PUBLIC ACCOUNTS

HC Deb 22 January 1976 vol 903 cc1554-630

4.7 p.m.

Mr. Edward du Cann (Taunton)

I beg to move, That this House takes note of the First, Second, Third, Fourth and Fifth 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. 6298 and 6286). Before discussing the work of the Committee either in general or in the round—as my hon. Friend the Member for Maidstone (Mr. Wells) would say—or in particular, I should like to pay a tribute on behalf of its members to its many willing servants and counsellors, whose reward and justification is its success. I am very proud to be able to pay that tribute on behalf of the Committee as a whole. It is paid first to our Clerk, always patient and willing and so very helpful. It is paid to Mr. McKean, the Treasury witness, whose knowledge has been increasingly available to the Committee. I am sure that the members of the Committee would agree with me when I say that there is great need always for effective evidence from the Treasury and, indeed, a form of partnership with the Treasury is essential for the working of the Committee.

Then the tribute is paid to Mr. Sythes, in his first year as Comptroller and Auditor General for Northern Ireland. The Committee was most sympathetic to the difficulties that the Civil Service has in operating in that part of the United Kingdom. I think that we were all impressed with the consistently high standard of his work and that of all those who worked with him and the civil servants whom we saw. In the context of the Private Notice Question to the Secretary of State for Northern Ireland which we heard a few moments ago, I am very glad to be able to underline that point and to stress our confidence in those who are serving the community in Ulster.

I hope, too, that the Members of the Committee will allow me to pay them a tribute for their conscientiousness, devotion and tenacity. We had a heavy programme of work in the Session to which I have referred. It was a calmer situation than in 1974, when we were so tediously interrupted by General Elections. Parliament is the richer, and the public are well served, by my colleagues' unadvertised and dutiful application. I am grateful to them, too, for their many personal kindnesses to me and for their support.

As in former years, the Committee has carried on its work in an entirely nonparty spirit. Perhaps I might illustrate this feeling of unanimity of purpose by mentioning that all five of the Committee's Reports were agreed without the necessity for any formal Division on the terms of their wording. The House is never so effective as it is when it is bipartisan.

As you know, Mr. Deputy Speaker, our responsibility is to expose waste and incompetence by Departments. Ministerial ineptitude is quite another matter. Ministers are vastly more extravagant, whatever Government they belong to, than any civil servants could ever be, and they are more costly to the economy. Our job is to probe and examine and, I hope, thereby to promote efficiency and effectiveness in the public service.

In the debate on the Reports of the Committee in the last Session, I reminded the House that because of the sound basis for ensuring accounting regularity under the guidance of the Treasury—or, to put the matter in rather plainer English, because there are no longer defalcations on a massive scale, such as we might have been accustomed to a couple of centuries or more ago—the Committee was able to devote its time to examining the wider aspects of departmental control over spending. That has continued to be true. The Committee has again been able to concentrate on seeing whether Departments obtain value for taxpayers' money.

It is fair to say that the Departments seem to us to be conscious of the need to avoid waste and extravagance, particularly perhaps in these times of financial stringency. But administration is complex—increasingly so—and things do not always go as well as they might. We considered a variety of cases which demonstrated the need for better management or stronger control.

I can also assure the House that, cordial as the relationship between members of the Committee and the various accounting officers summoned to appear before them may be, an accounting officer does not receive the summons with any feeling of pleasure. A cross-examination of a Department's shortcomings by members of the Committee is an experience which I am certain any accounting officer would willingly forgo whenever possible. I fancy that in practice there is every encouragement to a Government Department to avoid putting him in that position.

Perhaps I may quote in aid an example which comes to mind from the most recent examination of witnesses. Members of the Committee were very struck by the evidence given to us on behalf of the British Museum. I confess to being an ardent partisan of the British Museum. When I was a Minister at the Treasury I was responsible for introducing legislation which reformed the constitution of that remarkable body, which is such a credit to the nation. We were obliged to be very stern with the witness from the British Museum and to be highly critical in our Report. I have since noticed the concern that this has caused not only to the administration of the British Museum but to many colleagues in the House who, like me, are strong supporters of that institution. I like to think, therefore, that the Committee, its Reports and its criticisms where necessary—sometimes we regret having to make them—undoubtedly have a great effect, perhaps much more widely than is always the case, on the public service.

The Committee has been fortunate in having members with a wide range of interests which enable them to apply their experience successfully to the many different subjects which come under their consideration, and to probe more deeply when necessary. I believe that that is yet another illustration of the advantage that there always is to the House when its Members have good practical experience outside it.

The Committee has the responsibility to be critical in its approach, yet to be fair and to seek to make a balanced judgment, recognising that perfection, much as it may be a goal to aim for, is frequently unattainable in practice.

I hope that when I turn to the subject matters in the Committee's Reports the House will agree that we have sought to be constructive in our criticisms, giving encouragement to the efforts that Departments are making to improve their systems of financial control, yet also being frank in expressing our displeasure when we consider that strictures have been merited, as they were in a number of cases which we had under examination.

I told the House in last Session's debate that I hoped it would be possible to speed up the dissemination of the results of the Committee's work by publishing our Reports more often. Every member of the Committee is only too conscious that with volumes of this size and nature, covering 10, 12 or 15 different subjects, it becomes difficult for the House and commentators outside easily to digest the work that we are doing. Therefore, we thought that it would be better if we could publish three or four Reports rather than two main ones.

We made progress by publishing our Third Report in July last year, a Report which covered the evidence taken up to Easter. The balance of our main work was covered in our Fourth Report and our Fifth Report, which related specifically to Northern Ireland. Both those Reports were published in September.

I hope that members of the Committee who are good enough to be here this afternoon will agree that it might be a good thing if we could make further progress in that direction. But last year we found that printing delays and the need to wait for the proofs of evidence to be checked for accuracy militated against as much speeding-up as we should like. The printing delays and interruptions that the House suffered last year were a positive disgrace and an impediment to democracy. It may be that we are spoilt in the House, because we are so accustomed to a very high standard, but there is no doubt that the work of the Committee suffered, like the work of the House as a whole, as a result of those interruptions and delays.

I recall that in our last debate on the work of the Committee the hon. Member for Norwich, South (Mr. Garrett) criticised the so-called inferior status of the auditors in the Exchequer because, as he said, most did not hold an external professional qualification. That point needs further consideration. However, members of the Committee may think that the hon. Gentleman's comparisons did less than justice to the professional competence underlying the Reports which came before us or to the specialised training which all the people concerned have undergone. But I know that successive Comptrollers and Auditors General have kept the training arrangements for their staffs under review, and the recently-widened charter of the Chartered Institute of Public Finance and Accountancy has made its qualification more relevant to the needs of Government auditing. The training of new entrants into the Department will now lead to qualification as members of the Institute.

Finally in this preamble, I pay a particular tribute to the present Comptroller and Auditor General, Sir David Pitblado, who will shortly be retiring. I have had the pleasure of knowing him for many years, both in Washington, where he was Economic Minister, when I was a Minister at the Treasury, and now as one of the chief servants of this House. His whole career has been a distinction. We are deeply grateful to him for his devotion, competence, loyalty and pertinacity. He has been an outstanding Comptroller and Audtior General. I am sure that the Committee and the whole House wish him and his wife happiness in their retirement.

There is another remark I am constrained to make. I noticed some observations of the Prime Minister a short time ago in which he suggested that the format of the PAC might be something that could be applied to Europe. I thought that that was wise advice and in so far as it is appropriate for the European Parliament—I dare say soon to be elected—to exercise an increased budgetary control of European affairs, I hope that some use will be made of what I regard as the quite outstanding British experience.

I come now to the details of our work in the last Parliament. Our First and Second Reports dealt, as usual, with some cases of excess expenditure in Great Britain and Northern Ireland respectively. Almost inevitably, when Departments are—with the encouragement of Parliament—drawing their estimates of expenditure as realistically and tightly as possible, there are, despite supplementaries, some cases of excess expenditure every year. We shall be looking at some cases in respect of last year in a day or two.

Dealing with last Session, we recorded that we saw no objections to the sums needed being provided by excess Votes, and the House subsequently voted those sums. We probed more deeply into two cases. One dealt with the National Health Service in England and the other with road services in Northern Ireland where, possibly as a result of reorganisation of duties between local and central Government, estimates were by no means as accurate as usual.

In Northern Ireland there was some over-enthusiasm in accelerating the payment of accounts at the end of the year and in bringing forward programmes of work which would normally have been done in the next financial year. That is a practice which is wholly wrong. There was no loss of public funds, however, and we were assured that proper controls were now in operation in Northern Ireland. I deal now with our Third and Fourth Reports which record the bulk of our work. These were based, as usual, on the examination of witnesses on subjects brought to the attention of Parliament in the Reports of the Comptroller and Auditor General on the 1973–74 accounts and also on subjects where we were following up the comments in the Treasury Minute on the Third Report of the Committee in the 1973–74 parliamentary Session. A study of the contents tables in those Reports, which I dare say many hon. Members have made, shows that we examined a wide range of subjects. There were 35 in all on which we considered it necessary to report. There were others about which we had no need to report. It might be helpful if I indicate the broad aspects of our work by summarising them under six separate headings.

First, we looked at control over revenue and in particular at the arrangements for introducing VAT from April 1973 upon the abolition of purchase tax. The revenue in the first year was about £1,500 million—a not inconsiderable sum. But it is now running at about double that figure. There are vast sums of public money involved in this one new tax.

Second, we looked again at various aspects of Government assistance to industry, both in general and in particular in assisted areas, for instance to the shipbuilding industry and Rolls-Royce (1971) Ltd. Once again, large sums of money are involved. This is a continuing and I think worrying responsibility. It seems, if I may say this in parenthesis, that the sooner the House lays down firm guidelines for the way in which this assistance is organised and controlled the better. I hope that the PAC is already playing a part in that.

Third, we examined a number of different examples of the Government's purchasing arrangements for stores and their placing of contracts for large capital projects. Here again large sums are involved—£1,300 million on non-competitive stores contracts alone.

Fourth, we spent some time in examining the planning of several different computer projects. As hon. Members will know, either from general or personal experience, although we may live in a so-called computer age, computer projects have to be planned by fallible human beings. How fallible sometimes those human beings can be, even when they are civil servants! The longer I live the more truth I see in that statement by Mr. Patrick Hutber, the remarkable City Editor of the Sunday Telegraph, that only too often improvement equals deterioration.

Fifth, we looked at a number of aspects of the food and agriculture sector, particularly in relation to the United Kingdom's membership of the European Economic Community and the control of grants and subsidies.

Lastly, but by no means of least importance, we examined value for money and possible inefficiency, in a number of different types of administrative expenditure which the Comptroller and Auditor General drew to the attention of Parliament. These range over a wide list of matters as diverse as the operating expenses and maintenance costs of Government buildings, the operation of hospital laundry services in Wales and the cost of looking after a small bridge in Scotland.

I would like to say a short word about that item. This was the Inchinnan Bridge over the River Cart. It used to be looked after, and I dare say owned, by the local authority. In those days it took one man to open it and look after it generally. The maintenance was farmed out by way of contract. It was then taken over by the Scottish Development Department. A total of six men were employed full time looking after the bridge and maintaining it, at a cost of £18,000 a year. The bridge was opened only once or twice a year and the revenue gained from it was 80p, including VAT. It was a scandalous state of affairs.

The point is that here is a service which the PAC can render the House of Commons—by drawing attention to an apparently small item of this sort and asking the question: "How many other 'Inchinnan Bridge' situations are there under the control of different Government Departments where people are happily engaged in doing very little at public expense?" These are situations which must be exposed and will be exposed if we have diligent command in Ministries.

Under this general head of different types of administrative expenditure in some cases quite substantial sums of money were at stake while in others relatively small amounts were looked at. It was not just a matter of concentrating on the candle ends side of the economy. We were not concerning ourselves with candle ends as such but, as in the whole area of our deliberations, were seeking to ensure that the country's administrators do not adopt a complacent attitude towards waste and efficiency which, given more attention, could so easily be avoided.

I turn from that classic case of incompetence to some matters on which I wish to comment in some detail. Tax collection is never a popular activity in any country. In this country we take some pride in the effort which goes into operating fairly the administration of whatever taxes Parliament has authorised. If one individual or firm is able to evade tax—I do not mean avoid tax—the community as a whole is the poorer and there is injustice to the honest taxpayer. I am sure that hon. Members recognise the enormous task which faced the Customs and Excise on the introduction of VAT from April 1973, even allowing for the advantage which was taken of learning from the experience of other countries which had already operated the tax. Nevertheless, it was clear to the Committee that during the first year the controls over collection were less than adequate and that for reasons of policy the Department was deliberately adopting a velvet glove approach towards traders' failures. It relied substantially on the honesty and accuracy of traders in compiling their tax returns. This approach cost money.

What matters to this House is that it cost a great deal of money. The Customs and Excise Department made a statistical calculation for us showing that its tax losses in its first full year of control measures, 1974–75, were about £35 million to £40 million. We may therefore speculate that in the initial year, 1973–74, losses could have been substantially higher than that. We were deeply concerned about these substantial tax losses and recommended an urgent speeding up of more stringent enforcement measures. Paragraph 7 of our Third Report refers to that. In paragraph 9 we also suggested that more information should be made available to Parliament about the progress made in collecting the tax.

Quite frankly, we were not impressed with what the Customs and Excise had done under this head. I note that the Treasury Minute gives an assurance that the Customs and Excise Department intends to operate its enforcement procedures more rigorously. I have little doubt that the PAC in this present Session will wish to examine further the effectiveness with which this assurance is being converted into a reduction of losses of tax.

I am also pleased, incidentally, to see that the Department accepts the need for Parliament to be given more information about progress made in collecting the tax, so that if there were any further serious errors the Committee could inquire into the reasons.

While dealing with the income side of our finances, I should refer in passing to the Committee's examination of the control exercised over the level of fees and charges made for services provided by Government Departments. In the Home Office, in particular, there were delays in policy decisions on the appropriate proportion of costs to be recovered, so that charges were not being properly reviewed and income was not being increased to recover the full costs where they should have been recovered. We thought that the Home Office had been asleep, and we shall want to see how many other Departments have similarly slumbered and thereby lost revenue to the Exchequer.

I am pleased to note from the Treasury minute that steps have been taken to ensure that in future there will be a regular review at frequent intervals of the Home Office fees and charges and that action has already been taken to make a sustantial increase as soon as practicable in one matter to which we drew attention—the charge for vehicle removal.

I want to speak more fully now about Government assistance to industry. As I have said, this has been absorbing an ever-increasing amount of our national resources in recent years, both in general schemes of assistance and in intervention to help particular firms to remain solvent, and thereby—I dare say properly—to try to minimise unemployment. The Committee has continued to show a close interest in the general control arrangements for administering financial assistance under the Industry Act and we shall certainly keep these matters under review. We looked in particular at the progress made by Govan Shipbuilders and Cammell Laird towards attaining commercial viability. We shared the Department of Industry's concern about the unsatisfactory financial position of both these companies. We shall continue to watch the Department's efforts to ensure that they operate the effective financial controls which are a prime essential of good management.

The Committee also reviewed the current position of the relationship between the Government and Rolls-Royce (1971) Ltd. The Government's commitment here is now £168 million—a very large sum of money indeed. Here again, the Department of Industry is not yet satisfied with the company's organization and performance, and nor were we. In common with much of British industry the firm is experiencing a difficult time and has not yet paid any dividends. We can only wait and see what sort of return is achieved from this tremendous Government investment. I repeat that, on this whole subject of intervention in industry, it is essential that the House should lay down guide lines and that we should learn lessons from past experience.

One perennial theme flowing through the Committe's Reports is the failure of Government Departments to decide precisely their requirements and to draw up competent plans before placing contracts. As a result it seemed to us that many of the cost benefits of competitive tendering are lost by the subsequent amending of contracts to incorporate second and third thoughts and so on. This is noticeable particularly in the defence sector. No contractor can work with maximum efficiency if his customer keeps changing his mind about what he wants, or does not make up his mind at all on some requirements until work has actually started. That waste and inefficiency and those delays in completion of projects have to be paid for by the customer—in this case the taxpayer—not by the contractor.

One subject which illustrates this point is the hospital building programme into which we were inquiring. It is a disgrace that it has been necessary for three successive years for the Committee of Public Accounts to report on defects in control over hospital building. We have reported that the situation has been most unsatisfactory. We say so in paragraph 153 of our Third Report. Despite assurances from the Department of Health and Social Security that lessons have been learnt from past errors, I must say—and I am sure that my colleagues will confirm this—that we have yet to be convinced that those assurances have been transformed into achievements. The whole programme of hospital building in recent years has a thoroughly had record of waste and lack of control, and the House should not tolerate the situation any longer.

In a similar way, the military planners seemed to place production contracts for the main engine of the Chieftain tank—a very good tank—before its development had been satisfactorily completed. It took about eight years. believe it or not, to overcome the faults and failures which dogged each successive version of the engine and I am sure that the House will share our surprise—to put it no higher—that the Ministry of Defence remained satisfied at the end of those eight years—so it is said—that the development had at all times been conducted as efficiently and effectively as possible, and that no one—mark this—could be blamed for the failures. It may not be possible precisely to quantify the cost of these failures, but there can be little doubt that it must be substantial, and, again, it has to be borne by the taxpayer.

The same theme of inadequacy of planning ran through the various other matters. Lastly, under this head—the last one to which I want particularly to draw attention—the House will find our Report on various computer projects which have been seriously delayed. I give two examples.

There was the computer project at Swansea for centralising vehicle registration ad licensing and driver licensing. There, I am glad to say, the Department of the Environment recognised that in the formative stages planning had been defective and estimates of cost had been inadequate. That again puts it pretty mildly. It was a scandalous affair. It came on stream five years late. There is a staff now of 8,000, which is some 50 per cent. up on the 1958 estimate, although the number of vehicles with which they are dealing is less than originally estimated. The cost has gone up from £146 million to £350 million, two-thirds of which was made up of staff costs. I repeat that this was a scandalous affair, entirely due to bad planning, lack of planning, lack of proper feasibility studies and so on.

The second, similar example, although not so bad perhaps, is the Ministry of Defence's computer project at Bath and the Royal Dockyards. There were shortcomings in the system specifications and in the general planning and control arrangements. It was a very complex task—that we acknowledge—but the complexity had been underestimated. As a result, a less ambitious plan had to be devised and substituted, which of itself indicates the way in which the Ministry had embarked upon the project without taking sufficient care over the initial planning.

I leave the matter of planning to make another general observation. I hope that the House will not think that the Committee was concerned only with the mistakes of the past, to carry out inquests, autopsies as it were, into the bodies of the deceased. We were very concerned also about the future and, particularly in regard to the subject of computers, about the time when the scientists devise even bigger and better machines in the next generation of computers.

The work put into developing computer systems and writing computer programmes represents a very substantial investment of public funds. We do not want to see that investment dissipated at the end of the useful life of the existing computers. We want to see that advantage is taken of improvements in computer technology, but we say plainly to the Government that there can be no reason for new developments to be undertaken just for their own sake. If they are to be undertaken, let them meet real needs.

The Committee examined the subject of departmental control of administrative expenditure and grants. We looked at a number of cases where control on the part of various Departments seemed less than adequate. I regret that in several of these cases it was necessary for us to voice our concern, and in one case even displeasure, at matters which were brought to our notice by the Comptroller and Auditor General I shall not make detailed comments as I know that some of my Committee colleagues may wish to do so during the debate: I wanted to try to give the House a picture of the wide range of activities of the Committee.

I have already mentioned the Committee's Second Report dealing with Excess Votes required for Northern Ireland. As in the previous two years, now that this Parliament has responsibility for Northern Ireland, the Committee examined the Northern Ireland accounts on the basis of the Reports of the Comptroller and Auditor General for Northern Ireland. It then examined the Northern Ireland accounting offices in the normal way. Apart from the Excess Votes, we took evidence from the accounting officers on five separate matters. I am pleased to say that in spite of the difficulties in Ulster to which I have already referred, we had no serious criticisms to make in our Fifth Report.

So much for the work done by the Committee in the 1974–75 Session. I hope that the House thinks that what we have done and attempted to do has been useful to it, reflecting on Government expenditure and on our tasks in the House and how we discharged them.

I have had the honour to be the Chairman of the PAC for two years. It is the senior Select Committee and was founded by Mr. Gladstone over 100 years ago.

Mr. John Pardoe (Cornwall, North)

Hear, hear.

Mr. du Cann

Perhaps the hon. Gentleman wishes to intervene.

Mr. Pardoe

No.

Mr. du Cann

I shall come back to the credit that he is giving to Mr. Gladstone.

I have also had the honour to be a Treasury Minister in Mr. Harold Macmillan's Government and the founder-Chairman of the Select Committee on Public Expenditure. From that experience I hope that the House will permit me some short reflections on Government expenditure.

I state as a fact, and not for the first time, that it is now clear to us all that Government expenditure is out of control. The House of Commons is quite ineffective in establishing command. Indeed, it is against the interests of Ministers and of the Government of the day that the House should establish effective command. I am sure that unless we radically change our approach to this matter Government expenditure must continue to be out of control. So great are the pressures, both political and otherwise, that Government expenditure is almost forced to increase: those pressures are forcing it to increase inexorably. On the part of Ministers I believe that there is inevitably almost a conspiracy against Back-Bench influence.

It is also a fact that the House is failing in what I regard as its primary duty—namely, controlling the Executive through the control of the purse. In the lectures that we give to sixth forms and to others we state that we are proud of the principle of grievance before Supply. We have a Supply Day today, but this is an exception to the general rule. Most Supply Days are now mere formal debates with pre-arranged conclusions on party lines. The debates which should be most relevant to the control of expenditure—for example, debates on the Reports of the PAC, the Expenditure Committee or the annual White Papers—are tending increasingly to be benefits for the same small knot of specialists and a holiday for the majority. That is if, of course, we can arrange debates in the first place.

On two occasions as Chairman of the PAC I have had to stand in my place on a Thursday to ask the Leader of the House why we have not been debating the Reports of the most senior Select Committee. There is always trouble about getting time to debate the Reports of the Expenditure Committee. For example, we heard at Question Time today of the delay that takes place in producing the Public Expenditure White Paper. There is no guarantee that time will be allowed to debate it.

Incidentally, and not least important in this catalogue of matters which I thought it right to state plainly at the conclusion of my Report, the heavy expenditure of the State is increasingly a discouragement to personal or corporate effectiveness instead of the spur or example that it should be. We have only to look at the nationalised industries to understand the truth of that remark. I believe that that opinion will be common ground on both sides of the House. Indeed, on this matter there are not two sides, only one. There should be unanimity among Back Benchers on this matter.

If that is a matter of common ground, so too is the fact that the increasing and excessive central and local government expenditure that is likely to take place in the next decade is likely to remain the most potent inflationary force in the economy in the years ahead. I hope that I do not have to argue any further the need for better control and better methods of control.

If we consider the role of the PAC in these matters, I believe that it does excellent and necessary work, although its work is limited. I was pulling the leg of the hon. Member for Cornwall, North (Mr. Pardoe), but he is quite right to take pride in the fact that it was Mr. Gladstone who established the Committee. It was necessary then and it is necessary now.

I have some small but significant suggestions to put to the House in an attempt to improve our methods of control and to use the PAC more effectively. First, we must adhere to the proposals and forecasts of expenditure presented to the House year by year. In fact, we never adhere to them. Let us consider current experience within the time range of the Reports. The 1971 White Paper forecasts on expenditure were exceeded in 1974–75 by more than £5,000 million. The Public Expenditure Survey Committee system, which I strongly supported, has degenerated into a matter of academic forecasting and mere record keeping.

Thus it is that the figures are twisted and exaggerated to accommodate policies. Thus it is that policies are no longer made to accord with specific forecasts. The House should say "This will not do in future. It must stop." The basic system should be reinforced. I think that the PAC might well be given the job of acting as a monitoring committee. If that were done, no spending would occur outside the framework of parliamentary control—namely, back-bench control.

We can no longer allow the budgetary system to be solely concerned with taxes. Ministers' spending policies must have their taxation consequences plainly spelled out when decisions are made, and they must be argued for openly.

Support for Chrysler was decided by the Government in isolation. No one said "If we put this money into Chrysler it will mean an extra 6p on income tax", or whatever the calculation might be. It seems that we deal with only one side of the equation. We never deal with both sides together. That must change. There must be debates on revenue and expenditure.

I do not doubt that many civil servants in the Treasury and many officials throughout Government, in Cabinet Committees or in Cabinet, engage in such discussion and debate. I have been present and I have seen such debates take place. However, they should take place on the Floor of the House and not in private.

I also believe that new spending proposals must be balanced either by new tax proposals, argued at the time at which the spending proposals are made and agreed by the whole House, or by cuts in some other programme, with the Public Accounts Committee as the monitor.

The very least advantage of such a system—a radical change from the way in which Gladstone saw the PAC, but times change and the day of the inquest alone is over—would be that if public expenditure increases it would be only after the House had made the fullest inquiry and given its clear approval to such a course. Such matters as cash limits, departmental budgets, and so on, might be important parts of this apparatus of control. We must seek to bring control to the Floor of the House, which is where it belongs and certainly where it does not at present reside.

In addition, the efficiency of public spending could be consistently monitored on behalf of the House as a whole by the Select Committee on Expenditure. That body could examine alternatives in great depth and serve the House in future as well as it is serving us at present. That is what it was designed to do, but it has never been fully allowed to do so.

I suggest that it would be a good thing if we were to attempt deliberately in this House to popularise the process of control. We must see that what we are endeavouring to do on the Back Benches is better understood by the population as a whole.

As Members of Parliament, we are rather like icebergs because the public see only one-eighth of our work and the other seven-eighths of it is below the surface. That certainly applies to the PAC. Hon. Members from both sides of the House spend many hours of careful preparation and undertake their work with diligence, but the tonnes of evidence and recommendations produced by the PAC are mostly filed away and the House tends to debate those Reports only once a year. I hope that I am not advancing too radical a proposal when I suggest that the television cameras should be brought into the PAC. It would clearly demonstrate Parliament effectively at work. However, perhaps that proposal goes a little too far. I should like the House as a whole to seek to identify the process of control and to give the population in general more idea of our work. If the method I recommend is not suitable, no doubt the Government can propose others.

Perhaps all this is a little wide of the motion before the House, but I hope that the House will regard these reflections and proposals as relevant to the work and responsibilities of Members of Parliament and of the PAC.

My concern can be simply put. The public trusts us to be effective sentries of public expenditure. We can no longer pace out properly the perimeter of our guard. We must reform the system and the sooner the better. In the meantime, I pray for the blessing of the House on the work of the PAC.

4.54 p.m.

Mr. James Lamond (Oldham, East)

In supporting the motion, I wish first to be associated with the remarks of the right hon. Member for Taunton (Mr. du Cann), the Chairman of the Public Accounts Committee, in offering congratulations to the Committee's staff for the work which they have undertaken for the Committee, the House and the country as a whole. I wish particularly to be associated with the right hon. Member's thanks to the Comptroller and Auditor General, whom we shall be losing soon and whose patience and helpfulness to the Committee will be sadly missed.

I have been a member of the Public Accounts Committee for four years. Each year the work becomes more interesting because one becomes more familiar with it. In general, there is continuity of work from one year to another, and I believe that continuity of the Committee's membership is of some significance.

During my time on the Committee we have had three different chairmen, all of whom have been extremely good in that job because they have been patient and exceptionally keen in cross-examining witnesses. I very much admire the work of the present Chairman who has brought some innovations to the Committee which have been of value. The right hon. Gentleman believes in work-sharing and in giving everybody in the Committee the opportunity to play a leading part in its work. Such an attitude is valuable, and creates more interest for hon. Members.

The right hon. Gentleman's speech was an exceptionally fine analysis of the five Reports. I support every word he said in dealing with them. However, I part company with him in his conclusions. I do not go as far as he did in his criticism of public expenditure. I do not believe that it is out of control. I concede that it is very difficult to contain, but all of us are in some respects responsible, because we sometimes wear different hats in our demands on one side or the other. I offer this as no criticism of any one section of hon. Members, for demands tend to come from both sides of the House. On the one hand we call for cuts in expenditure and taxation but on the other we privately push for increased expenditure, in our constituencies, on hospital building and improvements, and all the rest of it. I have frequently asked for more money to be spent on such facilities in my constituency. Therefore, I am not critical of the Government on that score. Furthermore, I do not share the right hon. Gentleman's criticisms of local government expenditure.

It is disappointing to see such a small attendance of hon. Members in this debate, as on previous occasions when we have discussed PAC Reports. One may ask whether debates on these Reports are as important as the work in Committee. The PAC is often referred to as the most powerful Committee in the House, which is always flattering to one's ego when one is a member of such a Committee. I believe that that power, if it exists, derives from our Reports and from the action taken by civil servants following publication of Reports, rather than flowing from debates such as today's.

I believe that we should still be as powerful were the House to take these five Reports "on the nod". Almost everybody here for the debate today has served on the Committee, past or present. Hon. Members who have come to hear the debate out of interest, having read the Reports, are few and far between. This is difficult to understand because the Reports, despite their sombre and dull appearance, are a treasure-house of information for any hon. Member who wishes to make a name for himself and obtain a little publicity. The Reports contain some marvellous jewels for hon. Members who care to find them. The Press pick up only one or two items from the Reports and much information is there for the choosing, following a little examination of the contents. Therefore, if any young hon. Member who is keen to make a name for himself happens to be reading this debate, perhaps he will take a tip from me and make sure he obtains a copy of our next Report.

Perhaps the step suggested by the Chairman and welcomed by the Committee, that we should publish our Reports more frequently, would help. It is difficult to encourage interest in a Report that is half an inch thick and deals with many subjects. We must try to make our Reports attractive, so that anyone who sees them is encouraged to read them. Once people begin reading the Reports, their interest will carry them along and, perhaps, encourage them to take part in these debates.

As a member of the Committee, I have had the opportunity to put my point of view and express my misgivings about various events which have occurred, but we must not get things out of perspective. It is possible to come away from the Committee feeling a little disheartened, because it appears that everything the Government touch turns into a disaster. Of course, many things done by the Government are very successful, but it is no part of our job to go into these in any depth. The Comptroller and Auditor General directs our attention to matters that he thinks we should look at, and we usually consider only things that have gone wrong. In these circumstances, we might get a wrong picture of events and we should bear in mind that the vast majority of work done by civil servants and in local government goes right.

Unfortunately, things that go wrong sometimes turn out to be disastrous. I have a particular interest in the hospital building programme, because, before coming to this House, I worked for 16 years on the capital building programme team of one of the regional hospital boards. I have seen these problems from both sides and I know there is great difficulty in containing expenditure within estimates. Sometimes this expenditure gets completely out of hand, and I wonder whether we are not inclined to employ consultant architects too frequently. Hospital design is a very specialised job, and perhaps we should try to build up a larger staff in our own teams so that they can become specialised and more knowledgeable in this work.

Sometimes the Committee considers things that are so tragic they are almost humorous. The Chairman has already referred to the bridge over the River Cart, which has attracted some attention in the Press. Having a cynical turn of mind, I wonder whether it would have been noticed if there had been no income from the bridge. It was the enormous disparity between income and expenditure that attracted our attention. Some other bridges probably cost just as much to maintain, but, because people are not charged for using them, there is no income, and it cannot be said that six men are working to obtain an income of 70p or 80p a year from them.

If I had been a civil servant anxious to avoid the attention of the Committee, I would have abolished the charges, because no attention would then have been drawn to my activities. Of course, that would not have been proper, but another possibility would have been to waive the charge of 30p to the firm that floated boilers down river every six months or so. The bridge could have been kept open and cars charged 25p each to go across. That would have been a more buoyant source of income. I hope that our Report will at least result in some savings. I think the Chairman was rather hard on the six men involved. An attempt was made to convince us that they were assisting in the upkeep of nearby roads. It would have been far too boring for all six to sit waiting every day for the bridge to be lifted. I am sure that they found something useful to do.

Another disaster has been the motor vehicle licensing fiasco at Swansea. A little common sense at the outset would have prevented this. One of the great difficulties that computers have in dealing with applications is that many forms contain mistakes, or are not properly completed. Anyone who has had to queue to get a car or driving licence will have seen that almost every second person makes a mistake on the application form. Before this so-called improvement was brought about these used to be ironed out very easily by the clerk at the desk. I have frequently had to wait up to 20 minutes before I could get a licence. Now we hear boasting that the waiting period is down to 10 days—not including the time taken by the post, which could easily add another 10 days. I receive many complaints from my constituents about this service, and I sometimes feel like complaining myself. I bought a new car in December, and I am still awaiting the registration book. I take with a pinch of salt the assurances that we have received about improvements at the centre.

The work of the Committee is very interesting. I hope it is worth while and that we merit the praise of being the most powerful Committee in the House. I hope that civil servants feel a little afraid when they are called before us to explain a dreadful mistake. If that is the case, there is at least a vestige of power left to Back Benchers, and this is to be welcomed.

5.9 p.m.

Sir Timothy Kitson (Richmond, Yorks)

I begin also by thanking the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Taunton (Mr. du Cann), not only for the way in which he introduced the debate and for the very full account he gave of our work, but for the way in which he helped to organise the Committee and for his encouragement for those of us who are newcomers to it in the work that we have to do. I agree with the hon. Member for Oldham, East (Mr. Lamond) that this is an interesting Committee by any standards, and one feels that the work and inquiry that we are putting in are well worth while. The only point on which I might disagree with my right hon. Friend concerns the possible introduction of television. I can see a number of advantages in introducing it, but I believe it would make it extremely difficult for some of the accounting officers in replying to cross-examination from the Committee, and it might also to some extent inhibit the Committee's questioning if the cameras were present. As we have to sit on hot and stuffy afternoons through June the television lights and cameras might not be so attractive to Members in a small Committee room.

As my right hon. Friend said, the Reports of the Committee are published regularly. I believe it would be helpful to the House and to the Committee if there were not such a long delay between publication and the debate on the Report. With tonight's debate we have probably incurred the longest delay ever. Members of Parliament are nowadays confronted witth so much material to read, and this long delay may be the reason for such a light attendance in the House this afternoon. As every year passes it seems increasingly difficult for Governments to organise their timetables to cope with the increasing amount of legislation that comes before Paliament. I hope that those responsible for that timetable will arrange for the debate to take place some time before Christmas.. I believe that would be helpful to the Committee and the House.

Since I joined the Committee only in April and have therefore been concerned only with the Fourth and Fifth Reports, I shall be brief. The impression that I have gained during the short time I have served on the Committee is that since 1861, when it was first set up, central Government expenditure has increased dramatically. Since only 14 Members of Parliament are charged with ensuring that Government Departments obtain the best value for taxpayers' money, it must be appreciated that as each year passes the work of the Committee becomes more formidable. The Comptroller and Auditor General and his staff provide an excellent service to the Committee.

There are in the Committee's five Reports some remarkable examples of poor management in the spending of public money. It is traditional for hon. Members in this debate to refer in detail to one or two examples that particularly concern them, and I shall do that in a few moments. It is worth noting, however, that these are the only examples which the Committee of 14 has had time to examine in depth, and perhaps we should therefore consider how many instances it has not proved possible to bring to the attention of the Committee.

This year we have dealt with about 35 subjects. Most people will recognise that the Committee cannot hope to examine any more than a fraction of central Government expenditure, and of course there is also local authority expenditure, where extravagances have been known to take place from time to time and are currently causing considerable public concern. As a member of the Committee for only a short time, therefore, I find myself wondering what has happened to expenditure outside the narrow beam of the Committee's searchlight. How well equipped are we in Parliament and outside to examine and control to the best advantage the spending of taxpayers' money? Quite frankly, when our constituents complain of public expenditure running out of control, can we expect them to be satisfied with the work of the Committee, in view of the magnitude of its task?

There is, therefore, the wider point to consider. Do the procedures of this House for examining public expenditure amount to an economic reality? Most people would agree that in this country we need far better management information on Government spending programmes and far stricter budgetary control within Government Departments. The hon. Member for Oldham, East and my right hon. Friend the Member for Taunton have both dealt with the Inchinnan Bridge. As the hon. Member said, if the bridge had not had an income of about £1.20 in one year and £1.40 the following year, the situation might never have come to the attention of the Committee. It was explained to us that the manning level was necessary to keep the bridge operative and to protect it from vandals. That argument could be adopted with a lot of other bridges where there is a risk of vandalism, but it is not a very satisfactory argument. The whole affair caused a great deal of concern to all of us on the Committee.

Another cause of great concern was the hospital laundry reorganisation in Cardiff. The project was subject to many problems from the start. There was the delay in completion of the buildings; there were problems in training the staff; difficulties were encountered in the transfer of work; and the costs of operation escalated. Also, there was obviously something wrong with the design and ventilation of the building. Absenteeism because of the working conditions in this new laundry was running at nearly 30 per cent. The laundry was designed to handle about 2,000 articles a week, yet when it began operations it could take only just over half that number.

It seems strange that although a well-known firm of consultants had been employed, there had been little consultation with the laundry industry. The machinery cost £282,000. Senior people had visited the makers in Germany to see it working, but after it had been installed the engineers did not remain to see it working with the employees. The laundry service staff was not given time to train on this new and sophisticated equipment, which it had not seen before. Accordingly, the laundry was unable to meet the demands of the area.

No commercial operation in this country would consider buying new and complicated machinery without insisting upon those responsible for installing it remaining to see it in proper working order and meeting its production specification. The laundry was planned to run at 30 per cent. below average costs of other laundries in Wales, yet its costs were 11 per cent. above the average and, the following year, 6 per cent. above the figure for the rest of the hospital laundry services in Wales. That is a remarkable story. If only normal commercial practices had operated, many of the difficulties would have been overcome.

The third and final example that I wish to mention is the centralisation of vehicle registration and licensing and the issue of driving licences. I had the same experience as did the hon. Member for Oldham, East. I applied for a licence on 5th December and did not receive it until 7th January. In the 15 years in which I have been a Member of Parliament I have had few queries about the registration and licensing of vehicles, or about driving licences, but I know that all hon. Members are now getting queries about delays. The machinery that was installed is incapable of handling the problems that arise, and the escalation in price is terrifying.

The Public Accounts Committee could not have worked harder at its task than it did last year, yet in December Supplementary Estimates amounting to £3,160 million were presented to the House.

In reading the report of our debate on the same subject in 1975 I noticed that the Chairman of the Committee said: In my view, it is time to re-appraise the system of financial control exercised by the House of Commons."—[Official Report, 13th January 1975; Vol. 884, c. 51.] The Chairman repeated that remark this afternoon. That must surely be right.

In our previous debate my right hon. Friend the Member for Taunton said that our expenditure of the taxpayers' money was not fully effective, and that that was a tragedy. He suggested that we should improve the ways of examining and controlling public expenditure generally. Developments over the past 100 years warrant a general investigation into the size, powers and future programme of the Public Accounts Committee. If the scope of the Committee is widened and if information on Government spending programmes can be more comprehensive, from year to year there will be fewer instances of wasted Government expenditure, and there will be better control over taxpayers' money generally. If we achieved some of those goals, the Public Accounts Committee would provide an even greater service to the House of Commons.

5.23 p.m.

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

I join my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) in congratulating the Chairman of the Public Accounts Committee on the excellent way in which he has presented the Reports, which is typical of the way in which he conducted the business of the Committee.

I do not agree that the proceedings of the Committee should be televised. In the Reports which we present to the House of Commons many items are sidelined and cannot be disclosed even to the House. If the proceedings were televised some witnesses might excuse themselves from giving answers which are necessary to enable the Committee to make a sound judgment.

The hon. Member for Oldham, East (Mr. Lamond) made an interesting speech which contained one regrettable remark. I am sorry that he is not present to hear me say this. He made a comment to the effect that the witnesses who appear before us should feel frightened at being before the Committee. That is a dreadful thing to say. I consider that the Public Accounts Committee and Members of the House of Commons are part of a team which is helping to save the taxpayers' money. As a member of the PAC I do not con- sider that I have been appointed by the House to frighten civil servants. We should feel that we are there to put up a mirror so that the civil servants can see themselves. More important, we put up a mirror so that when he reads the Report the Minister will know what is going on in his Department.

I have been a Parliamentary Private Secretary in five Government Departments. That means that I acted as a fag or office boy, but the office boy often sees more of the game. I have always been amazed at how little a Minister knows, or can know, about what is going on in his Department. He cannot possibly know, because he is there for too short a time and is surrounded by a team of civil servants. When a Minister takes over a Government Department, during the first six months the Department is weighing up the Minister. During the next six months the Department is carrying out his instructions. The civil servants get to know his favourite subjects and, naturally, tend to concentrate on them.

The basis of the Report is exactly the same as the basis of an auditor's report of a public or private company. The Comptroller and Auditor-General is the auditor who points out on the Department's balance sheet items which he thinks require attention. The PCA is equivalent to a board of directors which queries with the staff concerned why the auditor has had to put a qualification on the balance sheet. The House of Commons can be compared to the meeting of the public company. There are even fewer present here than there would be at a meeting of a public company. It may be that some public companies serve gin after a meeting whereas the House of Commons does not.

We should not be critical of hon. Members who are not here. I reckon that I spend 200 hours a year on the work of the PAC. To re-read the Report took me 20 hours, and I knew the subject. The House of Commons probably has to consider between 150 and 200 Reports. Is it fair to criticise fellow Members because they have not had the opportunity to read the Report and, because they have not done so, are wise enough not to speak about it?

The Chairman of the Committee should be congratulated on overcoming the printing difficulties of having the Report published in five volumes. He explained to the Committee that he did that because he wanted to get the Report out as quickly as possible and felt that it would be wise that the Press should get an early intimation of what it contained. Unlike other Chairman under whom I have worked, my right hon. Friend had a Press conference. The Press performs a great service for the country, but the Inchinnan Bridge story was the only one that hit the headlines.

My hon. Friend the Member for Richmond, Yorks said that we should make our Reports more interesting. By all means let us do so, but I sometimes wonder whether, to get more Press publicity, they should be more sensible. I do not want the Committee to have Press publicity, but I want the public to know that the accounts are subject to scrutiny and which people are carrying out their work well and which are not.

I hesitate to give advice to the Press, but our Reports are full of technical items which should be of interest to the trades. I do not remember seeing any technical paper in which I have a professional interest any serious reports about the work of the PAC. There are a great number of people in industry who should be informed about any day-to-day apparent waste in Government Departments. Members of the technical Press do not know how to draw attention to this matter. After all, probably the Government Department concerned is their client—in many cases their best client—and they do not like to criticise their best client. They know well that if they complain to the Department, with which they must have good relations to enable them to carry on business, their complaint will be taken straight to the senior man and the individual who is responsible for the waste will get a kick and will not remain on friendly relations with them. However, I suggest that if members of the technical Press wish to bring this to our attention more often, they should see their Member of Parliament or a member of the Public Accounts Committee.

If a constituent writes to a Member of Parliament asking him about what is being done concerning a firm which makes laundry equipment, I am sure that there would not be one hon. Member who would fail to be in his place, however late at night, to raise the matter. One reason for lack of interest in this matter is that it has not been given the highlights which it should have been given. I promise not to speak about the Inchinnan Bridge. However, I shall refer to a subject which has come up for the third time of asking—hospital building. I say "for the third time of asking" because I believe that anyone in a new enterprise or who is opening a new programme is entitled to make one mistake. If he makes a second mistake it is carelessness. If he makes a third mistake it is almost criminal negligence. We have not yet found who is the culprit but I think I know who it is and I shall explain to the House why I think I know who it is. We cannot blame the people who gave evidence to the Committee because when it comes to buildings of great magnitude it is basically the whole political system which is wrong.

The Report deals with five hospitals. In each hospital there is a common factor which comes out extremely well in the evidence. In the Third Report, page 145, when the Under-Secretary in charge of the Health Building Division of the Department of Health and Social Security gave evidence, he said: I would not pretend that these are the only skeletons in our cupboards. I say "our cupboards" deliberately, because this is something in which both the Department and authorities are involved. We provide the financial resources and lay down procedures, but we are not a building agency. … There is one common feature in all these five schemes on which you in this Committee will shortly cross-examine me. They were not as fully prepared as they should have been when the contracts were let. This is a common feature running through all of them. When they went out to tender the hospital boards were under considerable pressure …". They were under considerable pressure from Members of Parliament, from people who have been pressing for hospitals for years. The Treasury suddenly lifted the lid of Pandora's Box and everyone said, "Let's have it." It happens every time. The Under-Secretary then said: … in some cases after long years of planning—to make very early progress in using the financial resources then available for hospital building". That common factor runs through all the hospital building programmes. I shall deal with the observations of the hon. Member for Oldham, East about consultants in a moment, but it is a different issue.

In the hospital plans for one hospital there are 400 variation orders. Those who do not know what the technical term "variation order" means can take it from me that it means that someone has changed his mind 400 times. That is a common factor in the construction of any building. As the building goes up, people see aspects they want to alter.

Unfortunately, hospitals are built basically by hospital committees. When a committee visits a building under construction everyone wants to change something and no one is strong enough to say, "No, it will cost too much". When I was the managing director of one of the larger construction firms we made the decision to build our own office. We held a board meeting at which every member of the board had a copy of the plans in front of him. The chairman then laid down that no member of the board was allowed to visit the building while it was being constructed except the director in charge. No one, including himself, could ever give a variation order without the whole board being informed of what was happening. He saved us hundreds of thousands of pounds.

In this instance we are talking in terms of saving a million pounds a hospital, and I shall tell the Treasury how it will be able to save on future hospitals. If it does not accept the advice which I and other hon. Members are humble enough to give it, once again it will waste money. We have a tremendous unemployment situation. Among those out of work at present are skilled workers and technicians. The Treasury should immediately announce that at a specified time in the future it will build some hospitals. If it does not do so, someone will suddenly turn on the tap and say, "Let us get on with it". Therefore, we should be planning those hospitals now. We should spend up to £1 million on planning 10 hospitals, and we should save on every one we built. It would be the greatest investment we ever made. The time to do it is now. The technicians will have more time to carry out their duties. The architects could visit existing hospitals, see the mistakes and benefit from them. Hospital management committees could have some members who have knowledge of big building projects and they should also be told that subsequently they must keep away until the construction is finished.

Doctors are a peculiar breed when it comes to dealing with hospital building. I have been responsible for building hospitals in Asia, Africa and Europe. The one common factor is that most doctors never have time to look at the plans in detail. Indeed, sometimes I suspect that they do not know how to read the plans. When the construction is finished they become like prima donnas who say, "We shall not operate on that stage", or "The light switch is in the wrong place". They want everything altered. It happens all over the world. It can be stopped by telling them that they cannot do it. However, everything can be made Sensible if the Treasury says Immediately".

People ask what the Tories are doing about expenditure and they say that the Tories always want to increase expenditure. This expenditure will save money. It is an expenditure which will build up this country's resources.

The hon. Member for Oldham, East thought that we should employ fewer consultants but have more architects run by a Department. I thoroughly disagree with him. If buildings are designed within a Department we shall lose competition and the variety or mix of architects' ideas. Moreover, if the Department has its own architects we shall not build up a team of architect consultants who can work throughout the world. There are many opportunities in Saudi Arabia and Africa. Indeed, the whole world is crying out for hospitals. We should train and give experience to our architects in designing more hospitals.

There is one thing fundamentally wrong with Departments dealing with consultants. I have suggested to the Chairman that we must put this matter right in the Public Accounts Committee. So far the only witnesses we have had have been civil servants and others directly employed by the Departments. However, on many occasions the civil servants concerned have said, "It is the consultants' fault". We never get the consultants before us so that we can put to them, "Is it your fault?" It is a one-way trade.

Another point is that when a Department employs a consultant it seems to think that it has to be the consultant as well. When a great firm wants to build a great building, it generally employs an outstanding architect, having made certain that he has been responsible for similar buildings. It examines the buildings which he has built before selecting him. A private client probably picks an architect because he has seen him playing billiards in the local club. That is not so with a great firm. The Department should do what the large firm does when choosing an architect and then leave it to him, saying, "This is the amount you have to spend. It is up to you to produce the goods." The Public Accounts Committee should be given authority by this House to cross-question the consultants who are employed.

I do not intend to detain the House any longer. I have concentrated on hospitals, because I know in my heart that this is an area which would help to ease the unemployment situation and hold down the cost of future hospital building. If we can get an assurance from the Minister that he will do what I have suggested, the work of the Committee and this debate will have been worth while.

5.42 p.m.

Mr. John Pardoe (Cornwall, North)

The hon. Member for Folkestone and Hythe (Mr. Costain), at the outset, referred to the comments made by the Chairman of the Public Accounts Committee, the right hon. Member for Taunton (Mr. Du Cann), who, turning into radical highways and byways, said that it would be a good thing if we opened up the PAC and other Committees to the television camera. I am familiar with the reasons given by the hon. Member for Folkestone and Hythe for turning down that suggestion. His words, if he cares to look them up, were almost identical with the words he used when answering a similar suggestion which, when I was a member of the Public Accounts Committee, I put forward in the debate which followed the report that year. The hon. Gentleman has not changed his views.

However, I am glad that the right hon. Member for Taunton has come round to that point of view. I believe that the importance of control over the Executive would be enormously enhanced if we could make this part of the work of Parliament more exciting by giving it—putting it in the vernacular—a little more political sex appeal. If we introduced the television camera—certainly the radio—in order to get more Press focus on this aspect of parliamentary work, we would be doing a great deal for Parliament's effective control over the Executive.

I congratulate the Chairman not only on the work of his Committee and its Report but on the splendid presentation which he gave with it this afternoon. I should like to join him in congratulating and thanking the staff of the Committee. I am sure that the right hon. Member for Taunton will agree that the staff are the essence of the whole thing. It is not just that they are good staff, but they are very numerous. This is the only Committee of this House which is adequately staffed. That is perhaps why it is the one Committee which gets down to the bits and pieces and under the surface.

We are all well aware of the dangers of increasing public staffing generally, but I think we should beware of applying that principle to the staff of the Committees of this House on which we are endeavouring to exercise our role as watchdogs over public expenditure. The PAC, as the Chairman indicated, is heavily dependent for the quality of its work on the staff. I wish that the Expenditure Committee—if it focused its attention more on expenditure than on general areas of policy—had the staff to do that job. If it had the staff, we could get better results.

I should like to follow the right hon. Member for Taunton in his remarks concerning our control over the Executive and its expenditure in particular. I appreciate that he made that reference with respect to all Governments, no matter what their political complexion. Public expenditure has, to a large extent, grown out of control under all Governments.

The latest manifestation was Wynn Godley's marvellous assertion that the Treasury had somehow mislaid £4.9 billion of our money. I was interested in the reply to that assertion given by the Chief Secretary in a speech to the Association of Health Service Treasurers on 14th November 1975. The right hon. Gentleman said: I am bound to say that my task of cutting public expenditure, and it has to be cut, at any rate from 1977 onwards, is not made easier by bogus talk of public expenditure being out of control. … This ignores the realities of the world in which we live. Parliament changed and the Government changed between 1970–71 and 1974–75. According to the Chief Secretary, the major reason for the non-parliamentary expansion of public expenditure is the continual change of Governments. We have it summed up in the philosophy that elections are highly inflationary. Indeed they are, and that might be a good reason for having fewer elections.

I turn now to some of the details in the Report. I do not intend to wade through the whole lot, nor to touch on many of the points to which reference has already been made. I should like to raise queries on three matters on which I hope there will be some comment from the Treasury Bench.

The first point concerns the Department of Industry and its control over financial assistance. The Treasury, in its comment, stated: Viability has remained of prime importance in considering applications for assistance, though it is not the sole consideration. I should like to know whether that is still the situation following the adoption of the new industrial strategy. I should have thought that viability was, if not the sole consideration, virtually the sole consideration if one were picking winners.

The second point relates to Cammell Laird Shipbuilders, which is 50 per cent. Government owned. The Government undertook support to the extent of about £25 million in 1972 and £14 million of capital work. The cost of the capital work had already reached £27 million when the Committee investigated the situation and it was likely to reach £32 million. In its comments the Department appears not to regard either of those commitments as open-ended, but apparently felt committed to complete the proposed reconstruction schemes. I should like to raise a query on that matter. This House will increasingly be confronted with situations where the Gov- ernment, having put in a first or second instalment, just have to go on because, in the words of the Department's evidence, they felt committed to complete the proposed reconstruction schemes. It would appear that, having started, we cannot go back. But it was specifically on that point that the House was reassured by the Prime Minister, on behalf of the Goverment, about injections of public money into British Leyland. We were told that it would be a step-by-step process. I wonder whether this House is in any position at any point, when something has been started, to say, "No, no further". I suspect that we shall get into a Concorde situation. We shall be unable to draw back. This situation will arise with every injection of public cash into industry. I hope that we shall receive some comment on that point, too.

Again, in the case of Govan Shipbuilders, the further loan to the company, and the extensions of the support period, are subject to certain conditions, according to the Treasury. In the Treasury Minute no specific account is given of those conditions. It may well be that they were given to the Committee and that the Committee did not think it worth while reporting them. But if we are to be assured by the Treasury that there are specific conditions on the extension of support and further loans—and throughout the whole area of financial assistance to industry—those conditions must be laid down and made public.

Those are just some of the details of the Report. It is a tremendous minefield of information about the way we conduct our public expenditure and our public sector. Earlier in the debate, questions were asked about the rest of the waste that is taking place, the waste that the Committee did not look at, much of which does not even come within its terms of reference. It is helpful for the Committee to look at hospital building programmes and to discover that there has been excess investment, but if we look at another aspect of the Department of Health and Social Security, what do we find? In an article written in Social Worker by the Chairman of the Supplementary Benefits Commission, he mentions the hostility of the public to the handouts to scroungers and layabouts, and the tottering Christmas tree collapsing under its own weight. That is in the latest issue of Social Worker, and it is written by Professor David Donnison. I have always taken him to be a good social democrat in these matters, and not on the side of viciousness towards needy people.

There is undoubtedly a great deal of this kind of waste occurring, and it is a pity that the Public Accounts Committee cannot turn its attention to those aspects of that Government Department. After two visits to the Department of Health and Social Security in my constituency last weekend, I fear that the offices of the Department all over the country are, unfortunately, presiding over a colossal fraud. They know it, and there is no way in which they can do anything about it. It is undermining the morale of the staff of the Supplementary Benefits Commission, and I was delighted that the new Chairman of the Commission has decided to draw public attention to it.

Concerning methods of control for the future, I was delighted that the right hon. Member for Taunton turned his attention to this in the latter part of his speech. One of the best surveys of the problem was contained in an article in the November issue of The Banker, on "Public Spending", by Professor Sandford and Ann Robinson, both of Bath University. They discuss not only the growth of public expenditure and Parliament's effective—or ineffective—control over it. They talk about the Supply Day debates, having clearly conducted a survey of them and of what is discussed in them. They state that A close examination of what Members actually talk about during these 26 Supply Days reveals that they do spend a considerable amount of time discussing public spending. The authors go on to comment that The general impression conveyed from reading these debates is that when Members make references to expenditure they are generally suggesting to the Government that expenditure on a particular function or item is too low and ought to be increased. Later in the article the writers state that the House becomes not a debating Chamber but a stage or platform for a series of unrelated demands. We ought to take account of that outside criticism. It is a very fair analysis of what we do. We spend far too little time on those Supply Days, and far too little of our time generally in this House, in considering in great detail the whole question of public expenditure, which has grown so fast. Parliament, indeed, is not now an engine of control over public expenditure, or over the Executive at all. It is, if anything, an engine for the enlargement of Executive power. I suggest that we start to reverse this process from today onwards.

We have been promised earlier by the Leader of the House, during business questions, a debate on the new Government White Paper on Public Expenditure. We have not yet had that White Paper but we shall have it very shortly. I suggest, Mr. Deputy Speaker, that through the usual channels we might well consider a new experiment this year—joining the debate on the White Paper on Public Expenditure with the debate on the Budget.

I know that the objection—which I can already see being raised by the hon. Member for St. Ives (Mr. Nott) from the Conservative Front Bench—is that if we do this there will probably be a cut in the number of days allocated to the two subjects. Surely it is not outside the realms of sanity in this House to arrange an extended debate to cover both subjects.

If we put public expenditure and taxation together we shall be able to get at the essence of the whole problem. If the attention of the public could be focused on those two matters together, we ought to be able to control public expenditure much more effectively.

The mechanics of public expenditure are in a terrible state. This is partly due to the strain of administering huge additional public projects, but it is mainly due to the absence of scientific cost control in most branches of Government. The Public Accounts Committee's Report draws attention to this in a large number of isolated cases. We need a Department-by-Department examination of expenditure on a properly costed basis. It should be done in much the same way as advocated by the Economist in May last year. That method has now been adopted in a major way by the Liverpool City Council.

This House neds cost estimates of individual services—the cost per head of every service offered to members of the public as individuals—so that we may have before us the basis on which to take decisions about the allocations of priorities and can see whether we are getting cost-effective value for money out of these services.

In this context I was amazed recently, in an Answer to a Parliamentary Question, that it transpired that the cost of educating a primary school child in Cornwall in the last fnancial year was around £180. In England and Wales generally the cost was £220 per child. In Inner London it was £330 per child. We all know about teachers' London allowances, but these cannot possibly account for that difference.

Drawing an analogy between money and quality, is it to be assumed that the quality of primary education in Inner London is 72 per cent. higher than in Cornwall? My own daughter goes to a primary school in London; therefore I can compare the two areas quite easily. The quality of primary education available at the higher figure in Inner London is certainly no better than in Cornwall. Perhaps we ought to draw the conclusion that all English children should be sent to Cornwall for their education, because it offers better value for money.

This example raises fundamental questions about the value obtained for the expenditure of a certain sum of money. We need to consider why it is costing so much more to educate a primary school child in London than in Cornwall. It would be helpful to have that sort of comparison region by region and area by area.

I hope that the right hon. Gentleman and his fellow Committee members will not mind my saying that there is no indication in their Report that any international comparisons have been made. Having been a member of the PAC in the past, I am not aware that it is even within the Committee's terms of reference, but it is a pity that we do not have a far better basis for international comparison of the cost effectiveness of our public services. I often wish that we were able to see in much greater detail how the costing is done in other countries, so that we could compare their costs with our own and any increase in costs one way or the other. It would give us a standard of comparison in the areas of public monopoly in which there are no market forces to guide us, and no real choice by the consumer. That kind of international comparison would be helpful.

It is therefore with pleasure that I again congratulate the Committee on its work. I hope that this debate, poorly attended though it is, will enable the House to think through to the new ways of controlling public expenditure which are so urgently needed.

6.0 p.m.

Mr. David Crouch (Canterbury)

The House may be poorly attended, but that is not due to the quality of speeches since the admirable standard set by my right hon. Friend the Member for Taunton (Mr. du Cann), the Chairman of the Committee. My right hon. Friend referred to the Reports of the Committee possibly being relegated to the files, hinting that that might be done too quickly. That is not my view. Nor do I think that the report of this debate will be relegated too quickly to the files. At least, I hope that it will not. That certainly should not happen to the report of my right hon. Friend's speech, an outstanding contribution which showed his remarkable grasp of the work of the Committee which he chairs with such distinction. He came to it after having chaired the Expenditure Committee, which succeeded the Estimates Committee, and with experience of the Treasury Bench as well. We are in his debt today for the lead that he has given us. I hope, Mr. Deputy Speaker, that you have not been bored by the proceedings and will not be bored from now on.

Mr. Deputy Speaker (Sir Myer Galpern)

I am obliged for the hon. Member's concern. I have been greatly interested in all that has been said. The only pity is that the television cameras have not been present, since attendance might then have been better.

Mr. Crouch

Only a few minutes ago there were no fewer than three Treasury Ministers on the Front Bench. I am sorry that two have left, but we are glad that the Financial Secretary is here, because he is closely connected with our Committee.

My right hon. Friend looked forward almost in an outline of political philosophy to the future of the Committee, which he thought might be changed. One of his proposals was that it should monitor the spending proposals to ensure that they were properly balanced. I agree that auditors normally look at the balance sheet and that it is logical, therefore, to assume that Parliament's auditor, the Public Accounts Committee, should see that the Government's expenditure programmes are properly balanced.

My right hon. Friend defined balance as the necessity to show how increased expenditure, if proposed, would be met—whether from taxation or from cuts in other expenditure. That is an interesting proposal, but, although without my right hon. Friend's authority and experience, I question whether the PAC should seek to enter into Government forecasting and policy making. Should it not rather stand back and keep its hands clean? After all, for over 100 years it has stood back and criticised and made recommendations. It has never tried to discuss whether the Government's policies were right or whether they were balancing their accounts properly.

I question whether this proposal is wise at this stage. I should be interested to hear further views on this matter, not only today from the Financial Secretary but at a later stage. I hope that the idea will be developed, here and outside. It is very important for us and people outside concerned with the functioning of our democratic system to consider the efficiency of the balance between the power of Parliament and that of the Executive.

My right hon. Friend also considered the question of giving Parliament's examination of Government expenditure more popular appeal. Expenditure today is enormous. Expenditure by Government Departments, overseen by the Treasury, is approaching 60 per cent. of the wealth of the nation, the gross domestic product. It is now so huge and complex and distributed over so many departments and agencies that it is difficult to keep track of. Those few hon. Members who work on the Committee have their work cut out to keep pace. We are greatly indebted to the Comptroller and Auditor General and his staff. We could not even face the senior civil servants who come before us if we were not so well served.

It would not be a bad thing to popularise the Committee and to introduce radio and television. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) was cautious, because he felt that it would inhibit witnesses. The Press and public have been admitted to other Committees and when a witness wants to say something in private, he can intimate beforehand that he would like them to withdraw. Surely that would not be impossible if radio and television were introduced. The public would be very interested to know how we try to safeguard their interests and deal personally with those responsible for carrying out this expenditure.

Something which has not come out today but has been discussed on other occasions in the last few days is the question of who should appear before Committees. There has been some argument about whether certain Ministers should appear before the Expenditure Committee. I will not express a view about that, but I am glad that Ministers do not appear before the PAC, that we concentrate on the accounting officers. At least we can always be sure that civil servants will turn up. In dealing with senior civil servants, we are dealing with the right people at the right level.

There is a historical reason for this. The PAC has always worked at the level of the Civil Service rather than seeking to bring in the policy makers.

Mr. Costain

Would my hon. Friend not also agree that this is the ultimate sanction that an accounting officer has against his own Minister? If a Minister tells him to do something that he knows is wrong, he can always report the matter to the Public Accounts Committee.

Mr. Crouch

I am grateful to my hon. Friend, who has also drawn on his long experience in the Committee.

I want to refer to one item which is contained in our Report. It concerns the hospital building programmes, which were already dealt with at some length by my hon. Friend the Member for Folkestone and Hythe. I am one of the few hon. Members who are members of a regional health authority. Therefore, I have seen at one stage down the line how the administrative expenditure of the Department of Health and Social Security is conducted. I am a lay member, not an officer.

When the Public Accounts Committee examined the accounting officer, the Permanent Secretary of the Department of Health and Social Security, I was extremely interested to learn something of what had gone wrong in the case of five hospital building programmes. In those programmes there was a lack of control which resulted in a waste of about £5 million. It is not the Committee's duty to discuss a figure of £5 million in a year when the particular Department spends £4,000 million. It is its duty to show where weaknesses in administration lie and to penetrate and find out why those weaknesses have occurred. The Committee must then make a recommendation to the Department concerned and the Treasury about what should be done. However, the Committee does not have to say precisely how those weaknesses should be corrected. It is up to the permanent official, the executive head of the Department, to take serious note of what the Committee says and not to put its Reports in a file or on a shelf.

It is the third time that we have had to report our concern about the Department of Health and Social Security to the House. We are talking not about a £5 million extravagance but about a serious case of maladministration. In this case we have discovered that the maladministration is down the line and not in Sir Alexander Fleming House.

Today the National Health Service is the biggest business in Britain, employing 9,500. It has recently been reorganised. I make a plea in mitigation for those health authorities that are involved. For them to go through the traumatic change which has affected the Health Service in the past two years has been a staggering experience. I speak from my knowledge of those with whom I have worked on the South East Thames Regional Health Authority. It is remarkable that so little has gone wrong. I know that many officials have burnt the midnight oil to enable them to keep pace with change and the problems in their profession and big business.

The Permanent Secretary told the Public Accounts Committee that in these five hospital building programmes matters had gone sadly wrong. He said that there had been inadequate control, that departmental precepts were not precisely obeyed, and that the Department recognised that a state of confusion and apparent deficiency in the control of hospital building programmes existed. It is as well that that deficiency in the Department should be highlighted today.

I want to comment on the weakness in the administration of this vast business of health. I hope that you, Mr. Deputy Speaker, will not rule this out of order, because I believe that it is relevant. There are two types of health authorities—the regional health authority and the area health authority. However, for the purpose of my argument we can think of them generally as health authorities. Within those two authorities two types of people are responsible. There are the officials or the civil servants and the members—those who are appointed to represent the public and the patients—the consumers of the Health Service. It is difficult to know how to perform as a member against an official. It is not quite like being on the board of directors of a company and hearing a financial director's report. The relationship is not the same. It is difficult in our public lifetime sometimes to identify the functions and duties of a member appointed to administer in the name of democracy these large sums of money.

I want to quote part of an answer that I received during the examination of the Permanent Secretary before the Public Accounts Committee last March. I asked him about the relationship of health authorities. At page 156, Question 848 of the Third Report, the Permanent Secretary said: … health authorities are in the strict sense of the term agents of the Secretary of State, accountable to her for what they do financially, and I, as accounting officer, am responsible for what they do. That is a perfect description of the function of a public servant in a health authority. I questioned the Permanent Secretary further about the function of that other person, the member, who I maintain also has a part to play in safeguarding the expenditure of public money. I said that I was critical in my understanding of his duties. The Permanent Secretary replied: It is difficult for a member, in the case such as we have before the Committee or the succeeding ones, to operate effectively. I do not think that I would say that it is impossible. I think that it is a matter of the authorities working out the procedures which will enable him to do so, and I would have thought it most important that they should, because otherwise he is put in an impossible position. That was a valuable observation and I offer no criticism of it. It is important that it was said.

There are 14 regions in this country and the members of these health authorities have a responsibility, which they must begin to shoulder, to work with their officials to ensure that they, as the democratic representatives, try to put the matter right. The question of public expenditure is a vast one. It involves great delegation of authority from the centre down the line. It is not the concern only of the officials. In some ways, as we have said, there are democratic representatives, and those also have a duty.

That was the only detailed point of our report to which I wished to refer. However, in conclusion I want to say something about the function of this Public Accounts Committee, of which I have had the honour of being a member for about a year. It is Parliament's oldest Select Committee, having been established in 1886—I thought that it was established then, but I have heard mention of 1861; we need not argue about that. It has the assistance, as we know, of the Comptroller and Auditor General and the Exchequer and Audit staff, of over 600 people. Very few people realise that this Select Committee has such a powerful staff behind it. It has earned an international reputation wherever parliamentary democracy is studied. It has great authority in this House, and it has been described as the terror of the Departments. That is not a derogatory term; it is one that I have taken from a distinguished civil servant, Sir Richard Clarke.

The Committee's function is to audit the accounts of Government expenditure. It is concerned—we should not forget this—with ensuring honesty and propriety in the handling of the nation's money—the taxpayers' contributions. As Government intervention in so many sectors of our lives has developed and is now so involved, these days, within the commerce of the nation, we must not relax our vigilance for a moment in seeing that our standards in the administration of the people's moneys are without any taint of corruption. We hardly mention this as a concern. Nevertheless, one of the functions of the PAC is to observe that there is no corruption. I am glad to say that it is not something that features in our Report. Nevertheless, we must never relax our attention to this sort of thing, particularly as expenditure is delegated and devolved.

Government expenditure is on such a vast scale these days, and so much of it is delegated from Whitehall, that we must satisfy ourselves that the rules are being observed and that the responsible Departments are ensuring that this is so. The independent outside audit is a vital component in our Government system. The operation of the PAC is a linchpin in the structure of our parliamentary democracy. As such, it is widely respected. As I have said, I feel very honoured to be one of its members.

To be Chairman of this body is one of the most responsible appointments that the House can offer, and it requires a competence no less than that of any Secretary of State. That has been the tradition of the Committee, and our present Chairman has proved that he can fulfil these demands with unruffled ease. He approaches this task in a traditionally English Way, at least as far as his manner shows. He conducts our inquiries in a very gentlemanly fashion. His manners are, of course, perfect, and no civil servant need ever fear that he will not be questioned and listened to in an atmosphere at least as friendly as that in the Reform Club and quite the opposite of that found when a person is summoned to appear before the Stewards of the Jockey Club. But the accounting officers and the Departments should not be deceived by appearances and the quiet dignity of Committee Room No. 16. The Reports can leave them in no doubt about the serious attitude with which the Committee and its Chairman approach the task of watching their affairs on behalf of Parliament and the people.

It is our duty to examine the efficiency of the Government machine and to make recommendations. A member of the Committee could easily be over-awed and even overpowered by the senior men and women of the Civil Service, who come before the Committee well briefed and well backed up by advisers. They pack the room. These senior people from Whitehall are used to answering and even advising Ministers. On the other hand, a member of the Committee could, if he were so inclined, resort to the rough tactics of bullying and scorn that are easily picked up in this Chamber. I have seen very little of either of these tendencies in our Committee. However, to guard against the first—being over-awed—requires a certain amount of application and reading, while to guard against the second requires a certain amount of understanding and respect. That is certainly present on the Opposition side of the Committee.

It is Parliament's job to ensure and to encourage the efficiency of Departments. I use my words advisedly—to encourage, as well as to ensure. The PAC can best do this by putting the responsibility for achieving efficiency firmly where it belongs—with the Departments.

I agree with the comment made some three years ago by that distinguished civil servant, Sir Richard Clarke, who said: The responsibility for this must be riveted on the Departments, and audit is one of the Permanent Secretary's main arms for this purpose. The auditor should be his ally, and not his arraigner and inquisitor in public when some weakness is discovered; the higher management should be trying to find weaknesses, not being criticised in public when weaknesses are found. Those are the views of a civil servant, and they sound like them, but to my mind they illustrate the best relationship that should exist between the Executive and Parliament—the best we can attain; perhaps perfection. Parliament must always be watching this kind of relationship, because we do not intend to have a cosy one. Both sides should be seeking ways to achieve better government, rather than one side trying to defend itself while the other side makes sport of the attack.

I believe that the PAC can enhance its present achievements by pursuing its course as Parliament's auditor. This is a single but vital function in our system of government. Some argue today that we are the Committee that is for ever shutting the stable door after the horse has bolted. I do not agree. The whole pur- pose of our audit is to find weaknesses and to get the Government to put them right. We are not only looking backwards; we are using our past experience to guide us in the future.

I think that it would be wrong to consider merging the PAC with the Expenditure Committee, as some have suggested. Each has a different function, and to my mind they should be separate and distinct. I regard the Expenditure Committee as an important new arm of Parliament's power to examine and check the Executive, but it should not be confused with the singular and concentrated attention of the PAC, which stands as the guardian of the nation's efficiency in the management and expenditure of what I have termed already as the people's contributions.

I do not wish to detain the House any longer, Mr. Deputy Speaker, and I hope that you will forgive me for taking a lead from my right hon. Friend the Member for Taunton in philosophising a little towards the end of my speech.

6.29 p.m.

Mr. Geoffrey Pattie (Chertsey and Walton)

It is with some trepidation that I have sought to catch your eye, Mr. Deputy Speaker, because until now the standard of contributions to the debate has been uniformly high and because I cannot speak with the authority of someone who has been a member of the Public Accounts Committee. That means that it is denied to me to make any suggestions about the further development of this Committee. All that I intend to do is to content myself with commenting briefly on two items that are reported on in the Fourth Report. They are the Chieftain tank engine and the bulldozer kit.

I am not singling out these items because they are necessarily the worst excesses to which the PAC has drawn attention—although, goodness knows, they are bad enough—but simply because I have a certain interest in and a knowledge of defence matters.

The fantastic story of the Chieftain tank engine is proof of the old adage that truth is stranger than fiction. It reveals a state of affairs in Ministry of Defence procurement that would have failed Marlborough and Wellington. The engine took 17 years—from 1957 to 1974 —to develop. As I read the verbatim reports of the Committee sittings I had to try to keep a balance between horror and suppressed hysteria. At times I could almost hear the voice of the late Gerard Hoffnung intoning some of the comments. At the beginning of the first sitting at which the Committee considered the Chieftain, General Sir John Gibbon set out exactly what had happened. He said: What happened in this case was that we placed two design studies, one with Rovers and one with Leylands, in 1955. That was all part of a co-ordinated plan for the design and development, and eventually the production of a new tank. We did it in that way because we wanted to exploit the previous experience in engine design of the Meteor petrol engine which had been used in the Centurion tank, the predecessor of the Chieftain tank, and a Leyland design which would be a multi-fuel engine based on the conventional diesel engines of that time. Both those approaches failed, and, of course, all the time that they were failing the design of the tank hull was going ahead and the design of all the things that would have to go inside he tank hull was also going ahead. By the time we got to 1958, when it was decided to adopt the opposed piston two stroke engine, the shape of the Chieftain hull was becoming fairly firm. The space available for the engine, when everything else had been taken into account, pointed to a tall and a narrow engine, which in fact, very luckily, exactly suited the shape of the opposed piston type engine … I think that it is probably not quite fair to say that we had to make an engine that fitted into the tank. Of course, if the engine had not fitted in and we had had to re-design the tank and perhaps make it rather bigger, it would have been heavier and we should have had to take much longer over the design of the hull itself. It seems that the Ministry discovered project managers some time in 1967, though that sort of management expertise had been known to the rest of industry for several decades.

The problem facing a Committee examining that kind of case, where the project has gone on for such a long time, is the recurrence in the evidence of the phrase "I was not there at that time, I am afraid." The witnesses, however expert in their own right, often have to refer back—in the Chieftain case, as much as 15 or 16 years. Not surprisingly, they cannot directly account for what went adrift.

The amazing saga continues. An engine was chosen for the tank—one that had not been used in fighting vehicles before, and then, piling horror upon horror, a decision was made to go ahead before it had been proved in trials or there had been further examination. Sir John Gibbon was asked whether the decision in 1963 could be justified by the military prognostications at the time vis-à-vis our relationship with the Warsaw Pact". He replied: I believe that I should take exactly the same decision in those circumstances as somebody did in those days, in that the British Army needed a new tank and needed it as quickly as was reasonably possible. Any hon. Member, whether or not he had knowledge of military affairs, would also believe that it would be useful if the tank actually functioned. It is all very well asking for it quickly, but if the engine does not work it will not be a great deal of use, whatever may be the balance of armaments between the Warsaw Pact and ourselves. I found that answer curious.

Reading between the asterisks, as one must on these top-security matters, I became aware of the export success of the Chieftain. My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) asked about that in the Committee. The export success has been considerable, but there is a sad postscript. It was once hoped that the tank, or a derivative, would be a main contender for a NATO standardised tank. It now seems fairly obvious that in about a year the decision will be made between an American tank, known as the XM1, and the German Leopard II AV. Whichever is chosen will obviously be suitable for the United States Army and the whole of the NATO forces, and it will go right through the 1990s. By then, the Chieftain will be totally obsolete. That will mean that the part of our defence industry building tanks will be producing a foreign design on a subcontract basis. The Public Accounts Committee can look at a series of terrible mistakes, as it has done here, and see what are the consequences for the United Kingdom's export opportunities.

The Chieftain tank bulldozer kit makes a little story all on its own that bids fair to be a script for a horror film. It would probably not be accepted by the television stations, because it is too farfetched. The kit was approved in 1962 and production started eight years after the project began. The problem seems to have been to fit the kit on to the front of the tank. The Military Vehicles and Engineering Establishment was involved. Sir John Gibbon said: The MVEE at the time were dealing with the main battle tank itself, with the whole family of armoured reconnaisance vehicles and they were also dealing with various logistic vehicles. That was suggested in the evidence as a reason why the Ministry of Defence and the MVEE were incompetent in their supervision of the project. The reason is said to be that they had so much other work to do, yet we are told elsewhere in the evidence that the establishment at the MVEE, although the work load was quite heavy, was about right. It is difficult for the Director of the Establishment to have it both ways.

My right hon. Friend the Member for Taunton (Mr. du Cann)—the Chairman of the Committee—asked the witness about production beginning in 1970. He said: you did not hold a final trial. Was that because the project was already five years behind schedule? Sir John replied: No, I think it was really because they said they had amended all the defects. The Chairman continued: Let us go to paragraph 85. There it is stated that you allowed a month before main production started in order to test one complete production bulldozer so as to eliminate minor snags, but those tests, of course, showed that there were, in fact, some pretty extensive faults. Why was not production stopped at that time? A little later he asked: One of those faults—I can appreciate that they were thought to be minor—struck me as perfectly extraordinary, if you do not mind me saying so. Why was it that the bulldozer kits would not even fit about 20 per cent. of the tanks? We are talking not just about incompeence but about monumental incompetence. Sir John's answer was: The point about this is that what was arranged to be done was that these bits of bulldozer kit should be fitted to the two towing eyes which are on the front of every tank so that it can be recovered from the battlefield. The incompatibility between the towing eyes is only a quarter of an inch and it is a perfectly simple matter to chop them off and re-weld them on again. But the real difficulty about this was in the thickness of the armour plating, because as it comes from the foundry it can vary by up to a quarter of an inch. This is an amazing story. I regret that this Report is not likely to be widely read outside the House. I hope that this debate will help to draw more attention to it.

A little later on the Report says: In this instance, I think that the MVEE probably ought to have spotted the fact that the two towing eyes on the front of every tank had to be manufactured to exactly the same distance from the top of the nose on the plate on the front, so that one could fit this bit of kit on. In other words, it would have been a good idea if they had worked. The Report goes on: The other modifications that are required, I think, are just the hazards of doing something new, and it is new to try and put a power pack on the outside of a tank, on the mudguard. This is a pathetic story, which gives me little confidence in the Ministry of Defence or the MVEE. My hon. Friend the Member for Canterbury (Mr. Crouch) said that it was not unknown for civil servants, put into this kind of situation, to say, "It was not us, it might have been the contractor." To be fair, there is no question of individual alibis here. Everybody has an alibi. The blame could not be apportioned to anyone. Not only is there no control over these projects; it is not possible to determine, at the end of over 17 years for the engine or eight years for the bulldozers, who was to blame. That is some measure of the sort of competence displayed.

In the cold, hard world of outside industry this would certainly have led to people being dismissed. I hope that some service has been performed in drawing attention to this small but important part of the Fourth Report. I have been most impressed by the standard and quality of all five Reports and the way in which they were introduced by my right hon. Friend the Member for Taunton.

6.42 p.m.

Mr. Robert Cooke (Bristol, West)

I pay tribute to my right hon. Friend the Member for Taunton (Mr. du Cann)—"the terror of the Departments", as I think he has been described. I cannot give the House as good an example of "Hoffnungery" as that given by my hon. Friend the Member for Chertsey and Walton (Mr. Pattie). However, that gives me the peg on which to hang some brief remarks about the British Museum publications to which my right hon. Friend referred. He did something to put in perspective what has emerged from the work done by his Committee.

There is no doubt that the British Museum was guilty of technical transgressions in its efforts to improve the services that it could give to the public by means of publications and other things produced in the Museum, such as replicas of exhibits. The Museum found itself with an archaic system. It wished to set up a properly organised company on commercial lines, so as to be able to cope with expanding demand. I am not sure whether the Public Accounts Committee discovered this, but the old system was costing the taxpayer something like £100,000 a year, much of that hidden in departmental Votes. That helps to put in perspective the technical transgressions discovered as a result of the Committee's investigations.

Under the old system it was quite impossible to keep a proper check on what was going on. The new system was brought in to impose a proper financial discipline. The Treasury accepted the proposal on condition that there should not be any subsidy, open or concealed. The bone of contention was whether there was a concealed subsidy about which the PAC should have been informed, because as a result of its investigations it discovered certain things that could be construed as concealed subsidies.

I should say that this new company had to cope with problems as they existed. It had to take over the stocks of books and other materials, going back to Mr. Gladstone's day. It was difficult to know how to value these, although their cost—or the figure at which they had "stood in"—I think that is the commercial term—to the Museum was of the order of £300,000. If that had been properly funded the annual cost to the taxpayer would have been considerable. Nevertheless, a bargain was eventually struck and the new company had to pay £182,000 for the stocks, which included publications of an important nature but of somewhat limited appeal.

Some of these stocks were in large quantities, as a result of over-optimistic printing by the Stationery Office long ago. The taxpayer got £182,000 from the Museum—not from public sources—before this company was allowed to be set up. As a result, it found itself with no working capital. It was difficult to get it oft the ground. This is where it transgressed technically. It is suggested that it did not pay a proper commercial rent for the premises that it got from the Department of the Environment. It could now be argued that it came very near to that, and certainly, with the present rents obtainable, what it is paying is probably right.

Another matter in which it got involved was the agreement that certain salaries which should have been charged to it should be deferred. The Auditor General strongly disapproved of that, and of the alleged rent subsidy, and referred to them as covert subsidies. That is why the PAC was involved, rightly. Everything has to be properly scrutinised.

As a result of operations starting in this somewhat unpromising fashion, in the first 17 months of trading the company made a net loss of £17,000. This was after meeting all the initial expenses of setting up the company, absorbing the massive increase in all costs during the period, repaying the Museum the whole of the salaries bill, together with on-cost for superannuation and administration, and paying rent on accommodation at an annual rate of over £40,000. By the end of the period, trading operations had achieved a break-even level and in its second financial year the company expects that it will make a modest net profit.

While, obviously, any transgression of the rules laid down by the Treasury has to be looked at carefully and pronounced upon—because it is a serious matter—it can be said that the result of what has happened is satisfactory from the point of view of the taxpayer. The future is indeed promising. Further finance can now be obtained from banks at normal commercial rates without pledging the credit of the Museum. The turnover in the materials dealt with is two and a half times up on what it was at the outset.

There are other great institutions which find themselves in a straitjacket because they have to work under an archaic system. The Stationery Office deals with publications for the Victoria and Albert Museum, with the result that some splendid but little-read publications have been published in enormous quantities. At the same time, many catalogues that should be produced are not available. I instance the case of the wrought iron collection, which is the finest in the world, and which has no catalogues. I believe that greater flexibility within the Victoria and Albert Museum would produce such things.

There is a domestic point here, too. The House of Commons' own bookstall, despite the help of Mr. Speaker's Art Fund, is, if not hag-ridden by old restrictions, certainly inhibited in indulging in the sort of activity it ought to indulge in. There are only a limited number of souvenirs, and other things available. Probably, in the light of the PAC investigation, we should follow the line of the British Museum.

I pay tribute to those who have given their lives to the service of the Museum and who are, perhaps, unfamiliar with the workings of the PAC and have sent for what are called accounting officers. They are not always the people who know, or, perhaps ought to. They are not the people who have the day-to-day management of some of the things that the PAC wants to investigate. If the Committee had not had to work by Gladstonian rules it might have been able to discover the full facts from the appropriate Museum officer.

6.50 p.m.

Mr. Peter Hordern (Horsham and Crawley)

First, I should like to thank my right hon. Friend the Member for Taunton (Mr. du Cann), who introduced the debate, and to say what a pleasure it has been to serve on the Committee under his Chairmanship. I have been on the Public Accounts Committee for some time. My right hon. Friend not only gives every hon. Member an opportunity to ask all the questions he wants, but the spirit of the Committee is always cordial to those officers who visit us. It is an extremely harmonious Committee.

The briefing that we receive from the Comptroller and Auditor General's Department is excellent. When I was a member of a parliamentary delegation to Australia some time ago I was asked about the work of the Committee, and Members of the Australian Parliament heard with envy that we had very thorough briefings indeed; I understand that Members of one or two of the State Parliaments have no assistance from technical briefings of any kind.

Like my right hon. Friend, I want to philosophise about the Public Accounts Committee and the nature of its work. I say this now, without any particular surprise, but it should be remarked that in this debate at present there is not a single Member on the Government side, except two on the Front Bench. I cannot say that our own Benches are thickly populated, and yet when one reads the newspapers one sees there is a great deal more interest now in the work of our Committee and Sub-Committees. I mention in particular the Expenditure Sub-Committee concerned with Treasury matters and monetary policy and the one which is now examining Chrysler and which earlier wrote an excellent report on British Leyland. These reports have rightly received attention and notice. They are contemporary, well written. The Sub-Committees are able to call upon expert advice and the questioners are clearly well briefed. The reports they produce are of wide and general interest.

The Report of the Public Accounts Committee land with a thud at one's home during a recess. They are not always read the following day, as perhaps they should be, and a long time goes by before they are debated in the House. They are concerned with affairs that took place at least one or perhaps two years ago. Often, assurances have been given in a friendly way that various things that have gone wrong will not go wrong again. They are reports couched in very good language, but ultimately they are concerned with good housekeeping. I am not saying that the issues are not important and that very large sums of money are not involved, but they are instances of a large Government expenditure machine.

No political party in Government can ever manage affairs so that there would never be administrative mistakes of the kind we consider in the Public Accounts Committee. That is because of the very size of the Government machine itself. Primarily our debates and reports are concerned with specific things which have gone wrong. That is the purpose of the Committee. It is our historic rôle and I have no doubt that the purpose is served very well. It is an ancient rôle and one which Mr. Gladstone envisaged.

However, I believe that it is time we tried to extend the rôle of the Committee. I do not mean in a management sense, although this may be what auditors and accountants would advise a public company to do. Certainly, they would suggest it to a company like a Government machine which is grossly swollen and unable to know from one day to another what its cash position is or even to assess it. Such a company would have had its management or advisory team to advise it on how to alter its affairs. We are not equipped in this House, however well-briefed we might be, to manage and advise on the affairs of the Government machine in that way, but we can carry out a much more supervisory rôle on the way in which the Government machine is working. I should like to give some instances of this and the way this could be practically managed.

I was interested to hear my right hon. Friend say—I think he did—that the system should be changed. I do not know quite how, physically, the system could be changed. Perhaps we could take to ourselves or be given further powers under which we could examine the Government machine on contemporary policy in much the same way as the Expenditure Committee examines Government policy. The rôle I seek for the Committee is one of overall surveillance. We have our own civil servants and we should be able to exercise surveillance. My right hon. Friend has said that we should be given these powers.

Technically, I see no reason why we should not take them ourselves if we want them. It is our Committee, responsible to the House, and the Comptroller and Auditor General's Department is responsible not to the Government but to the House. If we feel very strongly about the matter I see no reason why we should not have all-party conversations and debate a motion to discuss the rôle of the Public Accounts Committee in the future. It may not even be necessary to have a debate on the Floor of the House. If there is, as I believe, a greater interest in the affairs of the Public Accounts Committee and the Expenditure Committee than there has been for some time, there is no reason why we should not table a motion and vote on it if necessary.

I guess that no Government would particularly welcome that line of argument, but it seems much better that back benchers of both parties should be properly briefed about the activities of Government Departments. Without having power to change policy, the Committee could at least bring to common attention what is happening in the Government machine itself. What are the effects of Government policy? It lies in our hands to bring about a change, and I believe that public opinion is on our side. We should be prepared to take some such action.

The PAC spent some time considering the computer programme of the Department of the Environment for vehicle excise licences. My right hon. Friend the Member for Taunton has told the House something about how the programme overran its costs. However, we were never able to ask what the cost would have been if an entirely different programme had been adopted. We were unable to do so because it has been Government policy, laid down by successive Governments for many years, that the Government of the day should support the computer operations of one particular company—namely, ICL.

That is a perfectly reasonable and proper decision in respect of hardware, but software is a different matter. Software can be purchased separately. The PAC should have been able to establish the cost of an alternative softwear programme offered by an agency or another manufacturer. In fact, the Department told us that it was not even empowered to find out the alternative costs of another programme.

We are forced to adopt a certain programme because Government policy provides that we must back only one company. The PAC was unable to determine the effective cost of the operation or the alternative cost. That is an operation that is carried out in every civilised country in the world, but we cannot ask or be told. Apparently no one knows how the operation is carried out in other countries, or what the cost might be.

Another matter which is of contemporary interest is the aid that is given to the shipbuilding industry. Over the years aid to the industry has been given by successive Governments, and ever larger sums have been voted. The Govan undertaking was expected originally to be given £35.3 million over five years in constant terms. That is now what is called "funny money". The Department then told us that the figure had escalated to between £50 million and £60 million. That is what we were told during our proceedings last year. There are 5,000 workers at Govan, so that means that the Government are paying £10,000 per head.

We also looked into the affairs of Cammell Laird. We were told that modernisation was expected to cost £32 million. I understand that the figure is now considerably higher. Cammell Laird has 5,400 employees. That means that aid has been given to the extent of £6,000 per head. I forget the figures for Harland and Wolff but I believe that they are even larger.

As a Committee we should not only make these calculations but we should be able to ask the Department for its alternative ideas. Is it sensible to continue giving aid to shipbuilding and ship-repairing yards when they are engaged in what is necessarily a declining market? Is it sensible to keep people in the same job over an extended period merely to keep them working? I have never heard of any discussion on this matter and I believe that it should take place. As time goes on we are getting into an even greater mess.

Aid has been given to British Leyland and to Chrysler. I believe that the aid to Chrysler works out at about £10,000 a head. What will be the aid given to every person working for Alfred Herbert in Coventry? Enormous sums have been given to heavy industry, but is that the best way in which the money can be spent?

It could be argued that every person who has received that sort of aid would have been much happier to have been offered the money personally to enable him to move to a part of the country where employment is being offered. That might be one way of meeting the problem. Another method might be to improve the Government retraining centres so as to make them more efficient.

That is a problem in itself. When the PAC examined the retraining centres it found that it has been the aim of successive Government to increase their capacity to 100,000 men. I think that they now have a capacity of about 40,000. We were told by the Department of Employment that 30 per cent. of the places at the centres are not even taken up. It seems that 30 per cent. of those who do take up places drop out after a very short time. On further questioning it was discovered that, although they receive some money to attend the centres, the difference between unemployment benefit and the rate that they are paid for attending a centre is only some £5 a week. What sort of differential is that? It would be more worth while to spend more so as to give much more money to those who attend the centres. If they were paid more there would be an incentive. However, that was not a policy that we could discuss although it is something that the Department might like to consider. There was no debate or cross-examination.

I turn to one particular instance which is what might be called a vignette of what has been going on for a long time. It is an old-established practice that exists over a wide area. I have in mind the overseas aid fund of the Department of Overseas Development. Apparently we have a loan outstanding to Iran of some £2½ million. That loan has been outstanding for 20 years. The money was advanced because 20 years ago Iran was a rather under-developed country. When we asked whether the matter might be put to the Iran Government, that it might be suggested that they consider repaying some of the money, bearing in mind that conditions have changed over the past 20 years, we were told that that would be creating a most undesirable precedent.

Things have changed a bit in the past 20 years. Iran is no longer poverty-stricken. It is not in the first rank of countries which are to be helped considerably by that sort of sum. We should look at these matters in a more commercial sense even if not in a completely commercial sense. We should negotiate with Iran and ask the Iranian Government whether they might possibly speed up the repayment of this money. The Department's reaction was "Oh, no, that would be creating a most undesirable precedent".

There is a need to consider the rôle of the PAC and to consider whether there should not be much more active supervision of the Government machine. I give one more example that is inherent in what has happened over many years in the growth of the Government machine. We are about to see the Public Expenditure White Paper. I have no doubt that its publication will be followed by serious efforts in various Departments to cut out services that are very costly or have grown very costly in recent times. It seems that programmes are the first things to be considered and that the provision of services is the first thing to be cut.

In my constituency I know that discussions are taking place about the closure of one hospital, and possibly the maternity unit of Horsham Hospital. No one seems to put to the Department before the cuts are made the question "What about the size of your administration?"

In the health service between 1964 and 1974 the number of administrators has risen from 48,000 to 72,000. That was before the reorganisation of the service, so I dare say the number is much higher now. In the same period the number of doctors has increased from roughly 50,000 to 60,000. In considering cuts surely the people whom the Department should consider first are the administrators, not those who provide a service to patients and the general public.

This morning I heard on the radio an interview with some steel workers. They were asked for their reaction to their jobs being at risk. Their comment was "If we have to go, why should not some of the extra administrators go as well?" This seems to be the last aspect of Government expenditure to be discussed. The number of administrators has grown in every sector of Government. This, too, is a matter that should concern us deeply as a House of Commons, and perhaps we should pay more attention to that matter than we do in the Public Accounts Committee.

I say with confidence that the work of the PAC will grow. I discern a growing interest from both sides of the House and also from the public that control must return to the House of Commons, as was the case many years ago. The reason why our debates are so ill attended is that we concern ourselves too much with petty details about past expenditure and not enough with the current control by the Government and the Government machine. I believe that that day will shortly change, and I shall be pleased when that happens.

7.10 p.m.

Mr. John Nott (St. Ives)

I am grateful for the opportunity to intervene briefly in the debate, as Parliament is engaged today on its traditional and perhaps one of its most important functions. Since this debate on the Reports that we have been considering has been conducted, like the majority of our work in Parliament, in a non-party spirit, I doubt whether our proceedings will be very much reported. Nevertheless, the content of the Reports, which are very well presented, touches on subjects that are often much closer to the interests of ordinary people than anything that emerges from some of our better-publicised but more theatrical proceedings, such as the fatuous episode that we have twice a week, called "Prime Minister's Questions".

As the power of the State and the size of the public sector increase remorsely and impinge more and more upon people's private lives, so the need for Parliament to provide a check on extravagance and waste grows. I shall resist the temptation to talk about public spending generally, because we are concerned today with that efficiency of the public sector. I hope that we shall take the opportunity to have a full two-day debate on the White Paper when that document is published.

I agree with my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) that these debates on public spending and on PAC Reports take place far too long after the Reports appear. It would be much more effective if all Governments—and the Conservative Government was also responsible for this habit—could bring forward these debates much sooner after Reports are published.

Before I deal with some of the interesting matters raised in this debate, not least those concerned with the future role of the PAC, perhaps I may echo the praise already expressed about the work conducted by the Committee. Looking through previous debates on such matters, I believe that the eulogies made in the House about most Select Committee publications can be a little overdone—and indeed are sometimes overwhelming. I take the view that we are spawning more Select Committee and Reports than are good for Parliament. But there cannot be any doubt that the PAC, as our senior Committee, is of overriding importance and that the considerable amount of work that accompanies its deliberations reflects great credit on all its members.

I join my right hon. Friend the Member for Taunton (Mr. du Cann) in thanking the Comptroller and the Auditor General, the Treasury Officer of Accounts, and the Northern Ireland Comptroller and Auditor General and, all the other officials, for the great dedication with which they conduct their work. May I, as somebody who has served, albeit briefly, on other Select Committees, also say that we owe a great deal to hon. Members for the amount of time and energy they devote to this work. It makes nonsense of those superficial measures of an hon. Member's conscientiousness, namely, the number of Questions asked and the number of Divisions registered.

Mr. Pardoe

Sour grapes.

Mr. Nott

The hon. Member for Cornwall, North (Mr. Pardoe) says "Sour grapes". My Division record was not as good as his in the last Session, simply because I did not vote on frivolous matters, as he did.

I know that the House will join me in recognising the great courteousness, efficiency and diligence that my right hon. Friend the Member for Taunton displays in the many roles that he performs in the House. He is an admirable Chairman. I cannot speak from personal experience of his chairmanship of the PAC, but if he conducts its proceedings as well as he handles his other chairmanships, I am sure that everything, said of him today is well deserved. He is greatly respected on both sides of the House, and he made an excellent speech.

I turn to rather more controversial matters. It looks as though I shall have to be the person who stirs up the debate a little. I hope the House will forgive me for that.

I hope that the retiring Comptroller and Auditor General, who has had a long and distinguished career and who is known widely for his record and reputation, will have a happy retirement, indulging in a little gardening but remaining active. But I should like to comment on the appointment of his successor, whom, unlike Sir David, I have the privilege to know. I served briefly in the Treasury while he was its Second Permanent Secretary, and I believe that Sir David's successor is a man of the highest integrity and intelligence. He will come to the post well equipped to prove and investigate the Whitehall system, which nobody can know better than he as the official in charge of public expenditure.

But I must say of his appointment—I repeat that this has nothing whatever to do with the individual personally—that I doubt the wisdom and propriety of a senior Treasury official moving directly to this post. Looked at from the higher reaches of the Civil Service, it must seem appropriate and sensible for a gamekeeper to become a poacher, but I think that it reflects slightly on the status of the Comptroller and Auditor General's office if he comes to the post straight from the Treasury.

I say for the third time that this is meant as no reflection on the individual concerned, whom I greatly admire. However, I believe that we should consider in the future whether an appointment should not be made from outside the Civil Service—perhaps a senior accountant of international repute. Such a gentleman would not understand the system and would need support from those who did understand it, at least in the early part of his career, but he would be seen to come in from the outside and would be totally detached, in his friendships and background, from the Departments that he would be investigating—independent in a way that must be impossible if the appointment is made directly from those working within the system.

If I may take an analogy, there would be some questions raised if the retiring Finance Director of ICI immediately became its auditor and was responsible for preparing the ICI accounts. It must be the case that people working in the Civil Service develop loyalties and friendships in that role. My own experience leads me to reject the outsider's notion, much propagated in the Press, that Treasury officials are responsible for many of our economic failures. I believe that if the failures of Government are to be laid at any door, it is at the door of No. 10, and around the Cabinet table, in a failure of political will, and not in the quality or impartiality of advice given to Ministers.

I am sure that my right hon. Friend the Member for Taunton and the Financial Secretary to the Treasury would agree with me that Treasury officials and those responsible for this work are some of the ablest men in this country. I say this only to maintain a proper balance in my criticism of the appointment.

I come now to some of the comments made by my right hon. Friend the Member for Taunton and other hon. Members about the wide variety of matters in the Reports. I have read all five Reports and do not want to go into these matters again. They have been very thoroughly dealt with in the debate. I listened with particular interest, naturally, to the comments on the hospital building programme, because my hon. Friends the Members for Folkestone and Hythe (Mr. Costain) and Canterbury (Mr. Crouch), and the hon. Member for Oldham, East (Mr. Lamond) have an enormous wealth of experience in these matters. It was very interesting to hear their remarks. I was amused at the comments of the hon. Member for Oldham, East about the Inchinnan Bridge and what would have happened if no money had been collected instead of the pound or so that was taken during the year. Like him. I doubt whether the scandal would have been discovered.

A number of comments were made about the collection of the revenue, in particular VAT. My right hon. Friend the Member for Taunton will know, as an ex-Financial Secretary, that when a Minister tries to reduce the number of his staff in Revenue and other departments, he is told by civil servants: "No Minister, we cannot reduce the number any more because it is the duty of the Revenue to collect the taxes laid down by Parliament. If we reduce our staff, we may be open to criticism by the Public Accounts Committee." I think the Revenue departments already have an obsession with evasion. In the United States there is a self-assessment system, and if anyone fiddles his tax he gets a massive fine—far greater than anything in this country. While our revenue is still being collected in this detailed, specialist, individual way, we shall never get the number of Inland Revenue staff below 80,000, or whatever it is. Any time we try to reduce the size of the bureaucracy, we shall come up against: "Oh no Minister, remember the Public Accounts Committee." We have to get the balance right.

I am glad that my hon. Friend the Member for Bristol, West (Mr. Cooke) mentioned the British Museum's bookshop. I know that this has caused a certain amount of distress and I can see how people in the Museum who are genuinely trying to expand the activities and make them more commercial find it hard to understand why they have to be crawled over by accountants. In our various ways, we are all crawled over by accountants, and it is not always something that one really wants. I echo my hon. Friend's remarks about the enormous integrity of that great institution, and I am delighted to hear that the bookshop is doing very well. I know it will prosper even more in the future.

My hon. Friend the Member for Chertsey and Walton (Mr. Pattie) referred to the Chieftain tank. Of all the items criticised in the Reports, I think the Chieftain tank was just about the worst. Without going too deeply into the matter—and I speak from memories of earlier times—I say that we want Ministers in the Defence Departments to keep a grip on the procurement executive and the staffing of the defence effort. The Ministry of Defence employs overwhelmingly more civil servants than does any other Department. I cannot go into what one hears about productivity in the ordnance factories and the dockyards, but I listened with interest to the comments of my hon. Friend.

I was also very interested in the comments made about the future rôle of the Committee and the monitoring of the efficiency of the public sector. I have to start with our Cabinet system. Whatever may be the virtues of the system, the Cabinet itself suffers from a number of deficiencies as a final political authority which presides over the Administration. The Cabinet is comprised of individuals who, while primarily intended to represent the general interest, seem traditionally more prone to support the interests of their own Departments. This is not altogether surprising, since the political success of Ministers has traditionally been measured by their ability to extend the activities of their departments rather than contract them.

The very size of the Cabinet makes it difficult to maintain a high degree of consistent common purpose. When we take into account the fact that Ministers have a short tenure of office and a limited experience of their Department when they arrive, and have to cope with what amounts to a shareholders' meeting in virtual perpetual session—the House of Commons, the Press and television—it is remarkable that the public sector is not more inefficient than it is.

There has been some debate about one of our Select Committees recently and, while the House of Commons must never abandon its rôle as a critic of the Executive—this is where the Public Accounts Committee is enormously valuable—it is important for us to exercise a certain sense of self-discipline before allowing the chairmen of every sub-committee of every Select Committee endlessly to call upon civil servants and Ministers to attend. The Civil Service has a job to do. It is grossly overloaded in many areas, and there is a limit to the amount that Ministers and civil servants can be called upon to do in the House.

Our system undoubtedly places enormous responsibilities on senior civil servants to implement the decisions of Ministers. No amount of brave decision-taking and political will can be effective unless the Permanent Secretaries of spending Departments, where all the expertise and knowledge resides, have a real grip on their Departments. Looking in from outside, and having experienced it briefly from the inside, I have doubts. The Public Expenditure Survey Committee mechanism has proved a useful tool for measuring programmes but a total failure in controlling them. The manner in which ongoing operations are continually brought back into the five-year programme, year by year, without a sufficiently full re-assessment of their con- tinuing need, is a major failure in the existing system. Paragraph 19 of the Fifth Report says: The Department further stated that schemes were updated each year for the purpose of preparing its Annual Estimates and Public Expenditure Survey forecast, but not normally for the purpose of reassessing the merits of the schemes. Because of the unchanging relationship between costs and benefits the Department took the view that if a scheme were acceptable when first considered it would remain so even when the estimate was updated. We have a major area here in which the House should play a greater part, namely, the investigation of ongoing programmes which find their way back into public expenditure plans year by year. Such preventive control as the Treasury does exercise seems to be directed more to controlling increases in public spending, particularly capital spending, than to the performance control of ongoing expenditure.

I have to ask just a few questions before I conclude. In doing so, I am giving the Financial Secretary an impossible task and I am not really expecting to answer them all in this debate. But what is going on now about management by objectives in the Civil Service? The Minister was on the Fulton Committee, so he knows something about these things. Is the Civil Service recruiting at the right age, at the right level and at the correct level of experience? We are all conscious that Ministers need specialised knowledge, which is frequently not there in the existing system. This is a particular problem in relation to tax changes when we are hedged in by the problem of Budget secrecy.

What has happened to the staff review? If officers are now being graded by performance, what happens if their abilities and performance are unsatisfactory. How many PARs are being conducted now? I have doubts whether the system of programme analysis and review is working very well. Most important of all, what is being done to focus accountability more and more on people—not just the Permanent Secretaries but those further down the line? Civil Service pay and promotion must be more related to results if a Civil Service career is not to be just as secure as a parson's freehold in a rural parish with only three parishioners.

The Civil Service cannot go on being like that. Why is it that new proposals such as cash limits always seem to have to be thrust into the Civil Service from outside? When I was in the Treasury, discussions were already going on about cash limits. There were protagonists of the idea as early as 1973, but it was not until outside pressure came to be exerted that they were considered seriously.

My right hon. Friend the Member for Taunton referred to the Supplementary Estimates. If we have a much greater reliance on cash limits with a return, to some extent, to the old estimate procedures, a decision to allow Supplementary Estimates will no longer be just a formality. The Supplementary Estimates for 1974–75 amounted to £4.8 billion. The contingency allowances are another farce. In the Public Expenditure White Paper they were put at £150 million for 1974–75, and the final outturn was £2.5 billion higher than the plans. It cannot be right to have contingency allowances, in those circumstances, of £150 million. Of course, there will be changes in policy which will have to be provided for, but successive Governments have used contingency allowances without ever determining whether they are likely to be as great as the likely needs. The allowance is always kept as low as possible, so that the proportion of GNP and other measurements seems low—lower than is really likely to be the case.

When the new White Paper is published, if it contains a new regime of some sort on cash limits, the Public Accounts Committee may well have a vital new rôle to play. Ministers and Permanent Secretaries will have to be far more concerned with the pay roll and the expenditure of their Departments under a cash system than they have been with the volume controls employed in the past.

The financial calendar is nonsense. We must bring expenditure and revenue together. I agree with the hon. Member for Cornwall, North that the Budget and public expenditure must be brought into one. That has been considered before. The problem has always been that there are simply just not enough experienced people to bring these two exercises together. Everyone recognises the need to change the financial calendar. We shall need to do it for EEC purposes, and we shall have to bring ourselves in line with the calendar of the other EEC countries.

We are grateful to my right hon. Friend's Committee. It has performed an admirable task. We are grateful to all those who have worked hard in the Department of the Comptroller and Auditor General and the Exchequer and Audit Department. I congratulate the Committee on bringing forward these excellent Reports which have served the House and the country exceedingly well.

7.34 p.m.

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

My pleasant duty must follow upon that which was exercised by the hon. Member for St. Ives (Mr. Nott), and that is to draw attention to the work done by the Committee, and particularly by its very distinguished chairman. We have been well used to distinguished chairmen of the Public Accounts Committee. That is natural, obvious and clearly desirable, but it is not often that we have had someone with the background and experience of the right hon. Member for Taunton (Mr. du Cann). In his wide range of previous activities he has been an important Treasury Minister, Chairman of the Expenditure Committee and Chairman of the 1922 Committee. To find such a person heading the most senior of our Committees shows the wealth of talent and experience from which the Committee, the Treasury and the whole House benefit.

I pay my tribute to Sir David Pitblado and his staff of the Exchequer and Audit Department for the valuable work they have done, which I have always regarded as essentially allied to the work of the Treasury, presenting as it does a list of those areas where further investigation is required. I look forward to Sir David's successor, Sir Douglas Henley, taking office.

The hon. Member for St. Ives referred to the problems of a poacher turned gamekeeper. He and I and others here are all poachers turned gamekeepers, and some of us have reverted to poaching before once again turning gamekeeper. These are matters with which we are not unfamiliar, and that kind of familiarity is known within the Civil Service. The fact of having a Comptroller and Auditor General who has been the Permanent Secretary of a Department and investigates that Department presents the problem of operating objectively, which might be considered difficult. But perhaps because of the way in which the Civil Service operates it manages to cope surprisingly well, perhaps to the astonishment of those who are unfamiliar with our procedures.

We know that the work of the Comptroller and Auditor General and the Public Accounts Committee rests very strongly on the firm basis of information provided from within Departments. That is the enormous strength of the system, a strength that the House of Commons derives from the Public Accounts Committee. A number of hon. Members—the hon. Member for Canterbury (Mr. Crouch), my hon. Friend the Member for Oldham, East (Mr. Lamond), and the hon. Member for Folkestone and Hythe (Mr. Costain)—have described quite clearly the way in which civil servants prepare for their appearances before the Committee. They have explained the care taken in planning appearance, and even the apprehension which they sometimes show. These invariably indicate the importance of the Committee to Government Departments and Whitehall. I have known of accounting officers who have disappeared for a few days while preparing for their appearance before the Committee.

The success of the Committee's work cannot and should not be measured by the attendance of hon. Members in this House when the Reports are debated, but by the way in which it changes the future of those who appear before it, and changes the way Government operations are conducted. In the past the Treasury had a ritual obsession with candle ends, an obsession which spread to the Public Accounts Committee. For a long time it has been widely recognised that these criticisms are no longer applicable.

I speak as one who served on the Committee for almost six years. Its main concern now is to obtain the best value for money and the use of the most efficient methods of implementing Government policy—and that should be underlined. The Committee must not concern itself so much with policy. If it were to venture into that area the respect in which it is so widely held could diminish and it could become a political football. There is a fair amount of that already. We do not want more of that, but we need greater efficiency in the carrying out of some of the objectives of Government. The test, therefore, is for it to take for granted what the Government are seeking to achieve, and we have to ask therefore, as the Committee regularly asks, whether it can be achieved more economically and more efficaciously. The strength of the Reports before us lies in their conclusions in that respect.

The report on the hospital laundry service in Wales, which was referred to by the hon. Member for Richmond, Yorks (Sir T. Kitson), although it is not of great moment compared with others in the Report, suggests one useful technique which could well be considered capable of wider application. An investigation was carried out which showed that the cost of laundering 100 articles was very much more in Wales than it was in England and Scotland. That comparison drew to the attention of the Comptroller and Auditor General, and consequently of the Public Accounts Committee, a discrepancy which was worthy of investigation. Ratios of that kind are extremely valuable as a management tool and are used to a greater extent in industry. One of the great advantages of managerial control comes from the use of ratios for monitoring performance, and I welcome the extension of that method to the Public Accounts Committee.

The hon. Member for Cornwall, North (Mr. Pardoe) referred to comparisons that might usefully be made. I shall give one or two examples without questioning any particular Department. Some years ago the Treasury published a selection of unit costs in public expenditure, which showed the ratios that were applicable within the public service and the variations that occurred. That selection included prison costs per place, the cost of the police on the basis of the number of policemen in the force and the cost per mile of motorways. The wider use of these ratios could lead to better monitoring and might be worthy of further consideration.

Several hon. Members expressed interest in government aid to industry and the criteria which are applied. By a decision of the House, Parliament has given to the Government some of its powers in respect of the distribution of funds to industry, and it is right that the Public Accounts Committee should concern itself with the way in which those funds are used. I note from the Report that the PAC will continue to interest itself in this matter.

I welcome, as did the right hon. Member for Taunton, the use of the Institute of Public Finance and Accountancy. I pay tribute to the increasing expertise of the officers in the Exchequer and Audit Department. I have held in the past that wider qualifications might be thought desirable to increase the expertise, and I have argued for the employment of economists and people with accountancy experience in other areas. I pay tribute to the important work that these officers do and the training that they undergo.

The right hon. Member for Taunton said that the PAC had reported on 35 subjects on this occasion. I understand that it is necessary to draw attention not only to the most expensive items. One learns a great deal about the control of public expenditure even from the investigation of expenditure on the Inchinnan bridge. Certain principles underlie the proper control of expenditure which are not always best brought out by the most glaring examples of failures. They can sometimes best be illustrated by less important matters.

I note what is said in the Reports about VAT. To some degree I echo the words of the hon. Member for St. Ives although I do not go as far as he went in asserting the obsession of the Inland Revenue with evasion. One can easily go too far in the direction of trying to obtain the last element of revenue at a disproportionate cost. It is a question where the balance needs to be struck.

At the inauguration of a new tax it is clearly difficult to get the balance right. I have learnt, and I am sure that Customs and Excise have learnt, from the Committee's Report the methods of control suggested and the monitoring arrangements. That Report is of particular value, but I beg the Committee not to press the question of obtaining the last penny at the expense of a wholly disproportionate cost.

I was asked for certain guidelines on Government assistance to industry, and the hon. Member for Cornwall, North pursued this matter to some effect. The criteria for selective assistance were published in a paper on 12th January and there has been a considerable demand for the paper. As a result, a further 200 copies were made available to the Library. The paper goes into the matter in great detail.

I come to the problems of the licensing centre at Swansea. The right hon. Member for Taunton was right in saying that we need to take account of the new technology that is available to us, and also to have better expertise in selecting a technology to meet given needs. That means that a little more time has to be given to considering the most useful way of applying that technology.

It is only fair to point out that before the new centre was set up the licensing system was rapidly declining in efficiency. There were those who doubted whether it would be able to carry out the greatly increased volume of work. That led to a greater spirit of urgency and, perhaps, a less exhaustive examination of the method of organising the licensing system.

The hon. Members for Canterbury and Folkestone and Hythe referred to their experience of National Health Service hospitals. The House knows of the great experience of the hon. Member for Canterbury in these matters, and his carefully thought out remarks will be of value to anyone wishing to take them further. The comments made by the PAC are valuable. An undertaking has been given to provide for the more adequate preparation of schemes and, probably more important and following the line pursued by the hon. Member for Canterbury, to provide better cost control during the operation of the contract. This is a crucial point which was emphasised by the hon. Member for Folkestone and Hythe. He referred to the difficulties of relaying instructions and his point has been fully appreciated.

The hon. Member for Chertsey and Walton (Mr. Pattie) mentioned the problems associated with the development of the Chieftan tank and the bulldozer kit. I shall refer to the Treasury Minute because it illustrates how well the comments of the Public Accounts Committee have been noted. A number of hon. Gentlemen have quoted examples of the changes which have taken place. On page 15 of the Treasury Minute it says: Examples of this"— that is, the changes— are more extensive training of project managers and a clearer delineation of their responsibilities, standing arrangements for top-level scrutiny of major projects, and a step-by-step approach to procurement. The extensive training of project managers may be the most important change, and that was emphasised by the hon. Member for Chertsey and Walton.

I hope that I shall be excused from engaging in any detailed discussion of the observations of the hon. Member for St. Ives concerning the Civil Service. As he knows, the Treasury no longer has responsibility for most of the matters he raised as they now fall within the province of the Civil Service Department. However, the General Sub-Committee of the Expenditure Committee is conducting what appears to be a fairly thorough examination of the Civil Service Department. No doubt both the the hon. Gentleman and I shall look forward to the result of their deliberations with great interest.

The right hon. Member for Taunton asserted that Government expenditure was out of control. Frankly—especially when my right hon. Friend the Chief Secretary is sitting next to me—I strongly dissociate myself from the right hon. Member's remarks. However, there will be a White Paper on public expenditure and an occasion to debate these matters fully. Therefore, I shall resist the temptation of going into the matter in the way in which the right hon. Gentleman so obviously failed to do.

I shall refer to the problems of discipline. As was pointed out by the hon. Member for Cornwall, North, that problem does not exist in the House in the way in which it used to exist. Parliament grew up on the basis of having on the one hand to raise money and on the other to spend it. Therefore, it was faced with the discipline of doing something it disliked in order to do something which it liked very much. That was the discipline and that is why it became the centre of Government. In my view it no longer exists.

This House is in the process of becoming a spending House and all the speeches and pressures are upon the Government to spend money. There are pressures on the Government not to tax, but those pressures do not come to any great extent to this House. That is what has changed. Perhaps—these are only suggestions—it has something to do with the constituency surgeries where hon. Members are faced with a deluge of people who point out the inadequacies of the spending which is being undertaken in their name.

However, although this discipline has, to some extent, gone from this House, it has not gone from the Executive which has to resolve in the Cabinet Room the problem of the desire to spend and the desire not to tax heavily. The House of Commons had the ability within itself to resolve this matter but it manifestly did not wish to do so. It did not go so far as to state its priority in public expenditure. The Expenditure Committee was set up to resolve expenditure so that those who wanted to spend money on roads would be battling against those who wanted to spend money on housing who would be battling against those who wanted to spend money on education.

When I was the chairman of the General Sub-Committee of the Expenditure Committee I tried desperately to get such committees even to discuss the White Paper. So far from wishing even to discuss the White Paper on expenditure, one chairman wanted to avoid discussing his own subject and instead turn the subcommittee into one which dealt with something quite different.

Mr. Nott

Of course that is right. However, it would greatly assist the House if we could have figures which the House of Commons could understand. The public expenditure figures are extremely difficult to reconcile with the Red Book—Budget estimates. It comes down to the fact that we need to consider expenditure and revenue at the same time.

Mr. Sheldon

I fully accept that a more easily understood version would be of assistance. However, I do not believe that to be the reason why these sub-committees are not involving themselves in the discussion of choices. What mystifies me even more is why the outside bodies are not bringing pressure to bear on the various sub-committees of the Expenditure Committee. Even if the sub-committees were simply responsible for receiving pressures, the road lobby might think it worth getting in touch with the relevant sub-committee. There is a large education lobby as well as a property lobby and in my experience I doubt whether they have ever thought of approaching the relevant sub-committee of the Expenditure Committee. If we could turn them into the pressure groups at least there would be some resolution of the problems facing the House about how it can play a more important rôle in deciding public expenditure priorities.

The right hon. Member for Taunton refered to the need to examine alteration in spending which the Expenditure Committee was designed to do but has never been fully allowed to do. He is right to say that, but it has not been fully allowed to do that by the members of the Expenditure Committee. It is well within its terms of reference, its power and ability, but the members have not elected so to do.

This debate which we hold each Session is not critically important from the point of view of attracting hon. Members to this House. Its work is reflected by the impact it has on those civil servants responsible for the expenditure of public money. This has been a wide-ranging debate, indeed, more wide-ranging than usual. Some fundamental ideas have been put forward by all hon. Members and there will be a great deal of discussion about the way in which we may proceed following the debate.

As a Government Minister, obviously I cannot be closely involved in these matters, but I have said in the past that from time to time I have considered myself more a Member of Parliament than a Government Minister. Perhaps that is one of my personal weaknesses. However, I look forward to seeing initiatives being taken as a result of this debate, initiatives which will lead to the better selection and control of public expenditure in the interests of everyone.

Question put and agreed to.

Resolved, That this House takes note of the First, Second, Third, Fourth and Fifth 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. 6298 and 6286).