GOVERNMENT EXPENDITURE (Hansard, 15 July 1977)

§ Mr. John Moore (Croydon, Central)
I accept and understand that after the excitements of the day, the few of us left feel somewhat like the dregs in a bottle of old wine. However, I start by expressing my appreciation for the presence of the Treasury Bench in response to this brief Adjournment debate.
In examining the development and creation of the Government Press Centre, I am seeking to look at the control or lack of control through Parliament of public expenditure. I am seeking to use the Government Press Centre's creation as an illustration of this. At this stage I want to put on record my very serious thanks to the Under-Secretary of State for the Environment, the hon. Member for Manchester, Gorton (Mr. Marks), who I had thought might be responding to the debate. He has had to bear responsibility for answering many, many Questions that I have put down on this matter for some while.
You might well ask, Mr. Deputy Speaker, why I wish to discuss so small an item as the Government Press Centre as an illustration of the lack of control by Parliament of public expenditure. I think that the reason would be well appreciated by the Minister of State, 1108 Treasury, as he and I spent some time together on the Public Accounts Committee. I think that he would agree with me—and much of what I have to say is very much of a non-political, non-partisan nature—that one of the difficulties one has in discussing public expenditure in the Public Accounts Committee, or, frankly, at any other time in this House, is the sheer vast size of the sums involved. It is extremely difficult to get one's teeth into amounts running into billions. I felt that the Government Press Centre was a place that was of a human manageable size and, given its size, that the money involved should have been debated in this House. I stress that I am not discussing whether there should or should not be a Government Press Centre, and I apologise to those people in the Department of the Environment from the Property Services Agency who have been forced to answer so many of my questions. I simply use the Press Centre as an illustration, though one might ask in the tightened circumstances of our budgetary controls whether we can afford something so grandiose.
In drawing attention to the Government Press Centre, I wish to illustrate two factors. I want to examine the decision-making process of Government specifically in regard to the allocation of scarce resources which we must control through public expenditure provisions. We are not talking about a negligible sum. About £3 million is involved. The second factor I want to examine is parliamentary control, or lack of it, over such expenditure.
On the first point, there was no parliamentary debate at any time on this subject. I am sure that when other hon. Members read this debate in Hansard they will be surprised to know that there is such a thing as a Government Press Centre. The decision about it was taken by the governmental Civil Service decision-making machine, and no information was provided through Parliament.
I am indebted to the Under-Secretary of State for the Environment for an excellent background paper that he provided for me. He attached this paper to a letter dated 20th June. It says: After a great deal of consideration an inter-Departmental Working Party recommended in August 1975 that Lancaster House and 8 Cleveland Row should be used, with the intention that the former Bath Club should 1109 be hired to provide a convenient Press Centre nearby". That expresses the essence of the decision. I accept that the working party saw that a need existed. My concern, from a public expenditure point of view, is that although the need was recognised, the problem of allocating scarce resources was not considered adequately at that time. If that sounds harsh, I believe that that facts will make the point even more harshly
Two kinds of cost are involved in this project—capital costs and running costs. I will not go into great detail on the question of the £1 million-plus that has been spent on capital building works at the Bath Club to make the Press Centre. However, a seven-year lease was signed with six years' usage only. At the end of the lease there will be no contractual relationship relating to those premises. That suggests to ms that the £1 million-plus is to be written off at the end of the period.
I turn now to running costs, and here I rely upon ministerial Answers to Questions. I can say with authority therefore that there was no knowledge within Government at the time the decision was made of the potential running costs of such an institution. Let me quote an Answer that was given to me, which said: Detailed estimates for running costs were not available at that time because precise requirements had not been established."— [Official Report, 15th February 1977; Vol. 926, c. 133.] My conclusion concerning the decision-making process is that, although I accept that the discussion was all about the need for the centre, the resource use and the commitment of the —3 million, which I shall detail later, had very low priority.
I turn now to an area which I regard as far worse, in order to illustrate what I call the charade of parliamentary control of expenditure. This was a new venture, but no attempt was made to seek specific parliamentary approval. If one were very critical, one could say that there was almost an attempt to conceal.
The Library has been extremely helpful to me in my attempts to unravel the background to the allocation of parliamentary moneys. With the Library's help, I have been through all the Supply and Supplementary Estimates going back some years. The only reference which 1110 has any specific relationship to the creation of a new Government Press Centre comes in 1976–77, Class XIV, 1, Appendix 1. Under "General" there is a reference to Conference and Press Facilities, 1977" of £1,300,000. That figure covers "Conference and Press facilities" for 1977. But the figures did not appear at any time in the 1975–76 Supplementary Estimates, and did not appear again with any variation of any kind in 1977–78. That was the only specific reference I could locate, with the Library's help, to the moneys that we are discussing.
A much more serious point arises I make what I might call my ex post factor examination of my attempt to get at the facts. This is really quite frightening I remind the House of what we have been told following the whole series of Questions that I have put down over the past six months. The whole appearance of the scheme gives the illusion that we are talking of something very insignificant, very small and very uninteresting in terms of public expenditure.
I refer again to a parliamentary Answer given to me about the official capital and running costs associated with this venture. I asked what was the "annual expected cost", and in a Written Answer on 8th February 1977 I was told that it was £30,000 per annum. In a Written Answer of 15th February 1977 I was told that under Class XIV Vote 1, the original estimate of expenditure, prepared in October 1975, was £725,000. But by this time it was indicated that £830,000 had been spent. That was a modest increase, not excessive. It would seem, therefore, looking at the two figures that I uncovered in the course of my parliamentary Questions, that we were not talking of anything very massive—£725,000 in capital costs and a modest £30,000 per annum in running costs.
Then I looked at the reality as opposed to the appearance. The reality was deeply worrying in terms of parliamentary control of public expenditure. I shall go through the process and show how the current figure is reached. The original estimate for capital costs at October 1975 was £725,000, although this was never specified in Estimates but authorised 1111 under Class XIV, Vote 1. The expected cost that I was given, although the contract was not completed, was £830,000. That was a modest increase.
The Under-Secretary of State for the Environment, in a letter to me of 30th June 1977, said that the cost had increased. He pointed out that there were extra engineering works needed to the tune of £200,000. The capital cost, therefore, was now up to £1,026,000—an increase of 41.5 per cent.
Having uncovered this, one would have liked to see some kind of recognition of an error, or an apology, but nothing of the sort was forthcoming. I quote again from the Under-Secretary's letter, which points out that As a result of savings elsewhere it is unlikely that overall works costs on the Press Centre will exceed our initial estimate of March 1976 by more than about £120,000. If you are getting lost, Mr. Deputy Speaker, I must say that I was totally lost at that stage. I was unable to reconcile these irreconcilable figures. What were the figures? It seemed that £725,000 had been committed and £830,000 spent. The £1.3 million in the Supplementary Estimates might have had some relationship to those sums.
I turned to the memorandum that the Under-Secretary of State had kindly sent me. I began to see a different figure emerge. The memorandum states: Financial approval was confirmed in March 1976. The hon. Gentleman refers to money spent on the centre at Lancaster House and 8, Cleveland Row. It is stated: £905,000 would be spent on works at the Press Centre". At what stage should we have had a Supplementary Estimate or a specific reference to allow Parliament to discuss changes that were clearly radical and different?
I have been referring to capital costs but what about running costs? I was told in a Written Answer that it would cost about £30,000 a year. I was uncomfortable with that figure. I have some experience in business and it seemed unusual that an operation of such a size could be run in London on such small running costs. After much digging I thought that I had found much greater 1112 running costs and more detail, but the detailed report from the Under-Secretary of State shows that even at that stage I had not uncovered all the figures.
The report states that running costs for the seven-year period total £856,000. I had been told in a Written Answer that the running costs would be £30,000 per annum. An entirely new figure appeared. It appeared that there would be custody services of £15,000 per annum for seven years, telephone and Telex rental costs of £13,000 per annum for seven years, and rates, which most of us realise we have to pay. They had not been assessed but were thought to be £75,000 per annum for six years.
We may also assume that rent will have to be paid. Most of us who run organisations have to pay rent. Let us assume that the rent is not £12 or £10 per sq. ft., or whatever it may be in that area, but £6 because of the work that has had to be done on the premises. On that assumption we have rent of £984,900 for the six years' usable time on top of running costs of £856,000. Therefore, we have a total cost for the six years' usable time of £1,840,900, or £ 306,816 per year, as opposed to the £30,000 that I was told in a parliamentary answer.
The parliamentary exasperation and frustration are further illustrated by two tiny points. However, they may be illustrative of the way in which parliamentary control is regarded. In the column of figures in respect of costs the total is shown as £1.8 million. The figures are not difficult to add by use of arithmetic and they can be checked by a calculator. In fact, the total is £1,910,000. Another £100,000 appears because of poor arithmetic.
The second small point arises under FCO costs. There is £16,000 set against typewriters. I assume that the typewriters are disappearing from the centre as they are not covered in running costs. As the Minister will know, Members of Parliament have to buy their own typewriters. I remember buying one for my secretary. I negotiated as good a deal as possible and was able to obtain a reconditioned machine for £120. A cost of £300 or £400 a machine, which it must be if the total is £16,000, is illustrative of the different way in which we concern ourselves with our own money as opposed to public money.
1113 It seems that there is no parliamentary control. There is a slipshod disdain for parliamentary examination of the details. One wonders where else this may apply.
As I said at the beginning, I thought initially that this was an insignificant matter in terms of the total money involved. But, taking capital and running costs together, divided over the six years' usage of the Governments' Press Centre the expenditure involved means that we are paying £482,483 per annum for the use of it. I should have thought that, if we had had a debate in Parliament on that amount of expenditure, there might have been a degree of criticism about whether that was the right use of resources of that size and scale.
I conclude my remarks with three conclusions which I have reached after this study. First, resource allocation is often determined by officials who thereby diminish our political ability to determine expenditure priorities. Secondly, in the expenditure of public resources, insufficient diligence and discipline are exercised by civil servants. Thirdly, Parliament is not currently exercising control of expenditure and is therefore, for whatever reason, remiss in its prime elective responsibility. I think that the issue becomes clear from this small human illustration of the degree to which we are remiss in those duties.

§ The Minister of State, Treasury (Mr. Denzil Davies)
I have no doubt that the hon. Member for Croydon, Central (Mr. Moore) has raised an important issue. Unfortunately, he has raised it under the heading The inability of Parliament to control Government expenditure", and, although I have heard about the National Press Centre, he will understand this is not really a matter for the Treasury in terms of the detail of the operation. It is a matter for the Department of the Environment, and the hon. Gentleman has acknowledged the assistance which he has received from my hon. Friend the Under-Secretary in giving him the information which has enabled him to compile his arguments.
I am sure that the hon. Gentleman will forgive me, therefore, if I do not go into the details of the expenditure of £16,000 on typewriters. The Treasury has 1114 enough problems on its plate without putting its civil servants into every Department to ensure that not too many typewriters or quill pens are bought.
I turn, therefore, to the basic subject of the debate, which concerns Parliament's inability to control Government expenditure. There, again, this is a matter for Parliament. In saying that, I am not abrogating any responsibility. As a Member of Parliament, I have a very close interest in this difficult topic, as do all other hon. Members. But the responsibility of the Treasury is to ensure the control of public expenditure within the various limits, and over the past few years the Treasury has attempted to tighten its control over expenditure. It has tried to do so through cash limits, which have enabled it to keep a closer control of public expenditure. It has tried to do so through a tighter use of the Contingency Reserve. Again, that is helpful.
But the hon. Gentleman will recognise that, at the end of the clay, items of general global sums of public expenditure are determined not by civil servants but by Government Ministers in Cabinet in the normal PESC exercise which takes place every year. Departments fight for their priorities, and each of them ends up with its allocation depending on how the Cabinet determines priorities. It is then for the Treasury to attempt to ensure, through cash limits and the other controls that it has, to keep them within their budgets.

§ Mr. John Moore
Our difficulty is that at the end of the day only a very little piece of the pie is available to spend through Parliament on the viable projects that we need, because so much has been taken by this administrative action.

§ Mr. Davies
I accept that. I was developing my argument. I contend that Parliament has practically complete control over what the Government spend in terms of the total. Parliament votes money for the Government. If it wishes and if it has the necessary majorities, Parliament can deny the Government funds, and then the Government are unable to govern. So the control is there in the ultimate. But I accept that, when we come down to the smaller and detailed sums, perhaps the parliamentary 1115 mechanism is not sufficiently precise and stringent.
This is not a matter for me, and I would not wish to tell the House how it should control expenditure. Having sat with me on the Public Accounts Committee, the hon. Gentleman knows that that Committee does a heroic job in at least trying to analyse what has happened. It may be that the case he mentioned will one day come before the Committee. That is a matter not for me but for the Comptroller and Auditor General and for the Committee's Chairman. Although it may be a case of closing the door after the horse has bolted, it could be fruitfully considered in the Committee and lessons learned for the future.
This would not deal with the past problem, but there may be a case for extending the Committee's remit. It is interesting to see how other countries deal with such matters. In the United States the General Accounting Office has, at least in theory, a very strong power, and it is equipped with high-powered staff. I say "in theory" because I do not know how it works in practice, which is often different from theory. The Cour de Comptes in France has considerable powers. I do not know whether it works better than our system in practice. There may be a case for an examination by the House of the powers of the Public Accounts Committee to see whether they 1116 can be extended into these areas. The Select Committee on Procedure may be looking into the matter.
I am sure that the hon. Gentleman will agree that the House cannot determine expenditure of £16,000 on the purchase of typewriters. It has enough to do. But perhaps we could develop our Committees differently, and it may be that the Public Accounts Committee would be one means of doing so.
The matter is under continual debate. In our system change often comes slowly. Perhaps this is an area where it should come a little more quickly than in the past.
I cannot take the matter any further. The hon. Gentleman has raised a case that illustrates the difficulty in any modern complex society of any democratic body exercising detailed control over a bureaucracy. Bureaucracy is not necessarily a bad thing, but there is difficulty in controlling detailed Government expenditure. However, I must repeat that at the end of the day Parliament has the authority and the power to control Government expenditure. It can deny the Government money, and if that happens to any Government they must hand over to somebody else.