HC Deb 15 January 1979 vol 960 cc1333-458

[Relevant documents: Second and Third Special Reports of the Expenditure Committee in Session 1977–78.]

4.10 p.m.

Mr. James Boyden (Bishop Auckland)

I beg to move,

That this House takes note of the Eleventh Report from the Expenditure Committee, Session 1976–l77, the Twelfth Report last Session, and the related Government observations (Command Paper No. 7117) on the Civil Service.

Before we begin the debate, I should declare two interests. A very long time ago I was one of the few outside people appointed as a training officer in the Civil Service to develop the recommendations of the Ashton report, immediately after the war. Therefore, I have been concerned with the training of civil servants, and training generally, for a long time. When I first became a Member of the House I was interested in this subject and I followed that interest when I was a Minister.

My second interest is that I am currently parliamentary adviser to the Inland Revenue Staff Federation and in the years that I have been doing that job I have come very much to understand how so often this House wills the end but not the means. This used to happen once a year with the Budget. It happens more often these days and certainly—when the House is seeking greater surveillance over public expenditure—it must bear in mind those who have to carry out its instructions. Every year over the past few years there has been considerable misery and trouble for the staff of the Inland Revenue in carrying out its duties. I am sure that the hon. Member for Chelmsford (Mr. St. John-Stevas), sitting on the Opposition Front Bench looking very wise, will remember an incident not very long ago when his own party, by carrying a motion, helped to put a considerable burden on the Inland Revenue staff.

The papers in this debate are complicated, so perhaps I should start by explaining how they are set out. The Eleventh Report is the major work and it consists of a report and three volumes of evidence. This is the major debating document.

The General Sub-Committee of the Expenditure Committee considered the Civil Service from May 1976 until July 1977. It held 43 meetings and took oral evidence on 28 occasions—from Government Departments, trade unions, various national organisations and professional bodies, and several former Ministers, including the last two Prime Ministers. It considered over 100 memoranda, which appear in the minutes of the report.

It visited Paris to see what lessons could be learnt from the French Civil Service, and it also visited Washington. There is a long list of people who helped the Sub-Committee during the inquiry, whether by giving oral evidence or submitting memoranda, or by offering valuable advice. I should like to thank them on behalf of the Committee for their assistance.

Whatever is said about the House of Commons outside the House—and some people say that its prestige has declined and all sorts of other wicked things—the fact remains that, from my limited observations of the Expenditure Committee, almost every expert in the country, whether he be a professor or a tax expert, a trade unionist, a civil servant or a retired civil servant, is willing to come to the House and put himself to considerable trouble for the benefit of the Committee and for the benefit of the country. I should like particularly to associate with those remarks the specialist advisers who advise nearly all the Committees, not only the General Sub-Committee, on a part-time basis and for particular inquiries. This is a great tribute to the public spirit of a large body of experts.

The Twelfth Report of the Committee is the Committee's reply to the Government. Command Paper 7117 is the Government's reply to the Eleventh Report, and the Twelfth Report of the Committee is the report on the report. I shall spend most of my time on a small section—paragraphs 5 to 11 or so—of this report on the report because that brings us to the Committee's views in relation to those of the Government.

At this stage I commend the General Sub-Committee, which has made this report. The General Sub-Committee looks largely at Treasury matters. Seldom does such a Committee undertake such a major inquiry. It normally deals with the public expenditure White Paper and with the presentation of Treasury matters throughout the year. The Committee has undertaken this inquiry from the point of view of parliamentary surveillance of the Executive. In this sense it breaks new ground. I say to the Minister that the Government must address themselves to the rising tide of both public and parliamentary interest in surveillance by Parliament of the Executive.

Nearly all the recommendations about the Civil Service stem from this one basic fact. The Chairman of the General Sub-Committee, my hon. Friend the Member for Nottingham, West (Mr. English), is, of course, a great pursuer of this line. I am surprised that he has not raised any point of order or moved an amendment. Perhaps he will do so when I sit down. I do not always agree with his methods, but his single-mindedness is certainly outstanding. He has a most energetic Committee with diverse views. It is a miracle that time and again it produces such good reports—which in turn go through the main Expenditure Committee. I congratulate my hon. Friend the Member for Nottingham, West and his Committee on the excellent work they do and have been doing for a long time. This report is as good as anything that they have done.

The Minister of State, Civil Service Department is an old friend of mine. I say to him that he must ensure that the Government take steps to deal with this rising tide of opinion which seeks to associate Parliament much more closely with the control of public expenditure. The Leader of the House has promised that the matter will be debated in relation to the recommendations of the Procedure Committee. There is a lot of detail here and it is likely, when formal debate takes place, that the heart of the matter will not necessarily be worked out. The Government should, perhaps, consider, on an informal basis, setting up a working party of Ministers and Chairmen and members of Select Committees to see what can be worked out as an immediate programme. I am sure that steps could be taken in the next six months or so to lay a foundation for co-operation which would lead to substantial improvement of this relationship. I shall come in detail to the recommendations of the Committee on this, but I felt that I should say that this appears to be a practical way of evolving a basis of co-operation leading to some fundamental changes.

The Expenditure Committee has close contacts with the civil servants in the different Departments. Since I have been Chairman of the Committee, I have seen considerable improvements in relations between the Departments and the Committee and its Sub-Committees. The improvement is patchy. The General Sub-Committee has gone a long way, working with the Treasury, to improve the presentation of the Accounts and Estimates. We want to go further. The other Committees, over the past two years, have been working on the public expenditure White Paper. This is of particular relevance because we expect to have the Government's public expenditure White Paper announced in the next day or so. The Sub-Committees of the Expenditure Committee will be continuing this review.

In this connection the Committee is about to produce a document showing what recommendations it has made over the past four years or so and what has happened to them. This will be presented to the House, I hope, next Monday and will be published within the next two or three weeks. In this way the public and the House will be able to see how our inquiries and reports have made progress. It does not matter whether hon. Members agree about the degree of progress that has been made. What matters is that there will be a document available to show how the main Committee and its Sub-Committees have been progressing. This will provide a good basis for informed discussion on procedure and other matters.

I said that the core of this series of reports is the surveillance of Government expenditure. Paragraph 11 of the Twelfth Report is the heart of this matter. The Committee says: We find it wholly unsatisfactory that the accounts which are presented to Parliament are primarily useful for audit—and not for assessing management performance or the effectiveness of policy.

The Committee talks about the structure of the accounting system corresponding with the structure of accountable units within Departments so that management could be examined and goes on to say: We do not believe that this would make the Supply Estimates unmanageable, as the Government suggests. We also recommended that the attempt should be made to present analyses to Parliament showing the objectives of individual programmes and the results of past programmes.

This is one of the limited areas in which experiment could be begun. The Government could invoke the co-operation of some of our Committees, produce the surveys required and allow further work to be carried out.

In their observations the Government reject such an approach. I suggest that they should have second thoughts and begin, in a modified way, to produce some of these surveys. The Committee says: The Government's observations virtually ignore this proposal. We shall shortly be issuing a report about the ways in which we wish to see the present systems of accounting to Parliament improved but in the meantime we insist that Parliament cannot properly monitor policies or spending unless it is regularly supplied with information which illustrates the efficiency and the effectiveness of the management of government.

There are, of course, consequential effects of such a proposal. A good many members of the Committee believe that it is not adequately staffed to do this work. It follows that there will need to be increases in the staff. This is covered in chapter XIV of the main report. There will be other matters which will arise.

In my judgment, there will be a need to consult the Civil Service trade unions. I have mentioned the Inland Revenue Staff Federation. I am sure that the Inland Revenue staff have a lot to offer on the issue of the efficiency of tax collection and public relations. The staff are devoted to the public service. The image often put out of Inland Revenue staff is quite false. I know that hon. Members deal with a considerable number of complaints about tax matters that have gone wrong. Normally the matter is put right by ministerial instruction. Putting things right evokes the full co-operation of the staff. Members of the Inland Revenue staff have considerable experience of dealing with tax dodging which would be of value to this House in framing legislation. This is my principal point, the fundamental relationship between Parliament and the Executive. There is a growing tide of feeling that more must be done in this connection. It lies with the Government to take the initiative which will help us make progress.

There are a good many recommendations in paragraphs 5 to 10 of the Twelfth Report concerning the Civil Service at which the Government should look again. Much of what we found echoes what I found in 1945, namely, that in recruitment and training there is a bias in the selection of the administrative class in favour of graduates from Oxford and Cambridge and the independent schools. When I was a Minister with responsibilities for the Army I found a similar bias over the selection of officers. I stirred myself to make sure that as many rankers as possible should receive promotion. I found that the Army in no way resisted this. It said "If you can produce a better way, do so." I did not produce a better way. There are some fundamental reasons for this. A lot of working class people do not particularly like the idea of being in the Army, so that there is a narrower area available for selection. Without making any political point, this question of bias in the Civil Service is something at which Ministers should look.

The Government are aware of the problem and have agreed to collect statistics relating to trainees in the administrative class, so that the true situation can be uncovered. After all these years we have not made much progress here. There has been some progress in unifying grading. Here I refer to paragraph 5 of the Twelfth Report in which the Committee says that it would like the unified grading system to reach down to the level of principal. The Government are working on this and I have no doubt that there will be further progress. This springs from the reforms of the Fulton committee.

The Expenditure Committee makes the point, in paragraph 6 of the Twelfth Report, that there is a constant movement of senior people which militates against the best performance of duties. It says: We believe that such moves are unnecessarily frequent and lead to inefficiencies.

I trust that the Government will apply their mind to this point. Too often considerations of individual promotion are taken into account rather than the consideration of the public good.

The Committee also refers to a matter which is constantly cropping up in the House and in the newspapers, namely, the jobs taken up by retired civil servants, usually senior civil servants. The Government reject the Committee's recommendation that tighter rules should be imposed upon those moving, from the Civil Service into industry. The Committee says: We consider that this is a matter of principle upon which the Government should take further action.

Mr. Michael English (Nottingham, West)

I do not think that we suggested tighter rules. We merely suggested that there should be some sanction behind the existing rules, which have no sanction.

Mr. Boyden

I do not disagree with that. Perhaps my language was not quite as accurate as it might have been. The actual proposal was for contractual conditions when a person joins the Civil Service.

Mr. English

Or legislation.

Mr. Boyden

Or legislation.

We are very proud of our Civil Service —at least, I speak for myself. I think that we are also very proud that there is very little corruption. As that is so, we should take steps to see that if there is need for showing publicly that there is less fear of corruption it should be done, and here is an area in which it could be done. It is not the intention of the Expenditure Committee in any way to knock the Civil Service. I have already explained my views on the Civil Service. I think that it can be said about our Civil Service that, if a Minister wants something done, provided he gives the right instructions, it can be done. Sometimes, of course, Ministers do not give the right instructions, and so the wrong thing gets done—at least, according to what Ministers think.

The ingenuity and devotion to duty of the Civil Service is outstanding. The Expenditure Committee says: we want to put on record that we have a high opinion of the civil service. It has served the country well. Our report is about the improvements we should like made but our recommendations are really designed to help the civil service to do a good job better. Part of that is associating the House of Commons much more fully with the surveillance of the Executive, and also it is very much concerned with improving the standard of the Civil Service in relation to that particular task.

4.32 p.m.

Mr. Edward du Cann (Taunton)

I am pleased to have the opportunity to speak after the hon. Member for Bishop Auckland (Mr. Boyden), because it gives me the opportunity to say something, on behalf, I am sure, of the House as a whole, that many right hon. and hon. Members will be envious of my opportunity to express. I wish to pay a warm tribute to the hon. Gentleman for all his years of devoted and conscientious service as Chairman of the Expenditure Committee. I have had as good an opportunity as any Member to see that work and, as the founder-Chairman of that great new Select Committee of the House. perhaps I know as well as anyone the great burden of responsibility that lie carries. He has done the House well during his term of office, and I congratulate him, too, on the way in which he moved the motion.

The House is also looking forward to hearing the speech which, if he is successful in catching your eye, Mr. Deputy Speaker, we shall hear from the hon. Member for Nottingham, West (Mr. English), for I think that he will allow me to say that in his chairmanship of the General Sub-Committee of the Expenditure Committee he has done invaluable work on behalf of Parliament as a whole. I have not always agreed with him in the particular of every view that he has expressed either inside or outside this Chamber, as he knows, but that he is a doughty and conscientious servant of the House there is no doubt whatsoever.

We are privileged, too, and pleased that the Minister of State, Civil Service Department is present. I should also like to mention, in particular, the Financial Secretary to the Treasury, who, I believe, was a member of the original Fulton committee of 10 years ago. His continuing interest in these matters—now abetted by the Chief Secretary to the Treasury—is something that the House very much welcomes and appreciates, even if it does so quietly. Indeed, I am reminded that it is an interest that the Financial Secretary has continued over many years and has long maintained. We hope to see him with the opportunity before too long to have the authority to put some of the ideas which all of us share in this House into practice.

In the context of the subject that we are discussing, I believe that we, as parliamentarians, have two special duties. One of them was stressed by the hon. Member for Bishop Auckland. It is certainly our inescapable duty to see that the growing power of the Executive is subject to full and continuous parliamentary scrutiny and thereby to clear parliamentary control.

We watch the enormous growth in the volume of legislation, added to now in substantial measure by the European diktats of one sort and another upon which the Select Committee on European Legislation reports to us continually. It would be idle to pretend that we examine that legislation with the conscientious attention that we should.

We are witnesses of what I would call the monstrous involvement of Government in almost every aspect of our daily life, in terms of money, of employment, of patronage. We all know the story, and in aggregate it is horrifying. It demands surveillance ; it demands scrutiny.

There are those who take the view—I am certainly one of them—that in the process of creating our modern and complex society we have established a form of government that can be called—and I have so called it—an elected dictatorship. There is no doubt that our duty as Members of Parliament to control the Executive is heavier than it ever has been at any time in our parliamentary history. The hon. Member for Bishop Auckland was quite, right to underline this need and to put it at the forefront of his remarks.

The second duty that we have—a long way subsidiary but none the less important—is to ensure that the machinery of government and administration shall always be effective. It is not at its most competent, and all of our nation knows it.

An election year is not the most likely time to achieve reforms of a major character. We all have our minds on other things, as the exchanges before this debate indicated clearly. But my reason for congratulating the hon. Member for Bishop Auckland, as Chairman of the Expenditure Committee, and the hon. Member for Nottingham, West, was not mere politeness. I truely believe that both hon. Members are deserving of the highest praise in ensuring that this motion is on the Order Paper today, for what they are really saying is that they believe, as I believe—and as I think the overwhelming majority of our Back Bench colleagues believe—that the pressure to make certain that we live up to the responsibilities that I have endeavoured briefly to define must be maintained.

It is clear that there will be no change from the inside—it will not come from the Government and it will not come from the Front Benches in general. The status quo is a cosy thing and suits those who are in command only too well. What is needed is an exercise of political will on the part of the House of Commons as a whole.

Having been polite to the hon. Members for Bishop Auckland and for Nottingham, West, I hope that they will not mind if I go on to say that on the remedies they propose I have certain differences of opinion with them. I have no differences of opinion with them about objectives, and I repeat how splendid it is that they should again be defined on the Floor of the Chamber. The objectives that we are discussing are honourable—they are in accordance with our parliamentary tradition, they are what the nation wants, and I believe, above all, that they are what the nation needs. It is for that reason that the disappointment that I feel, and which many other Members of Parliament and commentators outside feel, with the Government's White Paper is so acute. That document is more notable for what it rules out than for what it suggests might be done.

As the hon. Member for Bishop Auckland so rightly said, we are fortunate in the United Kingdom in having a Civil Service that is honest, dedicated and impartial. I have complained in the House before that one of the sadnesses that is bound to arise for a member or Chairman of a Select Committee inquiring into various matters, particularly Public Accounts Committee inquiries, which are more like inquests than anything else, is that we examine what has gone wrong. It would be most agreeable if we constituted a Select Committee to inquire into things that have gone right.

But however much one may boast of the Civil Service and its competence—and it is competent—there is in this country a major bureaucracy. It is essential for us —indeed, it is our duty—to see that that bureaucracy is responsive, less expensive and, I believe, less numerous. It is our responsibility, too, to see that it is professional. It is much more professional than it is often given credit for being. Administration and the ability to administer effectively is, I believe, virtually a profession in itself.

However, I quarrel with the way in which the Fulton committee began its investigation. Let me quote one of the opening sentences of that remarkable report. It states that the Service is still…based on the philosophy of the amateur…Today…this concept has most damaging consequences…The cult is obsolete ". I would not have used that word. I would have said that the style is obsolete. That may be so, it may have been so or it may partly be so, but I believe that Fulton was shooting at the wrong target, and so, largely, is the Expenditure Committee.

In a second I shall come to the target at which we should be shooting. We talk about the things that are wrong, as Fulton did in that sentence, but let us also examine the ways in which we can go right. I agree with the hon. Member for Bishop Auckland, who said that we should ensure that what is done in our name by the Civil Service is fully accounted for. We cannot have power without responsibility. Today's debate in a sense is a preliminary skirmish. It is a proving ground for the debate that is to come in due course on the report of the Select Committee on Procedure, of which my hon. Friend the Member for St. Marylebone (Mr. Baker), and other hon. Members were distinguished members and of which my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) was the acting Chairman. One thing that we can be clear about is that from these Back Benches we are today saying that we wish to serve notice that these are subjects which we will not allow to lapse in any way, and that we shall return to them again and again until we get our way.

I turn now to particular matters that have been mentioned in the reports, replies and counter-replies. One recommendation of particular value appeared in paragraph 69 of the first volume of the report on the Civil Service. It reads: We recommend the inauguration of a programme of regular surveys on the possibilities of reducing costs through policy changes. In the previous paragraph attention is drawn to the ways in which Inland Revenue arrangements could easily be changed without penalising individual taxpayers and with a substantial saving of staff. I regarded the Government's reply to that important proposal as extremely feeble. I agree with them totally that we must develop management audits of one style of another. That is an area in which the PAC has experimented. It is a wide and beckoning field which national auditors in some other countries have now begun to enter, though usually at a pretty measured pace and with many cautious looks around them as they go.

In the past much of the value of the recommendations of the PAC stemmed from our concentration on the administrative efficiency of Government Departments in carrying out a given ministerial policy, but once the audit effort is tuned into an examination of the question whether a policy might be considered to result in excessive expenditure of resources for the results achieved, any criticism by the PAC is likely to pose a challenge to the Government of the day about the justification of its policy. The validity of that challenge will not normally be easily conceded.

The Comptroller and Auditor General has entered into this subject in recent years in certain cases when considerable sums of public money have been at stake and the issues have not appeared to be heavily political. The views of the PAC in such cases may not be accepted by the Government, but its reports will usually serve to draw to public attention the financial effects of certain policies that might not otherwise have been appreciated.

The PAC has welcomed these opportunities and will undoubtedly make further controlled ventures into this more controversial form of work. So far, so good. As the House will appreciate, controlled ventures and experiments are one thing, but they are in no way a substitute for an authoritative group of Members backed by a substantial staff effort able to carry out continuous management audits of various aspects of Government work.

The second matter on which I shall comment is that of audit itself. I turn here to the Government's observations on the eleventh report of the Expenditure Committee. The Expenditure Committee recommended that the Comptroller and Auditor General and the Exchequer and Audit Department should take over the audit of many more bodies that are currently their concern—for example, the nationalised industries. The Government have come down against that, and I agree with them. I do not see why the physical audit work of the Exchequer and Audit Department should be extended just for its own sake. That would require a huge recruitment of staff, and at the moment there is a great deal of cross-fertilisation between private firms of auditors and the Exchequer and Audit Department by different groups of people doing different work. That is a thoroughly good thing.

However, the next part of paragraph 91 is somewhat astonishing. The end of that paragraph and the beginning of the next are indecisive. Broadly speaking, what the Government are saying is, to me at any rate, unacceptable. We are discussing the recommendation of the Expenditure Committee that the Comptroller and Auditor General and the Exchequer and Audit Department should be allowed access to the books of any institution or organisation that it thinks it necessary to examine in order to report to Parliament at any time on any matters that are relevant to Parliament.

These are matters about which the Public Accounts Committee has reported to Parliament in plain terms. Whether we speak of the housing associations, the accounts of some of which seem to me, in the light of the PAC examination which will be continued next week, to be in a great muddle and to be suffering from a lack of command, whether we speak of the British National Oil Corporation, where huge amounts of public money are now involved, or whether we refer to the NEB, which again has to deal with large amounts of public money, if Parliament is voting money for any purpose, it must be right for there to be the authority to have it reported upon. There can be no excuse for keeping out the Exchequer and Audit Department from any organisation or institution that it wishes to visit from the point of view of reporting to Parliament.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

A few minutes ago my right hon. Friend said that he did not believe that the Comptroller and Auditor General should have the right to go into the affairs of the nationalised industries. We suggested that he should not take over the audit of them but should have the right to look at the standards of accounting and to report on anything that seemed wrong. My right hon. Friend almost gave us the point when he admitted that it might be necessary for the BNOC or for the National Enterprise Board. Is there not some conflict between those two points?

Mr. du Cann

If I misunderstood the matter, I apologise to my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) and the House. My view is absolutely clear. I should not wish the Exchequer and Audit Department to take on huge new audit responsibilities, but I think that it should have access, if it thinks it necessary, to the books and records of all State institutions, including the nationalised industries. If that is what the Expenditure Committee is saying, I agree with it.

I come now to the third point, which is the second chief point of my intervention. Without going into the matter in detail, I thought that the Expenditure Committee put the matter brilliantly, clearly, succinctly and well in paragraph 107: A reappraisal of the entire apparatus of Parliamentary control of expenditure is overdue. Cash limits should also be reviewed from this point of view. I am sure that that is right. I take the view that with cash limits the House, for the first time in my membership of it, has an outstanding opportunity better to control and survey Government expenditure.

Mr. John Garrett (Norwich, South)

Does the right hon. Gentleman agree that the Public Accounts Committee, of which he is chairman, should have the right to inquire into all spenders of State money, including private industry? The right hon. Gentleman mentioned only State organisations. I think that he has failed to comment on what I should have thought he would find very important—namely, the recommendation that it should be made clear that the Comptroller and Auditor General is a servant of this House.

Mr. du Cann

If the hon. Gentleman, whose particular interest and expertise in these matters the House knows and recognises, will allow me, I shall come to his second point later.

I should have no objection to the hon. Gentleman's first proposal. The fact that I spoke especially about State institutions does not rule out the lesser breed, so to speak. The hon. Gentleman will know that on a number of occasions the Public Accounts Committee has looked at the way in which State money which has gone to private companies has been spent. One of the recommendations in the last calendar year was that the Government should seek to evaluate to a greater extent the effectiveness of State aid to private companies. I believe that much of it is unnecessary and wasted.

I go on with my main point and will come to the second question posed by the hon. Member for Norwich, South (Mr. Garrett). I have increasingly come to the conclusion from my experience in this House that the only way to achieve the objectives of better control of the Executive, of continuous scrutiny of the activities of the Government, of obtaining better value for money and of ensuring that there is clear surveillance of the huge amounts of money that the Government are now voting to industry of one kind or another is, without doubt, by the extension of the work of Select Committees.

We are looking forward to the debate on the report of the Procedure Committee. It is scandalous that the Leader of the House has not yet given us that opportunity. Be that as it may, the new Parliament, when elected, will have to take this matter on board.

To come to the second point made by the hon. Member for Norwich, South, I am not clear that the Select Committees will necessarily do their work by relying exclusively upon the assistance of the Exchequer and Audit Department.The Times, published on the day after the Government's White Paper on the Civil Service, stated: The one Parliamentary body before which Whitehall trembles is the Select Committee on Public Accounts. I do not know about that. It continues: The Comptroller and Auditor General fillets departmental books and presents Back Benchers with a loaded revolver to fire at examples of mismanagement or impropriety. The effectiveness of this Parliamentary weapon stems from tradition and the skills of the 700 strong staff of the Exchequer and Audit Department. I totally endorse that view. In particular, I endorse the tribute that is paid to the staff of that Department. I have no doubt that they are most competent and that their skills, already considerable, are improving all the time. But what matters is that any audit division whose work is available to the House should he wholly independent. It should not be at the beck and call of some Member with a particular axe to grind. I welcome what the Government said about consulting the Chairman of the Public Accounts Committee about future appointments and so on, but I have some nervousness about the suggestion that we might bring the Exchequer and Audit Department wholly under the aegis of the House of Commons.

I wish to suggest something else. The hon. Member for Norwich, South is familiar with the United States scene, as are other right hon. and hon. Members who are present. I should like to give a snapshot of the United States scene to those Members who arc not so familiar with it. There are more than 400 members of, the House of Representatives and they have 11,000 staff or clerical helpers. There are 100 senators and they have 6.500 staff.

We know that conditions in the United States are different, that the system of government is different and that the scale of operation is different. But how much reinforcement does any hon. Member here now have? Does any Member have more than I have—one secretary with a parliamentary allowance which is less than the going rate for what is called an executive secretary in senior echelons of business or, for that matter, in the Civil Service? There is no comparison. We are not merely behind ; we are light years behind the United States. The United States Government have 55 committees and 300 sub-committees. There are 20 Select Committees of this House, the overwhelming majority of which are engaged not on affairs of scrutiny but, as much as anything else, on running the complex affairs of this House. In recent years the United States Government's staff has trebled. Our Select Committees have no staff. Of course, we have the services of the distinguished Clerks—and how splendid, conscientious and effective they are—and an occasional adviser. But that is all we have. It is so trivial as to be pathetic.

We may be so much smaller than the United States, but there is a great difference between the relationship of Government to the private citizen in the United States and the relationship of the Government to the private citizen here. There is vastly more Government effect upon the lives of business and the private citizen here than there will be in the United States even in 50 years' time. All the time the United States has been strengthening its apparatus. When, as it seemed at the time of President Nixon, Congress was afraid that the strength of the Executive was growing and being concentrated, it in turn strengthened the Congressional Research Service and the General Accounting Office. In 1972, it established the Office of Technology Assessment, with a staff of 600. In 1974 it set up the Congressional Budget Office, with a staff of 200. Of course, that is in addition to the Senate and Budget Committees.

I said earlier that I thought the Expenditure Committee was shooting at the wrong target, but a lot of what it has said is good and meritorious and I agree with it. But I do not think that Fulton, or for that matter the Expenditure Committee, ought to be saying" Oh, it is the Civil Service that is wrong. It is the Civil Service that needs to be re-organised." Those criticisms may be absolutely right, but they are at the wrong end of the spectrum. The target to go for is this Parliament. It is this Parliament that is amateur. It is this Parliament that sets so poor an example of competence and effectiveness. As the private citizens' representatives against the growing power of the Executive, my view, for what it is worth, is that before we seek to change others we should begin by changing ourselves, and substantially.

5.1 p.m.

The Minister of State, Civil Service Department (Mr. Charles R. Morris)

Conscious as I am of the signal contribution that the right hon. Member for Taunton (Mr. du Cann) has made in his capacity as Chairman of the Public Accounts Committee, I endorse his congratulations to my hon. Friend the Member for Bishop Auckland (Mr. Boyden) and the Expenditure Committee on their work, which is reflected in the reports now before the House.

Without in any way being patronising, I should like to say how much I appreciate the detailed interest that the Committee has shown in this subject. I join the two previous speakers in congratulating my hon. Friend the Member for Nottingham, West (Mr. English) on the contribution that he and his colleagues made to the work of the Committee. I should also like to express my appreciation of the dedication and persistency with which my hon. Friend has pursued the question of a parliamentary debate. I think that his efforts have made a signal contribution to making today's debate possible.

The reports before us have much to commend them. They are generous in their appreciation of the Civil Service and for the most part are modest in the objectives that they set by their recommendations. My hon. Friend the Member for Bishop Auckland indicated that the words of paragraph 4 of the Expenditure Committee report are designed to help the Civil Service to do a good job better.

The opening paragraph of the Eleventh Report indicates that it is far too long since a Select Committee of the House of Commons inquired into the Civil Service as a whole. Frankly, I agree. The last Select Committee inquiry that I know of occurred in 1942. I notice that the report indicated that it occurred 104 years ago. In fact, our research has indicated that it was 1942. As the right hon. Member for Taunton indicated, the last full debate on the Civil Service in this House was on the Fulton report about 10 years ago. Therefore, I welcome this opportunity to comment briefly on some of the major issues touched on in the reports.

My hon. Friend the Member for Bishop Auckland indicated that I, as a Minister with some responsibility for the Civil Service, and the Government generally, ought to be conscious of the role of the Expenditure Committee, and certainly the Sub-Committee, in the context of parliamentary surveillance. Let me say right away that the Government have already accepted nearly two-thirds of the Committee's recommendations. These include the greater part of the recommendations on recruitment, training, career management and pay and pensions—all major issues concerned with the management of the Civil Service itself.

Perhaps, understandably, we have been rather more cautious about the recommendations that affect the relationships between Parliament and the Executive. But here, too, we found much with which we could agree. We rejected only 11 of the 54 recommendations, and some of those only in part. There are 11 more recommendations which we have noted, or on which we await further developments. These are questions such as relating pay to performance and the future of administrative trainee recruitment.

The right hon. Member for Taunton forcibly made the point about the future role of the Comptroller and Auditor General and the arrangements for the audit of public money. I think that he would accept that this is a vitally important area, in which both Parliament and Government have a common interest in ensuring the most effective safeguards for the spending of public money. In addition to the work of the Expenditure Committee in this area, the Public Accounts Committee and the Procedure Committee have also recently expressed views covering a good deal of the same ground, and the PAC has indicated its intention to review the role of the Comptroller and Auditor General. In the light of these reports, the Government will wish to make their views known in due course. In doing so they will certainly wish to take account of the points made by all hon. Members in today's debate.

Before I take up the major issues on which I should like to comment, it may be helpful if I say a few words about the Civil Service generally. As the House will appreciate, during the years in which I have had some responsibility for the Civil Service I have received what I could perhaps describe as a surfeit of good advice about the Civil Service and civil servants.

As the House will recognise, defending the Civil Service is at times a rather single and lone vigil, but I find that reasonable opinion accepts and admires the dedication and hard work of the majority of our civil servants. I appreciate that fact. Equally, there is no shortage of views of a rather different kind. Some believe that the Civil Service is a deadweight of bureaucracy, protected against the disciplines of profitability. Others have dramatised senior civil servants as the power elite of an ageing democracy. Most seem happy to accept the cartoonist's impression of the Civil Service—bowler-hatted, brolly-carrying, bureaucratic Whitehall.

The reality is somewhat different from these traditional myths. First, there is more to the Civil Service than the Whitehall machine. The Civil Service has about 564,000 staff in non-industrial—that is, administrative—jobs. They are employed in more than 50 Departments of Government. Seven out of 10 civil servants work not in Whitehall, not even in London, but up and down the length of the country. Their pay is determined by that of people doing comparable work in the private sector and takes account of other conditions of work. They are ordinary working people who are doing essential jobs in our constituencies. They are there for one simple reason—because we in Parliament have democratically decided that we want these jobs and tasks undertaken.

Turning to the major issues, I should first like to say something about the crucially important issue of recruitment. I am conscious that my hon. Friend the Member for Bishop Auckland had some words to say on this point. I notice that the Expenditure Committee concentrated on graduate recruitment for administrative work. But we should remember that recruitment to the administrative trainee grade applies to only 250 entries in a Civil Service of 500,000 strong. So I think we ought to keep the problem in proportion.

Mr. Nigel Spearing (Newham, South)

Whilst their numbers might be small, it is they who set the tone and the standards.

Mr. Morris

My hon. Friend is certainly entitled to his views in that regard. He will recognise, however, having read the reports of the Expenditure Committee, that the Committee was understandably guarded in the conclusions that it drew from the limited evidence available. It concluded, for instance, that the success of Oxbridge candidates may be expected if the Civil Service is to recruit the most able people. This cautious approach contrasts with the views of those who perhaps uncritically accept the charge of bias in recruitment.

Here I would like to remind the House of some important points that should convince the sceptics that the extent to which certain candidates are more successful is not the result of conscious preference or prejudice. The first stage of graduate selection is a written test which is marked by outsiders who are mainly teaching at universities other than Oxford and Cambridge and who do not know whose papers they are marking. In these tests Oxbridge candidates, ex-independent school pupils and arts graduates all do better than others. This is an important factor. It is precisely the alleged bias. But it cannot be bias in the normal sense when the papers are marked by non-Oxbridge people, non-civil servants, who do not know whose papers they are marking.

Mr. John Garrett

What is the relative weighting which is given to the written test as against the oral test in the selection process? Will my right hon. Friend remember that the Expenditure Committee actually proposed the abolition of the administrative trainee scheme?

Mr. Morris

My hon. Friend is absolutely right when he says that the Expenditure Committee suggested the abolition of the administrative trainee grade. I take up the point regarding the weighting given to the oral and written tests because, quite frankly, my hon. Friend's anxieties about this alleged bias were shared by me. Let me give an illustration of the action that I took. On the question of the alleged bias, as I have indicated already, the first two stages of the entry are the need to have a good honours degree, and secondly, to go in for what I would call pre-entry tests. At those two stages all the applicants are anonymous. If they have got a good degree, irrespective of who they are, they can sit for the pre-entry test. I have indicated the way that the pre-entry tests are marked.

The third stage is the prolonged interview. Because of my anxieties about bias, I said to the First Commissioner of the Civil Service Commission "That being so, if there are three stages and the first two are anonymous, can you statistically examine what the result would be if you removed the third stage where the applicant is seen and identified and the third stage is determined by, perhaps, the personality and oral abilities of the applicant? "I said" Will you do a statistical exercise to establish whether the Oxbridge bias is reinforced or diminished if you eliminate the third stage? "

He did that precise exercise. What we found was that if one eliminated the third stage—the interview—the Oxbridge bias would seem to be reinforced rather than eliminated.

On the relative success of arts graduates, we should, perhaps, not be surprised if good engineers, physicists and other specialists tend to prefer, in their early careers at least, to work in the area of their chosen speciality. Indeed, remembering the importance which all of us attach to areas of life other than central Government administration, I am not sure why we should regret it.

The Committee noted—this may be the point, and I agree with the Committee —that it is less easy to see why, after several years at university. those candidates from fee-paying schools seem to do better. However, in response to the Eleventh Report, the Civil Service Commissioners have agreed to collect and publish statistics to show the type and class of degree of applicants and recruits in terms of school and university attended. Such statistics will provide useful information on the background of administration trainees, although academic performance is not the only factor to be taken into account in recommending candidates for appointments in administration.

Mr. William Molloy (Ealing, North)

On this vital subject, will my right hon. Friend comment—at some stage if not immediately—on the grave apprehension that is felt on the Staff Side regarding the increasing number of retired Service officers who, with some comparative ease, it would appear, can do a lot of jumping and get into a high level within the Civil Service? This has a deleterious effect on the promotion of those who have made the Civil Service and not the military Services their career.

Mr. Morris

I share my hon. Friend's concern about that situation. If he can give me details of such circumstances, I shall certainly investigate them.

The Committee made five recommendations on recruitment. Three and a half of those recommendations have been accepted and one remains for consideration. Let us be clear that where the so-called statistical bias reflects a preference for ability, I believe that public opinion would want that to continue. The public have a right to the most able civil servants that can be provided.

I turn now to the efficiency of the Civil Service. I agree in particular with the central position that the reports give this topic. When considering the Civil Service. one is dealing with a very large organisation with an immense range of functions. No one claims that it is 100 per cent. efficient. If it were 100 per cent. efficient today it would not be so tomorrow, because the first crucial point about efficiency is that it changes as objectives change, as constraints change and as costs change. It requires unremitting attention.

Frankly, it is difficult to measure efficiency over a wide range of administrative services where the overriding test is not profit but acceptability to Ministers, Parliament and the public. No single management technique or financial reporting system can in itself be adequate. The tests of efficiency vary from one service to another. Therefore, we are obliged to examine our administrative operations one by one. There are no panaceas.

It is not a very exciting process—least exciting of all, perhaps, when the facts do the Civil Service credit. For example, Civil Service candidates achieved a 96 per cent. pass rate in the part I examinations of the British Computer Society compared with a national pass rate of 66 per cent. A second example is a Public Accounts Committee report last year, which demonstrated an error rate in paying social security benefits of only 1p in every £8, which, I suggest, is impressive. A further example is that a 1975 study of Government postal and telecommunications methods showed potential savings of £6 million. Of these, once-and-for-all savings of £3 million, with annual savings of a further £2 million, have been achieved. Studies that may result in further substantial savings are still in progress. These facts about efficiency were, I thought. well reflected in the Committee's reports and evidence. They are sometimes less well understood elsewhere.

Of the many recommendations of the Committee in this area, we have accepted the great majority, sometimes with qualifications which reflect the points that I have already made. Above all, what we accept is the importance and usefulness of the continuing scrutiny, case by case, directed realistically to the facts of each case. I hope that members of the Committee, in turn, will accept that this continuing process is right.

One final aspect of efficiency links with my next topic of accountability. We have to strike a sensible balance between the responsibilities of Departments and the central role of the Treasury and the CSD. The complexities of the management operations of modern Government Departments—particualrly the larger ones —raise important issues about the way in which central responsibilities for efficiency, can best be exercised. But it remains the case that each departmental Minister is responsible to Parliament for the work of his Department. That includes the way its money is spent, and all aspects of its performance.

The Governent do not suppose that they have found all the answers to the many problems of efficiency. I shall be listening with great interest to the contributions of all hon. Members, from both sides of the House.

Finally, I turn to an issue that is not specifically referred to in the recommendations before us but that is a crucial factor in any consideration of the Civil Service administration, namely, the political accountability of the Civil Service. which rests on the simple proposition that civil servants are fully accountable to their Ministers for the way in which they do their jobs. That is the basic pattern of accountability within our constitutional procedures.

My hon. Friend the Member for Luton West (Mr. Sedgemore) and other critics have argued that the reality is different. and my hon. Friend is entitled to his view. The critics claim that administration is too complex to enable a Minister to control, in every detail, the work of his Department. In that sense, I agree. A Minister has to delegate. He cannot do it all himself. No Minister would deny the pressure on his time, but that is no reason to confuse the clear lines of accountability. On the contrary, it is a reason to reinforce them. The simplicity of this pattern of accountability is its strength.

Of course there are problems, as there are in any large organisation with a long chain of command, but I do not believe that Ministers fail to make their wishes clear to their civil servants and to get them carried out as the conspiracy myth —and it is a myth—would have us suppose. Elected representatives must answer for the actions of Government, and I doubt whether any of my ministerial colleagues would have it otherwise.

One important reason why the accountability of civil servants to their Ministers works in practice is the limits on the role of a civil servant. His job is to provide a continuing service to Ministers, which, of course, means to each successive Government. The permanent administration is there to facilitate and carry out the continuing business of government.

The giving of advice is a case in point. Civil servants are not there to force their own opinions on Ministers. Rather, their job is to see that the facts and the consequences of the options open to Ministers are properly considered. That is also their incentive. In following their duties, civil servants seek to win the confidence of successive Ministers and they do that and do well in their careers to the extent that they do their jobs properly.

I have commented on only a few of the issues raised by the Committee's reports. No doubt hon. Members will raise a number of other matters, and, with the leave of the House, I shall do my best to reply to those points at the end of the debate. I conclude by reiterating my belief that there is no room for complacency about our Civil Service administration. Effectiveness cannot thrive on neglect.

Mr. du Cann

The right hon. Gentleman said that, with the leave of the House, he would seek to answer a number of points at the end of the debate. Will he give further consideration to the fact that the report was published 18 months ago and the Government's comments were published nine months ago and that in between we have had the comments of various sessions of the Public Accounts Committee on the accessibility of books and records?

It was all very well for the Government to say, nine months ago, that they wanted further time to think about the matter—the Minister said roughly the same thing earlier—but surely the right hon. Gentleman could have given us a better answer, at least on some aspects of the report. I hope that he will not mind my saying that a plain answer from the Government, in accordance with the wishes of the House, is overdue.

Mr. Morris

I do not believe that even the right hon. Gentleman would wish the Government to examine the crucial issue to which he referred solely in the context of the Expenditure Committee's report. The Government are obliged to look at the argument not only in the context of the Expenditure Committee's report but in light of the views of the Public Accounts Committee and the Procedure Committee. That inevitably takes time.

We have had the report, the response to the report, the response to the response and we are now having a debate. The Government will, of course, take into account what the right hon. Gentleman has said and will give serious consideration to the contributions of all hon. Members in the debate.

Mr. Kenneth Baker (St. Marylebone)

There are many issues to which the right hon. Gentleman has not replied, and the comments of my right hon. Friend the Member for Taunton (Mr. du Cann) are fully justified. One recommendation of the report was that the Civil Service Department should be dismembered, with part going to the Treasury and the rump remaining as the personnel department of the Civil Service. That recommendation is germane to the machinery of government and central control of the Government. It has been on the table for two years. Does the right hon. Gentleman have any view on that proposal?

Mr. Morris

The hon. Gentleman is entitled to raise that important issue, but, in so far as that matter relates to the structure of government, it does not fall within my province. It is essentially a matter for the Prime Minister.

Mr. English

We have mentioned parliamentary staff and civil servants. I think more highly of the staff of the Committee than I do of those who have advised my right hon. Friend, because the response by the Government said that this matter was primarily one for the Prime Minister. Will my right hon. Friend kindly represent that the relevant Act provides that all orders changing the functions of Government Departments must be laid before the House and that in that respect they are primarily a matter for the House?

Mr. Morris

I shall be delighted to convey to the Prime Minister the views that my hon. Friend has expressed with such force and clarity. I certainly give him that undertaking.

I hope to have the opportunity to reply to detailed points at the end of the debate.

Mr. Ridley

May I return to the important matter raised by my hon. Friend the Member for St. Marylebone (Mr. Baker)? The Minister said that the future organisation of the Departments and the Committee's recommendation about transferring responsibility for staffing back to the Treasury were matters for the Prime Minister. When will the Prime Minister announce his decision to the House? Will he wind up the debate? Shall we have an early statement from the Prime Minister? It is no good the Minister of State's saying that because it is not his responsibility we are to get no answer at all.

Mr. Morris

I wish that occasionally the hon. Member would listen to what I say. I have indicated already that, if the House agrees, I hope to have the opportunity of replying to what hon. Members say during the debate. That deals effectively with the question that I was asked about who was to reply to the debate. I have also been asked when the Prime Minister will make his views known. My right hon. Friend will make them known in due course.

I was saying that in the administration of the Civil Service there was no room for complacency. Effectiveness cannot thrive on neglect. It requires unremitting effort to see that the Civil Service is properly managed and run, and I can assure the House that the Government will see to it that this effort is maintained.

I have spoken of change. We need not fear change, provided—and it is an important proviso—that we can discuss it reasonably and give due weight to others' views as well as our own. It is in that spirit that I welcome these reports and look forward to the contributions of right hon. and hon. Members on both sides of the House.

5.31 p.m.

Mr. A. J. Beith (Berwick-upon-Tweed)

The Minister of State has left many questions unanswered, and he has admitted already that he will not be able to answer some of them later in the debate because they fall outside his province. He will know that the intricacies of tabling Questions to the Prime Minister make it virtually impossible for hon. Members to table Questions to him on the key matters referred to by the hon. Member for St. Marylebone (Mr. Baker). The Prime Minister is assumed by the authorities of the House not to be about to make any changes in the Government or in the structure of Government Departments, and it is extremely difficult to secure answers to Questions on such matters.

I have always been instructed that the Government are supposed to be a seamless web when they appear before the House and that any Minister speaking from the Dispatch Box speaks on behalf of the Government as a whole. Therefore, in a debate of this kind one would expect the Minister of State, Civil Service Department, to be so advised after consultations with his colleagues that he could deal with major proposals such as this affecting the future of his own Department. Perhaps quick consultation can take place between now and later in the debate to resolve the difficulty.

There are some features of the Civil Service which are easily forgotten, although the Minister reminded us of one or two of them. It is an enormously varied body. It contains senior policy advisers to Ministers. It contains large institutions managing computerised records, such as the very large one at Longbenton near Newcastle where some of my constituents work. It contains the veterinary surgeons who try to eradicate brucellosis in my constituency. It contains the local offices which deal directly with the public. It even contains those who care for the ancient monuments, in a constituency such as mine. It often seems that the policy making core of the Civil Service, unlike some of these other groups, is a London-based and rather inbred clan of people. It is occasionally possible for those from these distant parts to join it, but if they do they have to accept its values, buy houses in London and become committed to remaining part of this small and rather narrow group.

It is extremely important not only that we recognise the diversity and spread et the Civil Service but that we make more attempts to get those civil servants who are involved in the central policy process to spend considerable parts of their careers outside that central area, not simply in dispersal, which is important for other economic reasons, and not simply by siting major Government offices outside London, but by trying to ensure that the career pattern of a senior policy adviser takes him through the varied and physically scattered parts of the responsibilities of his Department.

The second feature of the Civil Service which it is easy to forget is that, because it is a life-long occupation for so many of its members, it tends to become even more inbred. It is one of the many instances where our objectives for the Civil Service tend to conflict. We want to have a Civil Service which can survive different Governments and which can carry out the instructions of different political parties. We do not seek to have a Civil Service which changes wholesale when a new Government come into office. There is fairly widespread agreement that that should be so. There are differences of view about how far incoming Governments should be able to bring a corps of advisers with them into sensitive Departments. But there are very few who would argue for the kind of wholesale change of office which occurs in some countries and the regrettable consequences which arise from them—the jobbery and the destruction of professionalism which are the consequences of it. Our tradition of Civil Service reform has been to build up a career Civil Service which can serve Governments of different political persuasions.

However, one of the consequences of that is that it is a life-long service in which very many of those who rise to the senior ranks have spent their entire working lives with little or no experience outside. Therefore, we have to make more conscious and deliberate efforts to bring into the Civil Service people from industry, commerce and so on whose experience is different and whose experience can broaden that contained in the Civil Service. The corollary of that, of course, is that we must encourage movement out, although I share the concern of the Committee about some of the departures from the very top of the Civil Service into senior positions in commerce where the potential for corruption and the wrong kind of influence on decisions is great. It is one of the problems about any kind of exchange system, and it is one on which the Committee was right to place some emphasis.

What is more, there needs to be more interchange between the Civil Service narrowly defined and the other civil services which we have—the quite separate public services of nationalised industries, local government, the National Health Service and, as the Committee pointed out, the Diplomatic Service in the Foreign Office which is a quite distinct Civil Service with a career pattern which is quite separate from that of the home Departments. We want more interchange there as well.

As for pay and comparability, about which the report makes a number of comments, it is important that we reactivate pay research and that we do so with the strong independent element for which the Committee and many others have called. It is important for civil servants to know that the levels of comparability of their salaries will be determined properly in the future. But it is also important for the general public to know the principles on which this comparability is being assessed, and there are some factors of which full account must be taken.

It is important that full account is taken in pay research and comparability of the clear advantage of an inflation-proofed pension system. I do not criticise the Civil Service for having developed a system of inflation-proofing of pensions. It is a model to the rest of the community. However, it is one which it is very difficult for the private employer to follow and it is one which it is important to recognise when assessing what a Civil Service salary level should be.

It is important to recognise the job security which there is in the Civil Service. When we compare the salary of a permanent secretary with those in private industry, we have to recognise that the chances of the permanent secretary ceasing to have a job either because of the inadequacy of his own decisions or because of the failures of his organisation are virtually negligible, whereas anyone in private industry in the position with which he is being compared stands a fairly good chance of losing his job either because of his own fault or because of the fault of others.

While I am dealing with matters of pay and rewards, it is not out of place to comment on the extraordinary use of the honours system in the Civil Service. I do not see why we have to assume that it is impossible to be the head of a major public Department for any length of time without the person concerned having a handle to his name. I do not see why we have to build into the public service the assumption that rising to certain levels brings with it automatically certain kinds of public recognition by honours. It is a little odd that the person who achieves distinguished service out in the field, whether it be climbing electricity pylons or carrying out rescues as a coastguard, might rate the British Empire Medal whereas for anyone who carries out signal achievements in a warmly heated office of some size to which he has been taken in a chauffeur-driven car a KCMG is more appropriate. Honours of any kind should go to out of the ordinary service. They should go either to service within a job which is beyond the normal call of duty or to service outside the job for which one is paid and which is of exceptional value to the community. This clearly would involve some civil servants in being given that kind of honour and recognition, but it is not necessary to maintain an automatic honours system to the extent that we have done over the years for our Civil Service.

It is the job of the Civil Service to serve Crown and Parliament, and Parliament has the job of holding it to account. Therefore, there are inevitable limits to the extent to which we can hive off, practise accountable management and say to any manager in the Civil Service "You are in control of this area of activity and, as long as you deliver the goods and produce the right results, no questions will be asked." It is impossible to operate a public service in that way if it is to be held accountable to Parliament and if its detailed decisions are to be questioned by Members of Parliament. Therefore, many of the fashionable changes which management consultants recommend in industry are more difficult to apply in the Civil Service, and we have to be more hesitant about applying them.

We in this House rightly expect to be able to challenge detailed aspects of decision-making right down to local level, and we thereby reduce the discretion which managers of Civil Service units can be given, although, in the last few years, we have surrendered a great deal of power in the interests of effective management and in the interests of creating accountable units. We have done this by developing the public corporation as a body to administer the more commercial activities within the public sector in Britain. We felt it right to allow commercial methods of management which precludes detailed questioning of, for example, the work of the British Railways Board.

We have transferred sections of the Civil Service over to the public corporation side. Whereas at one time we could question in this House the quality of service given by the Post Office in a particular locality, we have denied ourselves that opportunity by making the Post Office a public corporation. We have changed the status of the Stationery Office and of the Ordnance Survey. We have created the Supplementary Benefits Commission, the Property Services Agency, the Manpower Services Commission, and the National Enterprise Board. We have created body after body which has taken an area of Government activity and subjected it to less parliamentary scrutiny. There were some good reasons for doing this, but we have given up a lot in the process. I agree with some of the comments of the Committee in paragraph 91 of the Eleventh Report: We believe that hiving off is only viable in limited areas of Government and that it should be approached with caution…we were impresesd by the consideration that hiving off necessarily involves a diminution in the area of ministerial control and we believe that more attention should be devoted to developing proper control mechanisms for hived off bodies. It is not always ministerial control that is reduced by this hiving off. Usually, the body which is created is subjected to substantial ministerial influence. The appointment of those in it may be a matter for Ministers. The funding of it and the major decisions affecting it involve Ministers to such an extent that the body is bound to listen closely to what the Minister says. But the opportunity for Members of Parliament to question and challenge what the Department is doing is reduced in the formal machinery of parliamentary Questions and in wider ways by this kind of process. We must watch it with some care.

Mr. Ted Leadbitter (Hartlepool)

That raises a very interesting question. Today's debate is on a motion to take note of the reports. Does the hon. Gentleman think, bearing in mind the dates on which the reports were published, the time the Committee sat and the date of the Government response, that any changes could be anticipated in a debate to take note, no matter what we say?

Mr. Beith

No, I do not. It is my view that the interests of Ministers generally do not coincide with any of the major reports to which we have referred. Ministers can get along nicely with the system as it is. The initiative for changes such as those recommended by the Expenditure Committee and the kind of changes which the Procedure Committee has recommeded—they are linked, and I will say why--must come from the Floor of the House. We cannot expect Ministers to change their natural conservatism, if I may use that word with a small "c ". We would be foolish to expect an initiative from the Government Front Bench or any of its occupants. We must press them from other Benches in this House. If we do not, nothing will happen.

I mentioned ways in which we have reduced the formal accountability to Parliament of various bodies and thereby reduced our control over the Civil Service. We must not confine ourselves to that accountability through Question Time and such means, because we have discovered over the years that traditional parliamentary control has proved inadequate in regard to policy and cost-effectiveness in the public service.

We have to look for other means than the ability to challenge and question a particular decision after the event. That is why it is so important to see in the same context as this debate the report of the Procedure Committee and its recommendation to develop a Select Committee system to enable a continuous scrutiny of the work of Government Departments. We must get on with it. I endorse the comments of the right hon. Member for Taunton (Mr. du Cann) and others, including the hon. Member for Bishop Auckland (Mr. Boyden), who opened the debate, in their demand that the Government should put concrete proposals before the House. We must have proposals to which we can give some effect. We can have endless debates to take note, responses to reports and responses to responses to reports, but until we have proposals through the House we shall not get anywhere.

The wider interest which the Procedure Committee has shown in financial control and accountability and its desire to go on to develop proposals on these matters is relevant. The Committee, of which I am a member, has one reason for not wishing to proceed with these matters so far. It sees no sign yet that its first major recommendations will be ear-tied out and sees little purpose in going on to recommend further detailed changes unless it sees some earnest that it will get something done.

I wish to comment on some of the points made about the management of the Civil Service in the recommendations and the Government's response. The extension of unified grading is desirable. It is ludicrous still to be pushing this so long after the Fulton report. There is a regrettable persistence in the Civil Service in the belief that one can run any administrative system by having strata and that one proceeds from one level to the next only if one is capable of doing any and every job which the next level requires. There is a persistence in the belief that it is good and morally improving to put square pegs in round holes where possible. Unified grading is one of the means by which we can challenge some of these assumptions. There is still a belief that it is desirable to move people from job to job far more frequently than any outside observer would regard as sensible. Change in that respect is also desirable.

On recruitment bias, I differ from some of those whose views I share on other aspects. I believe, after some experience of teaching potential applicants for the Civil Service and teaching sonic of those who have become its members, that the bias that remains is not to any great extent the fault of the Civil Service Commission or those who administer the testing and entry system.

Hon. Members should recognise the way in which these things work in practice. I can speak from my own experience. I went to university from a working-class home and was surprised to discover towards the end of my university career that contemporaries of mine were applying by examination and interview to join the Civil Service. I thought that joining the Civil Service was a fate that I had avoided by going to university in the first place. I thought that joining the Civil Service meant going behind the counter at the local office and was the alternative to proceeding in the sixth form and getting to university. I do not know where we supposed the top levels of the Civil Service came from. In the family background of most of us, there was no conception that if one had a good academic record one could enter the Civil Service by a route which would lead to the top. By the time we discovered this, it was too late to try.

This lack of knowledge of how the Civil Service operates still persists, and many people in universities haw made their career choice long before they realise that this opportunity is available. It does not apply to the specialists. It does not apply to those who go in for engineering and discover that one of the fields in which they can have a specialist career is the Civil Service, but it does apply to those who might otherwise enter as administrative trainees. Some of the best students I taught had exactly the same attitude and simply did not realise that this was a career opportunity for them They had thought of other things they wanted to do long before reaching the stage of the Civil Service examination being taken by contemporaries.

No one can claim that the Civil Service has served us to perfection, despite the pride that we rightly take in some of its best features. Even when we pick on its shortcomings, however, it is not up to us to blame the civil servants, because responsibility for the public service of this country rests in this House by definition. We are responsible. Of course, we do not make it easy for ourselves to exercise that responsibility, not least because we withhold so much information from (he public in general and from ourselves in particular.

We have frequently neglected in past years, although not so much at present, to give the necessary backing and show the necessary determination in helping our own Committees to obtain the information that they require. Time and time again, civil servants have been allowed to take actions which would never have gained parliamentary approval if Parliament had known anything about them.

In many of these cases—not all but some of them—Ministers have at least known what was going on. They did in some conspicuous cases, such as the return to the Soviet Union after the Yalta conference of people who subsequently met a terrible fate, but civil servants did many things then which they would never have been allowed to do if Parliament had known much about it. If we consider how the fate of the Banaban people was determined by colonial servants over a number of years, we may wonder how much Parliament knew about it. From the reports of the Parliamentary Commissioner we learn of cases of which Ministers knew nothing at all and which were reported after the event, but again we can see how much better Parliament could have dealt with some of these things if it had had the information.

We could at least make some progress in this field and ensure that concrete proposals come before the House. If hon. Members who are here today remained here on Friday to ensure that the Bill tabled by my hon. Friend the Member for Isle of Ely (Mr. Freud) dealing with official information received a Second Reading, at least we could let some light in that way.

5.51 p.m.

Mr. Michael English (Nottingham. West)

Hon. Members have been kind enough to refer to me and I thank them for their references. I also thank the Chairman of the Expenditure Committee, my hon. Friend the Member for Bishop Auckland (Mr. Boyden), who has always presided over our discussions in the full Committee like a father figure—very necessary when a fractious Sub-Committee such as the one I chair produces points of discussion for his judgment. I also thank the staff who serve the Committee. Although small in numbers, they have been efficient during the production of this report.

Finally, I thank my colleagues on the Sub-Committee. They are named, as are the specialist advisers, in the report, but I should like particularly to mention the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) because he did an early draft of six chapters of the Eleventh Report—the first that we are considering today—and my hon. Friend the Member for Norwich, South (Mr. Garrett) who did the first draft of the second report that we are discussing. I do not think that my hon. Friend the Member for Norwich, South will mind my saying that his main interest is in this aspect of the Sub-Committee's jurisdiction rather than in some of its Treasury matters and that his work on the Sub-Committee prompted us to go into this subject in the first place, because of his former work for people who were on the Fulton Committee.

I refer to people on the Fulton Committee because this is the first report on this subject since that Committee reported. Contrary to what my hon. Friend was told by the civil servants who advised him, the first sentence of our report is correct: this is the first report by a Select Committee of the House of Commons for 104 years—when our report was written: it is rather longer now—on the Civil Service "as a whole ". There was a Committee which met in private in 1942, which published no evidence because it was during the war and which considered some aspects of the Civil Service at that time—but not the Civil Service as a whole. Its evidence was published on the authority of my and my hon. Friends' Sub-Committee. Otherwise, it would still be in the archives. It is now available at least to scholars but it is of no more use than that.

I wonder whether the Minister will explain one contradiction that I felt in his remarks. He said that the Government had accepted many of our recommendations, which is true, that they had rejected others, which is true, and that some they had not made up their minds about, which is also true. Would he be a little more specific? There are occasions when it is by no means clear whether the Government have accepted or rejected a recommendation—

Mr. Boyden

Or made their minds up.

Mr. English

Or made their minds up, or proposed to think about it. If my hon. Friend is so much a believer in the virtues of the Government response, why did it take so long and why has it taken so long for it to be considered by the House?

The White Paper took eight months to come out. I have every reason to believe that the unions, the National Staff Side of the Whitley Council and the Joint Consultative Committee for industrial civil servants, who greatly helped the Committee, also produced their comments to the Head of the Civil Service before the end of 1977, but it was still not until March of the next year that the White Paper came out. We produced another response to that in July 1978 after we had heard certain other evidence. Since then, nothing at all has happened.

My hon. Friend said that we had gained this debate. If he will forgive me for saying so, this debate was not intended to be held in this Parliament. It is held only because nearly a third of the Members of the House were kind enough to sign a motion that I was hawking among them. They represent all the parties in the House —Ulster Unionists, SDLP, Scottish and Welsh nationalists, Liberals, many hon. Members of the principal party opposite and many on this side of the House. There was no debate before what most people expected would be the dissolution of this Parliament ; when we unexpectedly met again there was no debate in the last quarter of last year. Even when a commitment was given that the Procedure Committee's report would be discussed, there was no commitment that this report would be discussed until those many colleagues, all of whom I should like to thank, exerted pressure to see that it was done.

In certain respects, this report has occasionally been misunderstood. It was partly misunderstood at the beginning because the Stationery Office, another portion of the Civil Service, did not manage to publish it until September 1977—although we gave a copy to the Government in July and all the evidence had been given over a long period—at a time when most parliamentary journalists are on holiday before returning for political party conferences. This is a matter of some importance, because when it was received and published, many journalists —as the political editor ofThe Sunday Timessaid at the time—got it wrong.

Those journalists devoted themselves primarily to what they called the minority report of my hon. Friend the Member for Luton, West (Mr. Sedgemore). My hon. Friend has been maligned, I think. He received more publicity as a result, but I am sure that he will agree that he came to me and said that he had no intention of making any recommendation alternative to those to which he had agreed in the Sub-Committee.

There is one recommendation on which my hon. Friend and I agree and which the main Committee cut out, to which I shall come in a moment. He had no intention of making such a recommendation, but he wished to express his views, and under the procedure of the House one cannot express one's views in writing, except at the main Committee, when one is a member of a Sub-Committee. We have considered this on the Procedure Committee and have made a recommendation designed to cure it. It can be cured simply by merely publishing the proceedings of Sub-Committees.

This is a technical point and I wish to say publicly that my hon. Friend carried out entirely his assurance to me. He expressed his views in a well-written alternative chapter I as an introduction, with which I do not agree but which expresses his views. Hon. Members will see that he made no alternative recommendations there.

Of course my hon. Friend disagrees with some of the things that the majority of the Sub-Committee and of the main Committee put in the first of our reports. In particular, many of my hon. Friends were concerned about the paragraph which is now 106, where we said that we concurred with the Government that effective cash limits should be fixed before pay negotiations are entered into. and paragraph 107. In the light of current events I do not need to explain why that was—as it still is—a matter of genuine controversy. Understandably there were divisions upon that in the Committee.

I must take up the point made by the right hon. Member for Taunton (Mr. du Cann). I am grateful for his support of the report. He mentioned the staff of Congress and quoted a very large figure for it. I hope that he will consider a recommendation that was in the Sub-Committee's report but which was cut out by the main Committee. Those who are loosely described as staff of the Congress are sometimes the staff of individual members and sometimes the staff of subcommittees. We were amused to discover when we went to America that the staff of the General Sub-Committee of the Appropriation Committee of the House was three—the number of staff we brought in our party. Sometimes the staff are attached to full committees, sometimes they are the staff of the House and sometimes of both Houses. The General Accounting Office is an office of the Congress as a whole. The right hon. Member said that he doubted that the Comptroller and Auditor General could be a servant of Parliament but his analogy leads us in the opposite direction.

Sometimes such people are on the staff of political parties or party groups. There is scope and good reason for all those types and levels of staffs. A totally different function is carried out by a person working for a party group on a Committee and a person working for the Committee as a whole who is an officer of the House. Those functions are totally different and should not be confused. If one refers to large numbers one is in danger of lumping together different functions.

Mr. du Cann

I said that I was giving a snapshot view of the position in the United States. The hon. Member's description is accurate, but what he has said does not invalidate my argument. There is an amazing contrast with the United States where substantial staffs are available, no matter where they come from and what designation they have, to enable members of the House of Representatives and the Senate to do their work. In this country, although we have a devoted service, the numbers are limited.

Mr. English

Like the right hon. Member, I am trying to do many things in a short time. When the right hon. Member reads the report, he will see that we did deal with this matter. Our primary recommendation was that the House of Commons Commission should take over the Treasury's powers of proposing the Estimates of the House of Commons. That has been done by law, but unfortunately the Back Bench Members of the Commission, by a mysterious coincidence, have not been appointed. That is a traditional ploy of the Executive when dealing with Parliament. If Parliament passes an Act that takes away some of the Executive's powers and gives them to a parliamentary body, by a mysterious coincidence the processes seize up and the body is not appointed. That is what has happened in this case.

There were only five matters of controversy in the Committee and only in one case did the main Committee delete a Sub-Committee recommendation. I regret that because I should have liked the report to mention the desirability of updating the Hardman report on the regional dispersal of civil servants.

The hon. Member for Norfolk, South (Mr. MacGregor) who was then a member of the Sub-Committee, proposed a motion on those lines. He and I voted for it, but we were defeated by one vote. It was a non-party vote because the question of the dispersal of civil servants arouses great passion which is almost evenly divided between the parties. That passion depends upon how many civil servants one has in one's constituency and whether they wish to be there.

It is odd that we should have a dual system of pay that gives people who come to London more money if they are in the lower ranks and yet we say that we wish some civil servants, jobs to be moved outside London. The Hardman report was based upon figures prepared in 1972. Those figures have not been revised although much has happened since then.

On the rest of the report the Committee and the Sub-Committee were in agreement. I am pleased to say that all those recommendations that were relevant to the Procedure Committee have been endorsed by the Procedure Committee.

I am most anxious about recommendation No. 14 in paragraph 42. We recommended legislation which might penalise companies which appoint ex-civil servants from specified jobs without obtaining the concurrence of the Government. In this instance, unlike others, the trade unions were not at all happy. The First Division Association and the Institution of Professional Civil Servants opposed that suggestion. They believed that existing rules of conduct are already sufficiently restrictive. That was not our case. We know the rules of conduct, but nobody is obliged to obey them. There is no sanction.

The National Staff Side said that the change was not necessary because the existing rules were sufficiently tight. It said that it would be opposed to any standards which were more onerous for civil servants than for those outside the service. We did not suggest that corruption outside the service should be permitted. Of course, I am opposed to corruption outside the Civil Service as well as in it. But it has not always been the view that civil servants' standards should be lower than, or the same as, those in private industry. I believe that they should be higher in the Civil Service than outside. It is an extraordinary staff side which accepts the notion that the standards in the public service should not be higher than outside.

The Government rejected our recommendation and, without specifying them in detail, referred to the views of the Salmon Royal Commission on the Standards of Conduct in Public Life. The Government did not mention the Redcliffe-Maud committee's contrary recommendation or the TUC's evidence to the Salmon Commission—namely, that Salmon should do something about it. Salmon said of employers of ex-civil servants that the "unwritten sanction" was sufficient and that "a business organisation" would not lightly contemplate…incurring the Government's disapproval. I often wish that working papers could be submitted to ensure that Ministers are told the facts. My staff told me what had been said by Salmon. But I wonder whether Ministers who sign their names to such responses know what has been said. In this case Ministers seem to say that legislation is undesirable because arm-twisting is better.

Have we not heard that argument before? Have we not experienced that argument in relation to Ford and to the road hauliers today? When it is possible that people are being corrupted by the anticipatory offer of a job, there is no doubt that some legislation is necessary to back up the existing rules which have no meaning without such legislation.

So weak was the Government's reply that the Lord Privy Seal, when giving evidence before we produced our second report, undertook to reconsider the matter. However, on 26th June he reiterated it partly on the ground that it should apply to others—the others mentioned being Ministers, some Members of Parliament "— that was meant to frighten us off it— members of fringe bodies, employees in the nationalised industries and officers in the Armed Forces ". If one looks elsewhere in the evidence, one sees that it does apply to such officers. The list also included local government members and officers and employees of commercial firms working on Government contracts. In other words, it was said that it should be made as large as possible so as to make it look as frightening as possible.

It was also said that means already existed in the law of corruption. Why have any rules if means already exist in the law? The last excuse of all was that a crowded parliamentary timetable would prevent us from enacting this small piece of legislation. As I said earlier, the present debate was not intended to be held in this Parliament. It was said that applications comprise only 10 per cent. of those who leave at under-secretary level or above. I do not know what that means. Anybody who is going to obey the rules obeys them and applies, and anybody who does not obey the rules does not apply. It is as simple as that.

It was said in the letter that the purpose of the existing business appointment rules—is to reassure the public and the business community on the impartiality of State servants. Therefore, we have a set of unenforceable rules published merely to reassure the public. That is what it is all about. Nobody who seriously considers the issue thinks that there should be unenforceable rules as distinct from a set of rules backed by a modest statement in the law so that they can be enforced.

That was only one recommendation that was rejected. I wish to be fair to the Government who accepted many of our recommendations. Indeed, they accepted with alacrity almost all of our recommendations on pay and pensions. Those were accepted in November 1977, long before the Government's reply was published. I emphasise the fact that they were accepted after discussion with the trade unions. Therefore, we shall have, in theory, from 1st April the restoration of comparability and the Pay Research Unit under a board which is to be somewhat more independent than was the previous board.

On the subject of boards, the Minister said that the Goverment had accepted some recommendations and rejected others. What did he mean by that statement? We suggested that the Civil Service Commission should contain a majority of part-time outside non-civil servant members. Therefore, the Minister accepted two out of six, which on my arithmetic is a minority. Does he call that acceptance or rejection? In fact, it is a compromise. However, he did not have a category relating to compromise. He had only a category of acceptance or rejection. Presumably he has forgotten some of these recommendations.

The strange aspect is that, having accepted all those recommendations on pay and pensions, some of which are vitally important because the restoration of the Pay Research Unit and comparability will affect pensions and pay—and in present circumstances the date of 1st April will be an interesting one indeed which is looked forward to eagerly by hundreds of thousands of civil servants and possibly even by millions in the public sector—the Government rejected our recommendations on efficiency. It said "Yes" to pay and pension proposals, but turned down our proposals on efficiency. I find this very sad.

For example, we suggested that the Ultimately responsibility for monitoring the control of efficiency should be vested in the Treasury. I am afraid that the trade unions are very much against that suggestion and the Government have not yet reached a conclusion. I think I understand why. If one wishes to change the functions of departments of Government, this is perhaps best done after a General Election rather than before. But I do not see why the Government cannot announce what they consider should be done if they are restored to power after the next election. The same could be said of the Opposition, because it would be interesting to know the Opposition's view on this matter now, before the next election.

We suggested what I shall loosely call an efficiency commission. Sir Norman Price, the Chairman of the Inland Revenue, mentioned, as has been stated earlier, various ways of ensuring more efficiency. He also gave evidence to the effect that it was not the job of the Inland Revenue Commission to introduce such changes, and implied that the Commission relied on the Treasury to tell it to make them. The Treasury's view was that it is not its job and that the Treasury can change the law on taxation only in principle and policy and so on.

We took evidence from the civil servants in the CSD who said that each individual department was responsible for efficiency. Finally, we had evidence before our second report, but long after our first, that the CSD is ultimately responsible for the efficiency of government. The matter is not very clear. What is clearly needed is some organisation to consider this topic. I gave the analogy of the Law Commission. My Sub-Committee preferred an analogy with non-lawyers rather than with lawyers. The analogy in the report is with the comité centrale d'enquête which did a very good job for many years after the war in making recommendations on efficiency. It would be a good idea to have somebody who is not involved in the current processes and intricacies of taxation law or social security law or something of that nature making suggestions as to why and how changes can be made and the position improved.

It is important that we should consider bow to give incentives to individual servants in the matter of efficiency. We do not want individual servants to have the incentive of the sack, for the good reason that they are civil servants. We do not want successive Governments to sack people whom they dislike on the grounds that they are inefficient. That is why civil servants are difficult people to sack. It is one of the bulwarks of the Civil Service in a society such as ours. That principle even applies to the civil service in the United States, but in the United States increments can be speeded up or withheld. The National Staff Side is "totally opposed" to such a suggestion, as the Government says, but the Government agree to research into the subject. I am not sure what is meant by research. Many nations have adopted such a proposal, and if the Government say that research work is necessary, why do they not have an experiment and try out the proposal in a Department or area of State? I do not see how the Government will carry out research into the matter, other than by discovering the practice in other countries, without trying the system in practice.

Our most important recommendations were those on parliamentary surveillance. We recommended that the Exchequer and Audit Departments Acts should be amended. They date from 1866 and 1921, and therefore it is not unreasonable that those Acts should be amended. We suggested that they should state as a principle that the Exchequer and Audit Departments may "— and I stress the word "may "— audit any accounts into which ;public money goes. We did not suggest that the Exchequer and Audit Departments should be the sole auditor of every person in the public sector—all 7 million of them.

We suggested that the Comptroller and Auditor General should be the supervisor of all the audits. If an auditor is a private firm of auditors, it would be a good move if that private firm of auditors were responsible ultimately to the Comptroller. It has been argued in relation to private industry whether auditors should always be responsible to boards of directors, and so forth. However, there is no need for it in public industry. We could easily make the auditors of British Rail, for example, responsible to some body other than the board of British Rail but still remain private auditors.

These details are relatively unimportant. We know perfectly well that there must be consultations with many interested groups, the accountants, local government, nationalised industries, the various quangos that have escaped from the system. That is not the point. The real point is that there should be a revision of the Exchequer and Audit Departments Acts by the normal process of consultation so that all these things can be considered. It is that that the Government rejected. They even rejected talking about it. They did not merely reject some of the details that I think are arguable. They rejected the idea of even talking about an Act passed in the last century and an Act passed over 50 years ago. I think the right hon. Member for Taunton will agree with me on that, although we might disagree on the details.

The Government rejected that idea with this comment: Whenever new public sector or quasi-public sector bodies are set up—the Government will continue to consider carefully whether the C and AG should audit or have access to their accounts. That is a sheer, complacent piece of arrogance. The Government are saying that they will continue to consider carefully whether they should be subject to auditors. It boils down to whether something under the Government's responsibility should be properly audited. I am sure that some odd parts of the fringes of British industry would love a situation in which they only had to "consider carefully" whether they were audited.

The Comptroller and Auditor General's version is quite different. He said something with which I agree: when a new departmental function is hived off to a new public body it should be standard practice— that his department should be able to audit it.

Mr. du Cann

I totally agree with what the hon. Member said in the concluding sentence of the last part of his speech. Every hon. Member would agree that it is intolerable that we should still be waiting for permission for the Comptroller and Auditor General to look at the bodies to which large amounts of public funds have been voted by this House. But on the point that he made about "may audit any accounts ", I see that the recommendation says that, but he will see that the following sentence contains the word " always ". That is the reason for the confusion of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).

Mr. English

We suggested that the Comptroller and Auditor General should always audit accounts where the bulk of receipts into the accounts is public money. Unless the right hon. Member for Taunton is defining public money in a way that we did not intend, I do not think that even British Rail with its deficit would say that the bulk of its receipts are from the Exchequer rather than from the individual customer.

The Government went on to say that it is of cardinal importance that the C and AG should not be subject to directions from any quarter… I agree. Why then is he? When the Minister replies will he explain why the Government first said that they thought that it was important that the Comptroller and Auditor General should not be subject to directions from any quarter, and why he actually is?

The right hon. Gentleman may not be aware that the Comptroller and Auditor General already is entitled under the Exchequer and Audit Departments Act 1921 to look at any account anywhere, even that of a local cricket club which does not receive public money, subject to one condition, merely that the Treasury tells him to. I have checked the meaning of section 3(1) of the Exchequer and Audit Departments Act with a lawyer in the service of the Crown and have learned that in effect it says just that. Section 3(3) goes on to say something much more serious: If in the course of any such examination any question arises between the Comptroller and Auditor General and the accountant, it shall be referred to the Treasury, whose decision thereon shall be final. In other words, if one does not like what the auditor has said one can tell him to chase off. That is the peculiar power of the Treasury.

There are many people in many parts of industry who might think it amazing if they were given the power to tell their auditor, in effect, to exclude from his report something that they wished excluded. That is the effective meaning.

Lastly, and most importantly, until 1975 our audit did not have a truly professional staff. It was not allowed to recruit graduates, and did not do so until 1975. Although the recruits took an examination, they did not have a professional qualification. They are now taking the professional qualification of CIPFA, the financial accountants and public accountants. The reason for this was simple. The audit's establishment and pay were determined by the Treasury and the Civil Service Department. The body being audited was allowed to decide what its auditors should be paid and what their status should be.

Dr. Normanton, who was quoted by the Procedure Committee, said that the "administrative subordination" of the Exchequer and Audit Department had had a momentous; long-term consequence… the status of British auditors was fixed at a level in the public service which was unquestionably the lowest of any major country in the Western world ". When one considers the history of the Crown Agents, who can disagree? I am not talking about the mere peculation in the Crown Agents. That can happen anywhere. But when a body of auditors has existed since 1866 in its present form and in the whole of that time it never realised that every payment being made by one quango was illegal, one has to ask why. The reason is that it did not have any lawyers. It presumably had to rely on the lawyers of the Crown.

There have been arguments as to whether the Comptroller and Auditor General is a servant of the House. He is not a servant of the House. He is referred to as such in many speeches and documents but he is in fact a civil servant. One must conclude that Ministers' civil servants do not always tell them who is a civil servant and who is not.

What was most disappointing about the Government's response to our report was that it was inaccurate. This was the last subject on which I thought I would see inaccuracy. On one minor point it actually misquotes our report. Elsewhere it adopts the technique of replying to things that we did not recommend or not replying to things that we did recommend. Those are well known techniques, but I think that they are a little cheap. But I did think that the Government would get their facts right. It is said in the Government's reply to our very last recommendation, in which we suggested that there should be an agreed definition of a civil servant, that the most important distinguishing characteristic is service on behalf of the Crown ". It is not. The Superannuation Act 1965 —and I doubt if any person who currently receives benefit from it would like to be excluded—says in section 98(2) that a civil servant is a person serving in an established capacity in the permanent civil service …"— of the State, not the Crown. It goes on to say that such a civil servant may be a servant of the Crown or may be somebody who is given a certificate to the effect that he is one by the Civil Service Commissioners—in other words, not a servant of the Crown. People who I would have thought were servants of the Crown, such as members of the Royal Household—for instance, Her Majesty's Private Secretary—are not civil servants within certain meanings, although they are paid as if they were, at the rate of a deputy secretary in his case. The servants of this House who do not serve the Crown but who are employed by the House of Commons Commission are civil servants within the meaning of the Superannuation Act 1965. The whole thing is a hotchpotch.

The object of this exercise is to exclude the employees of what we nowadays call quangos. It sounds so much nicer to say that there are only 750,000 civil servants and not 2 million or so, which one would have to do if one included the National Health Service, or nearer 3 million if one included various other groups or even 7 million if one included the public sector as a whole.

The history of this is interesting. The words "civil servant" were actually coined not for servants of the Crown but for members of a quango. These were the civil, as distinct from the military or naval, servants of the East India Company. I cannot resist quoting something that was said in this House about the earliest civil servants. The quote goes: Animated with all the avarice of age and all the impetuosity of youth, they roll in one after another, wave after wave. There is nothing before the eyes of the natives but an endless, hopeless prospect of new flights of birds of prey and passage with appetites continually renewing for a food that is continually wasting. It goes on to say: Their prey is lodged in England. That description came from Edmund Burke in making the point that unless we took steps to control at least one civil service we might lose India in the same way that we had just lost America.

The National Staff Side asks us a relevant question when it says: Despite unfounded criticism and hostility from a number of quarters, the Service has continued to operate most effectively and we consider it would be appropriate for the General Sub-Committee and the House of Commons to acknowledge this fact. Of course I do acknowledge that. However, it goes on to say that: Doing so will be a well-deserved public recognition of the overall efficiency and devotion of the Civil Service… It hopes that Parliamentarians will take this opportunity of expressing due appreciation of the Civil Service and that any criticism offered will be constructive… I do express such appreciation and I hope that our criticism has been constructive. But I do not like to see the items rejected being recommendation 23 on what I call an "Efficiency Commission," chapter IV on accountable units, which is rejected basically because there are hardly any more accountants in the Civil Service now than there were when the Fulton committee reported, and above all, the recommendations on audit that we have discussed.

I ask every thoughtful and honourable civil servant who serves the Executive and the State to consider the fact that when the Select Committee on Civil Services Expenditure reported in 1873, Britain controlled the greatest empire in the world. If one thinks of the situation of the United States, Russia, China and Japan then, compared with that of Britain, one will see what I mean. Where are those countries now, and where are we?

The primary responsibility for that change must lie here in Parliament. But I do not think that anyone who serves us can say that he is utterly unresponsible for all the events that have come to pass in the last century—approximately the century of written Civil Service examinations and the modern Civil Service as it is today. One must say that this country is not actually very efficient. Its inefficiencies must, in part, be laid at the door of the system of government. They must be laid in part at the door of the politicians and also in part at the door of those who serve them.

6.35 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I have the honour to speak after the hon. Member for Nottingham, West (Mr. English), who is Chairman of the Sub-Committee. We are all in his debt for the tireless work that he did as Chairman in preparing this report. As the hon. Member for Bishop Auckland (Mr. Boyden) said, in paying tribute to the hon. Member for Nottingham, West, he has succeeded in getting hon. Members with such different and disparate views to agree to such a large proportion of this and other reports. As a member of the Sub-Committee, I add that he has always shown the utmost courtesy and care in making sure that we were all going along the same lines, and I am grateful to him.

It is important that this is an all-party report, signed by Members in all parts of the House with different points of view. That means that the report is something that can be taken down off the shelf by succeeding Governments in years to come and shown to civil servants by Ministers who can say that they want progress in implementing it. It is also something upon which Parliament can continually ask for progress in its implementation. It is not a report produced by one group or party. It has the stamp of authority of the whole House in so far as it has sought to find ways forward, particularly in the efficiency of the Civil Service.

This was the area in which the Government's response was most disappointing. I agree with the hon. Member for Nottingham, West in his criticism that the tone of the Government response was remarkably cavalier—almost dismissive of the central theme of the report, which dealt with the efficiency of the Civil Service.

I do not wish to go into the many amusing, interesting and difficult points that I have described as the "battle of Sedgemore "—the matters that concern the relationship between Ministers and civil servants, about which the hon. Member for Luton, West (Mr. Sedgmore) has such strong views. Indeed, I rather agree with them. Neither do I wish to refer to the dispute about bashing the Oxbridge graduates, because I believe that that is rather a false trail.

I want to try to integrate the question of what we are to do about the large number of people who owe us in Parliament, and through us, the taxpayers, the assurance that they are organised and that they work in the most effective way possible. The present strength of the Civil Service is about 730,000. When I was a Minister we were asked to reduce the number of staff in our Department, which was just over 14,000. The advice came back that it was quite easy to do so if we made certain parts of the Department into hived-off quangos. They would then disappear from the figures. Indeed, the greatest reduction in the number of civil servants came about when the Post Office was made into a nationalised industry.

That is not what we should do. Whatever the figure is whether it is the 2 million quoted by the hon. Member for Nottingham, West or the 731,000 quoted by the Government—we do not know whether half that number could do the job, whether three quarters of that number would be right, or whether it is right as it stands. In any cost-conscious commercial organisation systems are invented, improved and tested until those who are responsible are certain that they have done their best to secure economy in the running of that concern. They have to do so. That is because their competitors are doing so.

Large insurance companies, banks, or manufacturing companies have to maintain the pressure for economy and cost control. If they do not, they become uncompetitive. Management systems have to be invented whereby those responsible are able to know pretty well whether their expenses are on target. We tried to sketch out—it was our central theme, and should be integrated in my remarks—a possible way of doing that within the Civil Service. We did not have the knowledge or the time to do that totally.

We believed that there should be a process of breaking down into accountable units so that each group had an area of work and so that they were controlled by one man, the head of the unit, to whom they would be responsible and who would be responsible higher up. We believed that the accountable units should coincide with cash limits, so that Parliament and the public could identify the accountable units and would know the extent of the cash limits. We believed that the cash limits should be added up to form the cash limit for the large blocks in the Government's White Paper. That may be a simplistic proposal, but at least that would provide a system of control.

We also want information. How can we possibly say whether the British Civil Service is efficient unless we know what it costs to perform certain tasks? There are two obvious ways, and others that are less obvious, to determine unit costs. For example, how much does it cost to pay one pensioner's pension? We do not know. However, we can compare the cost of paying a pension in other countries. What does it cost to maintain I sq. ft. of Government office accommodation, to service the unit, to clean that accommodation and to furnish it? Again, we do not know. It is easy, however, to make comparisons. We can compare not only the costs of such operations in other countries but the cost to the private sector.

I asked representatives of the Property Services Agency when they last obtained tenders to provide office accommodation, to maintain buildings and to repair Government equipment in need of repair. The answer was that they were not intending to obtain tenders. They did not want to know about costs in the private sector and they did not intend to find out.

I asked the head of the Department of Health and Social Security whether he had asked the major computer companies for tenders for paying out the old-age pension. That operation does not have to be performed by civil servants. Even if it conceded that, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, probably it is better that in Newcastle the job should be done by civil servants, we could at least ascertain whether the Civil Service is carrying out that task efficiently by obtaining information on who would do it at a different price.

There is no attempt to assess that information. The Government are totally negative in their response to our plea for unit costings and for putting other work to tender to find the costs in the private sector. There is an absolute refusal to consider that approach.

I turn to the question of the common services. It is clear that there is no way that we can make a man responsible for the efficiency of the work that is done in his accountable unit if we provide for him free stationery, free office accommodation and free telephones and communication equipment. That man should be made to pay the costs of those services to the Property Services Agency or the other common service agencies. In that way the costs of his block of work would reflect the true cost and could be examined.

I am not a management consultant. I could not possibly justify asserting that much that is in the report is absolutely right. Hon. Members do not have the time or the skill to do so, but we should be given the assurance that something on the lines that I have suggested will be carried out.

When we said that the Civil Service Department should be split into two and that staffing inspection should go to the Treasury, we were not saying that capriciously, to snub the Prime Minister, who is thought to prefer some alternative solution. We adopted that approach because it is vital to any form of managerial efficiency that the man who pays the cash should be responsible for stall inspection. In the instance to which I have referred the Treasury is so responsible. It seems crazy that the CSD should be able to say to the Treasury "The staffing is all right, so you pay the money to pay for the staff ", when at the same time the Treasury is responsible for getting value for the money that it spends. We cannot divide those two functions. There has been no answer and no response from the Government.

We cannot accept the lack of knowledge and the lack of certainty about the efficiency of our public service. It seems that the CPSA requested that a statement be made—it was done almost under duress—to the effect that it is marvellously efficient. That seems almost to suggest that it is not. I have never suggested that the service is not efficient. I have the greatest admiration for our civil servants. I merely say that public accountability demands that the Civil Service is so organised that it is proved to be efficient rather than we should simply take its word for it.

How can that be done? My right hon. Friend the Member for Taunton (Mr. du Cann) said that we alone could perform that task. He said that it could be done in the House and that Parliament should insist upon that. We can insist that something be done, but we cannot get it done. As parliamentarians, we make a mistake if we involve ourselves in detailed, painstaking work of vast proportion that we are not really equipped to deal with, however many staff we have to help us. We have to debate, investigate and vote upon the great issues of the day as they arise. We must not get bogged down.

I now strike a slightly discordant note. There are those who believe that Select Committees are the answer to all our problems. The problem is that those who carry out the work of Select Committees are hardly heard again. They will hardly be heard in the Chamber, seen on television, or read in the newspapers. That is because they are trying to do a job that more technical and less flamboyant characters could do better.

Who is to organise the Civil Service for us? We cannot ask the heads of the Civil Service to do it. That would be like asking Mr. Weighell to organise a plan to cut out the overmanning of British Rail. We could not possibly leave the task to the Civil Service. Ministers cannot do it. In the Department for which I had responsibility, the Department of Trade and Industry, there were about 14,000 civil servants. We did not know them. We could not possibly meet them. We did not have time to think about organising that number of civil servants. We had to perform the political functions of a Ministry and not the managerial functions.

It may be that the Minister should be responsible for performing such a task. He would have great problems. He would need the seniority, importance and backing of the Cabinet to go to the Departments and insist on accountable units, proper reporting and proper auditing techniques. I should support him to the hilt if he tried to do so. Although we like him, we feel that he has not distinguished himself by heating his brows to the point where he achieves accountable units in the Civil Service.

Maybe we should look elsewhere. My view is that it might be necessary to appoint commissioners who could be Cabinet Ministers. They would go round the Civil Service installing the proper management structures and accountable units, having their power direct from Cabinet to insist that these things be done. I am not unaware of the fact that I am putting forward something that is contentious and strong, but I believe that public opinion will no longer tolerate the uncertainty about the efficiency of the Civil Service, to put it at its least.

We say in the report that we should bring in cash limits for each block of spending and that those cash limits should be agreed before the Civil Service pay round. That is a contentious recommendation if ever there was one, but it is one that is fundamental to what I am trying to say, because it changes the whole game.

Once we have a cash limit of, say, £10 million for one accountable unit, the head of that unit can pay his civil servants twice as much if they perform twice as well. It is the most revolutionary proposal in the whole report, and if civil servants preferred to stick to present numbers—that is, overmanning—they would not get the increases that their colleagues got. Hon. Gentlemen laugh at that, but it seems to me to be the way in which we have prospered over the centuries, because those who do better get more. That is the way productivity and the standard of living are increased. It is most difficult to do in the Civil Service, and easiest in the commercial field. That is not a reason for laughing at it; it is a reason for trying all the harder to achieve it.

6.53 p.m.

Mr. William Molloy (Ealing, North)

One of the interesting features of the Eleventh Report on the Civil Service is a phrase in the introduction which states that It is 104 years since a Select Committee of the House of Commons enquired into the civil service as a whole ". The Minister said that there had been a report on the Civil Service as recently as 40 years ago. I do not know who is accurate, but I welcome the remainder of the introduction, which says: we recommend that in future the various aspects of the civil service should be regularly reviewed by appropriate committees of the House. I hope that when that takes place we shall not have quite such a big discussion about the House of Commons and its responsibilities, the civil servants who man the various Departments of State, and the principles involved. I hope that there will be a closer examination of the men and women of the Civil Service. We should get away from the habit of referring to them as units and numbers and remember that they are people who are doing a very useful job.

I hope that future examinations of the Civil Service will take full cognisance of the representations of the National Staff Side. We should appreciate that the National Staff Side represents 590,000 non-industrial civil servants with a vast range of tasks, which they perform with dedication and efficiency. There has always been criticism—and in some quarters vicious hostility to civil servants —by people indulging in the national pastime of poking fun at all levels of the Civil Service. It has now got to a level which I find distasteful. I hope that the House will agree with me in that. Such activity might impress the vulgar and gratify the malevolent but it does not do anyone in this House any credit to join in this sort of vulgar chorus.

As in all human associations, there are errors and even occasional lapses from standards. There are failings to be found in any organisation, public or private. Very often these errors are made not by civil servants—particularly those in lower grades—but by this House. If there were any truth in some of the offensive criticism levelled at civil servants the public administration of this nation carried out by our civil servants would not be, as all fair-minded people say it is, the best in the world.

I am always impressed when I travel abroad to Commonwealth countries and meet people who have, as it were, served an apprenticeship either in the House of Commons or in a department of the British Civil Service and I believe that Parliament's attitude must reflect the well-deserved public recognition of the efficiency and devotion of our civil servants.

There is, however, a threat to that efficiency. That threat concerns recruitment to the service in both general and specialist areas. Up to now we have had a high-flown debate about high-level people in the Civil Service, and their relationship with policy as decided by the House of Commons. We should be remiss if we did not recognise the aspiration of the lower grades of civil servant, and I say clearly to the House that there are shortages of both operational and supporting staffs in many areas of the Civil Service. This is becoming an acute problem, especially in London and the large conurbations. Recruitment and wastage problems at a time of high unemployment are disturbing. They must surely indicate the uncompetitive level of Civil Service pay which, if not remedied, could produce a deleterious effect on the service. I believe that the Minister realises the gravity of a situation where more than 50 per cent. of our civil servants are paid wages below the national average. I hope that my right hon. Friend will note that last sentence, realise that it is important, and make an appropriate comment when he replies.

I wish to highlight one or two other matters which lie close to the hearts of the Civil Service unions. There is a need for a greater degree of central monitoring in training. I understand that this is now under discussion between the Civil Service Department and the Staff Side. The Staff Side believes this to be an important issue. I hope that the discussions will continue—although not for too long—and will produce a fruitful solution.

The Staff Side also attaches great importance to job evaluation. If we are to understand the complexities and difficulties of the Civil Service, it behoves us as parliamentarians to understand precisely the sort of work which it carries out. If we can assist the Civil Service in getting a sensible system of job evaluation we shall have done a service to the Staff Side, as well as increasing our own knowledge.

Another important issue concerns open reporting. This procedure, supported by the Staff Side, will undoubtedly contribute to job satisfaction. The system will improve when the CSD takes on board the outstanding features of the Staff Side's proposals. These are mainly to do with the fact that when an individual is reported upon, unless there is such a method of reporting in operation, he can be acted against without his knowledge. In this way an individual is denied a basic freedom.

There is a major defect in the Eleventh Report. That report concentrates excessively on the upper echelons of the Civil Service. It appears to be unaware that the vast majority of civil servants are in the lower echelons. The report, and the debate, has concentrated on the crown of the tree at the expense of the vital roots. The captains receive the concentration, the troops get very little acknowledgment. My right hon. Friend must mark and correct this.

I wish to refer to the Pay Research Unit, which is dealt with in the report. There are many misconceptions about the pay research system. It is not, as many assume, a device to featherbed civil servants. Quite the contrary. It imposes upon the Civil Service negotiators far greater discipline than is the case in almost any other industry. Because of the pay research method, pay negotiations in the Civil Service are highly structured. There is less opportunity than is the case elsewhere for meandering around the subject.

It is worth stressing that the Priestley Commission, in 1955, recommended this form of pay determination on the grounds that it would take the Civil Service out of the political arena. Pay research does not command universal support among civil servants, many of whom distrust it. The alternative is the pay bargaining that is well known in other industries, which would inevitably lead to frequent confrontation between the Civil Service and the Government, to the disadvantage of both.

The public sector pension schemes form another vital issue for the National Staff Side. This is an area abundant in misconceptions. The most common is that civil servants receive their pensions absolutely free, in addition to their pay. The reality is that the difference between the Civil Service pension scheme and outside pension schemes—both in respect of contributions and benefits—is taken fully into account in the pay determination process. In other words, although the Civil Service scheme is non-contributory, civil servants pay for their pensions in that their rates of pay would unquestionably be higher if their pension scheme was contributory.

I come now to pay and performance. This is a subject on which there are the most grotesque misconceptions. Incremental scales are in no sense peculiar to the Civil Service. The service retains such scales because they reflect what is a common practice in the white-collar sector of private industry, particularly in banking and insurance. There appears to be an assumption that incremental scales represent a quite uncovenanted benefit to the civil servant. This is not the view of civil servants, by whom incremental scales are uniformly disliked. As the National Staff Side has said from time to time, incremental scales are merely a way of deferring the rate for the job. This is in contrast to the practice in the blue-collar sector of industry, where the rate for the job is paid immediately upon a person coming out of apprenticeship.

It is noticeable that the annual conference agenda of every Civil Service trade union is packed with motions calling for the abolition of incremental scales. Existing disciplinary procedure provides for these scales to be withheld in cases of indiscipline. It would be utterly deplorable if there were to be some system by which, as a result of arbitrary and subjective judgments as to performance, a civil servant were to be delayed even more in reaching the rate for the job. The result of such a move would undoubtedly be to create massive resistance on the part of civil servants and an acceleration in the pace of the demands calling for the end of incremental scales.

Political democracy, as I understand it, enables us to bring to the agenda of political discussion the welfare of ordinary men and women. Any form of authoritarianism, fascist or communist, removes this aspect. There is no free and open discussion of the situation of ordinary men and women. If this subject is placed on our polictical agenda it demands our consideration. The decisions of this House, particularly when we seek to enhance and improve the lives of ordinary folk, depend for their implementation upon the civil servants. It is they who must make a reality of what we have discussed and decided. We could spend much time criticising the men and women who make up our Civil Service at every level —no doubt there are faults and irritations —but we have to see the matter in this light.

The civil servants make a massive contribution towards making a reality of the ideals that the House embodies in its legislation. It behoves us to see that members of the Civil Service obtain the sensible acknowledgment and just reward to which they are entitled.

7.9 p.m.

Mr. Kenneth Baker (St. Marylebone)

The hon. Member for Ealing, North (Mr. Molloy) has made a good defence of the Civil Service, particularly from the union point of view. He had a good and full brief. He rightly reminded the House of the various assets of which we should be proud in the Civil Service. If we were to strike a balance sheet for the Civil Service there would be on the assets side the almost total lack of corruption and political manipulation. Certainly there is no "spoil" system operating throughout the Civil Service. I am glad that that does not occur.

I think also that on the assets side there is the fact that most civil servants, judging from my experience as a Minister, are thorough and fair people and try to make the right decisions for the benefit of the citizens of the country. But the Government should appreciate that there is a degree of resentment towards the Civil Service, which has always been evident in our society but is probably rather sharper now than in the past. The reasons for that resentment are several.

First, there is undoubtedly a feeling in the country, and many ordinary people have evidence, that the Civil Service is more pervasive today as our society becomes more complicated. There are more civil servants making decisions affecting our lives in one way or another than there have ever been in the past. This has led to a fairly steady increase in numbers.

I say "fairly steady" because when the Conservatives were in office, when I laboured in the vineyard of the Civil Service Department, it was the only period this century which saw a decline in the overall numbers of civil servants. But by and large the trend has been upwards. It has certainly been upwards under the present Government. There are now 30,000 to 40,000 more civil servants than there were in 1974. That is a cause of resentment among many people. Again, it is not a new complaint. George Orwell described civil servants as having prehensile bottoms. But there is a tendency for bureaucracy to increase in size and numbers which is resented in the country.

The second point of resentment is that the Civil Service seems remarkably insulated from the slings and arrows and blows which affect people in other walks of life, particularly in job security. If one enters the Civil Service, unless one is caught with one's hand in the till, one will die a civil servant. That is not the pattern in the private sector.

Thirdly, there is the feeling of resentment which finds its most articulate view in that of the hon. Member for Luton, West (Mr. Sedgemore), that the civil servants, or certain senior civil servants, really run the country and subvert the political will of Ministers, particularly Labour Ministers, and particularly Socialist Labour Ministers. He has expressed that opinion in his very engaging amendment to the report. I believe that he continues it in the theme of a novel that he has written which a publisher's blurb has described as being about lust, sin and retribution in Whitehall. If the novel lives up to that description, I hope that the hon. Gentleman will send me a copy.

I do not share the hon. Gentleman's paranoia in the belief that there is a Whitehall mafia trying to subvert and destroy Ministers. I think that the Left wing of the Labour Party, and particularly the Secretary of State for Energy and his colleagues, has a belief that there is this mafia that is constantly trying to defeat the honest views of Socialism when they come up in Cabinet or in Whitehall. I do not believe it. I believe that if such views are defeated it is not civil servants who are to blame but the politicians who put them forward. Who knows but that these extreme Left-wing views are found by other Labour Ministers not to be attractive, sensible or effective? So I say to the hon. Member for Luton, West and the Left wing of the Labour Party, to coin a phrase, "The fault, dear Brian, lies not in the civil servants but in yourselves and your underlings."

The report we are considering makes many important recommendations, and I think that the Government's response has been exceedingly shabby. I thought that the Minister's speech was thin and vague. There are many things on which the Government have not commented. The two important ones—recommendations 52 and 53—relate to departmental Select Committees. One would have liked to see a rather more positive response from the Government on that issue.

There is a report from the Select Committee on Procedure recommending a complete change in our Committee system. I am a strong supporter of such a change because I do not see how we can change the imbalance between the legislature and the Executive without a changed Committee system in this House, and the sooner we have such a change the better. Then, the work of the Civil Service and of the Treasury would be looked at and examined by a Select Committee shadowing the Treasury and the Civil Service Department.

The Select Committee on Procedure recommended that one Select Committee should shadow both Departments. I believe that, if we had that system of Select Committees, much of the detailed scrutiny which my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) talked about could be dealt with, because one of the functions of those departmentally-related Select Committees would be to go through the Estimates of their Departments in some detail, a task which has not been done for many years in this House and which this Chamber is very unsuited to do. Properly staffed departmentally-related Select Committees could do it.

The Government have said that we are to have a debate on the report of the Select Committee on Procedure, and I ask the Minister to convey to the Leader of the House and other ministerial colleagues that it should not be for the Government to decide which particular recommendations of the Procedure Committee they agree with and then table and which we are allowed to vote upon. If the House of Commons is really in charge of anything, it should be in charge of its own procedure. The line of the Government should be not to debate in Cabinet and discuss at ministerial meetings which parts of the Procedure Committee report they are prepared to select for us to debate. They should table all the Procedure Committee's recommendations and we, the members of the legislature, should decide which of them we accept and which we reject. If we cannot be trusted as Members of Parliament to be in control of our own procedure, we can be trusted with nothing. I hope, therefore, that the Government will follow the course of action I have suggested.

The other matter concerning the machinery of government which the report of the Expenditure Committee deals with is the recommendation that the Civil Service Department should be split, with the control function going back to the Treasury, leaving a sort of personnel department. The Minister said nothing about that aspect. He should have done. He said that it was a matter for the Prime Minister. He has just been out of the Chamber. I do not know whether he went over to Downing Street, knocked at the door of the Cabinet room and said "Prime Minister ", or "Jim" or "Sir ", whatever he calls the Prime Minister, "please let me have a decision on this urgent matter because the House is pressing me." Somehow, I feel that the Prime Minister would have had some views about the CSD if he had been asked to make such a decision tonight. But it is time that we had the Government's views on this matter.

I do not agree with that recommendation. I believe that the Treasury should be split. I have argued this elsewhere. I would divide the Treasury into a department which dealt with overall economic policy and financial and fiscal matters and the whole economy, under the Chancellor of the Exchequer, and a department, a sort of Budget department, headed by the Chief Secretary, as a senior member of the Cabinet, with the CSD reporting into that department. But this is almost a doctrinal matter when it comes to matters of the machinery of government. The important thing is that the control over cash and manpower should be better co-ordinated than it is at the moment.

I turn now to two related matters. I am glad to see the sections in the report on the question of index-linked pensions. The Conservative Government introduced index-linked pensions for civil servants. My hon. Friend the Member for Guildford (Mr. Howell) did it on that Government's behalf, and, in a rash moment of benevolence as a junior Minister, I extended the privilege to Members of Parliament. We are all beneficiaries of the system and I am not apologetic about it.

But it is important to understand that many people outside believe that it is a very cosy life indeed for those in the public sector who have index-linked pensions, and the scheme can be justified only if the present generation of public sector employees pay the going rate for indexation. It is clear that they do not. The Civil Service is getting indexation on the cheap. So are most of the public sector funds.

The Civil Service had a reduction last year of 1.75 per cent. for the benefit of index linking. The Government Actuary, in a report to the Select Committee, agreed that this figure was too low and recommended a figure of over 3 per cent. An independent actuary said that it should be more like 5 per cent. No doubt the Government Actuary has already made a submission to the Government as to what the reduction ought to be. That is to be printed and it will be subject to close scrutiny by the outside pension interests and by actuaries, because they will want to know how the financial justification for index linking is worked out. I suspect that the deduction should be quite significant. The soundings made in the private sector suggest that it should be. I believe that the index linking of pensions can be justified only if the present generation of public sector employees pay at the proper going rate.

Mr. Ridley

Working out the deduction entails estimating the rate of inflation. One of the awful things about that is that it appears that the Government Actuary is made to accept the Government's estimate of the rate of inflation which is clearly put out for electoral purposes. That is another difficulty.

Mr. Baker

One of the things that the PRU will do now that it has an independent board is to look into the mechanism of how the deduction is calculated. I have the greatest confidence in the Goverment Actuary. He is the doyen of the profession. But at the end of the day he makes a personal judgment, because actuarial science is not exact. It may well be that there should be three actuaries who examine the factors. It will be incumbent upon the Government when the findings of the PRU are published to make it clear that the going rate is deducted from Civil Service pay awards.

I should like to mention the PRU itself. I believe that the principle of pay research is good and fair. Successive Governments have always made it subject to the overriding considerations of incomes or economic policy. The Select Committee endorses that in recommendation 31 which says that cash limits should prevail and any findings of the PRU should be dovetailed into the cash limit. This is one of the recommendations upon which the Government have been singularly silent. Clearly this will be made a point of conflict during the next two or three months. I hope the Minister in his reply will refer to this.

There is a sense of injustice in the Civil Service that it has been left behind. Pay research is designed to allow it to catch up. How much will it be allowed to catch up this year—the entire amount of the findings, part of them, or that part within the cash limit?

I am not opposed in principle to establishing the pay of this part of the public sector—nor, indeed, many other parts of the public sector—by a series of relativity exercises. One of the greatest problems facing the country is how to determine the pay of a large public sector which employs between 6 million and 7 million people. There is no easy answer to that. Cash limits on their own are not an easy answer. As soon as they are published they become matters of negotiation with the unions. The Civil Service unions and certain public sector unions produced a naive document last week stating that they want to be involved in determining the size as well as the pay of the Civil Service. They want to determine the number of needs that have to be met and then recruit to fill those needs without considering the cost.

That is an exceedingly naive approach. Ask anyone whether he needs another 2,000 nurses for mental hospitals and the reply will inevitably be "Yes ". The one element that is missing in this dialogue is the public. In America the public have been asked through referendums about the size of the public sector and the consequent level of taxation. There is no doubt that the ordinary public there want a lower public sector, even though that means lower services.

I believe that that is the feeling in this country today. I hope that the Minister will be able to open his mind a little on this issue because it is central to the conduct of Government policy overall.

I congratulate the Committee on producing the report. It will be referred to on many future occasions by future Governments. I hope that they will take it down, dust it, open it and consider why many of the excellent suggestions in it have not been implemented, or even partially implemented. I hope that we are seeing the beginning of a long debate.

7.25 p.m.

Mr. Brian Sedgemore (Luton, West)

The hon. Member for St. Marylebone (Mr. Baker) was kind enough to misrepresent the views of myself and my colleagues about the Civil Service. Earlier the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred to the battle of Sedgemoor, the last pitched battle fought on English soil and waged across a ditch in Somerset. Professor A. J. P. Taylor said that it was the last time that the English people asserted themselves. I believe that the Prime Minister sacked me from the post of Parliamentary Private Secretary to my right hon. Friend the Secretary of State for Energy in order to allow the English people to assert themselves once again. I shall try to do that here tonight.

I want to concentrate not on the report that the Committee prepared and, miraculously, agreed on, but on the Government's reply to it. The two people who had most to do with that reply were my right hon. Friend the Prime Minister and the Head of the Civil Service, Sir Ian Bancroft. I am bound to say with great respect to those two distinguished gentlemen that their reply stands very much in contempt of Parliament and shows all the sorrowful values of our seedy corporatist establishment.

I fear that at the root of the problem of our system of Government lies the growth of corporatism. It will corrupt us all if we do not look out. When a friend of mine said in barbed jest recently that the right hon. Member for Sidcup (Mr. Heath) was a corporatist, my right hon. Friend the Member for Huyton (Sir H. Wilson) was a civil servant corporatist, and my right hon. Friend the Prime Minister is a godfather corporatist who makes all the other corporatists offers they cannot refuse, I did not laugh; I winced. If we are to understand our society and the way in which corporatism has developed, together with some of the issues brought out in chapter 13 of the report and in my draft, which was not accepted, we have to consider the power of the Prime Minister and work down from there.

One factor that emerges is that in our modern society the British Prime Minister certainly has more power than any medieval king and can certainly stand tall beside any of the dictators of the modern world. His power stems partly from patronage. The Prime Minister appoints all the members of the Cabinet, about 80 junior Ministers, all the permanent secretaries and the chairmen of the nationalised industries who control about 20 per cent. of the gross national product. He has a large say in the appointment of bishops, although I suppose that bishops and archbishops do not matter much these days. He has a considerable say in the appointment of most of the judges in our society.

It may be said that the President of the United States has all those powers of patronage, and more, but the British Prime Minister has something that the others do not have. To patronage he can add a unitary system of government, a Cabinet system of government, and a Whip system of government. It is the combination of those factors that makes him so powerful.

The President of the United States has to deal with the separation of powers, which gives him enormous problems. I do not suggest that we should move towards the United States system, but if we are to change the way in which we are governed we have to start at the top, and one of the areas that we have to consider—an area that has not been considered in the past—is the patronage of the Prime Minister.

There are three ways of beginning to break that patronage. The first would be for the parliamentary parties to elect their respective Cabinets, or part of them. The second way is closely related to the report. The permanent secretaries in Whitehall should be hired and fired by their own Ministers, not by the Prime Minister. That would avoid many problems that people who have not worked in the Civil Service do not know exist. This relates to the relationships which develop between Permanent Secretaries and the Prime Minister through the operation of the Think Tank, through the operation of the secretary of the Cabinet and through the operation of the Head of the Civil Service. The third and obvious way of busting the Prime Minister's patronage is to let Select Committees deal with the appointments of chairmen of nationalised industries.

I commented on permanent secretaries. What can one say about the top civil servants in our society? There are 750,000 civil servants who, in my view, are doing an excellent job, to the best of their ability. Many of them deserve far better rewards than they are getting. They do not deserve the barbed comments and stings which are directed at them.

I heard the Minister's speech. To describe it as thin is probably fair. The system of government that he described was not the system that I saw when I was in the Civil Service for five years. Indeed, it was not the system of government that I saw as Parliamentary Private Secretary. As the evidence comes out, it seems that the system of government is not based on the theoretical notions put forward by my right hon. Friend the Minister of State—notions that one can read in Dicey, in Bagehot or even in Mackintosh and Johnson, and other political analysts. If one looks at Tommy Balogh's "Apotheosis of a Dilettante ", which was published in the late 1950s, goes through to "The Crossman Diaries "—it is extraordinary that, for all his political acuity, Crossman did not see patronage as that which sustained Prime Ministerial power —looks at Joe Haines' book—forget the whisky-throwing chapters, but look at the two chapters on the economy and on the Foreign Office—and then waits for the book by my right hon. Friend the Member for Blackburn (Mrs. Castle), which will be published after the election—which cannot be that far off—one sees that it is clear that they describe a system somewhat different from that which the standard textbooks would have us believe exists.

But do not even look at them. One might say that they are all disgruntled politicians. Let us look at the public statements, for example, of Lord Armstrong, who was Head of the Civil Service under three Governments. Lord Armstrong made it clear that civil servants set the framework and the parameters within which the Civil Service worked. Let us look also at the statement by Sir Antony Part and his comment "We could provide blocking tackles; we could push them off and deflect them here and deflect them there." I have spoken to civil servants about Lord Armstrong. Their view is that he has blown the gaff. They regret that he has done it.

I do not think that there is corruption in our Civil Service. I believe that there was a central core of integrity, but that it is beginning to disappear. It was probably there in the last century and, curiously, may have had something to do with the administration of an empire, but in the last 15 years, since the time that I was in the Civil Service, that core of integrity has been breaking up. Whereas, when I was in the Civil Service, civil servants met obstacles, looked at them and saw them as things to be faced and got over, now there is a tendency—only a tendency, but an important tendency—for civil servants to act as a pressure group, just like many other groups in our society. If I am right, that is an unsatisfactory state of affairs.

My right hon. Friend and I have had many good discussions on this matter at Labour Party meetings. He said that we were in danger of developing a conspiracy theory. I do not believe that it is a conspiracy theory. It is partly about expertise, but it is fundamentally about a system of the shared values of the Civil Service corresponding to the values of many other people in our establishment and those values expressing themselves in the advice that they give. If anyone wants to call that a conspiracy, let him call it one, but let us not say "X has one theory and Y has another."

I did some homework. I went through my diaries over the weekend and considered one Department—the Department of Industry. I do not want to be unfair to that Department. Not all civil servants operate in the way that I am about to illustrate in my examples, on which I shall ask the Minister to comment. I shall put them briefly and succinctly, in a series of questions. This is probably a good time to do it, because it covers the whole period of one Administration—five years. We can look at it from year 1 to the year now coming up.

What does the Minister say about a senior civil servant consulting the press behind the back of a Minister in order to damage that Minister? I am talking about Sir Anthony Part, a former permanent secretary at the Department of Industry.

Secondly, what does the Minister say about those accounting officers' minutes which permanent secretaries put in on the workers' co-ops—Meriden and Kirkby? It is a serious matter for top civil servants to suggest that Ministers are spending public money in a wrong fashion. How could my right hon. Friend square that, for example, with the fact that no accounting officers' minutes were put in on Concorde, Rolls-Royce and UCS, on which all the same determinations arise? Is it acceptable that civil servants can put in partial and political accounting officers' minutes?

Thirdly, what would my right hon. Friend say about a civil servant from the Department of Industry who kept appearing at the Treasury to advise the Chancellor of the Exchequer against the known views of the Minister at the Department of Industry? One civil servant at the Treasury told me that he thought it most peculiar that Mr. Alan Lord, who eventually moved from the Department of Industry to the Treasury and has now gone into private practice, should keep turning up and advising the Chancellor at that time. Stabbing daggers into the backs of those for whom one works may be acceptable conduct in private industry but it is not acceptable conduct in a Government Department.

Fourthly, what would my right hon. Friend say about a senior civil servant in the same Department who, in his enthusiasm to support GEC over the Drax B dispute, referred to some of the most skilled workers in the land, at Parsons, as "lemmings "? Is that kind of vulgar description, in official papers, the way in which Government business should be conducted?

Fifthly, should senior civil servants in that Department write minutes to their Ministers deliberately seeking to set one Minister off against another?

Sixthly, should civil servants, in the presence of myself and other Labour Members of Parliament, gloat at the breakdown of the Chrysler planning agreement, presumably on the ground that they originally did not support the rescue carried out by the Chancellor of the Duchy of Lancaster?

Seventhly, should civil servants have supplied the GEC with information on Kirkby to enable it to take it over behind the backs of the workers at Kirkby?

The more I see of government, the less I become surprised. But what about my eighth point? The eighth point shocked even me. I ask my right hon. Friend to view this matter seriously and carefully. What would he say to me if I were to say to him that last October civil servants and Ministers and others in the Department of Industry were drawing up plans behind the backs of the board, managers and workers of a particular firm to enable a foreign company to take over that privately owned British firm and to wind it up in order to buy the title of that firm, get the goodwill and manufacture somewhere else in the United Kingdom?

What am I talking about? What is this public scandal that I am now raising? I am talking about plans drawn up last October by civil servants, Ministers and others—I speak with the certainty that what I say is correct—to help Kawasaki to take over Meriden with a view to winding it up in order to buy the Triumph label and produce bikes from 100 cc upwards somewhere else in the United Kingdom.

What do I say about that conduct? I do not know whether it is paranoia. Can the facts be paranoic? I say that such conduct is unethical and disloyal. It is disloyal to the workers of Meriden, because that is a private company and not a publicly owned one; it is disloyal to Parliament, because we have not given civil servants, Ministers or anyone else the power to do such a thing; and it is disloyal to the constitution of the United Kingdom.

If I were to put such matters into a novel, call it "Mr. Secretary of State" and ask Quartet to publish it, what would people say? They would say "There goes that man Sedgmore again. He is being venomous, vicious and vindictive." But can the facts be venomous? Can the facts be vicious? Can the facts be vindictive? Or is the real argument that sometimes the truth is so cruel that people would advise us not to tell it to the public?

The Chairman of the Expenditure Committee and I have our disputes, but all credit to him for the production of this report. He raised the question of the relationship between civil servants and industry, on which I have been doing some research. I looked up all the civil servants that I could find at permanent secretary or equivalent level who had resigned or left the Civil Service in the period from 1974 to 1977. It was discovered that there were 27. One of them died. But what was instructive about the other 26 was that every one of them went into industry. Not one went into the trade union movement, charity, or back to the academic world. Some may have fallen through my net, but I believe that list to be reasonably comprehensive.

If I am right, we first see that a job in industry is now part of the career structure of senior civil servants. That has to be viewed against a particular background. We have heard about quangos. About 10,000 jobs are associated with quangos. Theoretically, they are allocated by Ministers, but one does not need to be very intelligent to know that most of those jobs must be in the patronage of permanent secretaries in Government Departments. They hand out 10,000 jobs, and senior industrialists are getting a fair slice of those part-time jobs. That is a fact.

At the same time, permanent secretaries, on retirement, are going into industry. There is a suspicion, which, to be fair, needs further study, that there is a merry-go-round of jobs between industry, top civil servants and quangos. This is something that must be looked at.

There is a further point. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said that a senior servant was advising him on behalf of a specific oil company, yet everything that I read tells me that industry takes the view that people in the Civil Service are unfitted for going into industry. Therefore, why are all these permanent secretaries going there? The answer is quite simple. First, industry feels that the Government machine is complicated and likes to have people working for it who can explain the Government machine, how best to lobby and how best to put pressure on Ministers. Secondly, because the Government give contracts worth billions of pounds to private industry, it is obviously much easier to operate with the Government if industry employs civil servants with friends and colleagues working in government. Third, and most important, industry employs senior civil servants—despite its apparent dislike of them—because it believes that is the best way to sustain its values in government.

Even the Conservative Party must have some qualms about the way in which that system could develop. But whether or not the Conservative Party has qualms, there are bound to be qualms inside the Labour Party where this system of shared values may not reflect the very values of the Labour Party.

The New Statesman recently coined the phrase "Florentine corruption ". I had never heard of it. The New Statesman said that Florentine corruption was corruption that had taken place in Florence several hundred years ago and described it as "secret government by secret processes ". One needs to look no further than the operation of our Select Committee to see the development of Florentine corruption. It is no fault of any member of the Committee; it is the fault of the Executive.

I remember one meeting at which we questioned an under-secretary at the Treasury. He denied even the existence of the medium-term economic assessment that is produced every year. I produced a Bank of England document, which I distributed to the whole Committee, the under-secretary and to the press, about discussions between the Bank of England, the Treasury and the Cambridge Economic Policy Group on the medium-term economic assessment whose existence he had denied. To be fair to that civil servant, I saw him in St. James's Park a few weeks later and we had a good laugh about the incident. But in a sense the incident was not funny.

However, it took a more curious turn. The same Committee questioned the Chancellor of the Exchequer on the European monetary system. The Chancellor seemed to be denying that the Treasury had taken a certain view. I referred to a document which was available to a few members of the Cabinet, and the Chancellor started to mislead the Committee. I do not want to say that he was lying, because I believe that would be an unparliamentary phrase. However, a character in a Bernard Shaw play said "Lying hardly describes it ". I go further; I got lost in an ecstacy of mendacity, as did the Chancellor in our Committee and I had to refer to a Cabinet document in order to show that.

The serious point was not that I got the sack. That is a trivial issue. The serious point about these two incidents also relates back to sanctions busting—a subject that this House will develop, presumably when the motion comes forward, where in my view the Executive has clearly lied to this Parliament. The serious point is that if one has a situation whereby the Executive can mislead or lie to Parliament, and whereby one can institutionalise that misleading or lying to Parliament—which is what I believe we have witnessed in our Committee time and time again—one does not have a democracy. One of the essences of a democracy is that the elected representatives of the people have a genuine, power-full check over the Executive. In the four years since I have been here I believe that we have witnessed the erosion of that check.

Having said all that, I do not want to leave the House with the idea that there is something malevolent or evil about top civil servants, top politicians, the Chancellor of the Exchequer, or anyone else. But we are foolish if we close our eyes to the question of shared values. I leave the House with a last image which has remained with me ever since it occurred. In our Committee we questioned Sir Ian Bancroft and Lord Peart, who chaired the Cabinet sub-committee which the Prime Minister set up. I am not even sure that my right hon. Friend the Minister of State was on it. Perhaps he can tell me when he winds up the debate. The members of the Cabinet sub-committee are selected because they do not have advanced views on democracy and accountability. The sub-committee draws up its report and other Cabinet Ministers are then invited to send in written amendments. They are turned down, presumably by Sir Ian Bancroft because he does not like them. I know that that is the case.

When the Committee questioned Lord Peart on this I asked him about the Cabinet sub-committee system of government and the way it worked. The dialogue went something like this. It was almost like a pantomime. There was a question from me, Sir Ian Bancroft answered, and Lord Peart talked. I asked a question. Sir Ian said "You can't answer that "; Lord Peart replied" I can't answer that." I put another question. Sir Ian said "You can't answer that" and Lord Peart replied "I can't answer that." Because Sir Ian Bancroft was giving the answers and Lord Peart's mouth was moving, I can only assume that they were wired up under the table. I am asking the House to disconnect the wires.

7.49 p.m.

Mr. Tim Smith (Ashfield)

If even half of the eight examples adduced by the hon. Member for Luton, West (Mr. Sedgemore) are accurate, I certainly have qualms about the system which he described. But I am no expert on these matters and I shall leave it to others to judge.

What I do know is that I agree very much with the earlier part of the hon. Gentleman's remarks concerning the power of patronage of the Prime Minister, establishments, and so on. More than anything else, this illustrates the difficulty and the obstacles which this House will face in getting the recommendations of this report, and others like it, implemented. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) referred to the way in which he thought this might be done. Clearly, more thought will have to be given to how we ensure that the recommendations are actually implemented.

I begin the brief substance of my remarks by congratulating my right hon. Friend the Member for Taunton (Mr. du Cann), the Chairman of the Public Accounts Committee, on his contribution, which I found most stimulating and most encouraging. I regard him, as I am sure many people both inside this place and outside it also regard him, as being the champion of parliamentary sovereignty and parliamentary surveillance of Government activity.

There is now a greater intervention in the lives of private citizens in this country than there has ever been before. There is more legislation than there has ever been before. This is not the fault of any one Government. It is a fact that as society becomes more complex, this is almost inevitable.

In this context my right hon. Friend the Member for Taunton argued that this House of Commons has in some ways been left behind and is amateur by comparison with the professionals with whom it has to deal, and Members of Parliament are not really qualified or equipped to deal through Select Committees with the problems that we face.

Indeed, I think it odd that we shoud be talking about qualifications and examinations for civil servants whilst, on the other hand, we know that no qualifications whatever are required to become a Member of Parliament and that no training is provided for Members of Parliament when they take up their appointments for the first time.

For my part, when I was first elected I had to ask myself "What have I been elected by my constituents to do?" I came to the conclusion that there were two things. First, it was my job to represent the interests of my constituents, and, secondly, it was my job to act in concert with other Back Bench Members of Parliament to check the activities of the Executive. It is a matter of regret to me that this is the first occasion on which I have been able to deal with the second matter at all effectively.

In this respect it is obvious that the work of Select Committees is vital to the checking of the activities of the Executive. Although he is not here, I should like to congratulate my neighbour, the hon. Member for Nottingham, West (Mr. English), and indeed the members of the Committee on this report by the Committee and say that I agree with many of the recommendations. If one takes the report and the Government reply together, the only conclusion that one can reach is that the Government reply is feeble and in some respects, since it seeks to evade some of the recommendations, it is also dishonest.

I shall deal with two specific matters in the report of the Committee. The first is to do with accounting in the Civil Service and management accounting. Obviously, if we are to have a more efficient management system in the Civil Service we have got to have a more efficient accounting system. I should like to refer to paragraph 93 of the Eleventh Report which deals with "Accountable Units ". It says: The Fulton Committee recommended the introduction of accountable units over a considerable area of executive work …There has not been a determined effort to implement these recommendations. The Committee tells us: There are substantial built-in obstacles to the introduction of accountable units. The traditional structure of the Civil Service, and particularly the system of parallel hierarchies…inhibits the effective allocation of authority. Then again the Committee says—and I think this is most depressing reading— It would appear that there is an element in the Civil Service opposed to the introduction of accountable management and its implications for the status quo. As we all know, the Committee went on to recommend that, as soon as possible, accountable units should be introduced into all areas of the Civil Service.

The Government reply to this is really quite inadequate, in my view. The Government say—and I think it is fair— In the absence of the common private sector yardstick of profitability, the development of these systems needs much care and uses up scarce skilled resources; further progress is unlikely to be fast. But the aim remains important and the Government will press ahead as fast as resources permit. My feeling regarding that is that of course it is true that it is less easy in the Civil Service to introduce commercial criteria accountable units than it is in the private sector. That is clearly so. It is difficult, but it does not invalidate the objective. I would say that resources spent on this aspect of work would be resources well spent. We could well spend more public money in this sphere and save public money in the long run.

Another point which the Government made in their reply was: …the responsibilities of individual managers should always be established as clearly as possible. This is, I think, the way the private sector would operate as far as accountable units are concerned. Each accountable unit would have a manager and his terms of reference and employment would be clearly defined, and it would be in the context of those terms of reference that the unit would be assessed and its accountability determined. That is the approach as regards accountable units within the private sector.

The second matter of accounting is dealt with in paragraphs 96 and 97 of the report about "Management Accounting" in the Civil Service where the report tells us that …the Fulton recommendation on the employment of accountants upon an increasing scale in the civil service does not seem to have had much effect. When Fulton reported there were 309 accountants in the Professional Accountant class; now the number is 377. I suggest that that is an extremely small increase in the number of accountants over a period of what must now be 10 years since the Fulton report was first published. In spite of this, Mr. K. J. Sharp, who was appointed Head of the Government Accountancy Service in November 1975 in accordance with the Melville/Burney Report, appeared fairly complacent about the position of accountants in the Civil Service. I suggest that there is no room for complacency at all. If we are to have the kind of accountability which we want to see, the first thing that we need to have are properly qualified staff within the Civil Service who can produce the kind of accounting information that we and the Committee seek.

A further point I would like to deal with is with regard to the audit of the Civil Service. This has already been dealt with at length by some previous speakers who have pointed out that the legislation is now totally out of date. The extent of the responsibility of the Comptroller and Auditor General is really ill-defined and the legislation needs to be amended to clarify what exactly the Auditor General can and cannot do.

This was dealt with by the Committee in paragraphs 153 to 155 of its report. Here it said, as well as pointing out that the legislation was out of date, that the new Act should state as a principle that the Auditor General may audit any accounts into which public money goes, even if such public money is not the bulk of recepits into such accounts ". I am sure that that is the right principle. I think we have got it straight. We are not suggesting that the Auditor General should take over the audit of nationalised industries and other large undertakings which are currently audited by private firms of accountants, but that he should have the right, wherever public money goes—including private companies which are now recipients of quite large sums of public money under the Industry Acts—to go into those organisations and investigate where the money went and see that it was spent in accordance with the enabling legislation.

The Committee also recommended—and this is a point which has not been mentioned previously in the debate—that: The Comptroller and Auditor General should in our view take over responsibility for the 591 staff of the District Audit from the Department of the Environment and thus secure the independence from the executive sought by the Green Paper. This recommendation was hotly contested by the Government in, I think, paragraph 96 of their reply, when they contended that because local government is autonomous the district auditor should not be interfered with and should continue to be accountable to ratepayers. The Government said in that reply: Local authorities are statutory autonomous bodies who are responsible not to Parliament but to their own ratepayers and electors…The change proposed would therefore involve a radical shift in the relationship between central and local government, with ramifications much wider than arrangements for audit. However, the response of the Auditor General himself was a good deal more constructive and positive. He pointed out, for a start, that As regards their finances, something over 50 per cent. of local authorities' total current expenditure is met by the taxpayer in terms of rate support. Clearly, therefore, Parliament does have a very substantial financial interest in the activities of local authorities.

The Auditor General also suggested that there might be some sort of merger between the district audit staff and his own staff because in many ways they are trying to achieve exactly the same ends in different Government areas. He said: a measure of central guidance and supervision over such matters as the audit methods and standards to be implemented, and the nature and balance of operational audits is an advantage. So there we have a positive and constructive response from the Auditor General.

There would be advantages, I believe, though here again one is not suggesting that the Auditor General would have the power to audit local authorities; but as over 50 per cent. of their income comes from central Government, it seems right that, at the very least, the Auditor General should have the same right to investigate and enter into particular authorities if he wished to see how the taxpayers' money had been spent.

An example occurred in my district recently. The district auditor discovered that, because the local authority had failed to claim grants from both the county council and central Government Departments, amounting to somewhere between £2 million and £3 million since 1974 and the formation of the authority, about £300,000 worth of ratepayers' money had been lost in interest charges which they would not have otherwise had to pay. If there were a better degree of co-operation between the Auditor General and the district auditor, perhaps that situation would never have arisen.

Certainly, however, if we are to achieve this, we must also improve the staff of the Auditor General. He employs 700 people. I do not know exactly what proportion of the total gross domestic product is represented by the organisations which he audits, but I would guess that it is about half, so that the other half is represented, roughly, by the private sector. It does not really matter what the exact figures are, because the fact that there are 30,000 people working in private audit and 700 in public audit is an indication of the fact that there is a slight imbalance; and although the Government say, quite rightly, that resources are limited, my feeling is that it would be public money well spent if we increased the size and the quality of the staff.

My final point about the Auditor General, to which reference has already been made, is the question of his independence. As the Consultant Committee of Accountancy Bodies said in its response to the Expenditure Committee, the assurance which is given by an auditor depends on his independence as much as on his competence. We have always upheld the independence of the auditor in the Companies Acts and so on, so it is equally appropriate that we should do so in the public sector. The only way, of course, is to ensure that he is accountable to the House of Commons. I think that the Committee suggested that this should be through the House of Commons Commission.

My hon. Friend the Member for Cirencester and Tewkesbury has said, in answer to that, that Members of Parliament should not get bogged down in Select Committees and in the minutiae of policy, and that perhaps they would not then be unable to see the wood for the trees. Nevertheless, I feel that it is the right approach that the Auditor General should be responsible to the House of Commons. But these Select Committees clearly need to have a considerably enlarged staff at their disposal who can deal with the minutiae and then, on the basis of exceptional reporting, which is the way in which management always operates, can report to the Committee on those items which they consider to be of exceptional interest and, therefore, worthy of report.

This brings us back in a circle to the point raised by my right hon. Friend the Member for Taunton about the facilities available to Members of Parliament. It is worth considering this change only if we have facilities here to be able to respond to it. It is no good whatever the Auditor General being accountable to this House if we here are inadequately equipped to exercise supervision and control. I am very conscious of the fact that we have a great responsibility to our electors. We are supposed to be the servants of the people, but at present I feel that we are inadequately equipped to carry out the duties that we have been given. We cannot start to do the job properly if the resources are not available. I believe that they should be available, and soon.

8.3 p.m.

Mr. Nigel Spearing (Newham, South)

The House will be grateful to the hon. Member for Ashfield (Mr. Smith) for pursuing one particular point. Hon. Members will also know that, in wanting to be fairly brief, I shall not comment on the hon. Member's interesting contribution. I shall refer, however, to that of my hon. Friend the Member for Luton, West (Mr. Sedgemore). He recalled something which happened to me several years ago. I did not mention it in the House, but I think I should do so now in view of what he said.

At a reception, I met a number of gentlemen who were representing Her Majesty's Government at an international conference. I was somewhat surprised because one of the gentlemen who had been a civil servant—I looked him up in" Who's Who "—had then left the Civil Service to become an adviser on government to a well-known multinational company, but his knowledge of the particular matter which was his last job in the Civil Service was such that the Government hooked him back for this particular occasion and presumably he got leave of absence from his new firm.

Many Opposition Members and, indeed, even many honourable members in the Civil Service—I use the word "honourable" deliberately—may not see anything wrong in that, but I suggest that a good many, particularly the bulk of the junior Civil Service, the bulk of the employees of the Civil Service, would certainly question it. I think that a good many Members of this House would question it. In view of the increasing ambit of Government, which is the will of Parliament, the difficulties in terms of occupation and knowledge, which were outlined by my hon. Friend the Member for Luton, West in the closing part of his speech, pose a new threat to what Gladstone did at the end of the last century. What he did then was to get rid of patronage, difficulties, suspicion and lack of confidence in the Civil Service. It may be that the new forms and new areas of Government of the last few years in particular have brought new challenges and, therefore, new ways, perhaps, in which we should seek, and the Civil Service itself should seek, to maintain the historic integrity of the Civil Service.

I wish to deal, very briefly, with some of the aspects related to the selection and careers of senior civil servants. I say straight away that those whom I have met, in almost every case, I have found civilised, efficient, courteous, thorough, of high intellectual qualities and very humane—at least, humane within the orbits of their experience. I also believe that the British Civil Service is very possibly, if not actually, the best civil service in the world. But it could be better. Some of the examples given by my hon. Friend the Member for Luton, West—whether or not his questions will be answered—show that we want it to be good, and that there are dangers that we have to watch and improvements that can be made.

When the Select Committee was in Washington or Paris, I was not a member of it, but I wrote to the Civil Service Department. I am grateful for the arrangements that it made for me 18 months ago to spend three days with the Civil Service Selection Board, following a board through its selection of administrative trainees. I thank the members of the Civil Service who ran that board, and those who were there when I was watching, for that very interesting experience.

I think that the system is probably, within limits, as fair as one can get. But I think that there may well be something in the question of an Oxbridge bias. I put this in a rhetorical form. It may well be that some of the habits and some of the degree assumptions of those two universities might perhaps be better suited to the sort of style of question and the sort of written answer that perhaps the Civil Service wants. That may be accidental. It may be nothing to do with the quality of education at Oxbridge or other universities. It just may be coincidental. I think that the hon. Member for Berwick-upon-Tweed (Mr. Beith) may have the most telling point when he says that there are large numbers of people in other universities who do not think in those terms, whereas in Oxbridge there may be people who from the days of their sixth form may have this in mind.

This aspect of the Civil Service might, perhaps, be called the Winchester syndrome, because both in the CSSB itself and throughout this very interesting report of the Administrative Trainee Review Committee, there seems to be an obsession with terms such as "fast streaming "," selection for the highest jobs and widest skills ", "protection of the high flyers ", "seeing that they get the experience ", and so on. Of course there will be an element of this, but I find it almost obsessive in the Civil Service. I know that one must have a width of experience because of the very important and senior positions that senior civil servants cap hold, but I am not so sure that the assumptions behind this rather outdated educational jargon are correct.

Mr. John Garrett

My hon. Friend will be aware, of course, that all these terms, such as "fast streaming ", "an elite ", and" picking the top people "are applied only to arts graduates. They are never applied to a graduate with a professional qualification.

Mr. Spearing

Yes, indeed. I was aware of that and I am grateful to my hon. Friend for pointing it out. There is surely a danger, mentally at least, of adopting an archetype view of the ideal civil servant, rather as one has a view of an ideal dog and tries to breed such an animal. As we know, high bred dogs usually have grave disadvantages and a good working dog often has to have a mongrel strain. I am not saying that technical people provide that mongrel strain which ensures a better animal, but one of the great omissions in the plethora of Civil Service literature is the absence of any discussion of later entry. I am referring, not to entry at the age of 28, but to people in industry and other areas joining the Civil Service at the age of perhaps 40 or 45. The right sort of recruits would provide the leaven for the present weakness in our Civil Service.

Mr. Charles R. Morris

My hon. Friend has made some trenchant points about selection bias in recruitment. He has had an experience that has been denied to other parliamentarians because he sat in on a selection board. I made facilities available to him so that he could inform himself, at first hand, of the interviewing procedure in operation. Can he, as an impartial observer who witnessed the procedure at first hand, give the House an insight into that interviewing procedure?

Mr. Spearing

I am grateful for the arrangements made by my right hon. Friend. I acknowledged that earlier. I cannot, within the terms of the debate, do what he asks because it would take too long. I did not criticise that procedure, but I suggest that there is a much wider context of which it must be part.

The administrative trainee committee report shows some of the reasons why the ideal of the super-animal falls down. I question the ideal for two reasons. The first is mentioned by the civil servants in typically guarded, but important language, The CSD said: There was some feeling that the selectors occasionally recommended candidates whose personal qualities were not quite what was needed ". If the Civil Service says that, we know that the feeling was quite strong. The report asks whether in future ways could be found of putting greater emphasis on personal qualities (or the capacity to develop them) which would be desirable in a successful candidate. Intellectual qualities are important and there may perhaps have to be a threshold level, but the more exacting the job in the Civil Service—and, perhaps, in politics—when responsibility and experience grow, personal qualities begin to count even more, particularly as regards motivation, a willingness and ability to learn from experience, and a due sense of humility. If one has to learn, one must be humble, and perhaps that is not a quality found in top politicians or top civil servants.

The second reason that the Winchester syndrome does not work in practice is demonstrated by a personal experience that I had when I took constituents on a deputation to see a Minister who had his permanent secretary with him. One of my deputation was a docker, though the deputation was not on a topic connected with dock work. It concerned a matter on which the permanent secretary was an expert, but the docker knew his stuff and beat the permanent secretary into the ground, despite the great efforts that had been made to get that man to the top of the tree. I therefore question some of the assumptions behind some of the selection processes. The permanent secretary has since been given a knighthood. I am not against that happening. If it is satisfactory to civil servants, let them have it. Knighthoods are free.

While the personal qualities of some of our senior civil servants are admirable, the collective quality of the Civil Service may be lacking in certain respects because collectively, through no fault of their own, but because of the machine that has been programmed in the past 20 or 30 years, civil servants lack something in the advice they can give to Ministers and in their ability to see things as they really are.

On every subject of which I have had personal knowledge and have contacted courteous people in Whitehall, it has seemed that they are looking at it in black and white, while I see it in colour. There are things that are clear to people who know about the subject which people who approach the matter from an intellectual angle apparently cannot see.

My hon. Friend the Member for Luton, West referred to civil servants leaving to take jobs in industry and elsewhere. The reply to a Question of mine some time ago showed that there was quite a large turnover of Treasury staff in the middle taxation ranks. That speaks for itself. My hon. Friend the Member for Luton, West referred to a former head of the Civil Service. I should not have thought that anyone would want much more out of life than being head of the Civil Service, but that man has now become chairman of a bank. Time prevents my referring to the Crown Agents, but we know from a newspaper report that a recent permanent secretary at the Ministry of Agriculture, Fisheries and Food is now a consultant to the National Farmers' Union.

The Government's reply to the report of the Expenditure Committee says: The Government are advised that agreements which restrict the right of an individual to take up employment are normally invalid as being in restraint of trade ". What are these people trading? I agree that civil servants get a fine training in administration, but I suggest that when they leave they take invaluable knowledge not just of the ways of Whitehall, how Ministers think and the way things tick there—important knowledge that we try to learn through hard experience—but an unrivalled knowledge of certain matters that they properly know about because they are high-ranking civil servants. But they are servants of the community and I question the increasing trend to which my hon. Friend the Member for Luton, West drew attention.

I know that it can be said that politicians do it too, and I would not necessarily defend those who regard it as proper to advise companies or Chancellors of the Exchequer who later go into the City or Secretaries of State for Trade who go into merchant banks. Let us be honest on both sides about this matter. Some hon. Members would defend such action, but I suggest that there is a difference between civil servants, who are given proper protection, and politicians, who take some sort of risk. However, if politicians do not want civil servants to act in that way, they must set an example and there must be a code and review dealing with this aspect.

There is an even stronger argument. We cannot expect the bulk of the Civil Service to look on these developments with equanimity. What will their morale be like if they know that it is likely to become the norm for top civil servants to go into industry and elsewhere? I suggest that the impact on the morale and conduct of all ranks of the Civil Service, right down to the junior clerk at the DHSS, could be fatal.

My hon. Friend the Member for Luton, West mentioned the power of the Prime Minister, and he has a theme about it from which I do not dissent. But there is one department of the Civil Service which has not been mentioned so far in this debate, and it is the Cabinet Office. I have not seen the figures, but I get the impression that this office has been expanding of late, as indeed has the orbit of government. But I suggest that probably it has been expanding rather quickly. Some people might say that its activities and influence have increased, are increasing and should be diminished. I do not say that because I do not know how big it is or the constitutional place that it may now be taking in the government of the country. But if it is becoming a significant factor in determining policy or in co-ordinating policies where two or more Government Departments are concerned or, as is rumoured, it is being used as an instrument to cut out collective Cabinet responsibility, we have to think seriously about that, too, because it means that the Prime Minister's Department in a unitary state is perhaps becoming a unit in our system of democracy which hitherto we have not reckoned on and which this House as the guardian of the people against the power of the Executive has to watch very closely.

I do not believe that Britain's problems, as we face them outside as we leave this debate, are those ultimately of cash or production. I do not go along with the idea of growth as the sole salvation of all our problems. I am not of that Gadarene persuasion. I think that the problems of the country are much more sociological and psychological. We in the Western world probably have as much production as we can cope with. If Britain is to make out and get this balance between the increase in production in certain areas which some of us want and getting through our problems inside the country and internationally, we shall need to strike a balance, and the Civil Service will be here when all of us have gone. What shape that service will be and what effect this House has on it, in a period of testing time for democracy until the turn of the century, will depend very much on the conduct, advice and integrity of the Civil Service.

Mr. Gladstone did a great service to this country and to democracy in the last century. We may have to take another look if we are to leave a democracy and a Civil Service which can serve the next.

8.22 p.m.

Mr. John Cockcroft (Nantwich)

I wish to say a few words based on my own experience in the Civil Service. In 1958, I took and passed the Civil Service exam and perhaps mistakenly went into journalism, in Fleet Street, instead. Years later, I was seconded from industry, from Guest Keen and Nettlefolds, to the Treasury, where I had the privilege of working for the present Prime Minister, which must be an unusual if not unique experience for a Conservative Member of Parliament.

Based on that experience and the opportunity that I had of being part of a scheme that involved seconding people from industry to the Civil Service—and, in theory, vice versa—I wish to make several points, the first of which is that I believe that the system of recruitment to the Civil Service is as fair as can be, allowing for human frailty and the fact that it is very difficult to avoid oligarchies and other organisations being self-perpetuating. However much the Commissioners lean over backwards to be fair and to ignore whatever prejudices they may have, to some extent it is inevitable that they will tend to think that a first-class civil servant is someone who is built, made and educated in their own image.

As for what used to be known as method II, it was based originally on the war-time system of WOSBI, which was pilloried and made fun of by A. P. Herbert in his very amusing book "Number Nine ". It is a system that is a good blend of the written and the oral technique. But, as with WOSBI, a possible criticism of it is that, other things being equal, the extrovert who takes the lead in discussions may tend to be favoured against the man who is more thoughtful and who takes his time to come to conclusions.

Turning again to the documents that we are debating, I wish to support with all my heart the feeling that there has been for many years that there should be a more unified structure in the Civil Service, and that it should go as far down as possible. I was in the Treasury just before the publication of the Fulton report, and that yearning was very strong at the time. I understand the feelings of the unions concerned. Naturally they are concerned to preserve the position, privileges and rights of their members. But when I was in the Treasury, the feeling was that to some extent the division between the so-called administrators, the executive, and clerical grades was an obsolete class structure and should be modified as quickly as possible. Certainly the traditional, historical definition was that administrators make policy whereas the other lesser breeds somehow implement that policy. This concept that some people make policy and others carry it out is surely an old-fashioned one in these days.

I now say a word about the cross-fertilisation between industry, the City and the Civil Service. It is unfortunate, in retrospect, that the scheme of which I was a part, though no doubt a not very successful part, was not a brilliant success and was largely discontinued. I think that there is a strong case for saying that if people can be persuaded to go into the Civil Service in middle age, having made a success of their careers in industry, and if successful civil servants can be spared to go into the City and into industry—possibly even into journalism—this is by definition a good idea. Certainly it happens more in other countries, especially in Washington, than it does in this country.

Having said that, however, I go on to say, again from my own experience, that acclimatisation is a difficult problem, especially in the Treasury, which is a small Department. It was all-powerful in my day because it controlled recruitment as well as economic management. But, just like coming here for the first time, it is very difficult to move into an environment where most of the other people there have known each other all their working lives. It can take a long time, as it does here, for a member of the Civil Service to deploy his abilities fully to the best advantage.

I was privileged to work under, or to, as they say in the Civil Service, Sir John Hunt, now secretary to the Cabinet, in the public enterprises division of the Treasury. In the short time that I was at the Treasury I saw how difficult it was for civil servants, particularly when working through sponsoring Departments, to keep a close eye on the vast part of the economy which is now accounted for by the State; and what a Herculean task it is to make sure, for instance, that financial targets are met without interfering unduly in the working lives of the boards of the State industries, and particularly of the chairmen.

Having considered the subject of parliamentary Questions from both sides, I think that I ask an average number of parliamentary Questions, but there are some hon. Members who ask an enormous number, while others ask very few. I should like the House to know how disruptive parliamentary questions can be to the working lives of civil servants. To see the tab on one's "in" tray can be horrific. Questions are almost invariably given top priority, and in my case, on one occasion, may have interrupted the writing of a brief for Mr. Callaghan, which admittedly may have been no great disaster for the country.

The statistics that we sometimes read about the cost of parliamentary Questions may be on the low side. One cannot account for the amount of time and distraction often caused through dealing with the minutiae, the tiny points, when other larger things have to be given a lower priority.

8.31 p.m.

Mr. John Garrett (Norwich, South)

I welcome the debate on this important report of the Expenditure Committee on the Civil Service. The Civil Service rereives remarkably scant attention from the House, given its size, the fact that it is the employer of nearly 750,000 people, its responsibility for the supervision of 40 per cent. of our gross national product, and its significance in making and implementing national policy. I am pleased to see that the Committee proposes to maintain its watch on developments in the Civil Service.

In the last 10 years there have been three waves of public and political concern about the Civil Service. The first resulted in the important Fulton report. I have to admit that I served the Fulton committee as a consultant. That wave was about the suitability of traditional Civil Service values to the management of a modern State. It primarily concerned the expertise and competence of the higher Civil Service to run a modern State and the need to develop the management practices of the service.

The second wave resulted in the new style of government promised by the Conservative Administration of 1970. That style of government led to experiments in hiving-off and departmental agencies. It is interesting to see that it was held as a point of policy by the Conservative Party at that time to create hived-off agencies which the same people now vilify as quangos. The Conservative Administration of that time also promised much more information on the objectives of government. The objectives of government were going to be spelt out. From that proposed reform, absolutely nothing resulted.

The present wave of concern about the Civil Service has resulted in this report, which virtually reiterates all the conclusions of Fulton and then emphasises the need for greater public accountability of the central administration of Britain and, in particular, the accountability of the Civil Service to this House and its Committees.

There is no doubt that the Government response to this report was a put-down. It was much less welcoming and understanding than the response of the Government of 1968 to the report of the Fulton committee. It is as if Labour in office has now lost all stomach for administrative reform.

I was glad to see that the machinery of government sub-committee of the national executive of the Labour Party is producing papers that emphasise the importance of Civil Service reform. I hope that these will be part of future Labour policy.

The Committee was much concerned with the broad issues identified and examined by the Fulton committee, particularly the practices followed by the Civil Service in developing its own top management. The British Civil Service, as far as I can see—I have done a fair amount of research—is unique in that it holds as a cardinal principle that top policy-making jobs must be in the hands of generalist administrators, with professionally qualified people kept in inferior posts. It follows extraordinary procedures in recruitment, training, promotion and even in organisation into parallel hierarchies to ensure that this principle of the generalist on top is upheld.

The Fulton committee observed that the Civil Service selected on entry, straight out of university, a small cadre of young mandarins who were overwhelmingly public school, Oxbridge arts graduates, and made special arrangements to ensure that they got to the top of the service while actually discriminating against graduates with professional qualifications. That is still the case in the Civil Service.

The Fulton committee carried out research on the ground into the effect of this policy and concluded that the British Government seriously suffered as a result from amateurism and downright bad management. To deal with that problem, Fulton proposed reforms in recruitment, the creation of a Civil Service college and the abolition of the Civil Service class system of over 1,000 separate career classes, all arranged in a pecking order with the amateurs on top and the professionals at the bottom, and its replacement by a unified grading system.

The Expenditure Committee has examined the results of those reforms 10 years after. In spite of the stated support for them and commitment to them by each Government since—this was corroborated by two former Prime Ministers who gave evidence to us—we found that those reforms had not been implemented. The Civil Service undertook to broaden the intake of young trainees in administration, but the result is that 21 per cent. of the applicants but over 50 per cent. of the appointees are from Oxbridge; 30 per cent. of the applicants but nearly 60 per cent. of the appointees are from public schools; 42 per cent. of the applicants but 57 per cent. of the appointees are graduates in the humanities.

The public school bias; is independent of the Oxbridge bias, as we can see from the fact that of recruits from non-Oxbridge universities, 8 per cent. of the applicants but no fewer than 21 per cent. of the appointees are from public schools.

These trainees are given exceptional treatment, experience and training and are put in an exceptionally fast stream for promotion to assistant secretary. Nothing of the kind exists for the young specialist staff employed by the service who actually have relevant qualifications for the management of Government—in accountancy, for example, the social sciences, science or engineering. Ten times as many administrators as specialists are promoted to principal level before the age of 29 and six times as many are promoted to assistant secretary level before the age of 45. The situation is now worse than when Fulton reported, because the enlarged entry of fast stream crown princes is now so great that it is cutting off the promotion opportunities for other young entrants.

Part of the Fulton reforms was the establishment of the Civil Service college, to train the managers, to act as a centre for research and to develop new skills in the management of government. It has done some good work in training and in management techniques, but we found that a quarter of the college's effort went into training the crown princes of the administration training scheme and only 6 per cent. went into training specialists and professionally qualified grades. An enormous amount of time and effort went into equipping young arts graduates with the knowledge that they should have had before they ever came into the service.

A sorry story was told by the first principal of the college. We learned that the Civil Service never took the college seriously, that it never set it any objectives, that it never defined any areas for research and that it gave it an organisation—this must be peculiar to our Civil Service—in which academic staff were continually checked on by Civil Service administrators who had no training or qualifications in running a college or courses at all, in which the academic staff were second-class citizens, with no prospect for advancement, and in which the teachers did not grade the students but the students graded the teachers. It is clear that the college suffered, and still suffers, from lack of direction.

The Expenditure Committee visited France and went to see the Ecole Nationale d'Administration, which has a worldwide reputation for producing the top management of the French civil service—a formidably competent body of people. The ENA takes in only external graduates and internal serving officials who take the trouble to study for five years or more for the public service. It puts them through a tough two-and-a-half year full-time course, much of it getting experience in public service postings or studying relevant subjects. It has only four permanent staff and it is enormously, impressively, efficient. It certainly does not suffer from the lack of direction which afflicts our college.

The Expenditure Committee rightly took the view that our management recruitment and training arrangements need wholesale reconstruction. We need to take in graduates and school leavers and simply give them a job to do, as any other large employer would. Let all of them—school leavers, specialist graduates, arts graduates—make their own way in the service. Then, when they are in their 30s, let them compete for entry to a staff college modelled on the ENA, sitting an entrance exam based on practical and useful subjects for the management of government—law, economics, social affairs, technology. Then let those who pass a rigorous course and postings outside the service be selected for a fast stream to the top.

It is important that such people should take the trouble to obtain the relevant qualifications and experience, inside or outside the Civil Service. That would represent an important and useful saving in money and effort. It would put the most able on an equal footing. Social background, or having been to the right schools or universities, would be irrelevant.

Mr. Spearing

I am interested in what my hon. Friend is saying, but if he advocates an entrance examination to a British-style ENA at the age of 30—which might be a good idea—in advocating a written examination for certain subjects is my hon. Friend not going back to the old qualifying method 1? How would my hon. Friend view a CSSB-type of entry at the age of 30—which I believe was fair —as a qualification for mature training?

Mr. Garrett

I see my hon. Friend's argument, but a qualifying examination must be in relevant subjects. It should not be in the subjects in which our administrators have always been examined—principally, history and the classics. The subjects studied should be relevant to the management of modern government. Those who do not possess such qualifications when they enter the Civil Service must take the trouble to acquire them.

Since the Expenditure Committee reported the Civil Service Department has come up with yet another administration trainee scheme. My hon. Friend the Member for Newham, South (Mr. Spearing) referred to it. That scheme virtually ignores the Expenditure Committee's report. It pays no attention to what we said about administration training. It is biased towards the all-round "good chap" with the right social background. It still shuts out specialist staff.

The argument in favour of the selection of an elite straight from university is extraordinary. Those regarded as the most able will not join the service if they have to compete with others from their own age group. The scheme does not propose to increase the professionalism of the Service—far from it. The scheme is proposed to deal with a problem caused by the change in the executive officer entry. That is the key to the sudden interest by the Civil Service Department in changing the administration trainee scheme.

The executive officer entry point was always the entry point for A-level school leavers who formed the NCO class of the Civil Service. But in the last 10 years the proportion of graduates entering the service at that level has risen from 5 per cent. to 50 per cent., and 70 per cent. of those have a first or second-class degree.

That new graduate entry of about 1.500 a year is not willing to watch the plum opportunities go to the mere 150 administration trainees who are no better qualified than they but who happen to fit what the Civil Service thinks a top person looks and sounds like.

The Minister should have nothing whatsoever to do with the proposed scheme. Its intention is contrary to the Expenditure Committee's proposal and to Labour Party policy on Civil Service reform.

It is sometimes said that Fulton's concern with the origin and characteristics of the higher Civil Service is a side issue motivated by irrelevant egalitarianism. That is what the mandarins would have us believe. But this concern is essential to the good government of Britain. A modern, twentieth century State cannot be well run exclusively by a group of people who have no training or understanding in research, quantification, analysis or management, and who change jobs with remarkable frequency in order to bear out the generalist principle of width of experience but no depth of experience.

It is interesting that the Fulton Committee criticised the Civil Service because top administrators move jobs on average at intervals of 2.6 years. The Expenditure Committee examined that matter and found that assistant secretaries and undersecretaries in the Treasury now change jobs at intervals of 1¾ and 1¼years respectively. An endless moving of jobs persists in order to bear out the principle of the generalised administrator. We must open up the top policy and decision making ranks to professionally trained people.

The Committee devoted much study to the relationship and the roles of the Civil Service Department and the Treasury. It concluded that control of Civil Service efficiency should be moved from the Civil Service Department back to the Treasury and that the management services and manpower divisions of the Civil Service Department should be put with the Treasury, leaving the rump of the Civil Service Department as some kind of personnel management department.

There are arguments that efficiency assignments might be more effective if backed by the weight of the Treasury, but in my view the proposal would create too powerful a combined institution in the Treasury and would weaken the power of the CSD to introduce good personnel management practices throughout the service. The Civil Service unions already complain that the CSD does not carry sufficient weight with Departments in this respect. To reduce that role to a mere rump would weaken its power even more.

I should prefer to see an arrangement in which the Treasury was divided into a finance Ministry concerned with short-term budgetary and fiscal policy and a planning Ministry concerned with public expenditure and national economic planning. I am not sure that the Expenditure Committee's proposals would achieve anything more than an increase in unaccountable bureaucratic centralism. What is needed is an increase in the power of the Civil Service Department to carry out efficiency audits of Departments. The Fulton committee proposed that it should carry out such audits, but it has never done so. It carries out exercises entitled "management reviews ", which are too dominated by the Department under study to have any value in terms of the raising of efficiency.

The Fulton committee advocated, and the Expenditure Committee repeated, that Departments should be organised on the basis of accountable units—that is to say, pieces of organisation by which results could be measured. The Expenditure Committee saw this as means of increasing public accountability. The Civil Service has created a few such units, such as the Property Services Agency and the Manpower Services Commission. The latter body has developed in the way proposed by Fulton in that it produces reports which enable us to evaluate its policies and, to some extent, its results. But the creation of accountable units within the Civil Service involving hiving off and all the rest of it is only the first step towards improved accountability. A much more important step is the reform of our national accounts to enable Parliament to examine the efficiency, effectiveness, the objectives and the results of Government spending programmes.

Little progress has been made in this respect, although it has been advocated by successive Committees of this House and by the Fulton committee in the past 10 years. Our Supply procedure of Estimates, Votes and public expenditure survey systems tells us what we are spending, but it never tells us what we are buying. The Treasury knows that much progress has been made in other countries, particularly in the United States, in devising arrangements for setting out the purposes and the results of public spending programmes, but it has always refused to introduce them in this country.

I remember in an earlier parliamentary Session during the proceedings in the General Sub-Committee of the Expenditure Committee asking the Financial Secretary to the Treasury why we had not been given more information about the objectives and results of public expenditure programmes, and he replied that he did not wish to overburden Members of Parliament with too much information. However, both the Expenditure Committee and the Procedure Committee have called for a wholesale reform in the presentation of public expenditure in order to increase the powers of surveillance of the House. No doubt we shall be debating this subject at greater length when the Procedure Committee's report is debated, but some views on the matter would be welcome from the Minister of State.

The fact is that the Civil Service has no management accounting system. Accounting has always been treated as a book-keeping exercise rather than as providing information on accountability. One effect of this can be seen from the fact that accountants are still rigorously excluded from the top management of departments; of all the professional groups in the Civil Service they have the worst prospects for promotion. In my view, a Select Committee is required on this subject because, without adequate information, parliamentary surveillance will always be ineffective. Better information is the first requirement for improved parliamentary control. The second requirement is the creation of a system of properly staffed and equipped investigatory Select Committees, each shadowing a Department of State. This has been asked for by the Expenditure Committee and also by the Procedure Committee.

A full discussion of this proposal will no doubt take place when we debate the Procedure Committee's report. The fact is that our parliamentary arrangements, centred on debate and Question Time, are no longer sufficient to call Civil Service Ministers to account for their actions. Modern government is too large and too technically complex to be examined on the Floor of the House. We need Select Committees with staffs of their own to probe, question and get at the truth. This does not necessarily mean consensus politics or cosy arrangements between Back Benchers on opposite sides of the House. The party battle can be fought in Committees as well as anywhere else. The big debates on principle could still take place on the Floor of the House, and they would be better informed if they were backed by investigation and hard evidence.

The Expenditure Committee has also done the House a service in observing that our system of public audit is out of date. Our Public Accounts Committee exchequer and audit system is nothing short of a scandal. It has hardly changed in 100 years, in a century in which we have seen auditable public expenditure grow from £70 million to £35,000 million. It is inexpert and narrow in coverage, and is still concerned with waste and extravagance rather than the efficiency of the management of bodies that spend States funds, both public and private. The Comptroller, the chief auditor, should be appointed by this House as its servant and be selected by Members of Parliament and Committees. He should not be selected by and from the ranks of the higher Civil Service.

Research carried out by the Expenditure Committee showed that far from being a servant of the House, as all the textbooks would lead one to believe, he is in most respects a servant of the Treasury. We need a powerful and independent state auditor, answerable to the House and nobody else, as is the General Accounting Office of the United States. This would do more to enforce public accountability than any other reform.

The British Civil Service is an institution of which we should be proud. It is as efficient as any other large organisation in the country. It constantly has to adapt to massive changes in policy, and on the whole it is underpaid. There are many thousands of public servants who operate local offices, regional offices and headquarters departments efficiently, equitably and with a remarkable speed of response. The Government have used them to carry the weight of incomes policies, often unfairly, and have unilaterally abrogated long-standing pay agreements.

Major reforms are needed. They are needed in the recruitment and training of top civil servants to provide a career open to all the talents and not just to the Oxbridge classicist and historian-type generalist from whose management we still suffer. Reforms are also needed in the public accountability of today's great bureaucracies. It is the duty of the House to see that these crucial reforms are implemented. The Civil Service thought that it could safely forget the demands of Fulton. We should remind it that we are vigilant, concerned, and determined to see changes.

8.53 p.m.

Mr. Hal Miller (Bromsgrove and Redditch)

The House is indebted to the hon. Member for Norwich, South (Mr. Garrett) for his expertise in these matters, even if some of us may have the impression that he doth protest too much about Oxford and Cambridge. I had not intended to enter this debate and I shall be brief. Unfortunately, I missed the Minister's speech, and I have an interest to declare as an honorary adviser to a Civil Service union. It was the hon. Member for Luton, West (Mr. Sedgemore) who brought me to my feet. I am glad that he has returned. As I listened to him he reminded me of a saying concerning one of the shared values that he so strongly deprecates: "The voice is Jacob's voice, but the hands are the hands of Esau ". He will be aware of the allusion.

The examples that he quoted need some rebuttal and also some understanding. We have now extended government into all forms of activity and it is no longer political but managerial. This has been the gist of so many remarks from both sides of the House this evening. It is therefore inevitable that civil servants will become involved and that policy options will have to be prepared. I oppose the final example he gave of the Meriden Motor Cycle Cooperative, but it is now there. It has problems with a new design and problems of production and sales. I can therefore see that it is reasonable that civil servants should be asked to prepare a possible scheme of things, including perhaps an association with a successful manufacturer.

Mr. Sedgemore

Is the hon. Member seriously telling the House that it is good conduct in public affairs for civil servants to pass on information about a British company to an overseas competitor so that that competitor can wind up the company behind the backs of the board, management and workers? Would he be pleased if they were doing that with Marks and Spencer?

Mr. Miller

I cannot credit the full extent of the hon. Member's revelations because I cannot believe that civil servants would be taking the decisions. When the option had been prepared, the Minister would have had to pass on it. I have no doubt that the Minister will comment on this when he replies. The point I am trying to make is that as we have developed the extent of government so, inevitably, we have have embroiled the Civil Service in commerce, medicine and industry. It is idle to suppose that they can be separated.

Many Labour Members have argued that greater expertise from these fields must be brought into the Civil Service. Yet apparently it is wrong for civil servants to take their expertise back into those fields. I do not understand that argument. I cannot understand the virginal nature of the Civil Service. None of those hon. Members who have made the point has teen particularly virginal—they move happily in and out of various occupations. Why are civil servants supposed to be different? I have been a civil servant. As government is extended, naturally the Civil Service is embroiled. There is no point in imagining that it can be otherwise.

Of course, it should be under control. This brings me back to the point first raised by my right hon. Friend the Member for Taunton (Mr. du Cann) that we are no longer in a position to control such things. The reason for this is that we have not equipped ourselves to do so.

The debate on this report is setting the cart before the horse. We should have had the debate on the report of the Procedure Committee first and put our own house in order before we started putting the Civil Service more into the order we would like to see as a result of the reform of our own procedures. Thus, we equip ourselves and are then in a position to determine the sort of Civil Service we need and the people we need to respond to that.

I ask the Minister to illustrate how cash limits are to be applied to the Civil Service while at the same time pay research is carried out. Are we to go into an area, into which I believe we should move, of a trade-off between jobs and pay? Is there to be more efficient management of the Civil Service, which will be better rewarded? One of the reasons why civil servants leave, especially in the higher echelons, is that their pay has been held down by acts of pay policy. They have left to make room for promotion for others. It is all part of the bias that has been introduced into our system by pay policy.

How will this question of pay research be linked with cash limits? This is very important and it depends crucially on the divorce of functions between the Treasury and the Civil Service Department.

8.58 p.m.

Mr. John Ovenden (Gravesend)

I declare an interest in that I am an adviser to a Civil Service union. That is well known to most of my colleagues and it is declared in the Register of Members' Interests, but as that document seems to have bitten the dust, I must put it on the record tonight.

I wish to speak exclusively on the section of the Select Committee report which deals with Civil Service pay and particularly with the Government's response to the Committee's recommendations.

I welcome especially the Committee's statement that the Pay Research Unit should be re-established. I welcome the Government's apparent acceptance of that recommendation. It is a belated acceptance. Many still believe that it would have been possible to introduce a measure of pay research, if not the full gamut of the structure, into last year's pay negotiations. We regret that at that time it was not thought possible by the Government to do so. However, that is history. We must now consider the action that the Government have taken in restoring fully the unit's work. We must address ourselves to where the Goverment now find themselves.

The action that the Government have taken opens up some wider issues. Without adequate answers to the questions that have been raised, and a much deeper and firmer commitment by the Government to act in response to the unit's report, the re-establishment of the structure could prove to be nothing more than a hollow gesture.

Despite the reactivation of the unit, there are still grave doubts and uncertainties throughout the Civil Service about the extent of the Government's commitment to comparability in the determination of Civil Service pay. The Select Committee and successive Governments have accepted pay research as the best and fairest method of determining Civil Service pay. However, in response to letters that I have sent to the Minister, and in answer to several Questions that Members on both sides of the House have put to him, he has so far steadfastly refused to commit the Government to acceptance of the unit's findings and to implementation of pay awards based on those findings.

If there is to be an orderly system of pay determination in the Civil Service, that can remain credible only if the Government are prepared to accept independent findings and not shelter behind pay guidelines or use backdoor methods of pay restraint through cash limits to withhold from civil servants the fruits of the system of pay evaluation that the Government have endorsed.

One of the great problems of pay policy that we now face is that of how to evaluate and determine pay in the public sector. It is difficult to find a proper system of pay evaluation. I believe that the Government are conscious of that problem. Over the coming months they will become increasingly conscious of the difficulties of pay in the public sector.

We have within the Civil Service a useful and worthwhile system of determining pay. It is a system that has proved extremely effective in doing its job and avoiding damaging confrontations. At a time when that system needs to be extended over the public sector, it would be tragic if it were to be sabotaged and undermined by Government action and made unworkable within the Civil Service. If that happened, confrontation within the public service would be inevitable.

The unit's report will inevitably prove that the public sector has fallen behind over the past three phases of pay policy. That has happened because that is a fact of economic life. Pay policy applies rigidly throughout the public sector while it is virtually ignored in large areas of the private sector.

If the Government are committed, as they appear to be, to a continuing pay policy and to phases 5 and 6, about which the Chancellor sometimes speaks, they have a duty to ensure that the injustices that are created by pay policy may be corrected. They must ensure that the anomalies may be put right within the developing pay policy structure. The Government must ensure that public sector employees do not fall further and further behind. They must ensure that those employees do not become the poor relations of those in the private sector. If pay policy is to have any credibility and any claim to justice, it is essential that the Government should face that problem.

It is argued in some quarters that the present pay policy prevents action along the lines to which I have referred. That is to ignore the fact that the very situation in which we now find ourselves has been created by pay policy and that its continuance has an exacerbating effect. To accept the argument that we can do nothing because of pay policy is to discriminate against public servants twice over. First, in that way we are holding them back behind their counterparts in the private sector. Secondly, we are denying them the chance to restore their living standards.

If the Government want a pay policy—some Labour Members have some sympathy with them in that view and I have some personal sympathy for it—they must face the responsibilities of tackling the problems that arise. To write 5 per cent. into a White Paper, to behave as though it were written on the tablets of stone, and to cling rigidly to that policy irrespective of the justice of individual claims, is the surest recipe for the collapse of pay policy.

In December I wrote to the Minister to seek assurances from him about the Government's commitment to the implementation of pay research findings. I asked him specifically for an assurance that the Government would accept the full implementation of the evidence of the Pay Research Unit and that that would determine the 1979 Civil Service pay settlement whatever the assumptions upon which cash limits were based. I did not get a very clear answer to that question and I would ask the Minister tonight to try and answer it and say what part the cash limits which the Government have laid down will play in pay negotiations and to what extent they will be used as a pay barrier and be used to override the evidence of the Pay Research Unit. On 11th December my hon. Friend the Member for West Stirlingshire (Mr. Canavan) sought an assurance from the Government that they would, in April, fully implement the increases justified by pay research findings. He failed to get that assurance from the Government. On the same day the Minister told the hon. Member for Woolwich, West (Mr. Bottomley) that the Government's guidelines would obviously be a major factor in negotiations. Perhaps the Minister can now say which factor will weigh most heavily with the Government in their pay negotiations. Will it be their rigid adherence to the 5 per cent. limit, or will it be their acceptance of the justifiable nature of pay research determinations and their commitment to comparability of the public sector with the private sector?

The pay research evidence is now available to unions and to Government. One of the Civil Service unions claims that increases in excess of 25 per cent. will be necessary for all its members if pay research findings are to be fully implemented. It also suggests that at the assistant secretary level increases of something like 50 per cent. will be necessary in order to restore comparability with the private sector. That pay research evidence shows quite clearly, and once again, that while pay policy has been strictly and rigidly applied against the public sector there has been scant regard for Government policy within managerial levels in private industry. The Government want more time to study the pay research report and more time to assess the value of Civil Service pensions. They want more time to determine the values of security within the Civil Service and what weight should be paid to that.

But surely it must already be clear to the Government from what they have seen that implementation of that report cannot be achieved within the 5 per cent. guidelines. The Minister ought now to be able to give us an assurance that the Government are prepared to go beyond that 5 per cent. limit if true comparability, and the independent findings of the Pay Research Unit, say that they should. There is a great deal of discontent within the public sector about the discriminatory way in which it has been treated in pay policy. A disregard of the pay research findings will turn that discontent into very real and very justifiable anger. I think it will undermine the morale and the efficiency of the public service and it will tend to drive those with marketable skills out of the Civil Service into areas where they can sell their skills.

It is already happening. In the data processing area the Civil Service is losing about 20 per cent. each year of its highly trained staff. Those are staff who are expensive to train. It really is a shortsighted, false economy to train people only to lose one-fifth of them each year rather than agree to pay them the rate for the job. I believe there are many misunderstandings in this House about the role of the Civil Service and about the attitudes of civil servants and their status. Too many politicians tend to think that civil servants are a highly paid and privileged class. The reality is very different.

About 300,000 civil servants in this country are paid below £60 a week—the TUC's low pay limit. About 8,000 executive officers, holding extremely responsible jobs within the Civil Service—generally young people with mortgage commitments and with families to keep —are also living at below the £60 a week TUC low pay target. That I think gives the lie to the idea that the Civil Service is a highly privileged, highly paid organisation and that it regards comparability as being the sole question to be decided in the determination of Civil Service pay, whatever the guidelines.

We are facing serious problems over pay determination within the public sector. There is much that the rest of the public sector could learn from the pay determination process in the Civil Service, and a great deal which the country could gain by the application of the principle throughout the whole of the public sector. That would be a great step towards the rational incomes policy which many of us want. If the Government do not give any commitment on pay research, if they are prepared to ignore the findings of such research, I fear that, rather than spreading this wise system throughout the public sector, we shall be in danger of destroying it within the Civil Service.

9.10 p.m.

Mr. Barney Hayhoe (Brentford and Isleworth)

I first declare an interest, in that I became a civil servant in 1944, when I was paid the princely sum of £156 per year. In the light of the comments of the hon. Member for Gravesend (Mr. Ovenden), that shows a remarkable change in values over the past 30 years. I am also a member of the Institution of Professional Civil Servants. I retain membership as a retired civil servant. I occasionally lecture at the Civil Service College.

The House is indebted to the hon. Member for Bishop Auckland (Mr. Boyden) for the service he renders by virtue of his position as Chairman of the Expenditure Committee and for the manner in which he has introduced this debate. I also pay tribute to the hon. Member for Nottingham, West (Mr. English), not only for his robust intervention as he defended his report—rather in the manner of a mother defending her young, under attack from outside —but for the extremely useful work which his General Sub-Committee has performed. It has collected important evidence which is a mine of information for those of us who were not privileged to sit as members of the Sub-Committee. The Sub-Committee reached many significant conclusions which in the main were endorsed by the Expenditure Committee.

I adopt the criticisms made by many regarding the inadequate nature of the Government's response. It was a pretty poor response after seven months' consideration. The Times said: what a lower, middle-grade White Paper. In Times language that is fairly condemnatory. The response has been criticised from all parts of the House today. I am afraid that the Minister of State's speech was of a similar standard. He failed to answer many of the important questions raised by the Committee and I doubt whether we shall receive clear answers to the points made during the debate.

The first recommendation of the Eleventh Report was that there should be regular reviews by appropriate Committees of the House. The Government "take note" of that recommendation. I give it a positive welcome. The Committee has performed a great public service in opening up an area which, I hope, will be followed by other Select Committees in the years ahead. The reports, the public comment and today's debate, have concentrated on a number of main issues highlighted by the Committee, such as pay, pensions, size, efficiency and the accountability of the service. There is also the point about the suggested bias in the senior ranks and the political independence, or impartiality, of the Civil Service.

There were also references to other important questions—for example, the machinery of government. There was strong pressure on the Minister to give a clear answer to the recommendations. We await with interest to hear whether he has managed to consult the Prime Minister.

On the whole question of reorganisation, I must say that, having watched it going on both in central Government and in local government and other sectors of our national life, I am suspicious of it. It seems to me that the end result is normally a heavier charge on public funds in one way or another. Lord Rothschild gave a splendid quotation in an article he wrote arising from the report. It was from a gentleman called Petronius in AD 66. He quoted Petronius as saying: We trained very hard, but it seemed that every time we were beginning to form up into teams, we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising, and a wonderful method it can be for creating the illusion of progress, while producing confusion, inefficiency and demoralisation. So, whatever the arguments may be for reorganisation of the machinery of government as between the Treasury and the Civil Service Department, I trust that those responsible—and that means my right hon. Friend the Leader of the Opposition when she takes over as Prime Minister—will pay attention to that wise counsel of Petronius so many years ago.

Mr. Molloy

The Opposition have their own Petronius in the right hon. Member for Leeds, North-East (Sir K. Joseph).

Mr. Hayhoe

The hon. Member for Nottingham, West referred to dispersal in the light of the recommendations of the Hardman committee and to the fact that a decision which he supported was turned down in the Committee.

Immediately on return to office, the Conservative Party will institute a review of the whole of dispersal policy. We believe that the circumstances have very considerably changed since the Hardman report, and therefore it would be right for the Government to review these decisions. We are also aware of the study that is going on at Strathclyde university, funded, I understand, by some of the Civil Service unions, if not by the Staff Side, and we are looking forward to seeing what comes out of that review, which is concerned with the cost of the whole exercise.

Unified grading has also been referred to. I believe that it is a worthy objective, but again there is a problem of cost, and it is right, in seeking to make progress in extending the area of unification—if that is the right phrase—downwards through the grades of the Civil Service, that proper account should be taken of the cost of the exercise, because it could prove very costly indeed to buy out some of the strange quirks and discontinuities which exist in the present system. If it can be done without heavy cost, I think that it will be a wise thing to achieve. Negotiations will be started between the CSD and the Staff Side on the matter.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) and my hon. Friend the Member for Nantwich (Mr. Cockcroft) spoke of the need for cross-fertilisation between the Civil Service, industry, and the nationalised industries. Again looking back to my own experience, I am sure that the more that such cross-fertilisation can take place the better, certainly in terms of people moving as part of their own careers, which is made a lot easier by one of the Fulton reforms not mentioned today—transferability of pensions. When I retired from the Civil Service after just under 20 years of reckonable service, all went, because in those days there was no possibility of transfer. I hope that, with the advantages available now for people transferring to and fro, there will be this greater crossing over, and also a much greater crossing over in terms of joint training, joint conferences and the like. A great deal can be done in that direction.

My hon. Friends the Members for St. Marylebone (Mr. Baker) and for Ashfield (Mr. Smith) spoke of the way in which the extension of Government has of itself created a much greater pervasive influence of the Government machine and of civil servants into the lives of ordinary people. I am certain that my parents—certainly my grand-parents—would have come up against government, whether local or national, in only a minuscule form as compared with people today who face so many regulations of one kind or another.

One of the difficulties faced by civil servants is that they attract criticism which rightly should come to this place because this place has generated the legislation and laid the tasks upon the civil servants. In performing those tasks they run up against the populace as a whole, which sometimes leads to friction.

I turn now to some of the major subjects under discussion. First, pay. The Government's 5 per cent. pay policy is falling apart. No doubt this will be discussed in much greater depth—and properly so—in tomorrow's debate.

Public sector pay presents particular difficulties at present. Some groups have already been promised substantially greater increases than the 5 per cent. proposed by the Government because they are special cases. Other groups within the public sector are claiming special case status. As the hon. Member for Gravesend said, there is pressure for substantial increases in order to meet what is expected to be the comparability information which will come from pay research.

I do not intend to say anything today to undermine the Government's position in the public sector pay negotiations which have now commenced and will no doubt continue. On this side of the House we welcomed the reactivation of pay research along the lines recommended by the Select Committee. We believe that the new independent element in the Pay Research Unit is of particular importance in establishing, as we hope it will, public trust and confidence in the system. We shall be looking carefully at the way the new system operates.

Pay research does not determine the amount of any particular pay settlement. It should provide the data acceptable to both sides upon which pay negotiations can proceed. My right hon. Friend the Member for Lowestoft (Mr. Prior) has made it abundantly plain that the Opposition cannot give any general guarantee or commitment on the implementation of any particular figure or amount which emerges from the pay research exercise. My hon. Friend the Member for Blaby (Mr. Lawson) asked in the Sub-Committee what account would be taken of job security in determining the amounts. This is a perfectly fair question. There has been a rapid rise in unemployment in recent years, and people in public service, particularly civil servants, have been protected from that. That protection must count for something. We want proper apportionment of such matters in these negotiations as far as is humanly possible.

My right hon. Friend has also reiterated the Opposition's full support for cash limits. In paragraph 106 the Select Committee came out in favour of cash limits being fixed before pay negotiations are entered into. My right hon. Friend has made it clear that cash limits cannot be used as a pretext for riding roughshod over the results of pay research. With co-operation and good will it should be possible to establish a satisfactory method of taking pay research into account in forming these limits.

I believe that there must be discussions with the Staff Side on these matters. Cash limits are here to stay. During the next few years we must develop sensible and suitable arrangements for dealing with pay negotiations in the public service in the context of pay research and cash limits. One is well aware of the fears on the staff side about cash limits. I, too, received the brief from the Staff Side, as did the hon. Member for Ealing, North (Mr. Molloy).

I believe that the fears expressed by Civil Service unions—and these were expressed in the evidence—are exaggerated. Anyone who had considered the Income Data Services Study which was produced in November, on this whole question of comparisons and cash limits and their effects on public sector pay, would soon have appreciated the complexity of these questions. Simple slogans either for or against the cash limits do not help to develop the constructive dialogue and debate that must take place. The conclusion of the study was that cash limits are a useful adjunct of policy; they are no magic wand. That is not all that far from a realistic and proper appraisal.

My right hon. Friend the Member for Taunton (Mr. du Cann) raised the very important question of the parliamentary control of expenditure. He was calling for the reappraisal sought by the Select Committee recommendation of the way in which cash limits fit in with the system, and I am sure that that will be necessary.

My hon. Friend the Member for St. Marylebone raised the question of pensions. Pay research is closely allied with pensions, as was pointed out by the Select Committee. The suspension of pay research, which was criticised widely by the civil servants, brought them an unexpected benefit. It meant that the Government Actuary did not carry out the normal annual recalculation of the amount which should be deducted from civil servants' pay in respect of the value of the inflation-proofing of those pensions. Suspension of pay research has therefore left the present adjustment for inflation-proofing at 1¾per cent., which everyone agrees is an underestimate. That figure represents a considerable undervaluing of the substantial benefit of a price-protected pension during the last few years.

I am glad that the Government have agreed that the Government Actuary will make an annual report, as the Select Committee recommended, setting out the advice he has given and the assumptions that he has made. Those assumptions are of crucial importance. If the Government Actuary believes that future interest rates will be greater than future inflation rates, he arrives at a deduction which is much lower than if he visualises an equivalence between interest and inflation rates.

I have the highest respect for the professional talent of the Government Actuary, but I am not sure that his crystal ball for dealing with the future level of interest rates or inflation is any better than anyone else's. Much more public light needs to be shone on these decisions because there is much public disquiet about the inflation-proofing of public service pensions. The man and woman in the street, the people in the boardroom and the trade union officials have all expressed criticism to me of pension inflation-proofing. They have all expressed their concern. It is therefore essential that those who receive inflation-proofed pensions should pay the correct contribution for them. That is perfectly fair, and I hope that the staff side would not seek a subsidy for the inflation-proofing of their pensions. I think that they would want it to be calculated properly and fairly, and in the best possible way.

Mr. English

I am grateful to the hon. Member for his support. Does he realise that in evidence we were told that the Treasury had not been consulted, the CSD and no Minister had been consulted when the relevant document was drafted? The worrying aspect is that someone actually drafted what eventually became a rule, if not the law, without realising its implications.

Mr. Hayhoe

That evidence was of very great interest. The section where the Government Actuary and some of his colleagues were being questioned was also of great interest. I believe that if what was then said had been widely understood it would, if anything, have added to public disquiet because the way in which these things had been managed certainly was not open, free and understood widely by those concerned.

Mr. English

And the end result was wrong.

Mr. Hayhoe

As the hon. Gentleman properly said, the end result was wrong regarding the size of the contribution. The 1¾ per cent., which was decided on the basis of 1973 figures, has been running ever since and is clearly out of phase. I hope that the Civil Service unions concerned will agree that this calculation ought to be made properly. If it comes out at a very high figure—I have no idea about the likelihood of that figure—it will be a matter for negotiation between the parties concerned on how they proceed. However, it must be a fair, unsubsidised figure. When that is widely understood, I think that there will be less concern and criticism of the inflation proofing of pensions, which is seen as a privilege available to the public sector employee.

I have referred to the Civil Service unions on a number of occasions. Looking back at my own experience when I was an active member of one and at the way in which negotiations between unions and management are carried out in the Civil Service, I believe that there is great advantage in the Whitley system. The way that the Whitley system has developed is a model of the methods by which disputes and problems can be resolved. The way in which the Whitley system, operating properly, has functioned in the past is in marvellous contrast to the kind of jungle atmosphere that we see outside in industrial relations.

There are some disturbing trends. We see a greater Left-wing political involvement in unions than before. We see pressure for the closed shop within the Civil Service generated by some unions. I should make it absolutely clear that the Opposition are against the spread of closed shops. It would be wholly wrong for the Government to agree to the establishment of closed shops under pressure from certain Civil Service unions. The establishment of closed shops in the non-industrial Civil Service would put at risk the basic principles of free entry, open competition and political independence. It would not be of any practical value or bring any practical benefits to the unions concerned. I am glad that my union, when it debated this matter at its last annual conference, came out firmly in opposition to demands for a closed shop within the public service.

Trade union affiliation to the TUC, to which, in common with other unions such as the First Division civil servants, I have not been opposed, could cause some problems. At Brighton this year, when the TUC conference was turned into a pre-election jamboree for the Labour Party, one saw and heard David Basnett, as Chairman of the TUC, deliver an offensively party political opening address. It was clear that some of the trade unions represented there, which, by their very constitutions, had to eschew involvement in party politics, were embarrassed by it. After the Prime Minister's speech to the TUC, the motion of support for Labour was not really put to the conference. It was the only motion on which there was no opportunity to vote either in favour or against. It was railroaded through, partly because some 30 per cent. of representatives at least at the TUC conference were there not to debate and support party political matters. I think that the leadership of the TUC should look carefully at this issue. Len Murray, in his speech, was careful to tread a line which accepted that there were difficulties for the non-political unions.

I turn to the other very important subject which has run through many of the speeches today—the whole business of Civil Service efficiency and accountability. The Government gave a very poor response indeed to the Committee's proposals. Very nearly insoluble problems are involved. The hon. Member for Nottingham, West asked what incentives one can get in the Civil Service operating effectively towards efficiency. My own experience was the way that one moved up was by empire building, which is the very reverse of efficiency.

If one could somehow persuade others who were determining the establishment that more people ought to be involved in the work on which one was engaged, one then floated up the scale. The same thing was seen in evidence by one senior civil servant who was asked whether departments would be allowed to appoint assistant secretaries. He said that if they appointed assistant secretaries a great pyramid automatically went with it—sort of eight of one and 16 of another. That approach to staffing, which certainly existed in the past and is still there, is a worrying one.

A very important comment was made by Sir Derek Rayner in the evidence which he gave. One of the comments which he made at the beginning of his evidence is well worth requoting. He said: Efficiency in the Civil Service is dependent, as in business, on motivation, and whereas in business one is judged by overall success, in my experience the civil servant tends to be judged by failure. This inevitably conditions his approach to his work in dealing with the elimination of unnecessary paper work, and in eliminating excessive monitoring, and leads to the creation of an unnecessary number of large committees, all of which leads to delays in decision taking and the blurring of responsibility. In his evidence, Sir Derek came up with a suggestion that my right hon. Friend the Member for Taunton and the Public Accounts Committee ought occasionally to call people before them and say what a good job they had done. That sounded good to begin with until it was examined in detail. But somehow one has to find a better way than we have at present of rewarding efficiency and of rewarding the person who can so organise the work, and improve the way of dealing with it, that fewer people are involved. That is something which should lead quickly to promotion.

In the discussions that I have had with people in the Civil Service department, I know that that is certainly their motivation. I do not know how widely it goes, but I believe that the points which the Committee has raised, and which are highlighted particularly by the quotation from Sir Derek Rayner, are ones which are not easy to solve. Anyone who has looked at this recognises the safety-first mentality, the attitude that doing what was done before, the putting in of estimates which are not all that much different from last year, is always safe. There are so many ways in which the whole system operates against getting a personal involvement in greater efficiency running right through the service.

The report has also shown that the size of the Civil Service can be reduced if better ways were found of discharging its tasks. The section dealing with reducing costs by policy changes is extremely important. But, again, there has been a bitterly disappointing response by the Government.

The hon. Member for Bishop Auckland referred to paragraph 11 of the 12th report and to its importance. It is an immensely important section with regard to accountability to Parliament. There was also the question of Select Committees. Among the recommendations that have been made is that an invigilation of the work of Departments should be carried out by Select Committees of this House.

We have had the report from the Expenditure Committee which overlaps the reports from the Committee on Procedure, but I thought it right to reiterate what has been said on behalf of the Opposition. My right hon. Friend the Member for Cambridgeshire (Mr. Pym) has given an undertaking that in the first Session after a General Election the next Conservative Government —he was speaking to a party conference— will present to Parliament proposals based on these Reports and the comments made upon them…the proposals…would embrace both the establishment of select committees to examine the work of Government departments and their agencies and revised procedures for dealing with legislation involving the taking of evidence. That was a very important statement indeed.

Again, as one who has been involved in policy-making for a party, I know that it is sometimes easier for parties in Opposition to enter into firm commitments of this kind. Since I believe that the papers on this will still be swanning around, no doubt many committees will be looking at them. I am delighted that my party has entered into that firm commitment and I hope the time will soon arrive when we can begin to implement it.

As for the Auditor General and the Exchequer and Audit Department, I believe that the Committee's view on the way in which this was dealt with by the Government was that it was a very shabby response indeed. I support paragraph 17 of the response by the Expenditure Committee where it makes it clear that the Comptroller and Auditor General and Exchequer and Audit Department should be empowered to carry out investigations of the efficiency and effectiveness of all bodies, the bulk of the receipts of which come from public funds, and that they should be staffed and organised in order to enable them to do so. This is the point to which my right hon. Friend the Member for Taunton brought clarification today when he was explaining some of the difficulties if they were to get involved in auditing the accounts of all public sector bodies. It became clear that that was not the intention. As I understood the exchanges, it seemed that there was a very wide measure of agreement. The crux of the matter was the access which these departments should have—not that they are going to do it all the time but that they should have the access of their own right.

We are grateful to my right hon. Friend the Member for Taunton, who speaks with such authority on these matters, not just as Chairman of the PAC but also as chairman of the 1922 Committee, for the powerful case he made for parliamentary reform, for giving Parliament better tools for discharging its responsibility on scrutiny and surveillance of the Executive.

Lastly, I come to bias in recruitment. I notice that the three hon. Gentlemen on the Labour Benches who were most vituperative about the bias of Oxbridge have themselves all been either to Oxford or to Cambridge, but that is perhaps in the nature of things. I believe that Lord Crowther-Hunt and those who go his way have got it all wrong. He was questioned on 26th October as to what were the proper natural qualifications if one was to succeed in the Civil Service and he said then that one had to be born in Social Classes 1 or 2, go to a public school, read classics at Oxford for preference and do not read a relevant subject. He has got it all wrong.

If one was of equal ability and if one had been born in social classes V or VI or whatever it is, and if one had been to a comprehensive school and had not been to Oxford or Cambridge, the balance would be slightly tipped in one's favour. That was quite clear from the figures given by the Minister of State. When things were unknown, when it was being done by numbers, the preference then came out more heavily for Oxbridge than when it was on an occasion when the interviewing bodies knew.

It may well be, of course—and this was gone over by the Committee—that because of the way our education system works, and everything else, the most able people end up at Oxford and Cambridge. When I hear what some of the Oxford and Cambridge graduates on the Labour Benches say, I question such a presumption. I believe that the way in which the Civil Service recruits is that it goes out of its way to try and make it as fair as possible. Regarding the difficulties relating to engineers and scientists, I well appreciate them, being one myself. Sometimes they are at a disadvantage compared with the administrators.

We had an astonishing tirade from the hon. Member for Luton, West (Mr. Sedgemore). He thought what he was saying might be described as vicious, vindictive and venomous, and I do not dissent from his own description.

Mr. Sedgemore

Will the hon. Gentleman give way?

Mr. Hayhoe

No. I must get on.

Mr. Sedgemore

I did not say that. Why does the hon. Gentleman tell lies?

Mr. Speaker

Order. The hon. Member for Brentford and Isleworth (Mr. Hayhoe) is not giving way.

Mr. Sedgemore

On a point of order, Mr. Speaker. The hon. Member for Brentford and Isleworth (Mr. Hayhoe) deliberately misled the House and said that I described my speech as vicious, venomous and vindictive. I did not describe it as anything. Why does the hon. Gentleman deliberately seek to mislead the House?

Mr. Hayhoe

The hon. Gentleman said that he thought that it might be described in those terms and that is what I said. The record will show that. He went on to explain why he did not think that that was so, but those were the words that came out of his mind about how other people might describe his speech.

Apart from the hon. Gentleman's attacks on individual civil servants, which I utterly deplore, he was bitterly critical of many of his own senior Ministers, including the Chancellor of the Exchequer, the Lord Privy Seal and, by implication, other senior Ministers. If half of what he said was justified, the whole ragbag of them are totally unfit to hold high office and they should be driven from power at the earliest possible moment.

My experience and knowledge of senior civil servants has been very different. In contradistinction to the Tribunite attack we have witnessed, let me pay tribute to the integrity, honesty and loyalty of the vast majority of those, whether in high positions or in lowly positions in the Civil Service and whether working in London or in the provinces, who serve the nation very well.

9.47 p.m.

Mr. Charles R. Morris

With the leave of the House, I shall intervene again. The debate has been instructive and enlightening and we have listened to a multiplicity of approaches from both sides of the House. It has been a hard hitting debate and who would have wished it to be otherwise, bearing in mind the Civil Service's central role in implementing the policy determined by the democratic process?

My hon. Friend the Member for Nottingham, West (Mr. English) referred to his diligence in circulating a notice of motion which attracted the support of one-third of hon. Members for a debate. Some of the splendid speeches in the debate merited the attendance of more of those hon. Members.

To use a Civil Service expression, I give preference to irrelevance by dealing first with the speech of the hon. Member for Brentford and Isleworth (Mr. Hayhoe), who quoted Petronius. Aristotle said that it is the essence of probability that some improbable things will happen, and it seemed the essence of probability that the hon. Gentleman would make the usual dull, commonplace winding-up speech. He certainly did that, but in some respects his speech was alarming because he threw in, almost off the cuff, the claim that the next Conservative Government would review the dispersal policy

The hon. Gentleman is entitled to make that commitment, but hon. Members can imagine the reaction in Scotland, Wales, the North-East, Liverpool, Middlesbrough, Southport, Manchester, Norwich and every city and area facing regional economic structural difficulties. Since 1974, they have known that they are to get units of the Civil Service dispersed to help them with their economic difficulties.

In an almost off-the-cuff reaction, the hon. Member said that a Conservative Government would review the Government's dispersal policy. That is a very important statement, and it will provoke alarm. The hon. Member should know, as all Government supporters know, that when the Government's dispersal policy was announced in 1974 the local authorities concerned in those areas of structural economic difficulty looked at the Government's statements and accepted them as binding commitments.

The dispersal policy has not even got under way to any marked extent. We are not sending the whole of the Civil Service out of London and the South-East. We are committed to sending 31,000 civil servants. But the hon. Member suggests that the first action of any incoming Conservative Government will be to review it. Very well. Let him make that statement. But then let him deal with the alarm and despondency that his comments provoke.

I was extremely impressed with the contribution made by my hon. Friend the Member for Bishop Auckland (Mr. Boyden). I have commented already on some of his remarks, but he raised another important point, which was touched on by my hon. Friend the Member for Norwich, South (Mr. Garrett) and other hon. Members on both sides of the House, when he referred to unified grading.

I recognise that there are certain technical and specialist civil servants who feel imprisoned within their own specialties in terms of promotion to the higher reaches of the Civil Service. I have sought to improve the situation for those grades. However, my hon. Friend the Member for Norwich, South argued that there had been no change and that the Government had not responded to the concern of the Expenditure Committee about unified grading. It is not true to say that. We have responded, and not only in our observations on the report. We have indicated that we are carrying forward unified grading. But we cannot carry it forward irrespective of the expense involved and the attitudes of the unions concerned. The unions have not got one view on the progress of unified grading and, what is more, it involves appreciable cost. One of the major costs is the job evaluation of the multiplicity of grades, which we intend to unify.

I come now to another important argument put forward by the right hon. Member for Taunton (Mr. du Cann). He asked about the recommendation of the Public Accounts Committee that the Comptroller and Auditor General should be given access to the books and records of the Housing Corporation, the BNOC and the National Enterprise Board. In that con-connection he also drew attention to paragraph 92 of the Government's observations. The Government are still considering the proposals about the BNOC and the NEB and have reached no definite conclusion on the matter. However, the right hon. Gentleman will be glad to know that the Government have decided to accept the recommendation of the PAC concerning the Housing Corporation.

Mr. English

We are all very grateful for that. However, the idea that a problem can be solved by throwing one little crumb to the people who are asking for a loaf of bread is quite wrong. That is no solution to the problem. Will my hon. Friend commit the Government simply to a reconsideration of the provisions of the Exchequer and Audit Acts, where all of us—the Public Accounts Committee, the Committee chaired by my hon. Friend the Member for Bishop Auckland, every other Committee, and people outside—including accountants, nationalised industries, local authorities and others—can say what should be altered? Will my hon. Friend commit the Government to that?

Mr. Morris

The Government are always prepared at any time to consider any views that my hon. Friend the Member for Nottingham, West may have.

I want to turn now to the important point made by my hon. Friend the Member for Nottingham, West and a variety of other hon. Members in regard to the business appointments argument—the argument about civil servants who retire and take up business appointments in the private sector. This is a crucially important point. I wish to emphasise that the Government, at the present time, have no evidence of any significant abuse of the rules in this regard.

Mr. English

You were given some at our Committee.

Mr. Morris

My hon. Friend is obviously referring to the views expressed in that Committee by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).

Mr. English

There were more in this debate.

Mr. Morris

My hon. Friend is obviously referring to the comments made in the proceedings in the Committee by the hon. Member for Cirencester and Tewkesbury. That was very tenuous evidence. The hon. Gentleman did not identify the civil servant to whom he talked. If there is any evidence of abuse, both I and the Government are anxious to see the evidence in order that we can deal with that position.

There have been suggestions about imposing a legal sanction. I am advised that if we were to impose a legal sanction that was to be effective, it would have to be contrary to an important common law principle. As I have indicated if there are cases of abuse the Government are anxious to know about them. I would be grateful if my hon. Friends or hon. Members in any part of the House would give me the information.

Dealing with the legal restraint, it is a fact that an employer may not impose restraint on the employment of an individual once he or she has left that employment, unless the employer can justify those restraints as reasonable. That is the difficulty that faces the Government at the present time.

I would have liked to deal at even greater length with the speech of my hon. Friend the Member for Luton, West (Mr. Sedgemore) but I want to deal with the question of efficiency and the efficiency commission to which reference has been made because I fully accept and agree with the emphasis that many hon. Members have placed upon efficiency. Some of them have misinterpreted the Government's observations. It is true that we have doubts about some of the Expenditure Committee's prescriptions. There are limits to the scope for breaking down the service into separate accountable units, because the functions of many units necessarily interlock.

I do not think that an independent committee can examine efficiency, because only Ministers can assess the importance that they themselves attach to particular safeguards and procedures, but that does not mean that do not accept the aim that is behind what the Committee has said, namely, that we should increasingly identify the costs of Government policies and programmes and make this information available for Parliament. We shall seek to proceed on those lines.

We have indicated that in terms of relating pay to performance we shall undertake a study to determine how this is achieved in outside organisations. We intend to proceed with that study.

I would like quickly to turn to the comments of my hon. Friend the Member for Luton, West. His speech reminded me of a boxer from whom I derived a great joy and sense of entertainment when I watched him in action. He used to pat his opponent in a rather friendly way and then deliver a knock-out blow. Listening to my hon. Friend's speech, I find that he has the same quality. He thought that the Civil Service was diligently hardworking and at the same time he accused individual civil servants of misleading Select Committees and accused my ministerial colleagues of mendacity. I emphasise that I believe that the Civil Service does carry out the role that this House gives it to undertake.

Question put and agreed to.


That this House takes note of the Eleventh Report from the Expenditure Committee, Session 1976–77, the Twelfth Report last Session, and the related Government observations (Command Paper No. 7117) on the Civil Service.