Accountability to Parliament

HC Deb 05 April 1982 vol 21 cc744-63

"(1) The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness in the provision of local authority services and in the financial management of local authorities of statutory provisions and of guidance and instructions issued to them by Ministers of the Crown.

(2) The Comptroller and Auditor General shall have access to all documents and records held by the Commission relating to any such studies.

(3) The Comptroller and Auditor General shall report to Parliament the results of his examination of any such documents and records, provided that he shall not in any such report refer to the affairs of any individual authority in a way which identifies that authority by name or otherwise.".—[Mr. Joel Barnett.]

Brought up, and read the First time.

Mr. Joel Barnett (Heywood and Royton)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

With this it will be convenient to take amendment No. 16, in clause 21, page 16, line 17 after "20", insert "or section (Accountability to Parliament)".

Mr. Barnett

I hope and believe that the objectives of the new clause are the same for the Government, local authorities and the House of Commons—to ensure better value for money in public spending and also proper and more effective parliamentary control. The new clause is a limited, but important, step to take the House in some way in the direction that the Public Accounts Committee unanimously recommended in its report last year. That report commanded all-party support among nearly 300 hon. Members in early-day motion 252.

The purpose of the new clause is to enable the Public Accounts Committee, through reports from the Comptroller and Auditor General, to report to Parliament on the spending of large sums of money that the House votes. For example, there is the 1982–83 rate support grant voted by the House, which will be over £10 billion. I believe that we can do that under the terms of the new clause without infringing the proper democratic rights of local authorities. I shall want to say a word or two about local authorities and their fears, which I recognise they have.

New clause 5(1) states: The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness in the provision of local authority services and in the financial management of local authorities"— this is the important part— of statutory provisions and of guidance and instructions issued to them by Ministers of the Crown. Therefore, that is a fairly narrow subsection.

I make it clear that the subsection is narrow. I would have preferred to go further, but we have deliberately written the new clause in a way that should be acceptable. It seeks to ensure that the House has the opportunity to consider whether Government measures and guidance encourage efficient local administration or the reverse. That is what the new clause is about. That is why I say that it should command acceptance on both sides of the House. It is a question whether the financial arrangements set by Government are well designed to meet what Parliament and the Government have approved.

The work does not have to be carried out by public sector or private sector auditors or by this or that type of consultant. That is not an issue. The Public Accounts Committee has never argued that the work must be done by public sector or private sector auditors. I hope that we can remove that question from any argument.

Personally, I very much regret the fact that, unfortunately, the way in which the debate has been conducted has given the impression that auditors are being treated as a sort of political football. Local authorities are being left, wrongly, with the impression that the auditors, whether private or public sector, are intent on intervening on policy issues. That is not what we are talking about. Auditors, consultants and others, who have specific skills, have the abilities to help local authorities, not to work against them and not to take political decisions that are rightly the responsibility of local authorities.

Mr. Christopher Price (Lewisham, West)

My right hon. Friend did not have the benefit of attending umpteen sessions of the Committee. Is he aware that it has been made clear by private as well as public auditors that they would very much resent being brought into this situation, so much so that they might refuse outright to be compulsorily appointed to audit a local authority if there were the slightest implication that they were there to do a political hatchet job on that local authority?

Mr. Barnett

I cannot say that I am sorry that I did not sit through those sessions, day and night in Committee, having done too much of that on Finance Bill Committees over the years. I am glad to hear my hon. Friend's comments because I know from colleagues in the profession that they do not want to become involved in policy-making decisions.

The difficulty is that local authorities feel that achieving greater efficiency in the spending of money is synonymous with cutting expenditure in total. That does not follow. The total level of expenditure is a matter for Government and local authorities. Within a certain level of expenditure better value for money will help local authorities that want more expenditure. More expenditure will be available through the proper and more efficient use of the money at their disposal. I hope and believe that local authorities will welcome the new clause and the direction in which we are seeking to move.

I am sorry that we are not going further. This will be borne out by my colleagues on the Public Accounts Committee. When witnesses from the local authorities came before the Committee it was clear to us that they were under the misapprehension that the Comptroller and Auditor General was part of the Executive. They did not see him as the independent figure that he is, although the Public Accounts Committee would prefer it if he were appointed in a different way. He is wholly independent of the Executive and of Parliament. He is an independent man—one day that person may be an independent woman—who would not intevene on policy matters affecting local authorities.

For the reasons that I have given I believe that local authorities will benefit from the studies that the Comptroller and Auditor General would be enabled to undertake under the terms of the new clause. In that way a Department's actions vis-a-vis local authorities—that is to say its statutory provisions or guidance—will be able to be properly checked by the Comptroller and Auditor General. Reports will be made to the House of Commons through the Public Accounts Committee. That can only be to the benefit of local authorities rather than to their disadvantage.

Therefore, new clause 5(2) provides access to documents for the Comptroller and Auditor General. Again I make it clear that it is nothing like a broad and general access. Subsection (2) states that that access is severely restricted to documents related to the studies that have been referred to in subsection (1). It is not general access either to the books and records of the local authority's auditors, or to the books and records of the local authority. Therefore it is narrow and restricted access.

New clause 5(3) specifically provides that the Comptroller and Auditor General will not be able to report on any individual local authority. That is rightly a matter for the audit commission and local authority auditors. That is their function, and not that of the House, or the Comptroller and Auditor General. I know from my experience as chairman of the PAC that the obligation of the Comptroller and Auditor General to report to the House of Commons, by convention through the Public Accounts Committee, will ensure that the report will not be treated in a manner that would harm local authorities. I know that my predecessor, the right hon. Member for Taunton, (Mr. du Cann), will agree.

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Having said that, I understand the worries of local authorities, whatever their politics. I have frequently said, both in this Chamber and outside the House, that their fears are very much misplaced. We seek to help them achieve greater efficiency, not to hinder them or involve ourselves with their policy-making decisions. No one is suggesting that the Comptroller and Auditor General and his staff should duplicate the work of the audit commission and its staff. The new clause does not suggest that. It is designed to help local authorities, and in so doing, help the taxpayer and ratepayer.

The new clause does not go as far as I know that ray colleagues on the PAC would like. I should like it to go much further. However, it is a modest but important step in the right direction.

Mr. King

The right hon. Gentleman said that he would like to go much further. Does he mean much further in the direction of local authorities or in other aspects of the possible role of the Comptroller and Auditor General? It is important to put that on record.

Mr. Barnett

There are two separate issues. First, as the right hon. Gentleman knows, there is the wider question of general access for the Comptroller and Auditor General to wherever public money goes. That is strongly supported by myself and nearly 300 members on both sides of the House. Secondly, although this is a limited new clause, I would much prefer that this House should go along with our recommendations in relation to local authorities. If the whole aspect were covered by a national audit office there would be better opportunities for pooling and sharing ideas and training, and for ensuring that the House was better advised and better able to obtain effective control of public money. However, I make it clear that that is not in the new clause. It is a narrow new clause.

I hope that the House and the Government will accept the new clause as a useful first step. However, I do not intend to stop here, although I must do so as it is a local government Bill with limited opportunities for amendment. The PAC believe that there is much more still to be done. It is an important step for two reasons. It will help local authorities and Governments to obtain better value for money, as the House intended. It will provide better accountability to the House of Commons. I hope that that is not a party political issue but one that all hon. Members will support as a means of proper and effective control over the Executive. The new clause does not undermine the principles of the Bill—which some of us may not like for other reasons—or the Government's plans on policy. Therefore, I ask the House to support the new clause, and the Government to accept it.

Mr. Edward du Cann (Taunton)

In the course of his admirable and lucid explanation of the new clause, the right hon. Member for Heywood and Royton (Mr. Barnett) laid strong emphasis on its constructive purpose. I am sure that that was entirely appropriate and right. He was also right to make the point that we are dealing with a relatively limited aspect of a campaign about which he feels, I know, as strongly as I do—the opportunity to make certain that the House has, on a continuous basis, adequate information with which to supervise the activities of the Executive.

I am pleased to be able make common cause with the right hon. Gentleman about this limited matter. It involves a principle that I believe to be important—that the House of Commons, which is accountable to the public, should be able to follow public money wherever it is spent, to decide how well it is spent and to publish its findings so that the public in general may judge the situation. I believe that that is essentially a practical and constitutional principle about which we have been too careless in the past. The process is essential for economy and efficiency in public expenditure, as the right hon. Gentleman also argued.

Total expenditure in 1982–83, as the Chancellor announced recently, is planned to rise to £114,900 million in cash terms—9 per cent. higher than the outturn for the previous year, 1981–82, when the figure was £105,000 million. Provisional planning totals shown in the White Paper show that spending in cash terms for 1983–84 will rise to £121,000 million and in 1984–85 to £128,000 million. The House will no doubt be astonished if the figures are as low as that. There is a downward pressure on public expenditure as a percentage of gross domestic product over this period—at any rate, that is forecast, but we shall see. Some may applaud that tendency but that is the matter, in truth, that divides us, or should be the chief argument between the two parties. However, We can all agree that the absolute figures are formidable, and so is the amount voted by the House for local government.

Volume 2 of the Government's expenditure plans shows that in 1982–83, this current financial year, it is estimated that the total local authority expenditure will amount to no less than £23,300 million and the aggregate Exchequer grant for the same year will be no less than £14,000 million. The rate support grant will be over £10,000 million. Those are huge figures.

I quote one sentence from the recently published report of the Treasury and Civil Service Select Committee on efficiency in the Civil Service. This passage is worth quoting and underlining: Very few areas of public expenditure are currently subject to accurate measurement of output. The burgeoning expenditure of central Government makes for extreme difficulty in making judgments on the competence of that expenditure. There are always physical difficulties. There is the obvious difficulty of time. That is why a number of us have argued that we should make opportunities now in different ways, hence the establishment of the Select Committees to provide Members of Parliament with better advice than hitherto. That is possible through the Select Committees with the appointment of professional advisers of one sort or another. That is precisely why hon. Members on both sides have argued so strongly, and will continue to do so, for an extension of the remit of the Comptroller and Auditor General. The House will then have better and more catholic information about what is happening. In parenthesis, I cannot resist saying, and I make no apology for doing so, that it is an impertinence that almost three years should have passed since the then Leader of the House on 26 June 1979 undertook that the Chancellor of the Exchequer would examine that proposal as a matter of urgency. Nothing has been heard since. That is why the right hon. Member for Heywood and Royton and I thought fit to table an early-day motion arguing for the extension of that remit, a motion that has been signed, as the right hon. Gentleman pointed out, by more Back Bench Members than any other motion so far in this Parliament. It is time that we received an announcement from the Government.

Returning to the matter of judgments on the competence of expenditure, we know that in any event judgments on some items are bound to be subjective. Judgment on some items also is bound to be bedevilled by party views or prejudices. But other items in the catalogue of expenditure are competent. Their effectiveness can be accurately measured. I suggest that there are more such matters in the total of central Government expenditure than are currently accurately measured. In general, the same is true of local government. Of course there is a problem. To some extent local authorities are creatures of central Government—that is to say, much of what they must do is dictated by Whitehall. To a large extent they are prisoners of Whitehall, but not entirely. In any case, it must be right as a matter of habit to ensure that outturn is compared with forecasts to ensure that one local authority's costings and competence are compared with another' s.

I dare say that right hon. and hon. Members can think of many other examples where it is right that better comparative information should be available. What I and the right hon. Member for Heywood and Royton complain about is that, in general, that is never available. Nor do the public—the ratepayers—see value for money obtained on specific projects as a general rule. I truly believe that if there were a better examination of what local government is doing with the money that Parliament votes, a considerable sum could be saved with, no doubt, considerable relief to the individual and the corporate taxpayer.

I cite one example relating to the assertion that I have just made. It came into my hands just last week. It is a report published by a ratepayers' group about the activities of one local authority. I shall not give its name, as it might be assumed that I was making a party point, which I am not. It is a matter of general interest.

In the memorandum accompanying the report, the following assertions are made. The report shows that the authority concerned spends far more proportionately than any other council, yet the social need is less than that in many other council areas. It points to items of wasted expenditure which, in the several areas examined, might be cut by about one-third without any disadvantage to deprived persons. It goes on to say that the area concerned spends 50 per cent. more per head on services than the average inner borough. Last, but by no means least, if all local authorities were staffed at the level of this local authority, there would be a further 1¼ million council employees. Those examples show clearly the need for a more searching examination of what local authorities spend in the public's name and what is done with the money that Parliament votes to them.

7.45 pm

Mr. John Garrett (Norwich, South)

Does the right hon. Gentleman agree that he has quoted an extremely one-sided example which is typical of "studies" carried out by ratepayers' associations? Such studies should also take account of the effectiveness of local authorities—the extent to which the local communities' needs are met. If the purport of the new clause is not simply to find cuts in the administration of local government but to enable local government to give better service to the community for which it is supposed to be providing services, that is one of the best points in the clause.

Mr. du Cann

I agree with the thrust of the hon. Gentleman's intervention. My right hon. Friends the Minister for Local Government and Environmental Services and the Secretary of State have made substantial attempts to control expenditure. Unfortunately, what they have done has inevitably been a fairly crude operation. As the hon. Member for Norwich, South (Mr. Garrett) argued, it is possible to suggest that that type of exercise may result in a diminution or a decrease in services. That is quite possible, and it may happen. In any case, many of us, while agreeing in general with the argument of my right hon. Friend the Secretary of State that central Government cannot be indifferent to what local authorities are doing in the context of the economy in general, feel some unease as to whether local democracy is being interferred with.

Like the hon. Member for Norwich, South, I would say that there is a more scientific method of proceeding. It is right to argue for value for money studies. It is right to expose what is being done. It is right to make certain that there is a real evaluation of needs and an accurate scientific measurement of whether those needs are being satisfied economically or extravagantly, well or badly.

That is the object of the new clause. It fits exactly with the idea that the hon. Member for Norwich, South has just advanced. Above all, those who spend money voted by the House of Commons must be accountable to the House. That is the whole purpose of the new clause. I very much hope that my right hon. Friend the Minister of State, my neighbour and friend for whose qualities I have such admiration, will think that what we are endeavouring to do through the new clause is prudent, right and wise. I hope that he will accept the amendment or at least the principle behind it.

Mr. Christopher Price (Lewisham, West)

I am happy to join in with the remarks of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and the right hon. Member for Taunton (Mr. du Cann). I am a passionate believer in the independence of local government, and it is essential for Parliament to retain this antibody in the body politic and to ensure that we do not swallow local government whole and deprive it of any sense of independence that it has. Nevertheless, we must vest in Parliament some broad control, rather than detailed control, of the effective spending of the money voted by Parliament.

The new clause is the right compromise for the time being. It seems that the Government will bow gracefully to the clear feeling of the House that this is the right compromise. I am pleased that that will happen. One has to admit that it is a difficult area. There will always be tension between central Government and local government.

It is a fact of political life in the United Kingdom that when one party takes control of central Government, the instinctive reaction—I believe it is a good instinctive reaction—of the thoroughly nonconformist, in the nonreligious sense, British people is to say, "The Tories are in Whitehall, so we shall put a different lot in our town hall just to stop that lot getting slightly too big for their rather substantial boots". We should do nothing in auditing and efficiency studies to invalidate that very good instinct of the British people which has been shown in succeeding elections since the Second World War.

There is, however, a caveat which I put forward in Committee and wish briefly to reiterate now. I very much favour proper auditing. I also very much favour studies of the impact on the economy of efficiency and effectiveness in the provision of local government services. But I believe that those are wholly different jobs. One is the professional auditing of the local authority's accounts. The other is the making of studies. They must be kept separate.

I say that in the context of the letter that the Standing Committee finally revealed to the public and had placed in the Library. Mr. Ken Sharp, head of the Government Accountancy Service, wrote about what he described under the heading of "soliciting" but referred to in the body of his letter as "touting". Mr. Sharp wrote in December 1981 to the 13 big accountancy firms in Britain: I am writing to express my deep concern at a developing practice within the profession to 'tout' for public sector business. Recently two cases have been brought to my attention of quite unsolicited approaches by leading firms to Government Departments. In Committee, I cited a number of cases, including one in Birmingham in which one of the big 13 firms had moved from its auditing function to its study function, as it were, without anything going out to tender, giving the impression that the Government's desire to bring the private sector into public sector auditing in Britain was a method of introducing a further element of privatisation—I do not say that that was the Government's intention, but that was the impression given—and assisting the great accountancy firms in Britain to secure more business than they would otherwise obtain.

I shall not go into the matter again at length, but it is worth quoting from a recent article in the magazine Management Today entitled "Accountancy's Golden Goose" just to put the situation in context in relation to the big 13 private accounting firms, because the House should be aware of the types of person with whom it is dealing. The article says of the big accountancy firms: Their current prosperity is breathtaking. The earnings of the upper tier of partners are of the order of £100,000 a year (some deemed to be earned abroad and so bearing tax benefits); an annual income of £1 million has been achieved by the managing partner of at least one of the four largest firms. We are therefore talking of moving into an area that has hitherto been dealt with by the district auditing services, none of whose members could ever have boasted an income of £1 million and most of whom live modestly in Petts Wood, if I may so put it. We are moving into this area a sector which is used to getting very substantial rewards from the private sector for its services.

I say no more than that, but if the Comptroller and Auditor General is to have general supervision of the studies department of the new audit commission, I hope that that will prove something of a check on these characters—I know that most of them are solely devoted to their professional purposes, but some are keener on raising their incomes—so that the studies of local government do not bleed so much money out of local government that they do not give value for money. There was a spate of such studies in the 1960s when I was in local government and on many occasions I felt that ordinary councillors could have taken better decisions than highly paid accountants. That point should certainly be borne in mind.

Broadly, I welcome the new clause and I hope that the Comptroller and Auditor General will monitor not only the studies but the degree to which they are necessary. I very much agree with my right hon. Friend the Member for Heywood and Royton. I hope that the Comptroller and Auditor General and the audit commission will show local government how to make spaces in its expenditure—not to make cuts in expenditure, but to create areas in which it can spend money more usefully.

The Select Committee on Education, Science and Arts, of which I am Chairman, has just toured various areas of the country in an attempt to find ways of spending a little money on funding the arts in Great Britain. I believe that if the rest of local government expenditure were better supervised, the arts—the Cinderella, or poor relation of local government expenditure—could be better served within local government. I cite that as just one example.

I welcome the new clause and I hope that if the Government cannot accept it as it stands they will give cast-iron pledges that they believe in the spirit of it.

Mr. Michael Morris (Northampton, South)

I shall not follow the hon. Member for Lewisham, West (Mr. Price) except to say that his Select Committee might take a leaf out of the Public Accounts Committee's book and recognise that we do not have to travel anywhere to carry out our studies.

As one who put his name to new clause 5 and who worked very closely with the Chairman of the Public Accounts Committee, the right hon. Member for Heywood and Royton (Mr. Barnett), I wish to emphasise certain points about the relationship between local government and Parliament. I do so as one who believes fervently in strong, effective and responsible local government—perhaps because for one period of my career I had the privilege of being leader of the London borough of Islington, which by any yardstick is a difficult area to look after. I thought then, and I still think today, that there are two vital dimensions to successful local government.

First, local government must recognise that it must work within the economic framework laid down by the Government of the day, whatever the policies of that Government. Secondly, however, the individual councillor is ultimately responsible to his own electorate within his own ward. The new clause violates neither of those two dimensions, but builds upon them.

We have already listened to contributions from my right hon. Friend the Member for Taunton (Mr. du Cann) and the right hon. Member for Heywood and Royton. The House owes a great deal to both right hon. Members for the persistence with which they have followed this course and the progress that we slowly make along that path.

When looking at the new clause, and recognising that our friends in local government have certain worries, it is worth reminding ourselves of what was contained in the first special report of the Public Accounts Committee. It is worth drawing to their attention appendix XXXIX of the Minutes of Evidence, where, in his memorandum, the Comptroller and Auditor General listed in paragraphs 14 to 18 what he called "Legitimate Parliamentary Interests".

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In paragraph 14, he reminds us that local authority expenditure comes from powers derived from statutes from the Houses of Parliament. In paragraph 15, he reminds us that the Government have rightly taken an interest in "both efficiency and effectiveness" auditing but that equally no Government have to be accountable to Parliament for the effects of whatever intervention they choose to make. In paragraph 16, he reminds us that there is no threat to local democracy as Parliament is not suggesting that individual authorities should be accountable, rather the collective whole or a large section of it.

The essential issues for Parliament are, first, whether the Government have taken appropriate and adequate measures to encourage efficient local administration of services that Parliament has empowered local authorities to run and, secondly, whether the financial arrangements and the Government's control of them will ensure that the money Parliament has voted is spent as approved.

If my friends in local government are worried, I urge them to read that appendix. They will find 10 examples listed, the majority of which suggest that it would be to the benefit of local government if studies such as that were undertaken.

How often have we who have served in local government reflected that Parliament—and this is true of all Parliaments—produces a Bill, gets it on the statute book and never adequately provides sufficient resources for local government to undertake the activity involved? How often have we complained about that? That would be a perfectly proper area for investigation.

I do not intend to speak for long because the issue is clear. It is fair to say that in the evidence he gave to the PAC, my right hon. Friend the Secretary of State for the Environment concurred with the points raised in paragraphs 17 and 18 of appendix XXXIX. He agrees that they are the legitimate interests of Parliament.

The aim of every hon. Member should be better accountability to Parliament and improved efficiency in local government. I do not believe that anyone would quarrel with that as an objective.

There is nothing in the new clause as presently drafted that affects ministerial accountability to Parliament. I readily admit that while the scope of the new clause is limited, it is an important step in the direction of the PAC's recommendations on the role of the C and AG and, indirectly, on Parliament's control of expenditure.

I also note that for many months my right hon. Friend the former Leader of the House, now Foreign Secretary, has been wrestling with the response that the Government should make to the totality of our report. This is an advance on a small front. I hope that my right hon. Friend the Member for Oswestry (Mr. Biffen), in his new role, will urgently look at the remaining outstanding dimensions and come forward with some recommendations at an early date.

Mr. John Garrett

I shall be brief. I speak only out of sentiment, because for me this represents the first crack in the Government's position after 10 years of campaigning. I did not originate this campaign. That began with a Dr. Normanton, who wrote a scholarly study showing that ours was the least progressive State audit system in the Western world. I was much impressed by what he said.

I am glad to say that over the years our little caravan has grown. First, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) joined me to write a pamphlet about it in 1972. Later, we received the support of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and the right hon. Member for Taunton (Mr. du Cann). Today, 280 hon. Members from both sides of the House support the reform of the Exchequer and Audit Department system.

I congratulate my right hon. Friend the Member for Heywood and Royton and the right hon. Member for Taunton on tabling the new clause. It is modest, but they know as well as I do that it contains two important principles which are the beginning of a wedge to be driven into the Treasury's position. The first principle is: The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness. If the new clause is accepted, or if the Government bring forward another new clause that includes those words, it will be the first time that they have been included in a public stature. The economy provision has been there since 1861, but what really matters are the words "efficiency and effectiveness". The economy provision simply minimises spending and exercises good housekeeping. That is fairly innocuous. That is why our Comptroller and Auditor General and our Exchequer and Audit system are so innocuous. However, "efficiency" means examining costs in relation to output. That is interesting. The crucial provision is "effectiveness", which means studying costs in relation to output and ascertaining the effect on the community of providing or not providing a service. That information will be extremely useful to the Opposition. I believe that time and again we shall discover that while cuts may have made local authorities more efficient, they have destroyed the effectiveness of local government to provide for the local community. Therefore, the inclusion of "effectiveness" is crucial.

The second principle is: The Comptroller and Auditor General shall have access to all documents and records held by the Commission relating to any such studies. That means that for the first time since 1861, audit can go outside Supply. The C and AG and his department can venture beyond money provided by the Supply procedure. Although all public expenditure came within the Supply procedure when the post of Comptroller was introduced in the 1860s, today only half of public expenditure is covered by the Comptroller, because non-Supply expenditure by local authorities, nationalised industries, quangos and so on has grown so much, particularly in the last 50 years.

Once we have established that, it is difficult to deny the Comptroller access to other non-Supply expenditure, such as spending by private contractors, nationalised industries and others. This is a useful first step towards parliamentary accountability for all public expenditure.

Next, we must follow the recommendations of no fewer than four Select Committees which said that the Comptroller and his staff should have the power to follow public expenditure wherever it may happen. After that, we need better information so that we can establish whether or not central Government, local authority and other public spending is effective. For that purpose, we need a change in the form of the accounts.

Lo and behold, we have the Procedure (Finance) Committee sitting on that subject. I have no doubt that it will come forward with some fairly positive recommendations in the fullness of time. The Government may not want that, because they established the Committee for only one Session. That is a matter that we can deal with as we go along.

The crucial thing is to make the Comptroller a servant of the House, as was intended by Gladstone. Over the years, the Treasury has drawn that power away from the House until, in the end, the Comptroller was virtually a servant of the Treasury, even though it was intended that he should be an Officer of the House. This is the first step towards a mass of reform that the House desperately needs if it is effectively to call the Government to account, and I welcome it.

Mr. Michael Shaw (Scarborough)

I am glad to take up the remarks of the hon. Member for Norwich, South (Mr. Garrett). Those of us who are members of the Public Accounts Committee have had the benefit of his views and we welcome and value them. He said that he was speaking only out of sentiment, but it quickly became apparent that he was speaking mainly out of enthusiasm. We must not rebuke him for that. However, I wondered whether he might be causing the Government to run away with the feeling that there is more in the new clause than they thought. I hope that my right hon. Friend will see nothing sinister in the clause. It is merely a small step forward and part of a steady progression.

I wish to add my good wishes and congratulations to the Chairman of the PAC committee, the right hon. Member for Heywood and Royton (Mr. Barnett), and to my right hon. Friend the Member for Taunton (Mr. du Cann), who have worked happily together. This augurs well for the work of the Select Committees. Clearly they should work in harmony rather than go off on their own courses and sometimes crossing each other without proper consultation. It is good that consultation and joint purpose obviously exist.

I welcome the new clause because I believe it right that the role of the Comptroller and Auditor General should be extended. The hon. Member for Lewisham, West (Mr. Price) said that there would always be tension between local authorities and the Government. I think that that is true. However, the Bill seeks to make the auditor much more independent than he has been hitherto and it will be improved if the new clause is accepted. If local authorities understand that the purpose of the Bill is in part to give the auditor greater independence, they should welcome the measure. I see nothing in the new clause to frighten local authorities. The right hon. Member for Heywood and Royton has clearly outlined the restrictions and the limiting factors that feature in the clause.

We do not wish to interfere with local government. However, I acknowledge that there are some who are still fearful about part III. They come to my surgeries and express the fear that there will be some form of political interference. I have sought to tell them on every occasion that that is not true, could not be true and is not intended to be true. That cannot be said too often.

The House should be able to follow much more than it has in the past what happens to the money that it spends. It is not enough merely to follow inquiries along lines that have been laid down by the Departments. Obviously the Departments may not have been doing their job. If we examine only the Department's records, we shall often find it impossible to tell whether the job has been properly done.

The new clause is a modest but important step and can do nothing but good. Local government need not have the slightest fear about it. There will be benefits for central Government, local authorities and Parliament from the new clause, which I hope my right hon. Friend will accept. Alternatively, he may see fit to table a similar proposal at a later stage.

8.15 pm

Mr. Durant

I agree with much of what my hon. Friend the Member for Scarborough (Mr. Shaw) has said. However, I have some anxieties and I think that they should be expressed. I agree with the first two terms that appear in the first subsection of the new clause, which are "economy" and "efficiency". It is the inclusion of "effectiveness" that brings us into the political arena. The determination of what is effective is a question of judgment and this is quite a delicate area. Local government has a slight anxiety about the inclusion of "effectiveness".

If a Minister performs services for the State that we consider are ineffective, we have the right of redress at Question Time and in debate. If a local authority is found to be ineffective, it might be possible through the method set out in the new clause to produce arguments that the actions have not been effective, but there will be little redress. We are moving away from the parliamentary arena and the governmental arena to a statutory agent created by Parliament and, I accept, operated under laws passed by Parliament, but it remains a separate agency. That being so, it may make a political judgment of effectiveness.

The hon. Member for Norwich, South (Mr. Garrett) expressed worry in an intervention that we might be getting rather near political decisions. He observed that a local authority might decide to do much more in one area of policy because of a political decision and might be ineffective. He said that its actions might have the wrong effect and that they might be taken because of political decisions.

Mr. John Garrett

Surely it is of interest to the House if a service that is provided widely throughout the country—for example, a service that is provided by local authorities to help the elderly—is ineffective. That might say something about the legislation under which it is being operated, or the capacity of local government or central government to manage. It is important for us to know whether a particular service is being managed ineffectively throughout the country. The purpose of the new clause is to make these matters comparative, which will be of great value.

Mr. Durant

I agree with what the hon. Gentleman says, but we are still entering an area of political judgment. I am not attacking the clause, but I feel that we might be bringing in party political judgments.

Mr. Joel Barnett

As the hon. Gentleman knows, I was not a member of the Committee that considered the Bill, so I do not know whether he supported the Bill as it stood. However, clause 9(1)(c) refers to "effectiveness" in the use of resources. I assumed that he agreed with that concept.

Mr. Durant

We are in debate and I think that I have the right to raise an anxiety. I did not say that I intended to vote against the new clause. I was merely expressing anxieties that have been put to me by people in local government. I thought it right and proper that they should be brought to light. I do not wish to go to the stake on the matter or to move an amendment to the clause. It is not my intention to try to eliminate "effectiveness". I am merely saying that the anxieties to which I have referred should be considered by the Government as part of their reaction to the clause. It is "effectiveness" that gives rise to some anxiety. The other parts of the clause are apposite to what we are trying to do.

The anxiety to which I have referred featured in debates in Committee. There was considerable debate about the political implications. The Opposition rightly probed the issue deeply and obtained pledges from the Government that they would table amendments to overcome the political implications. The Opposition pressed extremely hard. They felt that the audit commission would become involved politically. One or two Opposition Members referred to instances of the district auditor making pronouncements that they felt were political. This is a matter over which we shall have to exercise care. A large element of judgment is involved. I am in favour of the words "economy" and "efficiency", but I am slightly nervous of the word "effectiveness" and its implications.

Mr. Graham

I wish to intervene briefly from the Opposition Front Bench to express our gratitude to my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), the right hon. Member for Taunton (Mr. du Cann) and right hon. and hon. Members on both sides who have seized the opportunity presented at this stage of the Bill to demonstrate the need for the new clause. It remains to be seen whether the new clause eventually sees the light of day in its present form. I await the observations of the Minister. I wish also to see in what form the new clause returns to the House from the other place.

What has been demonstrated in a non-party manner is the genuine desire of right hon. and hon. Members to provide value for money in the oversight of public accounts. Political control in the House and in local councils changes frequently. It is clear, therefore, that the desire to provide value for money is genuine. Some good sense has been displayed by hon. Members on both sides. The Minister's words in Committee have already been translated into concrete deeds. I am sure that the right hon. Gentleman will have taken careful note of the feeling of the House that existing opportunities, which appear not to have been fully exercised, could be more effectively exercised instead of relying on the new role for the audit commission that appears to be in the mind of the Government.

I have been impressed by the constant reminders to the Government to carry forward the commitments made—I believe in June 1979—by the then Leader of the House. Hon. Members on both sides are anxious to ensure that they provide value for money to their constituents and to the House. The title of the new clause "Accountability to Parliament" says it all. We want to be satisfied that, on those matters for which the House is accountable, the opportunity exists for hon. Members to scrutinise and improve the situation. Members of the PAC and of the Select Committee have demonstrated their complete grasp of the underlying themes that have run through the debate. I am pleased that hon. Members have stressed that there is no party animus in the matter. I know the Minister well enough to believe that he will take this opportunity to refashion the words of the new clause so that, when it returns to the House from the other place, it will serve our aims as Members of Parliament.

Mr. King

I am grateful to the hon. Member for Edmonton (Mr. Graham) for his last comment. Had his right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) been speaking, he would no doubt have said that he knows the Minister well enough to know that when the words came back from the other place, they would need further amendment. Aside from that point, I am grateful to the right hon. Member for Heywood and Royton (Mr. Barnett) and to my right hon. Friend the Member for Taunton (Mr. du Cann) for the way in which both of them, as present and past Chairmen of the Public Accounts Committee, have presented the new clause to the House. I believe that the whole House is aware of the keen interest that the right hon. Member for Heywood and Royton has taken in the issues of accountability and the proper pursuit of the control of public money. The House is also aware of the interest taken by my right hon. Friend the Member for Taunton, his predecessor, in these matters. They are both keen campaigners.

I am grateful to my right hon. Friend the Member for Taunton for his courtesy in informing me that he has to leave the Chamber early to chair a further meeting of the Treasury and Civil Service Committee. I wanted to get that on the record in case any hon. Members thought that my right hon. Friend had walked out in the middle of my speech in disgust or some other form of disapprobation. I am not sure whether what I intend to say now will not make him walk out even faster in genuine disapprobation so that no one will know whether he is going to his Committee. I understand, however, that my right hon. and learned Friend the Chancellor of the Exchequer hopes to respond shortly to the points that my right hon. Friend has pressed on me together with other points. I hope that this will be possible.

I agree with the remarks of the hon. Member for Edmonton that we are concerned about value for money. All hon. Members who served on the Committee are, I think, flattered by the distinguished presence of other hon. Members interested in issues of public accountability. We have been seeking to deploy the argument that these are not party political issues. The hon. Member for Norwich, South (Mr. Garrett) made the point that they are as much in the interest of an authority that is anxious to minimise the demands on its ratepayers as in the interest of an authority wishing to seek how it can expand its services for a given sum of money. Value for money is an issue in which all hon. Members should take an equal interest.

I should like to refer to the original proposals of the Public Accounts Committee, the hearings it held and the local government evidence that was given. The right hon. Member for Heywood and Royton made the point that he thought that many local authorities or the associations may have been under a misapprehension that the Comptroller and Auditor General was in some way part of executive Government. That may be a misunderstanding among some representatives of local authorities. There are others who are under no illusion about what the Comptroller and Auditor General represents. They see him as being associated with the Public Accounts Committee and with Parliament and unacceptable on that basis. I say this straight. The right hon. Gentleman will know that this is a view advanced by local authorities. I shall refer to it later. They feel that there is a constitutional implication and that their position is in some way compromised through the Comptroller and Auditor General.

The right hon. Member for Heywood and Royton referred to his interest in this matter and called the new clause modest. I thought that some of his case was damaged by his hon. Friend the Member for Norwich, South who had me really worried and I was almost inclined to take the advice to leave the Chamber in a hurry. The right hon. Member for Heywood and Royton added that he would have preferred to go further. I picked him up on that because it is important, if we are to find an acceptable solution to the problem—and we cannot ignore the attitude of the local authorities—that the issue of "the thin end of the wedge" and "seeking to go much further in this direction" is put on record. It obviously behoves the Government to make it quite clear what they feel is acceptable so that we do not arouse further concerns. I am talking specifically about local authorities and local government and I am leaving aside certain other targets that it would not be proper for me to comment about, although the right hon. Gentleman might have had them in mind.

8.30 pm

We listened to the background of the debate, which has been much worked in the past. We had a historical summary from the hon. Member for Norwich, South, who said that he was speaking out of sentiment. I was struck by the fact that this was not a sentiment shared by the previous Labour Government who made it clear that they rejected the approach of the Comptroller and Auditor General having a responsibility to local government.

I know that we have to be careful about making party political points these days but I am intrigued to see that the official Opposition are supporting this amendment. The hon. Member for Edinburgh, Central (Mr. Cook) seemed to make it abundantly clear in the early debates on the previous report of the Public Accounts Committee that this was in no sense the view of the Opposition, and I understood that he was speaking for them. They did not seem to think that this was a proper position. It may be that speaking from the Opposition Front Bench is not necessarily speaking for the official Opposition, although that can lead to misunderstanding.

The hon. Member for Edinburgh, Central said: I do not deny that there is a role for more efficiency and effectiveness audits of local authorities, but if we attempt to achieve that effectiveness audit through an official operating in a closer relationship to Parliament and therefore to the Government, it will be resented by local authorities. That is correct and no hon. Member need be in any doubt about the extent to which that would be resented. He went on: Nothing is more likely to cause resentment within local authorities than the suggestion that Parliament should ultimately be in charge of an efficiency and effectiveness audit of local authorities.

Mr. Christopher Price

I take the statement as a whole but the Minister can take it from me that it is the "and therefore to the Government" bit that worries local authorities because they have hitherto associated Parliament with Government. I agree with him that if it were true that the Comptroller and Auditor General were an agent of Government I would not be in favour of the amendment. It is the hope of some of us that we can settle this with Parliament and Government. That gives us, who know people in local government, the conviction that we could persuade them that a parliamentary C and AG would be acceptable, whereas a governmental one would not.

Mr. King

That may be the hope. I do not want to rehearse all the columns of this Official Report but the right hon. Member for Heywood and Royton tried to make that point to his hon. Friend, who said later: I think my right hon. Friend will admit that he has failed to persuade the local authority associations of that view. It would be simplistic to suggest that that is the sole concern of local authorities. I agree with the hon. Member for Lewisham, West (Mr. Price) that they see a constitutional issue in the role of Parliament being distinct from the role of Government in this matter.

I am not advancing any of the arguments. I happened to notice earlier that, in an intervention by my hon. Friend the Member for Northampton, South (Mr. Morris) in that debate, he asked whether the hon. Gentleman did not think there was something strange in a situation where the chief inspector of audit prepares an annual report of two-thirds of the finance which is voted by Parliament and that report is not even laid before the House?"—[Official Report, 30 November 1981; Vol. 14, c. 105–6.] I think that will strike a chord with the hon. Member for Lewisham, West. Perhaps he will understand why I am not sympathetic to efforts to try to improve the arrangements when I say that I sent that report to the chairman or leader of every local authority in the country. I am sure many of them read it and studied it with care but the only acknowledgment that I had came from one chairman, out of 413 authorities, who complained about the cost and the quality of the envelope in which I sent it. That sometimes leads Ministers to believe that there are possible changes in the arrangements that might be made.

This is a much-rehearsed route. The previous Government rejected the approach. This Government considered representations and in the report on "The Role of the Comptroller and Auditor General" presented to Parliament in July 1981, rejected that role. They made it clear that in the case of local authorities they preferred the route of the audit commission. This is the route that we have put forward in the Bill. We rejected the route of the Comptroller and Auditor General.

Nothing daunted—and anyone who knows the right hon. Member for Heywood and Royton knows that he is not often daunted—he has returned with a variant to involve the Comptroller and Auditor General. With his usual courtesy, the right hon. Gentleman informed my right hon. Friend and me by letter on Tuesday of last week that he would be tabling this amendment. We received it on Wednesday, and only now are we beginning to get the responses of the local authority associations to it. Obviously the right hon. Gentleman would have expected us to consult them.

Hon. Members will have received a briefing from the Association of Metropolitan Authorities saying, effectively, that the first subsection is welcomed by the association but that the next two are not. The association says in effect that it is a good idea for there to be studies by the audit commission of the impact of Government policies on the effectiveness, efficiency and economy of local government, but a very bad idea if the Comptroller and Auditor General is then allowed access to those studies. That is the provision about which the association is concerned.

I have a letter, which I think may have gone to other hon. Members who served on previous Standing Committees, from the Association of District Councils, which is rather more hostile to the clause. I understand that the Association of County Councils has not formed a view other than that the proposal is novel and that it needs time to consider it. It may be attracted by subsection (1) if not by the other parts of the clause.

Right hon. and hon. Members will appreciate that the Government have certain problems in knowing how to deal with the new clause. We understand the concern about these issues and the arguments that have been advanced about Parliament's proper concern with the expenditure of public money and the proportion of public expenditure voted by the House that is involved in local government expenditure. That concern is real, and my right hon. Friend the Member for Taunton quoted the figures. Obviously there is some substance in this and a principle to which the Government are not unsympathetic. However, there are details in the new clause that need attention.

I say immediately that it is an important new clause. It breaks new ground. It provides in statute for outside appraisal of the effects of Government policies and it gives the Comptroller and Auditor General a role in relation to local authorities which he has not had previously.

We did not discuss these aspects in Committee, and we have not had an opportunity for any detailed consultations with the local authority associations. The Government have some sympathy with the suggestion that the Comptroller and Auditor General should have the right to examine the commission's studies showing the effect of Government policies on value for money, but our concern is partly about subsection (2).

Mr. McWilliam

The right hon. Gentleman has just said that this principle had not been put forward in Committee. However, he has to accept that I tabled detailed amendments covering this principle and extending it all the way through the Bill. We discussed the matter in detail in Committee.

Mr. King

The proposals are well rehearsed about the Comptroller and Auditor General as an alternative to the audit commission. If the hon. Gentleman says that he moved specific amendments providing that the audit commission should have a duty to prepare studies on the impact of Government policies and that the Comptroller and Auditor General should have access to those studies, I withdraw what I said. But I am not aware that the matter was raised, and I think there must be some misunderstanding about it. I do not want to mislead the House. However, it is not a crucial part of my argument.

The concern that arises is about access to documents, and that is dealt with in subsection (2). As the new clause is drafted, it could give the Comptroller and Auditor General access to the detailed papers of individual local authorities. This clearly could give rise to considerable concern. The hon. Member for Edinburgh, Central referred to the attitude of local government to the role of Parliament and the Comptroller and Auditor General.

Secondly, there is the problem that the Secretary of State specifically precludes himself in schedule 1(3) from access to the detailed information. That paragraph precludes him from obtaining from the commission information relating to the discharge of its functions in respect of any local authority. An important point about accountability in the House is raised if the Comptroller and Auditor General is to have access to more detailed information than is available to Ministers, who may be accountable to Select Committees. We shall have to decide the right level at which informaion and access to documents would be appropriate.

Another technical point is involved in the new clause. As it now reads, it would apply concurrent access to all the working papers. Clearly, that does not make sense. We believe that it should be consecutive. However, that is a point of detail.

A further point is that we accepted an Opposition amendment to clause 20 stating that we should accept consultation not only with local authority associations but with organisations of workers, on the studies that would be done on economy, efficiency and effectiveness in local government, and comparative studies. If that were made a duty, there should be parallel consultation in this new clause, and it would be sensible to inquire into the provisions, guidance and instructions issued by Ministers, which might include consultation with Ministers by the audit commission.

This is an important new clause, because it breaks new ground. It is a significant new step. However, I cannot recommend the House to accept it as it stands. If the right hon. and hon. Members who tabled the amendment were not to press it, I would give an undertaking that the Government see merit in its principle, but believe that it is inappropriate in its present form. I therefore propose that the new clause be withdrawn, on the understanding that the Government will then enter into immediate discussions in the light both of the substance of the new clause and of the further points raised in the debate, with a view to tabling our own amendment in another place that will achieve the main principle of this new clause but will cover the points of difficulty that I have mentioned.

Mr. Joel Barnett

I want to get the matter absolutely clear and on the record. I note what the Minister of State said about the need for consultations and discussions. I understand that perfectly. However, the Minister of State then used the words "with a view to". I am very conscious of the use of language in these matters, as I know the right hon. Gentleman is. I should like from him a clear commitment—not "with a view to"—that he will give an undertaking. We are going through difficult times. By the time he has in mind, he may be Foreign Secretary. I do not know what he may be. This is a serious point. I want a clear commitment, not only on his own behalf but on behalf of the Government that, after his consultations, a new clause or an amendment that will achieve the main principles of this new clause will be tabled in another place. Without that, I am sure that all the right hon. and hon. Members who support the new clause—and the Public Accounts Committee—realise that there will be no other opportunity to take action, once the Bill leaves this place. I therefore want clearly on the record a firm Government commitment that after the consultations they will come back to this House, after amendments have been tabled in another place to achieve the main principles of this new clause.

Mr. King

I am grateful to the right hon. Gentleman. As he said, I chose my words carefully. I entirely understand why he picked me up on the phrase "with a view to". Important issues, particularly about the degree of access to documents, have to be established, on which I hope to have full discussions with the right hon. Gentleman and other interested parties. Certainly, there will need to be consultations with local authority associations on the matter. If we can achieve agreement, so much the better.

I hope that we shall reach agreement on the amendment that will be tabled. If we fail to reach complete agreement, we shall undertake to table an amendment that embodies the principle and approach of new clause 5. That will afford both to another place and to the House the opportunity to re-examine the question and to vote upon it. That is the most appropriate way. I understand the right hon. Member's concern that if nothing emerged there would be no further opportunity to deal with the matter. There is a timing problem. This is a major issue and we have been faced with a difficulty about time. I do not wish to deny the House the opportunity for a considered approach to what we believe is the right solution to the problem.

8.45 pm

Mr. Joel Barnett

I thank the Minister for those remarks. I think that it is now crystal clear that we shall have another opportunity to deal with the matter and that the Government—whoever is in charge at the time—will table an amendment or a new clause to ensure that.

I hope that the consultations will win the local authorities' agreement. I understand their anxieties, but I think that they are misplaced. I hope that the debate will have assured local authorities that we have no wish for them to continue to be anxious. I hope that we have been able to persuade them on that score. It must be borne in mind that the Government have not always accepted everything that local authorities have wanted or not wanted to do. I hope that the consultations will go smoothly and I shall be happy to take part in them with the Minister. I know that the right hon. Member for Taunton (Mr. du Cann) would do likewise.

However, the responsibility for the new clause is not only mine. A number of right hon. and hon. Members on both sides of the House support it, because of the importance of the role of the Comptroller and Auditor General. Therefore, I do not wish lightly to withdraw such an important new clause. I should be willing to do so on the clear understanding and commitments that the Minister has given on behalf of the Government that he will table a new clause or amendments in another place to achieve the main principles of new clause 5. That is my understanding of the Minister's assurance. I hope that that will be acceptable to the House.

Mr. Dick Douglas (Dunfermline)

Will my right hon. Friend accept that new clause 5. is a compromise on a compromise and that right hon. and hon. Members on both sides of the House who put their names to the new clause would be unwilling to compromise much further?

Mr. Barnett

I am obliged to my hon. Friend. I am sure that the Minister will have noted his remark. We shall have an opportunity to debate the matter again. That is the important firm commitment that we now have. I made it clear that new clause 5 does not go anywhere near as far as the Public Accounts Committee or those who signed early-day motion 252 wanted. We are dealing with a fairly narrow point, although, as my hon. Friend the Member for Norwich, South (Mr. Garrett) rightly said, it is an important first step. It is on the clear understanding that there is a Government commitment to table an amendment in another place to achieve the main principles that are set out in the new clause that——

Mr. King

I do not wish to mislead the House or resile from anything that I have said, but the right hon. Gentleman has referred to "main principles". The difficulty is that we shall need to have discussions, and we shall have to say what we think has been established. If we do not reach total agreement, we shall table an amendment setting out what we think will meet the purposes of the new clause. It will then be possible for the House to consider and debate the amendment.

Mr. Barnett

I deliberately used the words "achieve the main principles", because the Minister used them. I hope that after the discussions, whether or not the right hon. Gentleman is able to get agreement with the local authority associations—I hope that he will, because I believe that their fears are misplaced—the House will have an opportunity to discuss the main principles of the new clause again. There is a substantial majority of hon. Members on both sides of the House in favour of not only the narrow new clause, but much more than that.

On the basis of the clear undertaking and commitment from the Government, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.