly horrific story comes out of the Committee's investigations. This happens continually. The question of looking into accounts goes back to the running of private companies and the idea that at the end the accounts will show that there is a profit and some share-out of profit.

When looking at the way Government Departments are run, it does not seem that we are concerned at the end of the year to see whether there has been a loss or a profit. We need to see whether they are sensibly allocating their resources and ensuring that things are being monitored as they go along, so that there is clear evidence, the day after, that there has been overspending or misuse of resources, and that this is not investigated two or three years later.

If the Committee is to be effective, it must have power to question what is happening now. Paragraph 134 of the report referred to the NHS. The Committee was critical of what was happening in the NHS and suggested that it was a difficult year and that sooner or later the Committee would have to return to the subject, and hoped that, when it did, the NHS would be in better shape. I should like the Committee to ask the NHS how money is being allocated this year, and not what they were doing in 1975. Another major problem is the assumption that a Department has gone wrong if it has overspent or perhaps if it has underspent. But what about the Department that has spent the exact amount of money that was allocated to it? We need to know if that Department performed well. It may have misused its resources just as much as, if not more than, another Department. The Department may have said "We have this money to spend—let us dish it out and use it in this way". If one has to work to a budget, it depends how generous that budget is.

If one is lucky enough to have a generous budget one can spend it very inefficiently, but circumstances may change in a way that leads to the spending of more money. It is important that the Public Accounts Committee should be looking at all Departments, and the reason for pursuing the Department should not be that the accounts are overspent or underspent. We should be questioning how the money is spent. One problem is how far we should go back.

Question 3411 of the report refers to the computer situation at King's College Hospital. The Committee was very critical of the Department of Health and Social Security because it took from August 1973 to February 1974 to decide, after it had been informed that things were going wrong, that the project should be stopped.

The Chairman of the Committee said he thought that there should have been rapid action within a month. It seems ironic that the Committee is criticising the Department for taking seven or eight months to take action, yet the House of Commons has taken several years to get round to looking at that same point and making some criticism. For the Committee to continue in its present way is to compound the waste of public resources. Its inquiries are not doing anything to rectify the position. In many cases they are doing real harm to the whole public service by creating a myth that there is a vast amount of inefficiency in the Government services. I am certain, as the report suggests, that there is some inefficiency, but when we come to examine the matter the scales are completely different. The amounts involved in many areas are very small compared with the total amounts of money that have been spent.

I suggest that we should have a Committee which first of all produces a report on its own procedure and then suggests that the procedure should be altered. The area that concerns me most is the computer experiment carried out by the Department of Health, which seemed to be one of the most tragic misuses of public funds raised by the Committee.

What disturbs me about paragraphs 105 to 118 of the report is that there was no clear statement from anybody why the Department was going to carry out this experiment with computers and what financial saving it hoped to achieve as a result of the introduction of computers.

It seems reasonable in a study to hope to achieve something and then decide to go into it and fail to achieve one's aim.

Mr. A. P. Costain (Folkestone and Hythe)

I sat on the Public Accounts Committee when I first came to the House about 17 years ago. The hon. Member should appreciate that the Public Accounts Committee deals with the past, while the Estimates Committee deals with the present. Is he not confusing the objectives of the two, or is he trying to suggest that the two Committees should be amalgamated?

Mr. Bennett

The two Committees should in many ways be looking at the same problem. The powers of the PAC to investigate what is happening should be greatly enlarged. I am not happy with the powers which the Committee now has to get things effectively put right.

Returning to the subject of the computer programme, I appreciate the difference between the styles of the two Committees. I said that in scrutinising the Government services we are in danger of falling between the two Committees, and of not getting the spotlight turned effectively on the way in which Departments operate.

The computer programme is most deplorable. There was never any clear objective of what it hoped to achieve to enable the experiment to be evaluated from the start to see whether it was worth while. Since no objectives were set, it was very difficult to measure anything at all. It makes me very angry to see £8 million or £9 million used up by the experiment, bearing in mind the state of the National Health Service in my constituency in Stockport. Had that £8 million or £9 million been spent on improving geriatric facilities in Stockport, there would have been a great deal more satisfaction among people using hospital facilities there.

I am certain that some constituents of mine who are looking after sick or elderly relatives in very difficult circumstances and are trying to get those people into hospital but are unable to do so because of shortage of beds, would be very angry indeed to read of the money wasted on the computer experiment. The consultants dealing with geriatric patients would be angry because instead of being able to treat their patients they have to spend a lot of time working out priorities, in terms of who should be admitted to hospital, whereas the patients should all be admitted straight away. That will make many people angry. I believe that this money could have been spent on hospitals in Stockport. However, I appreciate that it would be out of all proportion to the need of the care of geriatrics throughout the country.

I am concerned about another important matter—accountability and accounting in general within the National Health Service. I was pleased to see from the Government publication on the sharing of resources in the NHS that at least the Government are beginning to examine the way in which resources are allocated nationally. However, there is little idea how the resources should be allocated within area health authorities and hospitals. There is a crazy situation in Stockport, where a new maternity hospital has not been fully used since it was opened, whereas there is an appalling shortage of geriatric beds, with very old buildings being used for psychiatric patients in the area. There seems to have been a misallocation of resources.

It is interesting to examine waiting lists in Stockport for various hospitals, and requirements for treatment. There are fantastic variations from list to list, but nobody seems to have costed the misery caused to people on the various lists or to have considered the priorities. For example, one could have considered whether it would be better to carry out 50 hernia operations or one kidney transplant. It is high time that we tried to bring to the NHS a way of working out priorities at that level.

It is said by many people that doctors make the choices, in that they may choose to treat one patient with a kidney problem rather than another patient. Having discussed the matter with doctors, I suspect that they realise that there are many moral issues involved and, more often than not, in making their choice leave the matter to chance factors. I believe that as a nation we need to bring more rational thinking to bear on the allocation of resources within the NHS.

I plead with the PAC to examine its own working methods, and I hope that the NHS will expend much more effort in producing accounts and in working out the costs of various treatments and the priorities given. Although we shall never have sufficient resources to meet all the demands, we can at least try to improve people's health.

5.42 p.m.

Mr. Michael Grylls (Surrey, North-West)

I suspect that the hon. Member for Stockport, North (Mr. Bennett) is being excessively ambitious in asking for so much detailed material for the members of the Public Accounts Committee to examine. I make my comments with great diffidence because, in a sense, I come into this debate as an intruder since I am not a member of the PAC.

I wish to refer to one subject mentioned in the able speech of my right hon. Friend the Member for Taunton (Mr. du Cann), namely, the National Enterprise Board. I am sure that the House increasingly will want to examine the financial control and proper monitoring of the board and its operations as it develops. I speak as somebody who does not like that animal very much, but we are landed with it and in terms of financial control we must carefully consider its operations.

My right hon. Friend the Member for Taunton said that he had discussed the matter with the Secretary of State for Industry who was sympathetic to the problem and thought that the board's activities should be properly scrutinised. We are glad to hear that, and it is encouraging, but I wish that the Secretary of State would carry his sympathy to the extent of answering Questions. It is one thing to be sympathetic, but when I and other hon. Members table Questions we do not seem to get much in the way of answers. We are given answers on the lines "This is a matter for the NEB and not for the Department." It appears that the needle has got stuck in a groove, and that Questions are not being dealt with on this important subject. If we cannot obtain answers in the House, perhaps the PAC should take on the job.

The PAC seems to have hit the nail on the head in its report, in paragraph 64, where we are told that it is important that there should be proper arrangements to ensure public scrutiny of the NEB and its activities. The report calls for as much information as possible on methods of control of major Government-assisted industrial undertakings which are part of the NEB set-up. At the end of that passage the Committee leaves a question mark about what should be done. Perhaps the House could think about that matter. The NEB is by no means a minnow. In public expenditure forecasts up to the year 1980 it has been allocated £1,000 million to spend. It is an enormity in terms of consumption of taxpayers' money, and we must carefully examine its activities.

When the board came into existence after the passage of the Industry Act 1975 there was an exchange with the then Leader of the House, Mr. Edward Short, on 18th December 1975. He said that the House would be able to obtain answers to questions from the Secretary of State for Industry. I quote from the words of the then Leader of the House: My right hon. Friend will also, within the well-understood limits imposed by the need to maintain necessary commercial confidentiality, be answerable to the House on aspects of the Board's day-to-day management that raise issues of urgent public importance or concern national statistics. He will also be answerable, as appropriate, for the activities of the Board in its capacity as a holding company…."—[Official Report, 18th December 1976; Vol. 902, c. 1658.] The House may well take the view "So far, so good". It appeared at that time that shortly after the board was set up the House would be able to have its Questions answered and carefully to probe the board's activities, but that has not happened. We have not had answers to parliamentary Questions. The interim statement which had to be made after the first six months of the board's existence, in accordance with the Industry Act 1975, was a skimpy statement indeed. If such a statement had been made by the chairman of a quoted company on the Stock Exchange it would have been given short shrift by shareholders. Again, the problem was that one could not ask a Question on the subject and be given a satisfactory answer.

The interim statement said that the NEB had put out loans of £5.6 million. I asked a Question of the Secretary of State requiring him to tell the House to whom the board had lent that figure. I wanted him to produce a list of the people involved. That was a modest and, indeed, reasonable demand, but again I was not given an answer. The interim statement was a scruffy document, it was typewritten, it was tucked away in the Library, and it was not easy for hon. Members to get at it.

Draft guidelines for the NEB were then published. Those guidelines were not dated—and it was as well that they were not dated, because they have not been debated by the House since they were published in June, and indeed there has been no statement on definitive guidelines by the Department of Industry.

Therefore, we are left with all sorts of good intentions in the guidelines, such as proper parliamentary control, with which we should not quibble. But they have not been published as affirmative guidelines and there has been no debate. That is inadequate for a body which will be allowed to spend £1,000 million of taxpayers' money.

The capital structure of the NEB—my hon. Friend the Member for Chichester (Mr. Nelson) has mentioned this in a number of debates over the last few months—has not been outlined by the Government. I put down a Parliamentary Question on 28th June this year to the Prime Minister. I got short shrift from him. He passed it to the Secretary of State for Industry, but he did not answer it either. So, a year after it was set up, we have no idea of the NEB's capital structure. That is extraordinary.

We have not been told what return on capital the NEB is expected to produce. The hon. Member for Sowerby (Mr. Madden) is on the Committee and is very interested in the NEB. If he thinks that it is so good, no doubt he will persuade Ministers to publish forecasts of return on capital. In Sweden, for example, the Statsforetag, which is roughly the equivalent body, publishes its resources, results and yield on total capital employed in detailed terms. Details have actually been published in the Economist in this country, so they do not mind telling people what is going on. But there has been not a squeak from the NEB.

My right hon. Friend the Member for Taunton, as Chairman of the Committee, properly used moderate language, but I am not a member of the Committee and I do not feel in a mood to use moderate language. Our constituents, the taxpayers, do not expect us to be moderate when we think that Ministers have shown a total lack of responsibility in dealing with this sort of spending power.

I asked a question about staff and was told that that was a matter for the NEB. I was given the same answer about return on capital. I was even impertinent enough to ask a question about the administrative expenses of the Organising Committee, which is perhaps a bee in my bonnet at the moment. I was told that they are £414,000, and this is before the NEB was set up. I was impudent enough to ask how the money was spent. It will probably shock the Financial Secretary to know that the Minister would not reply and said that it was a matter for the NEB. But the NEB would not tell me a word.

I do not criticise Lord Ryder, who is doing a difficult job. He was foolish to take it on because it will be a very short-term job, but he does it well. The people I criticise are Ministers who will not give the answers that hon. Members have a right to expect. We had announcements this week about the British Leyland Mini replacement programme. The right hon. Member for Down, South (Mr. Powell) may say that it is ridiculous for Members of Parliament to try to make judgments about detailed industrial matters. I agree, but the NEB is involved through its 95 per cent. holding in British Leyland. What information have we had about the biggest investment programme that the NEB is putting forward? We have been given no detailed figures of output or productivity targets. Thus, parliamentary accountability by, and control of, the NEB is very bad.

The other day I asked whether the annual and interim accounts of the NEB could be placed in the Vote Office and not just slipped into the Library in what I consider a surreptitious way. Those of us who follow something closely can get details from the Library, but when such a huge amount of money is involved these things should be available in the Vote Office and sent to hon. Members. When I asked about that I was told that it would not happen. So the six-monthly report, and no doubt the annual report which is due at the end of this month, will be slipped into the Library.

I want to quote two ways in which money can be lost. These are two investments currently held by the NEB—admittedly small ones. The first has been much in the news recently—Dunford and Elliott. When the IRC first invested in that company in 1969, the cost was about £1 million, but it was transferred to the NEB for £122,111. Thus, through the folly of the IRC and the equal folly of the management, the taxpayer has lost about £800,000. Brown Boverie Kent, the instrument maker, was purchased for £6.5 million by the IRC. A few months ago, the company was transferred to the NEB for £4.9 million. Nearly £2 million of that investment has apparently disappeared.

I hope that what I have said will at least give an idea of the way in which the NEB is slipping outside the net of parliamentary control, to put it mildly. I hope that the House will accept these proposals. First—I say this in no belligerent sense: I am calm now—the Secretary of State for Industry must answer Questions on the Order Paper. We are not a lot of tiresome people—at least, not most of the time—and our Questions should be answered. I hope that the right hon. Gentleman will not stonewall or be obstructive.

Second, the annual and interim reports should be readily available and properly printed. Third, the details of the NEB's acquisitions should be given to Parliament. We should not continually be told that these are matters for the NEB and then have to rely on the information that we get from the Financial Times and other financial papers. There is no way of knowing that the NEB has taken over a company with our money until we read it in the Financial Times. I spend my time looking in that paper for details of how our money is slipping away.

Fourth, the Public Accounts Committee should be able properly to monitor and to question the senior management of the NEB. It should have a proper insight into the figures. After all, the PAC represents all the shareholders of the NEB and should be able to question the NEB, just as we always say private shareholders should get off their bottoms and question private companies.

The NEB is a new body which may not live long. It may be executed fairly soon. But while it functions we must ensure that there is proper parliamentary control. The Financial Secretary may not be able to answer all these questions tonight, but I hope that he will at least pass on their general burden to the Department of Industry and ask that Department in the year ahead at least to try harder to account to Parliament for the activities of the NEB.

5.59 p.m.

Mr. John Watkinson (Gloucestershire, West)

I agree with the hon. Member for Surrey, North-West (Mr. Grylls) that the National Enterprise Board should be brought within the purview of this Parliament and of the Public Accounts Committee. However, I do not agree that the life of the NEB will be short. I hope that it will last for many a year yet.

My first duty is to congratulate the Chairman of the PAC, the right hon. Member for Taunton (Mr. du Cann), and to say how proud I am to serve on that Committee and how enjoyable it is to be a member of it.

As a member of the Public Accounts Committee, I am grateful for the briefs and services rendered to it by the Comptroller and Auditor General. I noted the scalding remarks which my hon. Friend the Member for Norwich, South (Mr. Garrett) made about the Committee and about the State audit system generally, but I am grateful for small mercies. I have not doubt at all that the effectiveness of the Committee is largely brought about by the professional services which we have available to us.

From talking to colleagues who serve on other Select Committees in this House, I know that they envy the services we have. Indeed, I know of very important Select Committees of this House which have available to them only an assistant on a part-time basis, yet they are Select Committees dealing with vital areas of public expenditure.

There is a great deal in why my hon. Friend the Member for Norwich, South said about the Public Accounts Committee and the State audit generally. With him, I would welcome a wider definition of State funds, so that we in this Parliament could bring within our purview—and perhaps within the purview of the Public Accounts Committee—the expenditure of local authorities and the expenditure of nationalised industries. Here are two areas which are of vital concern to us as a nation and over which it is extremely difficult for us as Members of the House to have any form of direct control.

There must be a great deal of weight in the suggestion that the State audit should be separate and apart from and totally independent of that of the Treasury. If we are investigating Departments of State—and we all know that the Treasury is the senior Department of State—there is a great deal to be said for the provision of services to the Committee being separate from those of the Treasury. I also agree 100 per cent. with my hon. Friend's suggestion that there should be a much wider cross-section of persons, variously qualified, who could lend their assistance not only to the Public Accounts Committee but also to other Select Committees of this House.

From my experience in the short period during which I have been a Member of the House, I can certainly say that the most effective work which I see being done is done in the Select Committees. I am a great supporter of the Select Committee principle. I should like the Select Committee to have available to them the sort of professional staff and professional expertise which we know to be available to committees in other countries but which are singularly lacking to us in this Parliament.

I find it agreeable and acceptable that in our Select Committee procedure we are so often able to act in a bipartisan way. The Chairman of the Committee referred to this. I find no difficulty at all in combining, in studying and examining whether we are spending our money effectively, with those with whom I might disagree on matters of general policy.

There is a Committee reporting on the procedures of this House. I hope that when it reports it will give added weight to the authority and the status of our Select Committees. I know that my right hon. Friend the Leader of the House does not share my views about the work of these bipartisan Committees. He has indicated to Members on the Government side that he is against the bipartisan principle. I see no objection to bipartisan activity in these Select Committees. Indeed, I should like to see it extended, because I agree fundamentally with the proposition that it is only in the Select Committees that we are able to get at the Executive and question the Departments.

It is very rare indeed that one sees a Minister discomfited in this House at Question Time. It is so easy for a Minister to fudge the issue, knowing that in a short while the House will move on to the next Question. But in our Select Committee proceedings we can really get down to the nuts and bolts and adopt the investigative approach which is so vital. In my view, the people of this country expect us as Back Bench Members to be investigatory persons in our inquiries concerning the Executive.

For that reason I would support the proposal—which I believe has been put forward on previous occasions by the Chairman of our Committee—that perhaps our proceedings should be broadcast. There is a sense in which the immediacy of the event has a news value and a news worth which is perhaps lost when the matters are discussed at a late stage in a single debate in this Chamber. I am a supporter of the broadcasting of the events in this Chamber and would be in favour of extending it into our Select Committee as well. I appreciate that there are areas of our discussions in the Select Committee which cannot be broadcast, for reasons of State security, but there is no reason why certain other matters could not be broadcast so that the public can see that we are exercising this control over the Executive.

I believe that another area in which there should be some reform is the right of the Public Accounts Committee and Select Committees generally to call Ministers before them. I know it is said that it is not the function of he PAC to inquire into or deal with policy matters. Nevertheless, during the course of our inquiries we cannot avoid coming into contact with policy issues.

The Chairman of the Committee and the hon. Member for Surrey, North-West mentioned one such area, namely industrial policy. We had before us the civil servants from the Department of Industry, who were discussing with us the new criteria for assistance to industry. During the course of those discussions we investigated and made inquiries into the operations of co-operative enterprises. It was inevitable from the deep probing which took place in the Committee that the civil servants—I do not blame them for this—referred to ministerial enthusiasm and to the ministerial wish that that project should go ahead. It would have been helpful to us if we had been able to question the Ministers from that Department as well.

It is a very unsatisfactory state of affairs—but one which civil servants no doubt welcome—that civil servants have to hide behind the fact that it was the ministerial wish that a particular project should go ahead. If we are to be a proper investigatory body, it would be much more effective if the Ministers were present before the Committee so that we could question them if we wished to do so.

Mr. Peter Hordern (Horsham and Crawley)

Does not the hon. Gentleman agree that we have every right and every power to summon persons and papers, and that this power entitles us also to ask Ministers to attend upon our proceedings? I agree with the hon. Gentleman that we ought to make proper use of this power.

Mr. Watkinson

I am grateful to the hon. Gentleman for his intervention. I hope we shall do this in future, because there are certain areas—particularly the one I have been discussing in which it would be beneficial to have the Minister present. I accept that there are large areas of our activities in regard to which it is not necessary to have the Minister present. For example, there was the farcial case of the RARDEN gun, in which the gun would not fit the machine. That is a question of technical management over which the Minister clearly cannot have any direct responsibility. But there are certain broad areas in regard to which it would be advantageous to have the Minister before us.

The Chairman of the Committee referred to the fact that during the course of our inquiries we dealt with the co-operatives. The criticism which appeared in our report caused a good deal of Press publicity. An important issue that was examined by the Public Accounts Committee but was not brought out in the Press reports was that when the co-operatives were set us—they are ventures that I wholeheartedly support—they were under-capitalised. The Chairman said so during the course of our inquiries. The witness before us admitted that the Department would have been prepared to see an extra £1 million put into the Kirkby Co-operative if it had been requested. It seemed that in those circumstances the Department was relying overmuch on the advice given to it by the co-operatives. The witnesses virtually admitted before us that they recognised that the co-operatives were under-capitalised at the outset.

Another general point that has come to my attention during the course of our proceedings is the difficulty that is always occasioned when the Government come into contact with a business deal with outside parties. To continue with the example of the co-operatives, the valuation of the assets of the Meriden and Kirkby Co-operatives was extremely high and beyond the figures placed upon them by the district valuer.

That is a worrying state of affairs that can be illustrated again by the case we considered of the Government leasing buildings in the London area. The parties involved, because they knew that they were dealing with the Government, seemingly were able to extract more favourable terms than would have been obtainable from the market. That is a worrying feature that needs to be considered closely.

Another general area that is important to the PAC and which should be important to the House is the direction in which Government assistance can go. For example, the construction division of W. & C. French Ltd. was tied into a complex arrangement of holding companies. During 1974 the construction company approached the Government and told them that it would not be able to fulfil road system contracts unless it had some payment from the Government. The Government agreed to make an ex-gratia payment of £3.6 million. It became apparent thereafter that the money was used to pay off loans from the holding company to the construction company because the holding company had got into difficulties with its property deals.

It is an absurd state of affairs when public funds are being used to bail out companies in areas that are different from those which we though we were supporting. I was pleased to note that when we made a second payment to the company the loan was tied specifically to the construction area of the holding companies. It is important that the Government should have the closest possible scrutiny of where funds are going and the purposes for which they are needed. The PAC rightly pointed to the fact that the Highways Act 1959 was used to make this apparently around-the-back-door payment. There was little scrutiny or discussion of the payment in the House.

It is the intention of the Committee to investigate the ways in which public funds are used and ensure that they are usedeffectively. In the work that we undertake, I think we discover areas where there is fat or waste in the public sector. For example, there was the dreadful case of a hospital where land was up for sale for 14 years. That was a realisable asset that was not realised. That is a classic example of what should have been done by the public sector in ridding itself of an asset that it did not need. However, it failed to take that action.

In the Friern Hospital case there was a certain amount of frustration on my part, and no doubt on the part of the Committee in general, when we identified the grossest behaviour by a hospital management team but were unable to identify who was responsible for it. We could not blame anyone, and apparently no action was able to be taken. That backs up the remarks that have been made about the effectiveness of the Committee and how far it can go beyond making recommendations.

I find the PAC an effective body on which to serve. I find the questioning effective and the answers helpful in assisting the public in controlling Government expenditure. Having said that, I repeat that my hon. Friend the Member for Norwich, South made some perceptive observations about the operation of the State audit, which I hope that my hon. Friend the Financial Secretary will bear in mind.

6.15 p.m.

Mr. John Nott (St. Ives)

I hope that the House will permit me to intervene briefly at this stage. My hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) may want to say a few words later on the Fourth Report on Northern Ireland. I hope to keep my remarks relatively brief as I have never had the privilege of serving on the Public Accounts Committee, although I follow its work with great interest, not least the reports that we are now considering.

I echo the words of my right hon. Friend the Member for Taunton (Mr. du Cann), my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) and those who have spoken from the Government Benches, including the hon. Member for Gloucestershire, West (Mr. Watkinson), in praising not only the work of the Comptroller and Auditor General but the work of the staff of his office.

The PAC, as our most senior Committee, has a most excellent Chairman in the form of my right hon. Friend the Member for Taunton. His speech was thoughtful and constructive and the House owes a great deal to his efforts and those who serve on the Committee, because the House generally and the country are seeking greater efficiency in the public service.

I am glad that we are debating the reports in better time this year. I remember that last year the reports were in some cases debated almost a year beyond the time of their publication. As has been said by others, I am grateful to the Leader of the House for allowing the debate to take place in better time this year. My hon. Friend the Member for Richmond, Yorks said that there would not be enough time to consider the vast areas that are within the purview of the Committee were it to sit every day of the year. However, perhaps I might be permitted to make a few general remarks about the public sector and then slot in some comments about the examples that have been quoted by my right hon. Friend the Member for Taunton as well as some illustrations that are in the reports but to which reference has not yet been made

The public sector—I take this as one guide to its size and scope—now employs about 4.3 million people in public administration alone. It has been increasing by 1 million per decade. There has been an increase of about 1 million in the public sector since 1961, and unless the trend is reversed—I think it may be—it is likely that the increase will be another million by 1981. We are talking of a public sector that has been increasing rapidly in the past and which is forecast to continue increasing if the trend is not reversed.

Surely everyone in the House will accept that a society like ours that is developing and growing more sophisticated produces an expanding requirement for wider and better developed public services. Clearly the demand for better public services will continue to well up from the country. Other things being equal, that will lead to a larger public service. I hope to be entirely nonpartisan, but surely it is the case that long ago the demand for public sector services—I refer to the services at present performed by the public sector—began to outstretch the capacity of the economy to provide them.

Higher levels of employment in the public sector automatically generate demands for further growth in the public sector and increased expenditure to support those additional people. What is more, as the hon. Member for Stockport, North (Mr. Bennett) said, in the public sector there are no sanctions of redundancy and bankruptcy comparable to those which we know in the private sector. Although the sanction of redundancy extends to a very limited extent into the public sector, it does not have the harshness and severity which are to be found in the private sector. I wish that it were possible for us to invent some better incentives to performance in the public sector on the part of individuals, instead of people moving up the salary scale with their status increasing year by year. The Financial Secretary was a member of the Fulton Committee and I know that that body considered this in some depth. I see all the difficulties, but there would undoubtedly be a great improvement in our public services if we could work more incentive into the system.

The size of the public sector is leading at present to higher public sector deficits. Whatever their party affiliation, I think most hon. Members will agree that the taxable capacity of the country already has been overreached.

Those are some of the wider problems that we face. I shall come to the detailed points made by hon. Members in a few moments. But the basic question of principle really is whether we should continue on the traditional path in which total Government expenditure and employment have seemed to be generated almost as an accidental outcome of the decisions of individual spending Ministers. They may derive from manifesto commitments resulting from genuine desires on the part of the people as transmitted through the political system by the political parties. Are we to continue along this traditional path of generating more and more spending by the accidental outcome of a multiplicity of desires welling up through the spending Departments, or have we now reached a stage where the total must be controlled and where the overriding policy objective must be that the decisions of individual spending Ministers must conform to that total? I am asking, in other words, whether the decisions of the parts determine the whole, which I think is what has been happening since the war, or whether we now have to reverse the process.

Unless there is to be a change in the traditional way in which we tackle public spending generally, there have to be radical alterations to the way in which we finance the public sector. It may be that, for example, a new swimming pool or sports centre is highly desirable. It may be that in our developed society that is what the community wants, in which case I should not be against the public sector providing it for them. If, however, we are to go on providing more and more services of this kind, they have to become self-financing. If that is the route that we are to follow, it will mean that the education, health and environmental services budgets have all to be charging services—services which charge fees for what they provide—so that there is an element of pricing and the sanction of pricing in the public sector.

I do not believe that we shall go that way. If we attempted to price the services of the public sector, the demand for them would fall away. In the end, people want the maximum of discretionary expenditure. They want money in their pockets to spend on their homes and their families. If we charged for the services of the public sector, it would become clear that ordinary people preferred to have fewer of those services and more money of their own to spend as they chose.

Mrs. Audrey Wise (Coventry, South-West)

Does not the hon. Gentleman accept that, although demand might fall away because people could not afford to pay since they would not have the money in their pockets, that is not the same as need falling away?

Mr. Nott

But the hon. Lady does not appreciate that our resources are finite. I am sure that she works within the constraints of her family budget and income. In the same way, it is necessary for the nation to work within the constraints of its resources and its income.

Mrs. Wise

Putting my family's health and education first, of course—which is all that we are asking the nation to do.

Mr. Nott

I do not think that the hon. Lady has followed my argument. It may be that it was not very well presented. I am saying that if the services of the State go on expanding, bearing in mind that we have reached the limits of our taxable capacity, the only way in which they can be financed is by looking increasingly to charging. That is not a very radical statement.

On the whole, I think that the public services will have to be on an increasingly reduced scale. On the present basis of our spending policies, the National Debt will double in five years and by 1980 payments of interest on the National Debt will fall only a little short of the whole budget of the Department of Social Health and Security. Payments on the National Debt alone will dwarf any of the major programmes such as defence, housing, health or education.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

I am quite fascinated by what the hon. Gentleman is saying. However, I am not sure what it has to do with the PAC reports that we are discussing. It may be that the hon. Gentleman is not greatly interested in them. But there are a number of hon. Members who wish to take part in the debate, and I should be very sorry if they were excluded by matters which could find their place readily in some other debate.

Mr. Nott

It is impertinent of the Financial Secretary to make that comment. If he is incapable of answering some fundamental points, I am very sorry. But I said that I wished to make a few general comments about the scale of public spending before going on to some of the specific matters contained in the reports.

Looking at the scale of public spending, it becomes clear that, unless major reductions are brought about, we shall have to move more and more to a charging system. Therefore, in reducing the scale of our State system we have to look for specific areas, and it is to these that I now wish to turn.

First, there is the traditional rôle of the Public Accounts Committee, which is concerned with the efficiency of the public sector and the elimination of uneconomic functions. I think that the Committee has performed this rôle extremely well over many years. I should like to see this traditional rôle of the Committee extended further, and this brings me very much to the remarks of the hon. Member for Norwich, South (Mr. Garrett) and the hon. Member for Gloucestershire, West about the Exchequer and Audit Department.

I have no personal experience of the workings of the Exchequer and Audit Department. I am quite prepared to believe that it provides an excellent service to the PAC and does a very good job. But I, too, have considerable sympathy with the remarks of the hon. Member for Norwich, South because I feel that the status of the staff of the Department should be enhanced. The comparisons that the hon. Gentleman gave between our Exchequer and Audit Department and the comparable organisation in the United States were very interesting. It has never seemed to me that we have paid enough attention to the enormous influence, power and importance of the Exchequer and Audit Department, and, like the hon. Gentleman, I feel that it needs to be looked at again.

The hon. Member for Stockport, North referred to accounting and accountability in the National Health Service. He also made a point which was not too far removed from the comments made earlier about the Exchequer and Audit Department. It seems to me that the smaller the accounting unit in the public sector, the better. One does not want to recruit accountants or people pursuing accountancy functions to too low a level in the public service, because this would simply add to the numbers employed. Most hospitals, however, are not accounting units themselves. One wonders whether the accounting unit is not too far up the scale, either at district or area level, and whether more accountability is needed further down in the hospital service. This would make people more cost conscious than they are at present.

I find an echo in what the hon. Member for Stockport, North said about the way in which there has been progress towards the establishment of trading funds in the public service. There are trading funds for the Royal ordnance factories and, I believe, the Royal dockyards, as well as the Royal Mint. This is very useful and could lead to more accountability, which is very desirable. The Public Accounts Committee needs to look very carefully when Governments of any colour put new activities into trading funds. When I was a junior Treasury Minister, I was responsible for the Royal Mint and its activities. It built an extremely excellent new prestige building at Llantrisant in South Wales.

I notice in Opposition that, when that new prestige building, the present Royal Mint, was transferred into a trading fund, the assets were valued at a multiple of the rental values in South Wales. That has involved an enormous write-off in its transfer to the trading funds. In this case, I believe that up to £2 million was involved. Within a very short period that building was built at great expense and was then transferred into a trading fund at a much lower price, and the return on capital employed in the trading fund was therefore affected. I am sure that the Public Accounts Committee watches this sort of thing, but I believe that there is a major rôle for it to play here.

My hon. Friend the Member for Surrey, North-West (Mr. Grylls) referred to the National Enterprise Board. I am not sure of the principle here. I am not sure whether the Board falls into the purview of the Select Committee on Nationalised Industries or of the Public Accounts Committee. This is an interesting point. I am inclined to the view taken by my hon. Friend the Member for Surrey, North-West and also that of my right hon. Friend the Member for Taunton, the Chairman of the Committee, that the National Enterprise Board is an instrument of the Government and that in that sense it should be subjected to scrutiny by the Public Accounts Committee. It is a question of which particular Select Committee the Board should come under, but I think it should come more within the purview of the Public Accounts Committee than of the Select Committee on Nationalised Industries.

The second area which is vitally important is that where we are dealing with the transfer of activities and assets to the private sector or the hiving-off of assets from the public sector into quasi public sector bodies. The jobcentres saga is particularly interesting. Every hon. Member must have seen jobcentres going up in the High Street of his own town. I am shocked by the large sums of money which are spent on jobcentres and by the figures quoted in the report. Another example of this is the money spent on the Professional and Executive Register and the productivity, if I may call it that, of that particular department. In the private sector an employment agency could not survive for long on the kind of placings which that register has succeeded in making.

The Public Accounts Committee has an enormously important and expanding rôle in informing the House what is going on with items like the jobcentres programme. I hope that the Financial Secretary will refer to this when he replies. There is no point in spending £424 million on jobcentres if these are not helping to place people in jobs. The card index system, which has a traditional rôle in employment agencies, needs to be improved, but in my opinion that £400 million is not money well spent in the public sector.

Thirdly, there is the question of cash ceilings to which my right hon. Friend the Member for Taunton referred. I think that the present Treasury team, led by the Chancellor, has done an excellent job in developing the cash limits system. I believe that the work done in the Treasury in the last 18 months on developing and improving the system has been far reaching. Of course, we have criticisms of the way the system is working and the fact that it did not come in earlier. But this is a vulnerable point for us because I think we should have brought it in earlier than we did when we were in office. However, this has become infinitely more important with the rates of inflation that we are experiencing now. However, a lot has been done and credit should be given to the Government, and particularly to the Treasury, where it is due.

Two days ago we had dumped upon us the Supplementary Estimates. These amounted to £1.7 billion. I am very unclear why we have Supplementary Estimates of £1.7 billion at this time superimposed on top of cash limits. I have tried to plough my way through the Supplementary Estimates to compare them with the cash limits set down, but it is an impossible job for a Member of Parliament on his own. Therefore, it is vitally important that the PAC should set up some sort of monitoring system to compare, as we go through the year, the cash limits and the Supplementary Estimates which are tipped into the House, involving vast sums of money. Hon. Members simply cannot absorb them.

The total cash spending of the Government's main programmes is about £45.8 billion for 1976–77, of which about £28 billion is covered by cash limits as set out in Cmnd. 6440. Since Cmnd. 6440, the Government have brought more items of expenditure within the cash limits system. That is very relevant to some of the points made by my right hon. Friend. It is very difficult to put cash limits on industrial support, and certainly on regional assistance, but I do not think we should assume that huge blocks of Government expenditure should still be open-ended.

The Scottish Development Agency is, I believe, a useful new mechanism for closing open-ended commitments on regional policy. It involves a set sum of money which can be controlled. With the English regions, by contrast, regional assistance is virtually open-ended and unlimited. I should like the Government to close far more of their open-ended commitments—for example on regional support and regional policies, as well as housing, which I understand they are bringing within the cash limits system—so that the Public Accounts Committee could monitor progress of Government expenditure and compare it with Supplementary Estimates.

Fourthly, there is the question of manpower standards and control. Capital expenditure has taken more and more knocks under this Government. There is an endless deferment of programmes which are being pushed further and further out. Cut-backs in public sector capital expenditure have a devastating impact on the private sector. It is far greater than the impact on the public sector generally. Of course we must be realistic with a budget deficit of this size. For example, although good roads may be extremely important, we cannot describe them as a crucial social priority. Nevertheless, capital expenditure has taken too many knocks under the Government's cuts compared to what I would describe as transfer payments and current spending.

One of my hon. Friends said that the Public Accounts Committee has a rôle in keeping an eye on charging and making sure that charges are indexed to current rises in the cost of living. For example, if we were to reduce the amount spent on prescription charges to the 1971–72 level I estimate that we would save about £23 million in public spending. There is, therefore, a rôle there for the PAC, not to make decisions for the Government but to keep putting before the House the way in which charging is not indexed to inflation.

Finally, however, unless we can get control of current expenditure in the public sector we are lost. Current expenditure is related overwhelmingly to people, to numbers and to the relative price effect—that is, the relationship between what it costs to do something in the public sector and what it costs in the private sector.

That brings me to the House of Commons. Taking health, as an example, do we here need to obtain so much information directly from Ministers and from the Elephant and Castle? Is it not possible to persuade Members of Parliament to obtain more of their information from the regional health authorities? We will never get the numbers down in the central Departments if the demands of Parliament become intolerable. Thousands of civil servants are involved in preparing parliamentary answers, in dealing with Ministers' letters and ministerial briefings, and appearing before Select Committees. Parliament puts an enormous strain upon civil servant numbers in this way. If it is important to get numbers down, the point will come at which Parliament must call a halt and realise that it cannot have smaller numbers in the public service and still go on demanding such a vast volume of work from the Civil Service.

Mr. Rees-Davies

Does not my hon. Friend do as I do? I send one letter to the district council, a copy to the area authority, another copy to the region and a copy also to the Minister. In that way, when one receives the Minister's reply one is sure that those four know what goes on. That is my practice. Because of the structure of the National Health Service today, it must be done that way if there is to be any co-ordination between the proliferation which exists.

Mr. Nott

My hon. and learned Friend is correct.

Mr. Andrew F. Bennett

Is not the problem with the structure of the National Health Service related to the way in which the Conservatives organised it? Instead of asking parliamentary Questions to which the civil servants get the answers, would it not be better for us, through the Committee structure, to be able to call people in and ask them specifically what they were doing in the way they were running their section or department?

Mr. Nott

I am concerned to preserve parliamentary accountability. Our democracy is based very much on the ability of Members of Parliament to question the Executive, and that goes right down through the system. I am conscious, therefore, that we should not lose this unique ability of being able to inquire, for example, into a surgical operation which took place in a small county town. However, as my hon. and learned Friend said, we must train ourselves better, so that we do not always involve a Minister and central Department civil servants but instead write to the district and the area. We must do more of that in order to help in the central objective which we all share of reducing the numbers of people within the central Departments.

Consider for a moment the revenue Departments. The Inland Revenue, of which I have had some experience, and the Customs and Excise have grown almost faster than any other Department in central Government. The numbers of people employed in the Inland Revenue could be reduced by tens of thousands if the House of Commons was prepared to accept the abolition of the minor personal allowances. I am talking of the blind allowance and the dependent relative allowance, for example. They are important for individuals, and I do not mean to minimise their importance. But we should find some other way of helping these desirable cases which does not involve the tax system.

Could we not put building society interest on the same basis as life insurance so that it is deducted net and everyone pays a net sum of money after deduction of the basic rate to the building societies? We could get the whole of our income tax system down to two basic questions —"Are you married?" and "Are you over 65?". Those would be the only allowances. There is no reason why the House should not do that. I know, as a former Treasury Minister, that if any Government suggest changing just one personal allowance there is an outcry. But we could reduce the Inland Revenue by 30,000 or 40,000 if we were prepared to bring the whole tax system down to those two simple questions. The whole system would be self-coding and basically one of self-assessment.

The Customs and Excise has expanded far too fast over VAT. It has far too many people. We want to prevent the evasion of tax in indirect taxation, but the numbers have expanded beyond what is necessary. They must be cut down. If the PAC could help to build up all-party pressure, in an entirely nonpartisan sense—this is where the Committee can be so helpful—to try to educate the House of Commons into allowing any Government to simplify the system, we would go a long way to reducing those numbers in the public service and make it infinitely more efficient.

I am sorry if I appear to have taken a great deal of time. I have not dealt with many of the cases in one of the reports, but my hon. Friends will no doubt refer to those matters in detail. I think that the Public Accounts Committee has done an excellent job this year. I look forward to seeing the further work of the Committee expanded over the next few years in some of the ways I have indicated.

6.51 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

To some extent I share the view of those who have complained that Parliament does not have adequate control over public expenditure. But those who are knocking on the door of the Public Accounts Committee are calling at the wrong place. This House lacks a coherent Committee system. We need a proper system of appropriations as well as an efficient system of audit. The Public Accounts Committee is not designed to keep control over public expenditure.

I want to refer to paragraphs 12 to 17 of the Third Report, dealing with overseas aid. These paragraphs deal with two matters; first, the selection of consultants for overseas aid projects and, secondly, the non-implementation of projects that were found to be viable.

On the selection of consultants, I am inclined to be on the side of the Ministry rather than of the Committee. The Committee suggests that in all cases there should be, as it were, competitive tendering by consultants for particular projects. I think that in this respect it is being excessively pedantic. There is no statutory requirement. The report simply refers to the Ministry's internal instructions on the matter. I find the Ministry's explanation of the process of selecting consultants adequate and satisfactory.

It is absurd that a highly expert group of consultants working in a country should not be allowed to undertake examination of related projects on which it is already working. It is nonsense to have to go through the rigmarole of competitive tendering and the expense of sending a new group of people 3,000 or 7,000 miles to a country when there is a group there already.

The Ministry makes the point that firms may have long standing contacts with certain Governments in particular areas and that it is reasonable that their work in those countries should be expanded without going through the motions of calling in five or six different firms and selecting all over again.

In certain areas we have a vast amount of expertise within public bodies—for example, in coal mining we have the National Coal Board; in the supply, generation and distribution of electricity we have the Central Electricity Generating Board; and we have expertise within British Gas, the British Railways Board, and so on.

It is not feasible to go looking for consultants in some corner or other when we have this mass of technical, scientific and engineering expertise within these bodies on which we can draw and which can be used to advise developing countries in the development of such services. On that point I am more on the side of the Ministry than of the Public Accounts Committee.

The more important question, however, is what is described as the "non-implementation of projects." The criticism by the Public Accounts Committee is that only about half the projects which consultants had examined and found to be viable were subsequently implemented by the developing countries concerned. The implication by the PAC is that those studies should not have been carried out in the first place, or should not have been paid for by the taxpayer. The suggestion seems to be that the Ministry of Overseas Development should predetermine which feasibility studies ought to be undertaken, on the ground that, presumably, no study, or very few studies, should be undertaken without a castiron guarantee on the part of the poorer country concerned that it would automatically proceed to carry out the project or projects.

It is ironic that in this country there are no doubt scores of viable projects shivering under the poised axe of the Chancellor of the Exchequer, not because there is anything wrong with them or, indeed, because they have not been properly examined, but because we may decide that we cannot afford to carry them out.

The Ministry fairly defends this situation on the ground that we are dealing with independent countries which may or may not wish to carry forward particular projects which they thought a year or two ago were reasonable. The Ministry points out that there may be changes of Government, which occur in this country, changes of Government policy, which again occur occasionally here, and so forth.

The key point in the report is that in the past two years there has been a shortage of funds in the countries concerned. That is the crucial matter on which I wish to dwell.

The poorer developing countries have been savagely hit by the rise in oil prices, wordwide inflation, and the economic depression that is also afflicting us. I think that the Public Accounts Committee comes to the wrong conclusion when it states that the Ministry should be more selective in commissioning project studies". In other words, it should tend to cut down on the technical aid that is given in this way.

To my mind, what is needed is not less technical assistance, not fewer consultant studies where such studies lead to the determination that a project is viable, but more aid. It is silly to use the taxpayers' money to work out, through experts, good viable projects and then not to implement them.

The answer is to provide the cash aid, not to cut the projects. Alas, the record of overseas development assistance from the Western World to developing countries in the past few years has not been terribly good. From the United Kingdom the cash has risen from £150 million in 1961 to £349 million in 1975. Unfortunately, as a proportion of the wealth that we enjoy—the United Kingdom is one of the richest countries in the world—our contribution to overseas aid has gone down from 0.59 per cent. of gross national product in 1961 to 0.52 per cent. in 1964, and finally to 0.38 per cent. in 1975. Therefore, from contributing a little over a halfpenny in the pound of our wealth to the assistance of our poorer brethren, our contribution has sunk towards a farthing and, alas, is still sinking. In public expenditure terms, whereas 15 years ago 2 per cent. of our public expenditure—not GNP—was devoted to aid, it has now fallen to 0.89 per cent.—less than 1 per cent. Therefore, the record is not as happy as I should like to see it.

In terms of the percentage of our wealth which we devote to overseas aid, we have fallen behind our Common Market partners Belgium, Denmark, France, the Netherlands and Germany; we are way behind the Scandinavian countries, Norway and Sweden; and we are substantially behind some of our Commonwealth partners, such as Australia, Canada and New Zealand. It is no comfort to me that the records of Japan and the United States—two of the most powerful and richest countries in the world—are more scandalous and disgraceful than our own.

It is not as though the needs of the poorest countries have somehow disappeared. Infant mortality in those countries is eight times higher than in the West, life expectancy is one-third lower and 50 per cent. of the poorest people do not receive the proper nutrition for their physical needs. About 750 million people have a per capita income of $100 a year, or about £65. That will go up at the miserable rate of $2 a year unless something drastic is done.

The Public Accounts Committee suggests that the World Bank may provide funds for viable projects if we cannot provide those funds ourselves. It is therefore appropriate to the debate to quote the President of the World Bank, Mr. Robert McNamara, in a remarkable speech in Manila on 4th October 1976. Talking of the poverty of overseas countries, he said: The blunt truth is that absolute poverty today is a function of neglect—and of our neglect as much as of anyone's. For we here in this hall represent the governments, and the financial resources, and the international institutions best suited to end the curse of absolute poverty in this century. Poverty tends to perpetuate itself, and unless a deliberate intervention is designed and launched against its internal dynamics, it will persist and grow. He went on: The external assistance needed by the poorest nations over the past few years to achieve reasonable rates of economic growth, and to move towards meeting the basic human needs of their people, has been within the ability of the wealthy world to supply. And it would have been made available had the developed nations met the target, agreed on in the United Nations in 1970, of contributing 0.7 per cent. of their GNP to Official Development Assistance (ODA)—and had 0.2 per cent. out of this been earmarked for programmes benefiting primarily the absolute poor. The World Bank has a powerful record for its commitments of money to help the developing world. In the period 1964–68, $2.7 billion was committed. By 1974 the figure was $5.1 billion and by 1976 $6.9 billion. Unfortunately, even these sums are now becoming inadequate and there is a rather disreputable wrangle going on among the richest and most economically powerful countries in the world about increasing the capital resources of the World Bank and its affiliate, the International Development Authority.

Mr. McNamara also stated: Yet if steps are not taken—and taken promptly—to relieve the resource constraints facing the Bank, this record of growing assistance to the developing nations will come to an abrupt halt and one of the world's principal sources of development finance could find its scale of operations being steadily eroded in real terms. There is, of course, also the problem of the International Development Authority, which provides the soft grants for projects in developing countries.

Whatever financial constraints are imposed on this country they are not such that we are entitled to neglect the needs of people whose poverty has been set out in such stark words as those used by the President of the World Bank.

I am glad that the Public Accounts Committee has drawn our attention to this aspect of public spending. That it should inquire into the efficient and effective distribution of aid is proper. But I am not sure that I agree with its conclusions. I am more inclined to accept the views of the Ministry on those points. Nevertheless, I accept that it is proper for the Committee to investigate this aspect of public spending to ensure that the money is devoted to good purpose.

But the conclusion that we should draw from the fact that certain projects are not implemented is not that our consultants, experts and technical assistance should be cut back, but that the aid that we give should be sufficient to carry through those projects once they have been found viable by our scientific and engineering experts out there.

I shall give the House a further quotation from Mr. McNamara. He said: what is beyond the power of any set of statistics to illustrate is the inhuman degradation the vast majority of these individuals are condemned to because of poverty. Malnutrition saps their energy, stunts their bodies, and shortens their lives. Illiteracy darkens their minds, and forecloses their futures. Simple, preventable diseases maim and kill their children. Squalor and ugliness pollute and poison their surroundings. Unfortunately, that is true for far too many human beings.

I welcome the interest that the Committee has taken in the modest expenditure to relieve that situation. The conclusion that we should draw, however, is not that we should cut technical assistance but that we should provide the capital resources to ensure that that assistance comes to fruition.

7.7 p.m.

Mr. John MacGregor (Norfolk, South)

As a former member of the Committee which sat under the chairmanship of my right hon. Friend the Member for Taunton (Mr. du Cann) and as a member of the General Sub-Committee of the Expenditure Committee, I am tempted to stray in depth into some of the issues raised by my right hon. Friend in his excellent opening speech. But I know that many of my hon. Friends wish to speak and I shall, therefore, confine myself to brief remarks on those issues before coming to my main point.

I agree with the general approach taken by my right hon. Friend and I accept a number of the criticisms made by the hon. Member for Norwich, South (Mr. Garrett). I agree with him that the most attractive way for the House to probe and control the Executive is through Committees and not through the work that we do in the Chamber. The Committees are better qualified to do that job. I am doubtful, however, about the suggestion that this should be done by combining the Public Accounts Committee and the Expenditure Committee. The Comptroller and Auditor General, during an inquiry into the Civil Service, was asked about that possibility. He felt that the present staff would not be properly qualified to do the other work with which the Public Expenditure Committee has to deal. That could be put right over a period of time. But the objectives of the two Committees are different and it might be difficult to combine them.

I was interested in the remarks about the monitoring of cash limits. The General Sub-Committee is attempting to set up a system of dealing with that. The Chief Secretary to the Treasury came before the Sub-Committee to discuss cash limits about 18 months ago, and he drew attention to some of the difficulties. We have been looking at this question and I am doubtful whether public accounts procedures are the right ones for Parliament to use to scrutinise cash monitoring. The hon. Member is correct to talk in the way he does about the monitoring of cash limits, and he is even more correct to draw attention to the need for our procedures to be conducted in terms of our scrutiny of public expenditure.

I wish to make only one other general comment on that theme before turning to the specific point which I intend to raise. While the Public Accounts Committee has a large staff—whether it is properly qualified in all respects is another matter—it is extraordinary that the Expenditure Committee, which is carrying out a more up-to-date process, looking at the way expenditure is undertaken in the current year, has practically no staff at all. Whether we combine Committees or, as I would prefer, slightly alter the scope of the Expenditure Committee so as to allow it to do this sort of job, there is no question in my mind but that the Expenditure Committee needs a much larger staff, rather along the lines of the one that my right hon. Friend the Member for Taunton has, if it is to do its job effectively.

I come now to the reports. There are vast and rich seams in these six reports and it is tempting to try to deal with a number of them. This evening I shall concentrate on only one small practical matter, which appears in the Sixth Report at paragraphs 34 and 35. This is a matter to which my right hon. Friend referred in introducing the debate and to which my hon. Friend the Member for St. Ives (Mr. Nott) also addressed himself. It relates to the question of jobcentres.

In paragraph 35 of the report, the Committee came to this conclusion: We are not yet convinced of the necessity for siting job centres in expensive high street locations. It went on to recommend: before the programme of siting up to 1,000 job centres in expensive high street premises becomes too far advanced, the usage of the existing job centres should be carefully analysed so that their cost-effectiveness can be compared with that of modernised employment offices. I am bound to say that that is right on three grounds. The first is that the jobcentres are costing a great deal of money to set up. If there were 1,000 more, I believe that it would cost about £50,000 for each one, on average, in the first year. Secondly, there is a great deal of criticism about the siting of a number of these offices. My third reason for supporting the comments in the report is that if we look at the objectives of the jobcentres, as given to the Public Accounts Committee and as quoted in the report, we cannot help wondering whether it is necessary for them to be in expensive High Street premises to meet such objectives.

In paragraph 34, the report states that the Department of Employment told it that jobcentres were designed to expand the Employment Service Agency's share of the labour recruitment market from about 16 per cent., mostly from among the unemployed, by providing"— this is the key passage— a better service to employers with vacancies and hy catering for employed people who wished to change jobs and for the special needs of other people such as the disabled. I wonder whether it is necessary to be in expensive High Street premises to fulfil those objectives.

Mr. Rees-Davies

Far more fundamental than that is the fact that we do not need such centres at all. Why on earth do we want these jobcentres when we have perfectly good agencies that actually charge good money and make a profit out of supplying jobs to all the executive personnel and pretty well all the other people we are concerned with, including the disabled, for whom there are also other organisations?

Mr. MacGregor

I intend to come to that point briefly, although I do not want to take my argument quite as wide as to query whether there should be jobcentres. It is sufficient, in criticising the whole concept, to look at the way it has been carried out. There is a need for job-centres to deal with the unemployed. It is in the other areas of employment—for example, people moving jobs—that the existence of public agencies should be questioned.

It seems, and the report made this clear, that one of the reasons why the Employment Services Agency had found its ratio of success moving upwards was that it was, in its own words, "marketing vigorously". I suspect that has more to do with it than the siting of the offices. At the time when this report was published, there were 194 jobcentres. That was the figure for May 1976.

This week I asked a Question about where the programme had reached. I asked, in words similar to those used in the PAC report: what analysis had been undertaken of the usage and cost-effectiveness of existing jobcentres particularly in relation to their siting. We now find that 264 jobcentres have been opened—another 70 since the report was drawn up. The answer to my Question, given on 7th December, said: In following up a full-scale exercise into the cost-effectiveness of jobcentres, a pilot study has already been carried out into the comparative running costs of 50 jobcentres and a similar number of employment offices. Fuller research and evaluation, including siting, is to be undertaken in the near future."—[Official Report, 7th December 1976; Vol. 992, c. 175–76.] It seems that since the Department of Employment appeared before the Committee in May 1976 and since the report was produced in July there has been considerable slowness in following up the recommendation of the PAC on this point.

Since so much public expenditure is involved and since we are all deeply aware—faced as we are with further public expenditure cuts—of the need for cost-effectiveness in every area, I would have thought that there was a need to carry out the study recommended by the PAC before going ahead with the programme of jobcentres on the basis on which it has been undertaken up to now. I reach this conclusion by taking a single example. I do not know whether it is typical, but from one or two other examples of which I have heard I suspect that it is.

This example comes from Norwich. A great deal of public concern is being created among my constituents over a proposal for a jobcentre of 12,000 sq. ft. in an expensive central site. That proposal is before the planning authority. There are two aspects which absolutely confirm the approach of the PAC and which worry me. The first concerns the planning aspect and the advantage that the public sector seems to have here.

There is in Norwich at present potential office accommodation amounting to 1½ million sq. ft. which is vacant or being built or has planning permission, for which compensation would have to be paid if planning permission was refused or withdrawn. There is a total of 1 million sq. ft. of vacant office accommodation in the city. There are three alternative places which I would regard as suitable sites for the jobcentre. Admittedly they are not ground floor situations, but many people believe that they would be just as suitable. These sites have been turned down by the Employment Services Agency because they do not amount to the absolute ideal. What I find astonishing is that when so many others in the private sector are having to accept well below the absolute ideal, here we have the public sector holding out for just that. If the private sector had made an application for this new office block—it is a new block on which work has not yet started—it would have been turned down because of the need to occupy existing vacant accommodation.

My second concern relates to costs. Originally it was thought that the jobcentre would cost £200,000. We now discover that it will be built by a developer and that the question of cost relates to the rental and the length of the lease. It is not possible to discover what amount of public funds is involved because we have no information on the rental and duration of the lease. My suspicion—I receive this impression in other areas too—is that we shall find that the rental is above market values and that the duration of the lease will be pretty long, to enable the developer to have the guarantee to go ahead and build the development. If that is the case the developer is protected, but public funds are once again being used in a way in which they ought not to be used at present.

A lot more answers are needed on the subject of jobcentres. We have to ask whether they are producing returns in the same way as we ask the private sector to do. Unfortunately there is no criterion by which we can judge them. Private sector agencies go out of business if they move into sites that are too expensive or if they do not do their job effectively. Public sector jobcentres do not need to make a profit. We need a more flexible and imaginative approach by the jobcentres.

In this respect I was interested in a letter in The Times from Lord Teviot, who drew attention to the fact that one jobcentre had been invited to appear in the front hall of Capital Radio in a space 6 ft. by 4 ft. and was doing excellent work, achieving a great deal of success. Lord Teviot added that This radio station has also taken ESA staff out in their gaily-painted—but frankly elderly—bus, which was bought, I understand, for a couple of hundred pounds or so some time ago, and parked in various shopping centres. Approaches like that are imaginative, and at a time of need for restraint in public expenditure they are more desirable than the sort of thing that is now going on at Norwich.

I accept that the construction industry is in a terrible state and is anxious to have any new building projects put its way. One does not wish to say that a new building which would help it in my area should not go ahead, but we must be clear on our objectives. If we are to help the industry, let us do so through new factories, schools and so on and not by the creation of another white elephant merely in order to give it jobs.

The example of the jobcentres and the questions raised by the report show our problems as guardians of the public purse. It is difficult to get the answers we need in order to know whether the programme is being carried out effectively and to get control over it if we think that it is not. But at least we should be grateful to the Public Accounts Committee for bringing the matter to our attention, and I hope that as a result it will be possible to get more satisfactory answers about the way in which the programme is proceeding and perhaps to get a change of direction in it altogether.

7.22 p.m.

Mrs. Audrey Wise (Coventry, South-West)

I rise to support certain decisions made by the Government, particularly by Ministers in the Department of Industry, which are criticised by the report of the Public Accounts Committee. The decisions are those concerning workers' co-operatives. We are told by the Committee that: Much public discussion on assistance to industry has revolved around the viability of, and the social costs and benefits associated with, workers' co-operatives. It is true that workers' co-operatives are particularly interesting and cause discussion, but that is because of their nature and certainly not because of the scale of assistance given to them.

Assistance to industry generally is being given on a huge scale every day, both positively, through grants, and less directly, through generous tax allowances, which I think are of particular benefit to the largest companies. In contrast, the help to the co-operatives has been minimal, involving a sum of £10 million, not all of it by way of grant. I give as an example the Meriden Co-operative, with which I am most familiar. In that case, £4.95 million was made available by way of secured loan and only £750,000 by way of grant. Together, those sums are a large slice of the £10 million that we are talking about.

Not long before the crash which brought about the creation of the workers' co-operative at Meriden, £4½ million of Government money had been given to the private owners in that section of the motor cycle industry, and from subsequent events we know that the money might just as well have been poured down the drain. It did nothing to secure the jobs in, or the continued existence of, the motor cycle industry, but, perhaps because it was given to private enterprise, it was more acceptable in the eyes of some people.

I am not at this moment criticising the general principle of giving grants. I know that among hon. Members there is a great deal of direct experience of the process. Indeed, the Chairman of the Public Accounts Committee, the right hon. Member for Taunton (Mr. du Cann), himself has experience in this matter, because he is a director of Lonrho, and when Lonrho announced that it was buying Brentford Nylons, with the aid of a Government loan of £4.9 million, he declared, on behalf of Lonrho—

Mr. Rees-Davies

On a[...]point of order, Mr. Deputy Speaker. How can it be claimed that the Bri-Nylon case has anything to do with the subject before the House? Surely, it is merely intended by the hon. Lady to say something that is unpleasant, although irrelevant to our proceedings.

Mr. Deputy Speaker (Mr. Oscar Murton)

I must wait and see how the hon. Lady develops her argument before I can reach a decision on its relevancy.

Mrs. Wise

It is highly relevant, Mr. Deputy Speaker. I am referring to a section of the report which deals with loans and grants made in order to preserve jobs, and the loan made to Lonrho in order to purchase Brentford Nylons was given with that in mind, and I hope it succeeds. The situations are comparable. But one loan was made to a highly profitable private company and another to a workers' co-operative. And it was the latter which was subjected to scathing attack by the Public Accounts Committee.

At the time of the Brentford Nylons loan, the right hon. Member for Taunton said: We have a perfect right to use the facilities of the Industry Act and the Government is ready to trust us. Those of us who read the report of the inspectors on Lonrho find that a fascinating statement.

Rear-Admiral Morgan-Giles (Winchester)

Will the hon. Lady confirm that she has carried out the convention of informing my right hon. Friend the Member for Taunton (Mr. du Cann) that she was going to refer to him in the debate?

Mrs. Wise

No, I have not, because I observed that the right hon. Gentleman was opening the debate, and I assumed that he would pay the House the courtesy of remaining to hear it.

Mr. Max Madden (Sowerby)

On a point of order, Mr. Deputy Speaker. Will you give the House guidance on this matter, because it has been challenged previously? What is the so-called "convention" of notifying hon. Members? This point has been raised from one side or the other. In a long debate like this one, even if the Chairman of the Committee concerned is not present—one can understand why—surely an hon. Member is entitled to expect not to have to inform him if he or she wishes to raise points relevant to his Committee's work.

Mr. Deputy Speaker

There is a convention, but no rule.

Mr. Rees-Davies

Further to that point of order, Mr. Deputy Speaker. As it is now plain that the hon. Lady is making nothing but an indirect and despicable attack on my right hon. Friend the Member for Taunton (Mr. du Cann)—who had been present for the debate until only five minutes ago—may I point out that to try to draw a comparison between a co-operative, receiving public money, and Lonhro, dealing with Bri-Nylon and entirely private assets, has no relevance to the debate, but is being introduced by the hon. Lady in order to be beastly, and should be withdrawn?

Mrs. Wise

It was public money that went to Brentford Nylons.

Mr. Deputy Speaker

Order. This is a matter not of order but for debate.

Mrs. Wise

Thank you for that ruling, Mr. Deputy Speaker. I am interested in the case of Lonrho and Brentford Nylons because the amount involved was public money. I regret that the hon. and learned Member for Thanet, West (Mr. Rees-Davies) is not really acquainted with the way in which public money is being spent.

Rear-Admiral Morgan-Giles

On a point of order, Mr. Deputy Speaker. I apologise for interrupting again, but do I interpret your ruling correctly as being that this is just a matter of courtesy and good taste?

Mr. Deputy Speaker

That is what I indicated. There is a convention, but no rule.

Mrs. Wise

There is no lack of courtesy in an hon. Member assuming that the opener of a debate will be present to hear that debate. I have been present during the greater part of it and I have seen very little of the right hon. Member for Taunton.

Mr. Costain

That really is a most inaccurate statement. I have been here for the whole of the debate and it was only when reference was made to my right hon. Friend the Member for Taunton (Mr. du Cann) that I noticed that he was missing. He has been sitting in his place throughout. Surely the opener of a debate is entitled to have a cup of tea sometimes. I have been foolish enough to sit here throughout the debate and I have not managed to catch Mr. Speaker's eye.

Mrs. Wise

I said nothing offensive about the right hon. Member for Taunton. I merely quoted something that he said, and I stated that those of us who have read the Lonrho Report will find the statement fascinating. That is well within the rules of parliamentary order. I can only conclude that certain hon. Members are finding that a certain cap fits. They are responsible——

Mr. Deputy Speaker

Order. It would be in the best interest of the House and good temper if this aspect of the matter were passed over and the hon. Lady were now to continue with her speech.

Mrs. Wise

It may be that hon. Members on the Opposition Benches have succeeded in their desire to take my mind from the defence of workers' co-operatives and focus it more clearly and closely on the affairs of Lonrho, when I intended nothing more than a passing reference to it. I repeat; there has been nothing at all offensive in any comment that I have made about the right hon. Member for Taunton, who has himself informed the House that he is very proud to be a director of Lonrho.

I should like to turn now to the criticism that the Public Accounts Committee has made about the Crown Agents. In its Third Report it drew the attention of the House to a situation that had been brewing up over the Crown Agents throughout the time when the Conservative Party were in government—a situation that was inherited by Labour Ministers. According to the Third Report, in late 1974 the newly appointed Chairman of the Crown Agents informed the Government that The book value of their assets might need to be written down substantially giving rise to a capital deficit of £44 million at the end of 1974, and that they expected interest losses of about £11 million in the period to 30th June 1975. They thus needed £85 million to restore solvency and to provide a capital reserve of £30 million. That is a substantial sum—£85 million. That is eight and a half times the amount involved in the discussion on workers' co-operatives. And what had the Crown Agents been doing? They had been advancing substantial sums to secondary banks and property companies. The Public Accounts Committee does not show a proper sense of proportion in devoting about the same amount of space and time to that mater as to the workers' co-operatives, and it makes infinitely more scathing criticisms of workers' co-operatives.

I turn in detail to the critimisms that have been made.

Mr. David Crouch (Canterbury)

I was a member of the Committee. The hon. Member for Coventry, South-West (Mrs. Wise) seems to be suggesting to the House that she is not aware that this is a parliamentary Committee, a Select Committee, an all-party Committee. It is not examining one aspect of a mistake in Government expenditure by one Department or another in any party sense, but in a parliamentary sense. There is no question of the Committee's suggesting in its report that it is directing more attention to or criticism of the co-operatives than it is in the case of the Crown Agents. The criticism of the Crown Agents was very severe indeed.

Mrs. Wise

I am at a loss to understand the meaning of the hon. Member's intetrvention. Nothing that I said could me interpreted as meaning that the Committee was criticising in a partisan way. I was simply suggesting that the whole Committee, in the absence of evidence to the contrary, was not displaying a proper sense of proportion. About eight and a half times the amount of money was involved in and lost by the Crown Agents, compared with the amount involved—not lost—in dealing with workers' co-operatives. I am calling into question the Committee's sense of proportion, not its party composition.

I am determined to turn now to the detailed criticisms which have been made about workers' co-operatives, however many times Opposition Members interrupt. The Committee expressed surprise that the prices paid at Meriden for land, buildings and machinery were greater than the district valuer's open market valuation. I think it is a pity that the amount was greater than the district valuer's open market valuation, and so, no doubt, do all those concerned with the co-operative. But there is more to striking a bargain than the wishes of the purchasers, as we all know.

At Meriden, a private financier gained control of this important section of our industry, seeking, I regret to say, to make money rather than to make motor cycles. This financier gained control of the British motor cycle industry and then sought to close down this factory, which employed a considerable number of workers, many of whom live in my constituency.

The workers were not disposed to accept this, and they decided to defend the existence of this factory and their jobs with it. When they had shown extraordinary tenacity in this defence, the owner of the land and plant decided to sell and to try to get the best value that he could. I am not criticising him, as he was acting perfectly in accord with the ethics of the economic system in which we live, which I do not support but which Opposition Members do.

These purchases of land and plant were made to keep a British motor cycle industry in being, not for speculation or scrap but for use. In considering the question of the price paid, I quote from the Sixth Report: The Department informed us that although they left negotiations to the co-operatives so as to avoid becoming too closely involved in the management of the projects, in all the circumstances they were satisfied that the settlements reached were reasonable and defensible. In their view the co-operatives had an incentive to negotiate the lowest possible prices because they had to operate within an agreed level of Government support and it was in their interests to minimise all calls on their available funds. That sounds to me like an eminently sensible statement, and it is a sensible attitude for the Department of Industry to take. But I do not know what I am to make of the following extract from the Sixth Report: In Your Committee's view however any constraints imposed by the overall limit of available assistance were more than offset by the co-operatives' lack of alternative choice of locations and by the severe pressures upon them to restart production as soon as possible. The whole point is that here, in this location, was a motor cycle factory, suitably fitted up and equipped, with a highly skilled work force in the vicinity, all anxious to continue working there. It was of more value to the prospective workers' co-operative than it would have been to some mythical non-existent purchaser for some unknown purpose on the open market. The use which can be made of a location has a distinct bearing on the value of that property to a particular purchaser. I do not believe that there is any such thing as a simple and abstract value. I am astonished that the Public Accounts Committee should take such a mechanistic and unrealistic view.

Of course the co-operative wanted to restart production as soon as possible. I am sure that my constituents, the residents of Coventry and Meriden, and most of the population of the country would think that a worthy objective. For those geared to a system in which it can be profitable to keep premises empty it might be difficult to understand the simple reasoning behind my statements. Those who accept the reasonableness of the profits so disgracefully made from Centre Point by keeping it unused and empty will find it hard to grasp that it is reasonable to seek to restart production and is therefore possibly worth paying a little more to enable this to happen and to prevent the loss of sales of motor cycles. The Public Accounts Committee, in making these criticisms, has shown itself to be rather short of common sense.

Rear-Admiral Morgan-Giles

I am sure that the hon. Lady is trying to be fair. There is an NVT distribution centre in my constituency. I understand that the firm, which was in considerable difficulties, was advised by consultants that the only way it could remain profitable, continue to make motor cycles for export and provide employment was by rationalising and reducing the number of factories from three to two. That meant closing one factory. That is very much at variance with what the hon. Lady is saying. I hope that she will agree that that is what happened.

Mrs. Wise

No, it is not at variance with what I am saying. I accept that an action looked at from one point of view can be described as rationalising, and can involve cutting jobs. That is the way much of our economy is run. I cannot accept, however, that such action would lead to the maintenance of a viable motor cycle industry, nor can I accept that my constituents and the residents of Meriden should have been expected to facilitate the running down of their factory to preserve the profitability of the company when they considered that the motor cycle industry could continue and even expand if properly run and managed.

Rear-Admiral Morgan-Giles

What has happened now?

Mrs. Wise

What has happened now is that the remaining private section has continued to go the way it was previously going, whereas Meriden has succeeded in continuing to produce motor cycles. I intend to comment on the current position in a moment.

The Public Accounts Committee went further and said: We are not, therefore, convinced that the prices paid were wholly reasonable even though they may have been the lowest that the co-operatives could negotiate in the circumstances. The only conclusion that I can draw from that statement is the implication that it would have been rational and sensible to allow the factory to close. I am very pleased that the Government and the Ministers in the Department of Industry did not look at the matter in that way. They made sensible decisions, in terms of keeping the motor cycle industry going, maintaining jobs and agreeing to the proper use of public funds.

The greatest waste lies in paying people for doing nothing. To use money to back people who have shown their involvement and their intense enthusiasm for the work they are doing shows imagination and good sense. I should like that imagination and good sense to be repeated more often by all Governments.

I have concentrated my remarks on the Meriden Co-operative because it is the one with which I am best acquainted. The statements made by the Public Accounts Committee about workers' co-operatives in general are misguided, unfounded and extremely unfortunate. I hope that the Government will not be deterred from continuing to give assistance to workers' co-operatives where it is justified. It is one of the most useful and progressive purposes for which public money can be expended.

With NVT in liquidation, Meriden is now the only remaining part of the British motor cycle industry. If Meriden goes, we shall have no motor cycle industry. The collapse of NVT has added to the problems that Meriden was bound to face. As this matter is outside the control of the Meriden workers, I trust that nothing that may arise from it will be used as a justification for jeopardising the future prosperity of Meriden.

We have in Meriden a work force that has proved beyond doubt that it can produce motor cycles. All the objectives that are usually held out to workers have been achieved. There has been an improvement in productivity, the product has improved, and so has the assembly of the engines. On such matters as oil seals and other mysteries on which I am not an expert, but on which the workers are, I understand that the workers' suggestions and interest have led directly to improvements in the motor cycles being manufactured at Meriden.

Such utilisation of the talents and interests of the workers sets an example which I hope will be followed in all manufacturing industry. Compared to the good which has been done, and which I trust will continue to be done with the co-operation of the Government, any problems there may be should pale into insignificance. Instead of criticising the Government for their actions, the Public Accounts Committee should have congratulated them.

7.47 p.m.

Mr. John Biggs-Davison (Epping Forest)

I am quite prepared to believe that the hon. Member for Coventry, South-West (Mrs. Wise) does not know when she is being discourteous and partisan, but I thought that she was particularly ungracious to my right hon. Friend the Member for Taunton (Mr. du Cann), who at the beginning of his speech expressed sympathy with the idea of workers' co-operatives. I, too, support the idea of workers' co-operatives and of helping workers' co-operatives, provided that they can also help themselves. That is a purely personal opinion, and I must stick to my last and I want to be brief.

My right hon. Friend the Member for Taunton in his impressive opening speech praised the diligence and expertise of the Comptroller and Auditor General for Northern Ireland. I echo his words. I do not serve on the Public Accounts Committee, but I have studied its admirable work on Northern Ireland. I gather from the Fourth Report that a favourable impression was also formed of the professional skill of the officials with whom the Public Accounts Committee dealt. I noted the observation made by my hon. Friend the Member for Canterbury (Mr. Crouch), and recorded in the report of the evidence on the then newly-appointed Permanent Secretary at the Northern Ireland Department of the Environment.

The public service in Northern Ireland operates in circumstances of difficulty and danger and has borne casualties. Judith Cook was murdered on duty a year ago. Public servants' homes have been attacked, and they have been murderously threatened. But these men and women quietly, and for the most part anonymously, work and maintain the machinery of government. In such trying conditions the Civil Service has its work cut out to budget accurately.

Paragraph 64 in the Fourth Report states that the Department of the Environment seriously underestimated the effects of inflation in costing the new Belfast Central Railway. It is difficult to blame officials since serious underestimates of the effects of inflation are characteristic of present Ministers. Paragraph 66 in the Fourth Report suggests that the loss in connection with the Belfast Central Railway could be made good by the disposal of lands and property. I hope that in due course we may hear what progress has been made.

In paragraph 29 of the Fourth Report, referring to the case of a Norwegian company, concern is expressed by the Committee that the Department of Commerce had been unduly influenced by considerations outside the immediate field of commercial judgment. This, as the Committee pointed out, is a recurring problem. Departments take their lead from what they understand to be the policies of Ministers. The Department was concerned, as the report says, to create and maintain a nucleus of skilled male employment in Londonderry". Hon. Members know that the wage-earning breadwinners in Londonderry are often women, so this is a laudable aim, but it is arguable that workers in Northern Ireland could be served best by projects that have some prospects of profit. That might be a more productive use of public funds.

I share the Committee's concern that housing finance in Northern Ireland should be rationalised as soon as possible. The Government have published proposals, and there is evidence that a substantial increase in rents in both private and public sector housing is inevitable.

The report of the Housing Executive has been laid before the House. Its Chairman, Mr. James O'Hara, has said that tenants can expect increases of more than 60p a week. Squatting is a growing evil, and we await the Government's proposals for changes in the law.

Since the Fourth Report was brought out, the Under-Secretary of State for the Northern Ireland Office said in a Written Answer to me: The amount of rent and rates owed to the Northern Ireland Housing Executive at 30th September 1976 was approximately £5.6 million. Rate arrears in the private sector at the end of the financial year 1975–76 stood at £4.4 million; a precise figure for the financial year 1976–77 will not be available until next year."—[Official Report, 7th December 1976; Vol. 922 c. 145.] This is a matter of concern to the PAC. It is disturbing and unsatisfactory, and no doubt we shall return to it on a suitable occasion.

7.53 p.m.

Mr. W. R. Rees-Davies (Thanet, West)

I want to make a point about the aspects of the National Health Service commented on in the Sixth Report. The admirable work of the PAC, as set out in the report, clearly shows that substantial cuts could be made in the NHS in particular fields. It also shows that there is considerable inefficiency in the NHS which could be easily remedied.

I have started by giving conclusions and I should like to develop them. The House is fortunate to have a Chairman of the Public Accounts Committee with the ability and calibre of my right hon. Friend the Member for Taunton (Mr. du Cann). He has unrivalled and outstanding commercial knowledge. It is clear from the reports that he is an interrogator of no mean order, and as a cross-examiner he would have made a first-class "silk" at the Bar. He is ably backed up by my hon. Friends the Members for Folkestone and Hythe (Mr. Costain), Canterbury (Mr. Crouch) and Richmond, Yorks (Sir T. Kitson). They have done a great deal of admirable work.

The PAC should be extended and developed into special Committees and, although I do not have experience to express an opinion, I think that its work might be extended. It is certainly of the greatest value to the House and country, and a great deal more should be made known about the Committee's work.

May I, as a cross-examiner earning my livelihood out of the art of interrogation, make one tiny criticism. The matter with which I wish to deal is included in the Sixth Report of the PAC from column 2925 page 417 to column 2972 on page 424. It is well known that the art of interrogation involves dealing with persons who often wish to avoid or evade the questions. Unfortunately, the Permanent Secretary who was being questioned is a master in the art of failing to answer.

Here are the first-class questions that were put by the Chairman of the PAC, my right hon. Friend the Member for Taunton. He asked the Permanent Secretary: Can you tell the Committee by how much manpower in the Health Service has increased over recent years? The Permanent Secretary replied: I am afraid that I have not got that statistic at my fingertips". He promised that the answer would be supplied, but it never was. Later he was asked by my right hon. Friend: Can you tell us how the figures of bed occupancy have varied over the years? The Permanent Secretary replied: I can certainly provide that figure". But he never did.

He was then asked by my hon. Friend the Member for Folkestone and Hythe: Have you any idea of what the regions cost? My hon. Friend was, of course, referring to regional health authorities, and he was told by the Permanent Secretary: I am afraid that I cannot quote a figure, but if I might include that in the note the Chairman has asked for I will do so. A note at the bottom of the page in the report indicates that this note never appeared.

My hon. Friend the Member for Richmond, Yorks said that he had tried to discover who had made a decision about stopping an ambulance from collecting somebody. It had taken him 11 telephone calls to find the man who had made the decision.

My hon. Friend went on to inquire about staffing. He asked: How are you going to set out the staffings, in comparison with, say, 1st April 1974? That was the position which had obtained until the reorganisation of the NHS. The Permanent Secretary replied: I think that we shall have to try and set them out in terms of post approval, if that is the right word, or post established and not necessarily post filled, on the reorganisation on 1st April 1974". That was one of the really important questions. Figures were asked for and were never supplied. I have now put down Written Questions about these figures, and I hope that the answers will be supplied. They should provide valuable information, giving us a general picture of the NHS.

The Department of Health and Social Security spends the staggering figure of over £4,000 million a year. The reorganisation of the NHS established 14 regions, about 90 county areas and 200 districts. If we can cut these, as I am sure we can, by about 5 per cent., that will reduce costs by £200 million. That could be done by the immediate removal of the 90 area authorities which are not carrying out any useful purpose, as I shall prove.

It would be necessary for a few area administrators to be absorbed into the regional tier so that they could look after particular counties, but no valuable purpose is being achived by the area authorities. The work done by the districts is sufficient.

It is a waste of time hon. Members writing to the Minister, because the Ministry does not know what is going on at district level. The Ministry writes to the region, the region writes to the area, the area writes to the district and the district gets in touch with the general practitioner or the people concerned locally such as the community health council. In all my recent investigations, which have been fairly extensive, I have always sent seven letters.

I can give as one example a problem which was identified by the Public Accounts Committee. I recently had to deal with the problem of an elderly lady suffering a severe cataract. To my horror, I was told that in Thanet and, indeed, throughout East Kent there was a two-year delay before the lady could have an appointment to have her eyes examined. I found out from Mr. Darvell, the only ophthalmologist in the Thanet area, that that information was true. As a result of my intervention, the lady got her appointment the following week and had the operation, although, as Mr. Darvell rightly pointed out, this meant that someone else would have to wait longer.

I wrote to the Ministry, and the Minister of State replied: There is a two year delay for all routine cases. In exceptional cases, Mr. Darvell will see a patient otherwise… As far as the general situation is concerned, there has only, I understand, ever been one consultant ophthalmologist for Thanet—the Canterbury and Thanet will have an additional one in their programme next year. That statement was quite untrue. There were two ophthalmolgists, but one emigrated and has not been replaced, which is hardly surprising considering the overload of work. There is only one consultant now, but when I asked whether another was to be appointed I was told that this was a matter not for the Ministry but for the regional authority.

From then on I sent one letter to the Ministry, one to the region, one to the area, one to the district, one to the consultant, one to the consultant's advisers and one to the patient concerned. If one wants to get anything done in the NHS it is necessary to go through all these people, but they do not undertake different tasks. The administrator at regional level is doing almost an identical task to the administrator at area level, who is doing a similar task to that performed by the administrator at district level. That is how we get this build-up of tiers.

It was profoundly true when the Permanent Under-Secretary told the PAC: I have been made very conscious in my discussions during visits, whether when talking to a district management team or talking to the staff representatives from hospitals, of this feeling that they put very vividly to me of having a great many tiers above them. He can say that again. I have talked extensively to consultants and GPs, and they find it impossible to know what is going on or to get through to the Ministry. The Ministry is not often in touch with the regions, and the regions do not know what goes on in the areas. The area has to get in touch with the district. We need a surgical operation to remove the area level. The patient would at least then have the opportunity to reach an understanding with the district authority.

Having been told that the provision of more ophthalmologists in East Kent was a matter for the region, I wrote to that authority and was told that it was not a matter for the region. I was referred to the Kent Area Health Authority and was finally told: With regard to ophthalmologists in Thanet, I can confirm that Mr. Crawford has been replaced"— that is the man who emigrated— and the waiting time for any patient's treatment can be up to two years. This is very largely due to the lack of in-patient beds in the district. The letter went on to say that the authority would like to have the capital resources to provide a new unit in Canterbury, but the letter was so complacent as to be almost unbelievable. It said that there was a two-year delay for treatment but offered no kind of proposal to do something about the problem.

The letter also said that there were no beds, and I thought that it would be a good idea to find out whether there were any beds. I sought the bed occupancy rates in local hospitals and was told that at Princess Mary Hospital in Margate the occupancy rate had fallen to 46 per cent., at Margate General Hospital it was 70 per cent. and in the others it was about 80 per cent. There is an abundance of beds. There may not be the staff, although there are plenty of administrators. We are facing a serious situation, and we need this surgical operation to cut out the administrators and increase the medical staff. I understand that the same picture exists in other counties. We must try to secure more consultants and staff, who are really needed in the NHS.

There was a rumour that Princess Mary Hospital was to be closed. I asked at district level and was told that the authority knew nothing about it. The area authority told me that it had no knowledge of any such proposal. Eventually the regional authority gave me a first-class categoric reply that there was no such plan and that if a proposal were made it would be dealt with in the usual way and there would be full consultations.

How can the ordinary person understand a system in which there are four separate channels of communication—district, area, region and Ministry? Seven bodies would be involved in any consultation, to include community health councils, doctors and nurses and other hospital staff would also have to be consulted. It is sheer bedlam.

Mr. Andrew F. Bennett

Will the hon. and learned Gentleman give way?

Mr. Rees-Davies

It is no good the hon. Member for Stockport, North (Mr. Bennett) trying to intervene to make a party point. I shall make it for him. This system was set up by a Tory Government. I have given the hon. Gentleman his point. It was set up by a Tory Government, and it is sheer idiocy. The PAC tries to obtain an objective, all-party view of what is going on.

Mr. Andrew F. Bennett

I certainly wanted to make the point that it is a pity that the Conservative Party did not appreciate the problems it was causing when it was reorganising the National Health Service. One must be careful not to keep people in a continuous state of reorganisation so that one does not find out all that ought to be happening. One of the points made by the report was that the Committee could not pursue its inquiries too far because the NHS was in a state of reorganisation.

Mr. Rees-Davies

I recognise the point made by the Permanent Secretary when giving a very poor defence and a half-hearted reply, indicating plainly that his idea was that one should give the new NHS structure a chance.

No one who thinks seriously for a moment that one can live with this kind of structure, has any business sense or any sense at all. Anyone who tries to operate it must make six or seven copies of every single letter that goes out. There is yet another line of communication. There is also the medical officer for the region. If one writes to the region, it is a waste of time to write to Sir John Donne unless one writes to Dr. Porter, the regional medical officer, who is brought into the picture too. The postage is enormous.

I now wish to discuss the impossibility of getting a decision on hospital services. First, I shall deal with casualty departments. I am sure that what I am saying about Kent is true elsewhere. For 10 years we have been trying to get an improved casualty department at the Margate General Hospital. We were given a figure on cost but the figure escalated, as did the building cost. First, the doctors and nurses blew their tops and said that they really must have something done. I wrote to the Ministry, which said that it was a matter for the region. I wrote to the region, and the region said that it had passed it on to the Kent area. I wrote to the area, which said that it had passed it on to the district. I wrote one letter to Kent asking "Do you or do you not accept that it is your decision?" I received two letters, one from the deputy administrator, who said that it was not a decision for the area, and one from the administrator saying that it was a decision for the area.

What can one do in this situation? It is a deadly serious matter. In the end, I wrote to say that I wanted to see an absolutely firm recommendation to the region that this was priority number one. I wrote to ask the region to give a decision before Christmas that the casualty department could go ahead and to say that it had the money. The area replied "Ah, but it is subject to ready availability of cash".

If it is first priority, there must be some cash available. We are dealing here with projects of under £350,000. Therefore, one has to be able to make plain, if one is to have different authorities, exactly which powers to decide belong to which authority.

I do not want the region to have to decide this matter. The district must make the general and broad decision among competing claims. I want to keep the regions because—God forbid—if the matter should go to the Ministry, the Ministry does not seem to have any understanding of local requirements. It is no good arguing for the retention of county authorities. One will not get the money, because the money will only go to the regions. We should keep the 14 regions, get rid of the 90 county authorities and keep the 200 district councils.

There are one or two men who are useful at Kent area level, but if those men went into the region one could reduce the regional staff accordingly. I am told that this would produce a reduction of 4 to 5 per cent., which would cost £150 million to £200 million less. A decision must be taken.

I criticise Sir John Donne, who as far as I can see is incapable of taking any decision at all. The matter must be fought hard. The doctors are upset about the situation, and morale in the NHS in the area is appalling. There is now little leadership within the Service, and it behoves Members of Parliament throughout the country to enter the fray. Because of the way in which local authorities are organised, few people now understand the structure of the NHS.

We are looking forward to the establishment of a new operating theatre in the Royal Sea Bathing Hospital at Margate. We know that Canterbury is seeking similar facilities. A decision must be made on this matter. But has it ever been made? In June 1975 the then Minister of State, Department of Health and Social Security the right hon. Member for Plymouth, Devonport (Dr. Owen) came to Thanet at the time of the referendum, and we understood that we would have a decision from the Department about the operating theatre in Margate. I was not aware at the time that Canterbury had equal priority. Although that visit took place in June 1975, we have still not had a decision. Nobody in the Department, region, area or district had taken a decision. Surely the proper people to have taken that decision were those in Canterbury and Thanet District Council. It may well be right that Canterbury should have these facilities first, and it may well be that Canterbury will get them. I see that my hon. Friend the Member for Canterbury (Mr. Crouch) is present——

Mr. Crouch

I am not saying a word.

Mr. Rees-Davies

My hon. Friend is not saying a word, and I do not blame him. Surely we should have had a decision on the operating theatre within a year or two of the Minister's visit to Thanet. It appears that we shall not have two such theatres in the area because we cannot afford them, but we should decide at district level where the theatre is to be situated. A decision one way or the other must be taken. We are still awaiting the outcome of all these considerations, and there has been the usual kerfuffle with matters passing from the Department down to the region. We are fobbed off, however, with the excuse that nobody knows what figure is to be spent next year.

I hope that what I have said has been constructive. I hope that we shall cut out the area and have a clear decision. I serve notice that, if anyone in these bodies gives me an answer to the effect that he does not know what is happening, I shall immediately seek to raise the matter on the Adjournment. I shall be after him in his job, and I shall pursue the matter to the end.

8.19 p.m.

Rev. Ian Paisley (Antrim, North)

The House is grateful to the Chairman and members of the Public Accounts Committee for all their work as represented in these reports. We are particularly grateful to the Chairman of the Committee, the right hon. Member for Taunton (Mr. du Cann), for giving an able analysis of the Committee's work.

I wish to deal briefly with some of the matters mentioned in the report on the subject of Northern Ireland. The Committee examined a number of operations which had their origin in the work of the old Stormont Parliament. Then the Stormont Parliament was prorogued, and in the interim period there was no public scrutiny of spending by Government Departments in Northern Ireland.

I speak as a former Chairman of the Public Accounts Committee in Stormont. It is to be regretted that in that interim period certain operations were commenced, the direct results of which the PAC of this House is now having to examine.

We are also dealing with some matters begun by the ill-fated Executive. I have no obituary to write for that body. I should like to express the gratitude of the people of Northern Ireland for the able way in which the Chairman and members of the Committee dealt with those matters. I fully endorse what the right hon. Member for Taunton and the Opposition spokesman on Northern Ireland, the hon. Member for Epping Forest (Mr. Biggs-Davison) have said about the Comptroller and Auditor-General of Northern Ireland and his staff. They deserve the warmest possible thanks of the people of Northern Ireland.

As a Northern Ireland Member, I recognise the need for the closest possible scrutiny of what is happening in Government Departments in Northern Ireland. The Fourth Report of the PAC says, in paragraph 8: we are of opinion that DHSS failed to take effective action as early as it should have done in a matter concerning Giro cheques. This matter was raised by my hon. Friend the Member for Belfast, South (Mr. Bradford).

Some hon. Members get very hot under the collar about money for the Provisional IRA coming from the United States of America and other places, but if not one penny piece came from America to the IRA, it would remain a fact that the IRA is being financed by a vicious conspiracy in the manipulation of Government funds to thier own ends. That has now been exposed in the Housing Executive, where the Fraud Squad has been called it. About £3 million is involved, much of which, if we are to believe the reports that are circulating—I exposed this situation in the House many months ago—went to a company whose managing director is on the brigade staff of the Provisional IRA.

In the Giro cheque scandal, —133,000 was found to be missing for a calendar year ending July 1975. I congratulate the PAC and its Chairman on their close scrutiny, which has revealed that part of the fraud was inside the Post Office. Then, most of the cashing of the cheques took place in West Belfast, which is practically under Provisional IRA control. So what my hon. Friend the Member for Belfast, South insisted on—it was pooh-poohed by the then Secretary of State for Northern Ireland—has now been exposed by the PAC and should be carefully considered by every hon. Member. It is a most serious matter when the taxpayers' money is used to purchase bullets to shoot members of the defence forces and Her Majesty's security forces.

I congratulate the Committee. It is about time that this House saw to it that a representative from Northern Ireland was appointed to the Committee, so that this matter and other matters could be really gone into by someone who is on the spot and knows exactly what is happening in Northern Ireland. I do not mind who is appointed, but someone from Northern Ireland has a right to bring forward matters that we know about in Northern Ireland.

Then there is the matter of the constitutional stoppage, which need never have taken place if the House had listened to the voice of the ballot box. But when it did take place, what did the then Minister of Health in the Executive do? Incidentally, I understand that there will be Assemblies in other places, although this great nation of England is not to have such an Assembly, for some reason or other. Perhaps it can rule this country only if aided by the Ulstermen, by the Scots and by the Welsh—and is not fit—although it has given self-government to many nations—to rule itself. That may be the conclusion to be drawn. What I wanted to say was that in the crisis the then SDLP Minister of Health pulled down all the safeguards.

The Committee, in its Fourth Report, at paragraph 10, noted the essential simplicity of the emergency scheme". That is one of the best sentences in the report. It is written with a fine sense of irony. The report also refers to the inevitability that most of the usual safeguards had to be abandoned while it was in operation. Public money was put forth and practically every safeguard abandoned. A constituent of mine was amazed, during the constitutional stoppage, to receive a Giro cheque for an amount of money that he had not claimed. This took place in Northern Ireland.

Mr. McCusker (Armagh)

Did he return it?

Rev. Ian Paisley

He did return it. He was an honest man, and he was advised by his Member to return it. I hope that the hon. Gentleman would give similar advice to those in his constituency. The Department is making an investigation into what might happen if such a constitutional stoppage took place again. Perhaps the Minister, in his reply, will tell us how far this investigation has gone.

We have the amazing situation of public money paid out to Queen's University Library for library facilities relating to health and social services. A sum of £83,000 was paid out to the university, which the university did not spend for the year in which it was paid out.

Very rightly the Committee drew attention to the fact that there is a principle—I should have thought that the Department in Northern Ireland ought to know about it—that public money should not be made available before it is required. But evidently that public money was handed out before it was required. I do not know whether this sum of £83,000 was invested, or what interest came in from it. It is an interesting point, and I am sure that the Minister will be able to help us on it this evening.

With regard to the Housing Executive, staggering figures have been revealed this evening about rents and rates. There was a rent and rates strike, which was inaugurated by the SDLP. That party told its people that they would never need to pay any rent or rates which were withheld. These poor people believed the SDLP. Now they are unwilling to pay back what they have withheld.

The Housing Executive finds itself in great difficulty. As I left the Executive's offices after seeing the Director General on the last occasion, the chief of the Fraud Squad was coming in to have a look at the books. As I mentioned at the beginning of my speech, vast sums of money have gone to the coffers of the Provisional IRA. Surely there is a need for the Committee to continue its scrutiny of the work of the various Departments in Northern Ireland.

My next point concerns the recreation centres. The idea was put forward with great enthusiasm from all parts of the House. It was said "If only we build great recreation centres for the people of Northern Ireland, all will be well. The bombing and the shooting will be over, and all will be well." That is the sort of nonsense that has been spoken in the House.

I remember leaving this House on the day when Stormont was prorogued. A Member said "It is all over now. Peace has come." I said "What you have seen has been a Sunday school picnic compared with what will take place as a result of the folly of the House of Commons." The House, having sown the wind, has reaped the whirlwind. I am delighted that on the last occasion that the matter was raised in the House the Government told us that they had changed their mind about the whole programme.

This brings me to the question of the Belfast Central Railway Station and the whole reorganisation of transport. If we go to Belfast we see a huge sports and leisure centre being built on one side and the new railway station on the other. Between the two buildings are two Provisional strongholds——the Shortstrand on one side and the Markets on the other. When the expenditure has been completed, we shall hear the same type of loud explosion that was heard when the gasworks were blown up. That explosion will mean that the two buildings will have gone. Given the area in which the building has taken place, it will be almost impossible for the security forces to cover it.

I am glad that the PAC has underscored the fact that there must be a strengthening of financial control in these matters by the Department of the Environment. It is important that the Government Department responsible has a firm grip on how the money is spent. Surely that is relevant to the Belfast Central Railway Station. The report states: For these reasons we are of the opinion that insufficient control was exercised by DoEn, especially during the early stages of the scheme and that its financial basis was progressively eroded by factors which should, to some extent at least, have been foreseen. The Department's activities in Northern Ireland have been examined by the PAC, and the exposure can be only for the good. I trust that it is a shot over the bows to tell the Department that the House is taking note of what has happened.

A matter that disturbs us all in Northern Ireland is financial assistance to industrial undertakings. We want to see industries come into Northern Ireland, but we do not want to see industries that grab the grants, continue for a short time and then leave. It would be interesting to know how many businesses came in and left on that basis. A vital reference is made in page xiv, paragraph 29, which states: Your Committee are of opinion that in this instance DOC was unduly influenced in both respects by considerations outside the immediate field of commercial judgment. That has happened over and over again, and the possibility of making the industries viable is totally remote. However, the Government will continue to have them because of political considerations. For example, there was a shirt factory in Londonderry where the Government grant was being used to pay the wages. It was told that at a certain date the Government grant would cease. There was no possibility of that firm ever being viable.

On behalf of the people of Northern Ireland, I thank the PAC. I am glad that there has been the opportunity tonight to lay matters before the House that are of the greatest importance to the people of Northern Ireland. I trust that the PAC will continue to keep a close eye on the way in which the Departments in Northern Ireland are living up to their stewardship.

8.35 p.m.

Mr. Geoffrey Pattie (Chertsey and Walton)

I always find it helpful to look back at previous debates when reports of the Public Accounts Committee have been before the House. In one of them I noticed the following extract—and the House may care to guess when the debate occurred: Well might the right hon. Gentleman the Chancellor of the Exchequer be compelled to point out in his last budget speech that the total interest on the savings of the nation during the last ten years had been absorbed and swallowed up in the grave of this vast expenditure. At a critical epoch in our recent history we were authoritatively reminded, and from a very high quarter, that representative institutions were upon their trial. Looking at the inordinate growth of our national expenditure, as sanctioned by Parliament, could it be long, he would ask, before public opinion would indignantly repeat that solemn warning? He thought not. And he must add that the aiders and abettors of the present mania for extravagance would be alone responsible should the masses of their countrymen be forced to believe that Parliamentary Government, as now administered, is nothing, after all, but the cunningest device which the selfish subtlety of the governing classes could contrive to extract the largest amount of taxation from the hard-working, overburdened, but unrepresented portions of our community. That was said in the course of the first debate in the House, following the establishment of the PAC, in March 1861, and the Chancellor of the Exchequer referred to was none other than Mr. Gladstone who, later in the same debate, said: If the question of a Committee to examine the Estimates and expenditure is to be debated, all I can say is, there never was a proposition which more entirely deserved solemn and separate discussion—a proposition more important and one cutting more deeply into the roots of our entire Executive—ay, and I may add into the roots of our political system—it is difficult to conceive. At any rate, it is a proposition most inappropriate to mix up with a discussion on the manner of rendering or examining public accounts. I cannot attempt to discuss these entirely different matters at the same time, but I will direct myself to the principal object of the noble Lord. He has shown on this occasion his own zeal and diligence; and the House will be extremely glad to see another Member of Parliament adding himself to that number—necessarily a very small number—who are disposed to give up their time and attention to the driest of all possible subjects, but which is also not the least important—namely, that of rendering and examining the public accounts, and facilitating the functions of the House with regard to the public expenditure. As we know, the PAC was established in 1861, and there have been annual debates ever since. Here we are again looking at a number of Reports from the Committee. This has been my first year as a member of the Committee, but I know that all members of it have their favourite items in the Reports. Mine are the RARDEN gun, to which my right hon. Friend the Member for Taunton (Mr. du Cann) referred and which surely must be a classic for inclusion in all future textbooks examining what is meant by "critical path analysis", and the case of Friern Hospital, which, as the House will recall, involved the dumping of 250,000 cubic metres of rubble on hospital land without the appropriate authority.

As the newest member of the Committee, perhaps I may be allowed to pay my own tribute to my right hon. Friend the Member for Taunton for his guidance and chairmanship of the Committee. However, I take this one small point of issue with him. In his excellent speech, he mentioned the possibility of a sum of, say, £1,000 million as having been identified as the sort of excess at which we might look. My own investigations have shown that the figure could be somewhat lower than that—possibly in the region of £400 million.

When we have examined certain Departments, I have detected amongst my colleagues on the Committee something of a sense of unease—the feeling, almost, that they have been there before and that they are seeing the Departments yet again. This is compounded by the fact that they may be seeing them in future years. This feeling has been heightened by the impression, taken from the words of the famous Albert monologue that no one is really to blame.

We examined some of the most extraordinarily bizarre circumstances, and it was very difficult to find who was there at the time. The responsibility seemed to be nicely diffused between various sub-departments. We rarely hear of disciplinary action being taken in these cases.

I pay tribute to the Comptroller and Auditor General and his staff. I have been very impressed when I have dealt with them. Various types of problem come before the Public Accounts Committee. One example is the case where expenditure has vastly exceeded the estimate. This is often caused by very bad project management, or bad estimating at the outset, or a combination of the two. In this respect, we could refer to the Farnborough wind tunnel, or hospital computers, both of which have been mentioned in the debate. There is also the case where action is not taken when it should have been, such as rents in BAOR. There are other examples of action being taken where it should not have been taken, such as Friern Hospital. Then we have the consequences of various policy decisions—I think the question of jobcentres has been adequately ventilated already.

A new boy to the Public Accounts Committee might well ask how effective this Committee is. I believe that it is still highly effective. It calls on the Departments to do a tremendous amount of preparatory work in getting their cases right before coming to the Committee, and it seems to me that answering the Committee's questions is a salutory form of discipline. This is useful to permanent secretaries as a sort of management tool when they are new to large and unwieldy Departments and are grappling with matters of scale and complexity. They can point to the PAC as a form of discipline.

Then there is the fact that certain Departments are pleased when the PAC examines a particular problem and says that it is satisfied with the action taken, or with the remedial action. That causes a great deal of pleasure and satisfaction. One of the major problems with the activities of the PAC is that it is used as a kind of bogyman. One might say "If you do not wash your hands, brush your teeth and say your prayers, the PAC man will get you". There is a certain amount of evidence of this. I refer to the Defence and External Affairs Sub-Committee of the Expenditure Committee, when it reported at the end of July. On page 24 of its report it says The Ministry noted that it was the extent and intensity, and not the principle of monitoring which was at issue. They had no wish to monitor their contractors or sub-contractors in more detail than was necessary, having regard to the sums of public money involved, the competence and management systems of the firms, and the complexity of the tasks. They recalled that it was not so long ago that the Public Accounts Committee and the public generally were highly critical of the apparent lack of control of expenditure on large development contracts. In that case and in that industry people were worried about the Ferranti affair. After that, everyone chased about and set up all sorts of control mechanisms, involving large numbers of people. The same Committee received evidence from Hawker Siddeley Dynamics, and Captain Lewin refers to the number of visits that his factories received from the Ministry of Defence Procurement Executive. On page 37 he refers to 1975. He says: During September and October of last year, and these are typical months, we had from the MOD PE 385 day visits at Hatfield alone; at Lostock which is our production factory, 290 and at Stevenage, which concentrates on space, we had 85, making a total of 760 during two months, and this is leaving out the financial side. What I have just said is the equivalent of 20 persons per working day. If I add to that the financial oversight which amounts to 18½ persons a day, we get a total through the company—and it is quite a small company as companies go—of 38½ visitors of one sort or another every working day. Each of those visitors, if he is coming for a useful purpose, has to be nursed by the preparation of documents, by being looked after while he is with us. Sometimes it takes one of us to look after one of them. Leaving aside any expenditure which falls on the MOD, which must be considerable because they have to travel, the expenditure on us is very considerable. Much of it falls on the taxpayer, but some of it does not. When it does not it inevitably puts the price of the merchandise we are trying to sell abroad up. It is an overhead which has to be put on everything we make. It is for that reason that we feel we are in danger of pricing ourselves out of the business as a nation. That point is extremely significant. It is something that the people who consider the future of the PAC should bear in mind, because in order to be cost-effective we must obviously have highly-trained, highly-skilled and highly-effective people. There is a tendency at the moment, however, for Government Departments to say "The PAC would not like that", and then to extend the quantity and depth of its monitoring beyond the point at which it is in any way cost-effective.

In his excellent speech my right hon. Friend the Member for Taunton mentioned the United States General Accounting Office. In considering the future of the PAC, it could well repay this House to consider the scope and activities of the General Accounting Office bearing in mind, of course, that there would have to be a considerable recruitment of staff if we were to extend the activities of the PAC that far.

However, there is an opportunity here. The question about the National Enterprise Board is unresolved, and there is the possibility, should the Aircraft and Shipbuilding Industries Bill reach the statute book that there will be another two nationalised corporations. Could not these three bodies be audited by the Comtroller and Auditor General? I should be happier if I knew that he was carrying out the audit. That might give Parliament slightly more control in respect of the point that my hon. Friend the Member for Surrey, North-West (Mr. Grylls) was making earlier.

Let me now quote an extract from Greenwell's "Monetary Bulletin", which came out on 18th February this year and dealt with the United States system. It said: The new U.S. system has received little publicity so far in the U.K. Under the old U.S. system Congress debated and passed individual expenditure bills without reference to the overall budget deficit. Under the new U.S. system whenever additional Federal expenditure or a tax reduction is passed, either offsetting action has to be taken elsewhere to neutralise the effect on the previously agreed budget deficit or the increased budget deficit must be debated and passed. The U.K. should adopt a somewhat similar system. Not only should the cost of policy changes be announced in Parliament, but also the consequent change in the budget deficit should be debated and passed by the House of Commons. If we moved along those lines we should be extending and making more effective the work of this excellent Committee.

8.49 p.m.

Mr. Robert Taylor (Croydon, North-West)

There is obviously full agreement that the Public Accounts Committee has covered a great deal of ground in the year under review. I wish to draw attention to three particular issues which we discussed at great length. I have selected them because I believe that there is an opportunity in the case of each for the Treasury to take action which would make an effective, albeit small contribution to reducing Government expenditure.

The hon. Member for Stockport, North (Mr. Bennett) suggested that the Public Accounts Committee always looked at events after they had taken place and that this was not constructive. But some issues examined by the Committee involve expenditure of a recurring nature. It is that point to which I wish to draw the Minister's attention in the hope that he will take action.

Of the three issues that I wish to raise, only one has so far been discussed. My right hon. Friend the Member for Taunton (Mr. du Cann) and my hon. Friend the Member for St. Ives (Mr. Nott) referred to the Manpower Services Commission. I should like to confine my remarks to the Professional and Executive Recruitment Service of that organisation.

It is a fact that the Department of Employment has had an obligation since 1940 to provide a service for professional people and other executives who are out of work and seeking employment. As a result of the Employment and Training Act 1973, that service was revamped. That gave us an opportunity to see accounts broken down to such a degree that we could find out the cost of that small service.

The Comptroller and Auditor General confirmed that, when the service started again in 1973, it was on the basis that the year 1974–75 would produce a surplus of £60,000 and that the year 1975–76 would produce a surplus of £345,000. But the deficit in each year has been £1 million. In addition to that, the Government are making a handsome social subvention payment in excess of another £1 million. Thus, that small service is consuming nearly £2½ million a year. The point I wish to emphasise is that in doing so it is not in fact creating one extra job. The jobs involved would be filled anyway through the private employment agencies. I can see no objection to closing down that part of the Manpower Services Commission's activities straight away. It would make an effective saving of £2½ million per annum.

The second issue to which I draw attention is the Property Services Agency. I have on two previous occasions spoken in the House about that Agency. I make no apology for returning to it for a third time. The Property Services Agency was set up as a result of a Written Answer on a Friday afternoon without any debate in the House. In my view, it is a monolithic organisation which should be drastically pruned.

In the Sixth Report of the PAC, we see that the Property Services Agency was questioned about divers subjects such as the construction of a low-speed wind tunnel, the use of the Government car service, occupational works in new leased office buildings and the adaptation of accommodation for use as Crown courts in London. In addition, the Agency was involved in the Committee's questioning of the Ministry of Defence regarding delays in revising rents for accommodation in Germany. I do not believe that any chief executive can have control over such a diverse organisation. As I have said, there is scope for great economy in that Agency.

I should like to refer particularly to the item about occupational works in new leased office buildings. The PAC examined four new office buildings in London on which £7.9 million was being spent on fittings. The total floor area being acquired was 770,000 sq. ft. Perhaps I should declare an interest, as I have done before in debates on the Property Services Agency. I am in the building supplies industry, but that is noted in the Register. Despite the acquisition of 770,000 sq. ft. of office accommodation in London, very little accommodation—in fact, no accommodation of any significance—has been returned to the private sector. It is an incredible state of affairs about which I have repeatedly questioned the Minister. No office buildings are being vacated as a result of this new leasing. It is not necessary to continue to acquire buildings—not only the four in London which total 770,000 sq. ft., but other buildings throughout the country.

The figures given to the Public Accounts Committee by way of a note from the chief executive show that in 1975–76 it is expected that the Property Services Agency will have given up 170,000 sq. ft. and that for the current year the figure will be 280,000 sq. ft. Those are insignificant figures. They represent less than one of the four buildings which I mentioned earlier. I am convinced that there is scope for great economy in the Property Services Agency.

The continued leasing of these new buildings and the building of others illustrates what is wrong with this country. There are too many people being housed by the Civil Service. The wealth producers are paying for that extravagance through excessive taxation, which is sapping the will to work. I do not blame the Agency, because it is an agent of the Government. It is carrying out instructions given it by Government Departments which seek new office accommodation. There must be a time to halt the process. It would be feasible for the Treasury to say that for the next three years there will be a complete embargo on office accommodation for the Civil Service beyond the commitments into which the Agency has already entered.

My next issue is small but important —the Liverpool Teaching Hospital, which was covered under the inquiries we made into the National Health Service. The original tender figure for that hospital was just under £14 million. Today that figure is over £49 million, and we have been warned that there is still more to come. How can the cost of constructing a hospital increase from an original tender figure of £14 million to £49 million and shortly pass £50 million? The figures are serious. They are not only startling but totally and utterly scandalous. It is not good enough to say that they are the result of a contractor going into liquidation. That might have been the cause of some of the increase, but not of all of it. The matter is sufficiently serious to warrant an inquiry. We have tried to get to the bottom of it in the Public Accounts Committee and we plan to return to the subject in this Session. Some people must give us answers about how that money was spent.

Many boroughs, not least Croydon, urgently require a new hospital. What hope is there for Croydon if one contract has risen from £14 million to £49 million? We must know who is responsible for that extravagance.

It is a privilege to serve on the Public Accounts Committee, and I thank my right hon. Friend the Member for Taunton for the way in which he has presided over our meetings during the year.

9.0 p.m.

Mr. Peter Hordern (Horsham and Crawley)

I join with my hon. Friend the Member for Croydon, North-West (Mr. Taylor) in his tribute to the work of our chairman, my right hon. Friend the Member for Taunton (Mr. du Cann). Many kind things have been said about him during our debate. I thought that his speech demonstrated the valuable rôle which he plays. My right hon. Friend is an extremely good investigator, whose questions are always cogent. As he said in his speech, our problems in examining the public sector become more difficult as that sector grows.

One of the points made so well in the debate was that we as a Public Accounts Committee must expand our rôle in line with the extra power which the Government take upon themselves. Here I speak of all Governments. The extension of Government influence and expenditure must be matched, if not in quantitative terms then at least in the rôle we play as the PAC. One of the things we have to watch rather carefully is the way in which the Government try from time to time to obfuscate their operations. They did it some years ago in establishing the Property Services Agency and the regional area authorities for the health service. They have done so notably in this past year in the establishment of the National Enterprise Board.

I wish to mention the NEB first. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) made a good point about the establishment of the NEB. We were in some doubt about whether we would be able to apply proper questioning to the NEB. I hope that the Financial Secretary can give me a specific answer on this point. On page 6 the Treasury Minute, dealing with paragraphs 59 to 64 of our report, says that the Treasury and the Department of Industry: believe that the provisions of the Industry Act 1975 recognise the need for proper Parliamentary scrutiny and control of public funds made available to the National Enterprise Board, and they see no reason to expect that in practice the Committee will encounter any difficulties in the exercise of their responsibilities for examining the funds so provided to major industrial undertakings. I take that to mean—I would be grateful if the Financial Secretary would confirm it—that we shall have arrangements no different from those that we now have when we examine the Department of Industry on similar industrial undertakings.

I do not wish to deal with specific examples, because so many have been mentioned. Instead, I shall refer to some hardy annuals. A continuing feature is the work of the NEB and, in particular, its rôle in industrial intervention. I am sorry that the hon. Member for Coventry, South-West (Mrs. Wise) is not in her place, because I wish to mention Meriden. If the existence of these co-operatives had any point at all it was to provide not only some economic viability but some regional assistance, and particularly to help in areas of unemployment. That, at least, is what we have been told. It so happens that the firm of Kearney and Trecker Marwin, which has been mentioned, operates not in Sunderland or some other hard-hit part of the country but in Brighton, near my constituency—that is, in the area which has the lowest level of unemployment in the country.

The facts are in the report, and it is clear that this venture was a disaster, and probably still is. There was no reason for it at all. As for Meriden, the facts are now well known. The sum of £1.6 million was paid for land and buildings officially valued at £1.15 million, while £1.2 million was paid for plant and machinery valued at £600,000. The hon. Member for Coventry, South-West suggested that the difficulties that the Meriden Co-operative experienced concerned the existence, earlier, of Norton-Villiers Triumph. The reverse is the case. Had the report of the industrial advisers been accepted, suggesting that Meriden should be closed down, it is possible that NVT would still be in existence. It is certain that the existence of the Meriden co-operative scuppered the chances for NVT. The hon. Lady said that she would tell us the present position, but she failed to do so. We do not have to guess very much that the Meriden Co-operative is running at a severe loss.

In many respects, the case of the Scottish Daily News is the most disgraceful episode of all. It was liquidated six months after it began publication. But that is not all. The workers were not only involved in the management sense but were encouraged to subscribe their own money to the venture by no less a person than the then Secretary of State for Industry, now the Secretary of State for Energy. I want to quote what he said on 29th March 1975, in a statement issued by the Department of Industry. Mr. Wedgwood Benn…said the birth of the Scottish Daily News 'will be an historic event'. He added: 'It will be the first national newspaper to be run by its workers free from political pressures and commercial interests, and constitutes a general victory for the people it seeks to serve. 'This paper has been created by a courageous and determined group of workers who have suffered great hardships to make it possible. They would not accept defeat and I hope the newspaper will be read throughout the United Kingdom. It was not the workers who were at fault. They were encouraged and pressed by the right hon. Gentleman to commit their work and their savings to the venture.

Dare I suggest that if this had happened in any other business, that business would have been liable to prosecution under the terms of the Companies Act 1947? I think that that would have been the case. If anyone had made such a statement in advertising units for sale in investment or unit trusts, or any form of company, he would have had to make a disclaimer that it was possible for shares to go down as well as up. No such disclaimer was made in this case.

It was most reprehensible if not shameful behaviour by the right hon. Gentleman. One would have thought that the least he could have done at the time, when he knew that the members of the co-operative were going to advance their own funds, would be to subscribe his own money to the venture. I am not talking of funds in his Department. Having given these people some encouragement, he might have put his own personal funds in as a matter of honour.

I want to take up a matter of more major concern in which we have been interested for some time past and will no doubt be interested in in the future—the question of shipbuilding. In Appendix I, on page 541 of the report, which describes the rôle of the Department of Industry in rescue operations, there is a reference to what happens when a receivership is brought into play. It says: A receivership or a liquidation does not necessarily involve the complete cessation of a company's activities, since the responsibilities of the receiver or liquidator towards creditors will often be best fulfilled by maintaining the business as a going concern in order to secure the highest price…This, rather than the propping up of failed enterprises, is and should remain the principal contribution that the Industry Act—although not primarily an instrument for dealing with redundancies as distinct from promoting development and employment—can make towards dealing with redundancies; and it is likely to have the advantage of involving new management and additional private sector resources. In my view that is the action which should have been taken, in the case of the co-operatives, instead of trying to rescue them. The word "receivership" is a pejorative term. It is not a fair description of the activities of the receiver, who, in many cases, manages to achieve a successful rescue act.

I quote that part of the report because it is of continuing importance for the shipbuilding industry. During the past two or three years we have had to examine Government assistance to various shipyards. We were told that in 1974–5 the total amount of assistance given to two shipyards, namely, Govan and Cammell Laird, would amount to £60 million. So far, Govan has consumed £60 million and Cammell Laird £40 million. Upper Clyde has so far consumed £80 million. I forget for the moment the figure for Harland and Wolff, but at any rate it is very substantial.

We are not the only country to subsidise our shipbuilding industry. Many other countries do the same. Norway is giving £18 million to subsidise its shipbuilding industry. In Norway, 50,000 jobs are involved. It is expected that only half the shipyards in Norway will have any capacity until the end of 1977. In the whole of the world, shipbuilding over-capacity is about 60 per cent. United Kingdom yards produce 1 million tons of shipbuilding a year, out of a world market of 13 million tons. We can expect a drop in shipbuilding orders of about 60 per cent. and a loss of employment of possibly 20,000 out of the 41,000 jobs which now exist in shipbuilding.

Today we heard of the resignation of Mr. Day. I do not know what will be the position after his resignation, but it is certain that the reorganisation of the shipbuilding industry will present substantial difficulties. What is the long-term plan for the industry? That is the question which needs to be most closely considered. Otherwise, every year we can expect the Department of Industry to ask for yet more money for various yards. Literally, it is an endless process.

I have made some calculations, which show that so far at Govan and Cammell Laird each man has received the equivalent of £8,000. In Upper Clyde the figure is £7,000 a head. In Harland and Wolff it is about £10,000 a head. How long can this continue? A searching review of the capacity of world shipbuilding and of our future capacity is required. Otherwise, how much longer have we to continue forking out these sums of money?

The Treasury reply to this point was an unusually poor one. It said that In the longer term, if the nationalisation proposals now before Parliament are enacted, it will be the duty of British Shipbuilders to formulate a strategy in the form of the corporate plan which it will be required to produce annually. However, if any further direct financial support were being contemplated either for Govan or for Cammell Laird, the Departments would compare the cost of that support with the resource costs of closure, and with social costs so far as quantifiable. The Treasury reply does not take into account the continuing cost of support compared with the once-for-all cost of closure and the once-for-all social costs if such action were taken.

I do not know what the Government will do about a shipbuilding programme, but it is quite indefensible to keep thousands and thousands of men employed on the basis that they will be working in industries for which there is no reasonable prospect for recovery. It is a condemnation, almost a conviction, to work in an industry which cannot give any satisfaction. One problem with Upper Clyde is that no improvement in productivity has been made. That is not surprising. The members of any group of workers in a dying industry know that if they work hard they will work themselves out of a job. Why should they improve productivity?

It is necessary for the Committee to explore the long-term future of shipbuilding. I have just received an answer which tells me that the proportion of world shipbuilding completed in the United Kingdom in 1965 was 10.9 per cent.; in 1970 it was 6.3 per cent., and in 1975 it was 3.4 per cent. We cannot go on supporting an industry like this for year after year, with disproportionate cost. It would be a much better prospect for the workers in the industry and for the country if we took a view of the long-term future. Certainly, we must have some form of shipbuilding industry, but we cannot sustain it at the present rate. It is time that fact was realised.

I wish to refer briefly to one other aspect of public expenditure—the increase in staff numbers in the Civil Service, particularly in the Inland Revenue. On 1st April 1975 the number of staff in the Inland Revenue was 74,000. On 1st April this year it was 81,000. We are told that by 1st April next year it will be 90,000. That is an accelerating increase. I would guess that we now have the same number of staff in the Inland Revenue as has the United States, and possibly more, so fast are the numbers growing. The Inland Revenue salary bill in the last two years has increased from £139 million to £242 million. That represents a substantial slice to income tax.

The defence put to us by the Department is that this matter is subject to cash limits. I know that my right hon. and hon. Friends give credit to the Government for introducing that system, but we should not blind ourselves to its operation. It is perfectly simple at the beginning of the year to set a cash limit which is way above the cash limit at the end of the previous year. At the end of that year it is easy to set another cash limit which is far in advance of the previous limit. It is not difficult to keep within the cash limit if the limit is very generous. We must examine this much more carefully.

Mr. Andrew F. Bennett

Will the hon. Gentleman quote one example of a generous cash limit given over the past two years?

Mr. Hordern

Yes, the Insland Revenue, for one. Its cash limit is extraordinarily generous.

I come back to what I believe to be the most important aspect in the work of the Committee. Our rôle must be an expanding rôle. It is very different from our traditional rôle, accorded to us ever since the days of Mr. Gladstone, of looking at expenditure after the event, examining what is happening and seeing what should be done to put it right.

In addition to the cash limit system, the Government have evolved a new system of presenting their accounts. It is a very good one. They give Departments a profile of expenditure, and monthly reports are made showing how expenditure compares with the profile. Those results appear 10 days after the end of the month.

The Public Accounts Committee is the most senior Committee of the House. This is a totally new development produced by the Government. We are entitled to see what are the cash limits and how they are functioning. We also have a right and duty to see how the Government are getting on in controlling their expenditure. These profiles form the basis of the Government's forecast for the following year. The Government publish the forecast, so that it is generally available to the public. There cannot, therefore, be any sensible objection to publishing the monthly accounts and giving information about the monthly cash limits. We need that information if we are to do our job properly in controlling the Executive and helping to control public expenditure.

Our Committee is very slow in increasing its own expenditure. I wish that were true of every Select Committee. I notice, for example, that the Select Committee on Nationalised Industries found it necessary to go to about five countries to inquire of their respective central banks what they think of our central bank. The result was that they thought that our central bank did a good job.

I think we should make an expedition to see the United States Public Accounts Committee carrying out its work. There is no real alternative to a first-hand examination of the way in which that Committee works. I know that my right hon. Friend the Member for Taunton has visited that Committee, but other hon. Members would also be interested.

The United States Committee's approach to controlling public expenditure is very different from that which we have previously adopted. Not only are there other experts, as well as accountants, in the Auditor General's office, there is also a larger service. That service is entitled to examine Government expenditure in all Departments, to say what will be the trends of expenditure, and to make positive reports. That is the kind of service that our Public Accounts Committee ought to have.

We have, in considering our reports, dwelt a great deal on past events. It is time that we brought ourselves up to date, if only to monitor correctly the present and future activities of the Government.

9.21 p.m.

Mr. David Crouch (Canterbury)

I wish to refer to the speech of my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies). He referred to Canterbury many times in his criticism of the administration and the administrators in the National Health Service and of parts of the administration of the NHS at county level, including the regional health authority, of which I am a member.

My hon. and learned Friend made a good constituency speech. He worked himself up into a great lather with his criticism and his attempts to find anyone responsible for anything in the management of the NHS. But he also made rather a meal of it. My hon. and learned Friend is not now present. I am sorry for that, because I hoped he would be here. Hon. Members are generally only too ready to criticise the administration of the NHS.

Something has already been said by Sir Patrick Nairne and by the Secretary of State to the effect that, since reorganisation, it is absolutely essential that all those who work in the NHS—not only the administrators, but junior doctors, nurses or whatever—should have an opportunity to settle down and make the system work. That is not as difficult and complex as my hon. and learned Friend made out.

My hon. and learned Friend referred to the Chairman of the South-East Thames Regional Health Authority, Sir John Donne, who within that region and in a wider sphere is one of the outstanding men in the National Health Service today. I think that if my hon. and learned Friend went to the top in making his inquiries he would not find so much wrong in the administration of the NHS as he suggested.

I wish to refer to another matter that has been revealed in the six reports of the Public Accounts Committee, on which I have the honour to serve, but first I wish to say how much I appreciated the introductory speech the debate by my right hon. Friend the Member for Taunton (Mr. du Cann), who is Chairman of the PAC. He does a great service to the House and to the country by the manner in which he chairs this senior Committee. He does not rest on his laurels or those of the 500 staff working behind the Committee. He really adds something to the Committee through his application, and he does a great deal of work. For all those who serve on the Committee, he has created a serious atmosphere which is understood and appreciated by the House.

A consultative document on the English dimension of devolution was published today. It contains a comment on the difficulties that would arise if further devolution took place in England. It would impinge on the ability of Ministers to account to Parliament for the services they administer. Devolution or the transfer of powers from the centre to English regional bodies would make it difficult, according to the document, for Ministers to know what was going on and to keep effective control of Departments. But this problem is already with us without devolution in England. Government and departmental control, Government intervention and departmental activity are already massive, seriously over-active and burdensome.

The reports reveal all too clearly that Departments often do not know what is going on. This is a disturbing situation. The complexity of devolved responsibilities is now suggested by accounting officers to the PAC as a plea of mitigation.

In the National Health Service there are the Secretary of State and the Department at the centre, with 14 regions throughout the area responsible for the administration of more than £4,000 million. It is difficult for the accounting officer and the Secretary of State at the centre to know in detail what is happening in the administration of those moneys. One example is the case already referred to by my hon. Friend the Member for Croydon, North-West (Mr. Taylor) in which the costs of a new Liverpool hospital escalated from £14 million to £49 million and the building is still not complete. We have had many such examples from the DHSS and from other Departments. In many cases the responsible accounting officer tells the Committee, in effect, that it is difficult for him to keep control when there is so much devolution of responsibility.

The PAC recognises these difficulties, but Parliament cannot afford to acquiesce in this situation. The PAC investigates on behalf of Parliament and the public, and we have to know what has happened in the administration of Government expenditure.

Comments have been made about a possible extension of the rôle of the PAC, but whether extended or not, it has an important rôle in examining what is already happening and to require the persons responsible to account for their decisions. We require accounting officers to account for their stewardship and we must hold them responsible for errors, mistakes, delays, losses, extravagance, carelessness or even negligence.

It is not always easy for the Committee to carry out this task. The officers who appear before us are senior men and women holding high positions. It is not that which intimidates us as much as the fact that we understand their difficulties in administering such large amounts of money in the complex structure of management which has grown up in the Civil Service. These people are often impressive, and on many occasions we find them likeable. It seems hard to criticise them for the structure of management which they head and which is frequently inadequate for achieving good control.

Nevertheless we have a duty to be critical, and there is no absence of criticism in the reports. But the public do not really see the reports. Even Parliament does not take the trouble to see them, although we have an opportunity to do so in this debate. Certainly not all Members of Parliament see the people who come before the Committee. That applies only to the select few of us who serve on the Committee. We have a responsibility on behalf of Parliament as a whole to criticise. It is a public safeguard against the mistakes discovered not being repeated, that is all. That is the function of the Committee.

The question I wish to ask is whether the Committee is doing any good. Is the Public Accounts Committee—as it likes to say and to feel that it is when it comes before the House with some pomp and display—always there as a safeguard? Is the Committee effective? The reports disclose considerable inefficiencies and, in some cases, gross extravagance and lack of control of Government expenditure down the line from Government Departments to regions and areas.

The reports contain strong censure of the failure of officials and Departments to employ proper methods of control, but what happens as a result of this strong censure and the strong words used in the House? I have a fear that after the interview sessions with the Committee, which sometimes are gruelling to those who come before us, and after publication of the reports, there could well be a general feeling of relaxation in the Departments. Do the officers in a Department heave a sigh of relief, recognising that Parliament has only been doing its job but feeling that the job of the Department is too difficult these days for accounting officers to be able to spot mistakes before they are made?

Let us look at the example of the Crown Agents affair, to which the hon. Member for Coventry, South-West (Mrs. Wise) said that we had not given enough attention. What has happened in the case of the Crown Agents is incredible. In 1967 the Crown Agents started borrowing and lending with a view to making profits, though I would not criticise them on that point. The Ministry for Overseas Development, which is responsible for the Crown Agents, was not aware that the Crown Agents were doing this and knew nothing of this new development. The Treasury was not aware that the Ministry had relaxed its control over the Crown Agents.

Two years later, in 1969, the Ministry looked into the Crown Agents' activities very carefully and decided that they were being conducted in a sensible way. In February 1970 the Treasury learned from the Ministry that the Government carried ultimate responsibility for any losses that the Crown Agents might incur. The Treasury, too, got in on the act, but still no action had been taken against what the Crown Agents were doing.

The Ministry set up a committee of inquiry under the chairmanship of Sir Matthew Stevenson. In March 1972 that committee reported that the management of the Crown Agents was competent. Seventeen months later the Ministry acted on one of the points of that committee, after nearly one and a half years, and notified the Crown Agents of a slight change in their status and defined their new responsibilities. All this time the Crown Agents had been advancing substantial sums to secondary banks and property companies without consulting the Ministry. In 1975 the Crown Agents revealed that they had losses of £25 million, together with a capital deficit of £44 million, and they had to be bailed out with a grant of £85 million from the Government.

This is merely one example of what is happening under the eyes of a controlling Ministry and the Treasury. As the Government extend their activities more and more into industry and vast sums of public money are distributed. Parliament must ask whether the controls are effective. We must ask whether criticisms by the PAC are effective. This is not a matter of policy but is a matter of parliamentary procedure.

I am concerned to see that where capital is provided to the National Enterprise Board in general, through the National Loan Fund or through public dividend capital, the information required by the Comptroller and Auditor General about such loans will be restricted. I hope that the Financial Secretary will bear this point in mind when he replies to the debate.

The present situation is not good enough. Parliament has a duty to say so and to stop the Government in their tracks if we think that that is a correct thing to do. Perhaps the PAC always shuts the stable door after the horse has bolted, but Parliament has the right to say who has left the door open and, if necessary, to see that the stable boy is sacked.

9.36 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

We have had a debate on the work of the Public Accounts Committee which has surpassed similar debates in recent years. To begin with, the debate has run its full course, and it is some time since that has happened. We have had the benefit of a wealth of experience on the part of those who have served on the Committee, and all who take an interest in these matters will recognise that to-day's contributions have been well above the standard that has been set for so long. That is an indication of the respect held in the House for the right hon. Member for Taunton (Mr. du Cann) and the way in which his Committee has acted. Nobody can deny that the watchdog has barked and is keeping awake those responsible for the expenditure of public money.

When I examine the work of the PAC in investgating 43 main subjects detailed by the right hon. Gentleman and look back on my own experience as a member of PAC for a period of six years—the happiest years I ever served on a Select Committee—I can appreciate the way in which the Committee has developed and needs to develop.

There has been a certain questioning attitude about the future of the Committee and the way in which it can bring its expertise to bear. My hon. Friend the Member for Norwich, South (Mr. Garrett) and other hon. Members have gone into the background and have advanced various suggestions. I shall return to that aspect of the matter later in my remarks.

The staffing of the Public Accounts Committee has been excellent. It is another matter whether its expertise needs to be changed in the way suggested by my hon. Friend the Member for Norwich, Souht. The constant improvement in standards and the constructive search and care taken in examining these matters are all extremely important considerations.

I administered a mild rebuke to the hon. Member for St. Ives (Mr. Nott) a little earlier because I believe that these discussions must go well beyond the ordinary party fights that take place in this House, and it is right that that should happen.

My hon. Friend the Member for Coventry, South-West (Mrs. Wise) made a number of valid points and mentioned the way in which these considerations need to be balanced. The work of the PAC involves close scrutiny, and it needs the strength that come from the united effort in all parts of the House in seeking to ensure that the Executive is brought to account in the traditional way. That way needs to be brought up to date and needs to take into account various changing conditions.

That was the burden of the speech of my hon. Friend the Member for Norwich, South, who brings to bear on these matters an immense expertise which is welcomed and respected by the House. He said that the Public Accounts Committee and the Exchequer and Audit Department should test not only that the money has gone for the purposes intended, as well as the efficiency which is now regarded as normal in these examinations, but also whether other methods of achieving the goals are possible.

The hon. Member for St. Ives made an important point about the levels of accountability needing to be set lower down. I agree entirely. The difficulty is that when a permanent secretary appears before the Committee—one sympathises with him because of the difficulty of copping with complex structures in his Department—it is much more likely than not that he was not responsible when the error was made. So the attribution of responsibility is very difficult.

This valuable accountability can be achieved only if we can pinpoint who made the decisions, whether good or bad, and get at the decision-makers rather than some person who speaks for the entire Department but cannot claim complete knowledge even if he was there at the time.

My hon. Friend the Member for Stockport, North (Mr. Bennett) asked for certain reforms in the PAC. He asked the rhetorical question, when did a Minister ever resign? That shows the emptiness of some claims about controlling expenditure. We know, however, that the difficulty is the same as getting accountability from permanent secretaries: often the same Ministers are not responsible when the PAC examines these matters.

It might be argued that the Minister should be brought to account so that success or failure can be attributed, but even that is not a possibility, for many complex reasons—primarily because he can always claim that since he left the Department circumstances have changed and that he would have pursued a different policy. Part of that answer may be true, but in those circumstances accountability and attribution become impossible. We must live in an imperfect world and within those limits the PAC, perhaps with the improved staffing and expertise which has been suggested, will continue to live.

My hon. Friend the Member for Norwich, South mentioned the relationship between the PAC and the Expenditure Committee. There has been one development since we discussed these matters last year. The Expenditure Committee, headed by my hon. Friend the Member for Bishop Auckland (Mr. Boyden), will, I understand, be examining those expenditures which are the responsibility of each of the Sub-Committees. That is a recommendation that I have been trying to make for a long time and which I sought to put into effect when I was Chairman of the General Sub-Committee of the Expenditure Committee.

The decision then reached did not come into effect because of the General Election of 1974, but I am glad that it has been resurrected and I look forward to seeing the impact of the Sub-Committees upon those expenditure programmes in which they have at least some interest, even if they are not necessarily responsible for them. Obviously the direction it may take from then on can vary, but it is an important step forward. I look forward to seeing the results of it and I welcome it.

My hon. Friend the Member for Stockport, North dealt with the experimental computer programmes. These programmes were set up in the hospital authorities and elsewhere, and we must remember the background against which they were initiated. They are really products of the enthusiasm for computerisation which swept the country in the late 1960s. The Public Accounts Committee is quite right in its criticism and in its concern about the evaluations which need to be made of major projects of this kind.

Following the criticism which has been made, the Department of Health and Social Security will be gathering evaluations. We hope that this work will be completed early next year, and I expect that a report will be available from which the National Health Service will be able to obtain some very useful insight into the way in which this kind of computer change takes effect.

Mr. Costain

Will the Minister look into the computer situation? It is ridiculous that we have a whole series of computers which cannot even speak to each other because they are all in different languages. Is not that too absurd?

Mr. Sheldon

I take note of the hon. Gentleman's comment. The fruit of this evaluation will be a report which will bring some useful lessons to bear on the way in which these programmes ought to be introduced.

The hon. Member for Croydon, North-West (Mr. Taylor) spoke about the need for accountability lower down in the National Health Service, and this echoed the point made by the hon. Member for St. Ives.

It might be helpful if I commented at this stage on the point made by the hon. and learned Member for Thanet, West (Mr. Rees-Davies), who spoke about the failure concerning the reorganisation of the Health Service. He referred to some of the evidence given by the Permanent Secretary to the Department of Health and Social Security, who promised notes on several subjects which he had analysed and did not present them. These notes were not printed in the report of the Public Accounts Committee. As I understand it, that means that the Public Accounts Committee itself took the decision not to print them. I understand that the notes were indeed produced. Probably the reason why they were not printed is that they were subsequently side-lined.

There has been a fair amount of comment on the Manpower Services Commission—

Mr. Rees-Davies

Does that mean that the notes are available? Questions of the very greatest importance were raised concerning the structure of the Health Service, numbers, bed occupancy and so on. Would this information be available for the House?

Mr. Sheldon

It is not for me to speak for the Public Accounts Committee, but normally in cases of this kind some material might be side-lined as being of a confidential nature. The Public Accounts Committee does not wish to have matters published for very good reasons. I am not aware of the precise reasons for not printing them in this case.

The jobcentres have been criticised as being a very expensive method of obtaining increases in employment, and a number of comments have been made on them. I take note of the criticisms and comments which have bene made. There has been some examination of their performance, and it shows that these new jobcentres, wherever they may be put, have resulted in a 30 to 40 per cent. increase in the number of placings for employment by comparison with the old employment offices of which the jobcentres are the modernised successors.

On the one hand there are the modernised offices, and on the other there are the jobcentres. The jobcentres have produced an increase in the number of placings amounting to 30 per cent. to 40 per cent. Clearly the figures need to be analysed with some care. It is not enough merely to quote figures of that sort. There is a need to look much more closely at areas of comparability. However, I offer the figures to the House in the hope that they might be of some use. I know that in the meantime the Manpower Services Commission will make a number of surveys of the work of the jobcentres. The information will be available. Perhaps that covers some of the points made by the hon. Member for Norfolk, South (Mr. MacGregor).

As for the Professional and Executive Register, it is the aim of the Manpower Services Commission that these operations should be financially self-supporting in two to three years. That is the Commission's expectation.

The hon. Member for St. Ives spoke about value added tax and the large number of staff involved. It is true that the staff has increased, as he indicated, from about 8,000 to 11,000. We must remember that it was two years ago that the Public Accounts Committee reported that the value added tax not collected amounted to about £30 million or £40 million. At that time there was a certain amount of criticism of the failure to collect that substantial sum. Following that report and criticism, the staffing increased. I am not saying exactly what the cause and effect was, but I argued last year that we should be rather careful about criticising a Revenue Department for failing to collect the last few pounds to which it was entitled. That point was admirably expanded today by the right hon. Member for Taunton.

The increase in staff for the Inland Revenue is more startling. The hon. Member for St. Ives spoke about the need to get rid of allowances and to simplify the tax system. The right hon. Member for Taunton asked for simplification as well as for international staffing comparisons. I am generally much taken by the idea of seeking to make international staffing comparisons, on the basis that we are not quite as different in many areas as we once thought we were. However, in Inland Revenue affairs the differences are marked, as they are in the way in which tax is collected. That being so, there are clearly limitations on how far we can go in international comparisons in this field. Nevertheless, we are seeing what advantages might be gained by moving in certain directions.

I agree with the hon. Member for St. Ives that simplification is the easiest way of proceeding. He knows as well as the rest of the House that we do not get simplification because we are a fair-minded House of Commons. As soon as we introduce a new tax or consider an old one, someone will point out in Committee that one of his constituents is in unusual circumstances producing complications and is being hurt much more than others who are in more straightforward circumstances. Soft-hearted as we are, amendments are made and there is greater complexity.

The hon. Members for St. Ives and Norfolk, South served in Committee on last year's Finance Bill. They will know that the views they expressed today will not be the views they express in Committee on the Finance Bill next year or those they expressed when considering last year's Finance Bill. They know that last year their actions were designed to produce the sort of fairness that, in its turn, produces further complexities.

Anyone who has taken part in those proceedings knows the dichotomy between our good intentions and our perhaps good practices which tends to result in further complexities. Therefore, although hon. Members express that view now, I suspect that by the time we come to next year's Finance Bill we shall have an even more complex set of financial regulations than those which exist at present.

Perhaps I might deal with some of the aspects arising from Government assistance to industry. Here we had the problems of dealing with the new form of co-operatives outlined by my hon. Friend the Member for Coventry, South-West and where we had no set pattern of principles such as that which we were able to devise subsequently. The problems that we had there will now be made very much easier because of the criteria which have been established. Those criteria will apply to any future co-operatives.

We may find ourselves achieving some sort of synthesis even between the views of the right hon. Member for Taunton and those of my hon. Friend the Member for Coventry, South-West in that they lay down circumstances in which the decision to lend money to such firms ought to be made available. Now they are clearly known, and I think that criteria which are clearly known are the easiest to defend, rather than lending money without being fully accountable because we are not aware of the precise circumstances in which the money should be refunded in due course.

Mrs. Wise

Am I to take it that the Government are still wholeheartedly in favour of the principle of workers' co-operatives and will do all they can to encourage them?

Mr. Sheldon

Certainly. We have laid down these criteria and we look forward to further possibilities emerging where this principle may be usefully extended in the way I have indicated.

There were comments about the National Enterprise Board by a number of hon. Members, including the hon. Member for Horsham and Crawley (Mr. Hordern) and the hon. Member for Surrey, North-West (Mr. Grylls). The NEB is slightly different from some of the nationalised industries. For example, we start off with outside auditors. Then there are the problems of commercial confidentiality which apply to it in much greater degree than in most of the nationalised industries and other public bodies. But monitoring arrangements exist. The NEB will be making available to the Department of Industry information which is also to be available to the Public Accounts Committee, and the intention is that the PAC will get all the information necessary to scrutinise all funds advanced by the NEB to large industrial companies. The Comptroller and Auditor General will have access to transactions and communications between the Department of Industry and the NEB.

Mr. Hordern

Why cannot we see the NEB itself, since the information which is confidential can be kept confidential by the Committee by the process of sidelining what its representatives tell us?

Mr. Sheldon

As the hon. Gentleman knows, the Committee will have power to send for certain persons and will get certain information as a result.

We have had a most valuable debate and we have learned many lessons as a result of it. It shows the need perhaps not only for the continuing scrutiny which the PAC gives but also for the changes which have been suggested and which we shall need to look at a little more urgently than we have been doing over the past year to make sure that this valuable work at least keeps pace with new and emerging problems which confront us.

Question put and agreed to.

Resolved, That this House takes note of the First, Second, Third, Fourth, Fifth and Sixth Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute and Northern Ireland Memorandum on those Reports (Command Papers Nos. 6654 and 6653).