HC Deb 16 December 1987 vol 124 cc1185-205
Mr. Speaker

Before calling the Prime Minister to move the motion on the appointment of the Comptroller and Auditor General, I should inform the House that I am not able to select the amendment in the name of the hon. Member for Norwich, South (Mr. Garrett) and many other hon. Members. This is a proceeding in pursuance of an Act of Parliament, and the terms of the motion must be strictly confined to the limited subject matter of the proposed address to Her Majesty. However, the method of the appointment of the Comptroller and Auditor General is obviously a relevant consideration, and I am prepared to permit debate to range over the subject matter of the amendment as well as the main question.

10 pm

The Prime Minister (Mrs. Margaret Thatcher)

I beg to move, That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint John Bryant Bourn Esquire, C.B., to the Office of Comptroller and Auditor General.

I begin tonight by endorsing the tribute paid by the right hon. Gentleman the Chairman of the Public Accounts Committee in the PAC debate last week to the retiring Comptroller and Auditor General, Sir Gordon Downey. He has performed this exacting task with distinction for the past six years, and the House has cause to be grateful to him.

The procedure for the appointment of the new Comptroller and Auditor General is laid down in the National Audit Act 1983. We have followed that procedure minutely, as the House would expect.

The name in the motion before the House, which has the agreement of the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), is that of Mr. John Bourn. Mr. Bourn has served in a wide range of posts in the Ministry of Defence and at senior level in the Northern Ireland Office. He is eminently qualified to assume the post of Comptroller and Auditor General, and the Chairman of the Public Accounts Committee and I have every confidence that he will be a worthy servant of the Committee and of this House.

10.2 pm

Mr. Robert Sheldon (Ashton-under-Lyne)

I wish to support the motion on the Order Paper. It is the first time that such a procedure has been used. It is without precedent. The Prime Minister and the Chairman of the Public Accounts Committee have acted together in bringing to the forefront a person who is to be Comptroller and Auditor General. I pay the same tribute as that paid by the Prime Minister to Sir Gordon Downey. He has been outstanding; I use the word unreservedly. The language of the Public Accounts Committee is rather restrained. When I say that that he was outstanding, it has the full support of all members of the Public Accounts Committee and, of course, the Public Accounts Commission. Sir Gordon had the task of creating the National Audit Office. He organised the transition from the old Exchequer and Audit Department into the National Audit Office and into its present building in Buckingham Palace road. The way in which he has changed that office and the kind of work that it does is a tribute to him and the team that he gathered around him.

The time was when the Exchequer and the Audit Department — the predecessor of the present National Audit Office — consisted of civil servants whose value was only to the work of the Civil Service. Today, some of the accountants and auditors examining the accounts of the Government Departments are directly comparable with those in the private sector—so much so that we are suffering considerable losses as they move out of the National Audit Office and are attracted to private accountancy practices. There has been quite a revolution in the kind of people who have been appointed over the years. Undoubtedly Sir Gordon Downey has earned and deserved our tributes.

The Comptroller and Auditor General is an Officer of this House. That was so right from the beginning and my hon. Friend the Member for Norwich, South (Mr. Garrett) showed by his perseverance how the occupant of the office, who was once responsible to the House of Commons, became responsible to the Government Departments and the Government service over a period of 50 or 70 years. The change came about in the National Audit Act 1983, which was the precursor of this motion.

Mr. John Bourn is a notable person in the Civil Service. I might add that he is a visiting professor at the London School of Economics and has a wide range of interests. He has the background to enable him to understand the work of the Government Departments. I knew that the Comptroller and Auditor General would be going some months before he announced his resignation and I felt it right to ensure that I saw a large number of people and consulted widely both as to names and as to the methods of my consultations.

I saw some very useful and important characters in private practice who would have been excellent. However, the difficulty was that they did not understand what went on in Government Departments. The danger is that we shall appoint people who know something about the private sector but who cannot transfer their knowledge into the public sector. In America there are many inners and outers—people who move easily from outside the Government service into the Government service. We do not have those. I interviewed many people of outstanding ability who could produce splendid analyses of what was wrong, but I felt that not much was likely to be implemented. I was anxious to ensure that any recommendations could be carried through in a reasonable time. We are very short of such people.

I saw not only people from outside the public sector but those who had been in it. There were not many people with the necessary experience at the higher level. On the whole, those with experience in the public sector had been fairly junior when they left the public service.

The work of the Comptroller and Auditor General and his 900 staff is to inquire from within. He needs that ability. He can produce his reports because he has his own staff in the Departments. He produces two kinds of work. The first is certification work to ensure that the money spent on the instructions of the House of Commons is spent in the manner dictated by the House of Commons and that that money goes to the people to whom the House of Commons sends it. That is crucial. We should not underestimate the dangers of fraud and corruption. We take it for granted that we are safe from them, because fortunately we have very little fraud and corruption. However, it can recur, as has happened in other countries, and we should ensure that we remain as vigilant as ever. Nevertheless, that is becoming rather easier to handle in terms of staff. Computerisation procedures also have made it much easier to handle. Therefore, we are increasingly concerned with value for money exercises.

The Comptroller and Auditor General, acting solely on behalf of Parliament—that is his role today—has an investigatory role, a role in Parliament and a managerial role. Mr. John Bourn has that kind of experience. The Fulton committee understood that there was a shortage of people with such experience, but I think that in John Bourn we have such a person. Like all Officers of the House, he will need our support. I am sure that he will be able to earn that support. I wish him well and believe that he will do his job splendidly and be accountable to the House of Commons. He will make an excellent Comptroller and Auditor General.

10.10 pm
Mr. Michael Mates (Hampshire, East)

I am delighted to join the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) in paying tribute to the work of Sir Gordon Downey as Comptroller and Auditor General and to the work of National Audit Office. Its reports are valuable to the House and complement the work of the departmental Select Committees in scrutinising the Executive.

As the House knows, the National Audit Act 1983 empowers the Comptroller and Auditor General to carry out economy, efficiency and effectiveness examinations but not to question the merits of policy decisions. In practice, that distinction is hard to draw. In many cases, major questions of policy inevitably come into an economy, efficiency and effectiveness inquiry. I shall give one example from defence. Collaboration on a weapons system by more than one country reduces unit costs and results in economy. However, one must also take into account the value of independence in procurement; the extent to which compromise in setting a joint specification may be less than ideal for the United Kingdom; the time scale, and the question of interoperability related to the joint defence plans of the countries concerned and so on.

As the House knows, the reports of the Comptroller and Auditor General are almost invariably taken up by the Public Accounts Committee, under the chairmanship of the right hon. Member for Ashton-under-Lyne. The PAC does splendid work in checking the propriety and value for money of public expenditure. However, the PAC is hard pressed. It examines all areas of Government spending—[Interruption.]

Mr. Speaker

Order. May I ask hon. Members not to have private conversations?

Mr. Mates

I apologise to the House if the argument seems arcane. In fact, it is seminal to the work that we all do in this place to try to check on the Executive. While I am sure that it is not the most thrilling of subjects—

Mr. David Martin (Portsmouth, South)

My hon. Friend should not worry. He is making it interesting.

Mr. Mates

My hon. Friend is kind to say so.

As I was saying, the PAC is hard-pressed. It examines all areas of Government spending. Inevitably, the result is that it cannot give the time to major subjects which those subjects deserve. I mean this as no criticism of the right hon. Gentleman and his Committee but, when, for example, the PAC examined Nimrod it asked only 11 questions about that disastrous programme. Only a fortnight ago—again I do not offer this as a criticism—it dealt at a single sitting with three of the biggest subjects in defence — Trident, torpedoes and warships. Those subjects occupied for many months the Committee that I have the honour of chairing.

Mr. D. N. Campbell-Savours (Workington)

I suggest that the hon. Gentleman has no knowledge of the numbers of questions that are asked because not all of the answers that are received are necessarily published in our reports. I must ask him to withdraw the suggestion.

Mr. Mates


Mr. Speaker

Order. Before the hon. Member for Hampshire, East (Mr. Mates) goes too far down that line, may I draw his attention to what I said at the beginning. The debate concerns the appointment of the Comptroller and Auditor General and not what has gone on in the PAC.

Mr. Mates

Indeed, Sir, I accept that. However, we are talking also about the next Comptroller and Auditor General, the task that he will face and the possible conflicts that will arise if one cannot make the points that I am trying to make about the PAC, the CAG and the departmental Committees. If the hon. Member for Workington (Mr. Campbell-Savours) or the PAC asked questions in private, which have not been published, I shall of course, withdraw my remarks. However, I do not believe that the Committee went into private session on this matter, so I think that my comments stand because it is all on the public record.

Mr. Campbell-Savours

It did.

Mr. Mates

None of this would matter if the PAC were looking only at the propriety of public spending, which is its major function, and had not cast its net wider. The Public Accounts Committee does not have an explicit remit on policy, but all the departmental Committees do. I am the last to want to interfere with the traditional relationship between the Comptroller and Auditor General and the PAC, but when there is an overlap of subjects of inquiry with departmental Select Committees— or, worse, when the PAC reaches a conclusion different from the relevant departmental Select Committee—the only winner will be the Executive, the activities of which all hon. Members have a duty to try to scrutinise. A good and current example of an overlapping inquiry is that into the procurement of DROPS equipment. Those of us on the Defence Committee inquiry in the last Parliament—

Mr. Speaker

Order. The hon. Gentleman is going into too much detail. He must confine himself to the motion on the Order Paper, which is the appointment of the new Comptroller and Auditor General.

Mr. Mates

Mr. Speaker, I accept your ruling, but in discussing the appointment, we are discussing what he will do—

Mr. Speaker


Mr. Campbell-Savours

On a point of order—

Mr. Speaker

Order. The hon. Member cannot have a point of order in the middle of Mr. Speaker's reply to a point of order.

Mr. Mates

I am answering Mr. Speaker's point of order.

Mr. Speaker

The hon. Gentleman, rather than answer my point of order, should confine himself to the motion.

Mr. Mates

You have called me to order, Sir. I assure the hon. Member for Workington that I am not knocking the PAC; I am trying to suggest, in welcoming the appointment of the new CAG, that he has a potential problem on his hands.

Mr. Campbell-Savours

No problem at all.

Mr. Mates

It may not be a problem for the hon. Member, but he and I do not always agree on these matters, and I am as entitled to my view as he is to his.

The departmental Select Committees are relatively new, but the amount and competence of the work they can do is growing. I am putting down the marker tonight because I want to avoid any problems for the new Comptroller and Auditor General as he takes up his office. I am suggesting—I hope you, Mr. Speaker, will think that it is germane to the debate—that one or two problems might arise which the CAG would be advised to read about before he takes up his office. If that is out of order, Mr. Speaker, I accept your ruling.

I am surprised that anyone on the PAC should object to what I say, because we have a common objective to check the Executive. My questions and warnings relate to how we can best do that.

Mr. Campbell-Savours

Does the hon. Gentleman accept that the Defence Committee does not have a certification function at all, that that is the role of the PAC?

Mr. Mates

I am not trying to suggest that it has. If I give way again to a member of the PAC, I would be happier to give way to the Chairman because he and I know that I am not arguing against him, but I am trying to produce a common argument as to the better way in which the CAG might work with his Department to help all departmental Select Committees. I am serious in this wish.

The current example which highlights the problems is the DROPS inquiry. The Defence Committee in the last Parliament took 1,200 pages of evidence in that inquiry and now, perfectly properly, the Public Accounts Committee has decided to take up the inquiry. The worst of all worlds would be that we should disagree on our examination of the Executive. The Defence Committee has said that, during the PAC inquiry, in which it has indicated it will take some evidence, we will suspend our inquiry.

Mr. Speaker

Order. The hon. Gentleman must look at the motion again and reflect on what I said earlier. We are not debating whether the PAC has competence to deal with his Committee; we are dealing with the appointment of a new CAG. The hon. Gentleman will please confine himself to that.

Mr. Mates

If you want to tell me, Mr. Speaker, that to discuss the particular relationship between the Comptroller and Auditor General and the PAC and the way in which that affects the way other Select Committees work is out of order, then I will resume my seat. The point is—

Mr. Speaker

Order. The hon. Gentleman only has to look at the motion on the Order Paper.

Mr. Mates

Surely we should talk about what the Comptroller and Auditor General is going to do. If I am not allowed to talk about what he is going to do, I will end my remarks.

I am trying to make some helpful comments as the Comptroller and Auditor General begins his job and I wish him well. I want to be helpful and perhaps remove problems that would never have been discussed with the appointment of the Comptroller's predecessor because the departmental Select Committees had not gone about their business in the way in which they are acting now. If that is out of order, of course I will stop. I am trying to highlight one or two problems which the Comptroller may wish to address. Surely that is part of the spirit of the debate.

Mr. Speaker

Order. It is not a question of the spirit of the debate but of what is on the Order Paper. The hon. Gentleman should confine himself to that.

Mr. Mates

I accept what you say, Mr. Speaker. I will not resume my seat without wishing the new Comptroller and Auditor General well. When the problems arise, I will have to say that I tried to raise them today.

10.21 pm
Mr. John McWilliam (Blaydon)

Further to the point of order raised earlier, Mr. Speaker. The previous Comptroller and Auditor General made it clear that he believed that it was his role not to give the benefit of his advice to anyone but the PAC, which is not the constraint of the National Audit Act 1983. He gave that as his own view. We were trying to establish that the new Comptroller does not see his view as constrained in that way and that the department Select Committees also have the responsibility of examining the efficiency and economy of their particular Departments—

Mr. Speaker

Order. I think that that would be an admirable subject for a speech on a later occasion.

Mr. Mates

On a point of order, Mr. Speaker.

Mr. Speaker

Order. No, the hon. Gentleman has had his time. Mr. Garrett.

Mr. Mates


Mr. Speaker

Order. I gave the hon. Gentleman every opportunity to get in order, but he failed to do so.

10.22 pm
Mr. John Garrett (Norwich, South)

I am sorry to intrude on what appears to be private grief. I think that we have just witnessed a boundary war between the Select Committee on Defence and the Public Accounts Committee, which could have been settled in some other forum.

I oppose the process by which the selection of the Comptroller and Auditor General is made and I regard the appointment with some disquiet. I have no personal animus against the Comptroller designate and I am willing to believe that he will do an excellent job. However, the arrangements by which he is nominated pay inadequate respect to parliamentary democracy and the enforcement of parliamentary accountability and that issue should concern hon. Members on both sides of the House.

The history of the Comptroller and Auditor General since the establishment of the office in 1866 is one of constant encroachment by the Executive—the Treasury —until the passing of the National Audit Act 1983 which clearly re-established the Comptroller as an Officer of the House. Credit for that must go to the former right hon. Member for Chelmsford, the former Leader of the House, Lord St. John of Fawsley—I tend to say "Faulty" or "Forley" from time to time, but I believe he is Lord Fawsley. His interest in the issue re-established the Comptroller as an Officer of the House.

The Exchequer and Audit Department Acts of 1966 and 1921 enlarged the scope of audit and referred to the Comptroller and Auditor General as examining the accounts on behalf of the House of Commons. Lloyd George as Chancellor of the Exchequer in April 1912 referred to the Comptroller as an Officer of the House, and independent of the Treasury". —[Official Report, 17 April 1912; Vol 37, c. 371.]

Between 1866 and 1983, the Treasury exercised ever-increasing power over our state audit system. The Comptroller and Auditor General was nominated by the Treasury, usually from its own ranks. The form of the accounts was prescribed by the Treasury, and, gradually, less than half of Government expenditure was covered by the audit. The Treasury fixed the number and the grades of the auditors at a far lower level of qualification than in other state audit bodies. The Treasury ensured that our audit concentrated on narrow issues of waste, extravagance and proper authorisation, not on the efficiency and effectiveness of public spending.

A supine House of Commons allowed that encroachment to continue year after year. The process culminated in 1978, with a note by the Treasury to the general sub-committee of the Expenditure Committee which observed.

The CAG's relationship with Parliament derives from the fact that most of his reports are presented to Parliament and he has by long practice established a close relationship with the Public Accounts Committee at which his formal status is that of a witness. In 100 years, the Comptroller and Auditor General was transformed from an Officer of the House to nothing more than a witness before the Public Accounts Committee. There could be no clearer example of the bureaucracy taking power away from Parliament.

The present Comptroller's predecessor had the effrontery to say to the Public Accounts Committee: I think it would not be right … for Parliament or anyone else to as it were have the power to distract me from the way in which I and my Department ought to carry out that responsibility for statutory audit. Later, he said: The department is independent of all other public departments, including the Treasury, but at the same time it is an important instrument of the Treasury, since it is responsible for ascertaining that their directions relating to expenditure are duly obeyed; thus, the harmonious action and mutual support of two departments are essential to efficient financial administration. We have moved from a watchdog reporting to the House of Commons to someone who had to move in harmony with the Treasury.

The unsatisfactory nature of that development was made public in 1966 by a great scholar of audit, Dr. E. L. Normanton, who wrote that, in Britain, the powers of Executive direction over our state audit could scarcely be more complete and that they were incomparably more so than in any other Western country.

The 1983 Act put matters right and made it clear that the Comptroller and Auditor General was an Officer of the House. But in getting the Act passed, we lost some battles. Instead of the Comptroller and Auditor General becoming an appointee of the House, we were forced to compromise and agree to the appointment being made by the agreement of the Chairman of the Public Accounts Committee and the Prime Minister. No other state auditor in the Western world is appointed with the veto of the Head of Government. The Comptroller General of the United States is appointed by Congress. In West Germany, the President of State Audit is statutorily independent of the Government.

It is unacceptable that the Prime Minister should have a hand in the appointment of an Officer of the House whose job it is to inquire into the financial management of the Government. We should handle this issue by asking the Chairman of the Public Accounts Committee to produce a short-list of applicants who should be examined by the Committee in public. The Committee should then make the appointment, and its Chairman should table a humble address to Her Majesty. It has been said hat that would be unsatisfactory because the Government have a majority on the Committee and the Prime Minister would lean on them to promote a favoured candidate. That does not worry me in the least. The present members of the Public Accounts Committee have a fine, fearless record of independence, and I have no doubt that we can trust their judgment. Our amendment, the contents of which you said we could discuss, Mr. Speaker, was an attempt to pave the way towards such a change.

Where do you fit into all this, Mr. Speaker? No doubt you will confirm that Mr. Speaker is the line superior of the Comptroller and Auditor General. For management purposes, the Comptroller and Auditor General reports to you. Were you consulted about the appointment? Where else is a superior manager not consulted on the appointment of someone who reports to him? I certainly think that, under the procedure that I am proposing, there should be informal consultation between the Chairman of the PAC and yourself, Mr. Speaker — or whoever occupies your Chair. You see, Mr. Speaker, I trust the judgment and independence of yourself and future Speakers.

The proposed appointee is a civil servant who has served in the Treasury and the defence procurement executive. Many of the most important inquiries conducted by the National Audit Office that we see are on the subject of weapons procurement. That may place the proposed appointee in a difficult position.

It will be said that there was no other suitable appointment from inside the Civil Service. I do not doubt that. It will be said that there was no other candidate in the whole public service and throughout the public sector. I find that difficult to believe. However, the National Audit Office has 800 or more staff. Why is it not possible to find a successor within that organisation? What other organisation of its size has no succession planning nowadays? I certainly expect the next Comptroller and Auditor General to train up his or her successor, so the PAC has a choice within the Office as well as having to trawl outside it.

The Government resisted the extradition of the National Audit Office from the clutches of the Treasury tooth and nail in 1983. I remember being warned by Treasury Ministers that independent status was most unwise. They said that Her Majesty would riot like it because the appointment was in her name. They said that the public would disapprove of Parliament acquiring another 800 staff. They used every device they could think of to wreck the 1983 Bill.

It is interesting that if this Comptroller and Auditor General is appointed and we get the reform that we want at the end of his term, it will have taken more than 30 years to regain control of the Office. I have no doubt that we shall do it in the end. To most hon. Members, this matter is technical, peripheral and boring. To some of us, however, it goes to the heart of public accountability. The House must take complete and unfettered control of our state audit arrangements. We should be failing in our duty to settle for less.

10.32 pm
Sir Peter Hordern (Horsham)

The hon. Member for Norwich, South (Mr. Garrett) has the advantage of having studied the National Audit Office and the functions of the Comptroller and Auditor General for a great many years. But he was unnecessarily harsh about Lord St. John's Bill, which was, after all, a private Member's Bill when it was introduced. I recollect that well, as I was one of its sponsors. It was an attempt to separate the control of the National Audit Office from the Government. In that, it was successful.

Perhaps through some oversight, the hon. Gentleman neglected to mention the Public Accounts Commission, which is charged with the duty of the oversight of the National Audit Office, and, in particular, with the appointment of the Comptroller and Auditor General as the accounting officer for that body. Without making too many claims about the Public Accounts Commission—I would be the last to do so—I believe that the process by the which the Comptroller and Auditor General has been selected has been entirely right. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of the PAC, will correct me if I am wrong in saying that the Government have not interfered in any way in the selection of the new C and A G. Indeed, I believe that the Chairman of the PAC was largely responsible for the selection. If so, that is entirely proper and right. It is right that a leading member of the Opposition should have the function not only of being Chairman of the PAC, but of having a major say in the selection of the C and A G, which is at the fount of this business. I am sure the right hon. Gentleman has carried out that duty with his usual thoroughness and expedition, and I much look forward to meeting Mr. Bourn, as I am sure we shall soon.

I should like to pay tribute to Sir Gordon Downey—I have done so in another context—because he was an admirable Comptroller and Auditor General. As was rightly said, he more than anybody else introduced the functions regarding value for money that many hon. Members might feel were long overdue. We know from the evidence given to the Public Accounts Commission just how far this new direction will go. It is entirely right that the National Audit Office should in future take much more time and give much more attention to value for money in the public service. This is welcome everywhere—not just in the House, but by the Government—no matter how harsh the criticisms may be.

My hon. Friend the Member for Hampshire, East (Mr. Mates) spoke about the Select Committee on Defence whose work he well knows. From my recollection as a member of the PAC, I know that when we looked at the Sting Ray torpedo we did not think that we were expert enough to pronounce upon this weapon, so we shunted the matter off to the Select Committee on Defence. In due course we got a reply which more or less said that it was a very interesting development. I should say it was interesting! By that time it had cost over £1,000 million and there was not a single torpedo to show for it.

The National Audit Office has an accounting function, but the work of that office and of the C and A G will turn increasingly towards value for money and the effectiveness of the public service. My goodness, there is room for that.

Mr. Mates

I am grateful to my hon. Friend for making that point for me. The difficulty in which we found ourselves when we undertook that inquiry was that we were not privy to the information from the C and A G to which his Committee is privy. That can only mean that we cannot do our jobs as well as we might. That was a warning that I was trying to sound.

Sir Peter Hordern

I do not know about that. I should be very surprised if the Select Committee on Defence did not know about the money that had been expended up to that time. In any event, that does not alter the fact that the range of duties and responsibilities that the new C and A G will encompass will be much more inclined towards value for money. There is a great deal of scope for that in all Government Departments. I am sure that the new C and A G will carry out his task with the help of outside bodies and expert advice from private consultancy firms.

I am sorry that the National Audit Office and the C and A G are not empowered to examine the works of the nationalised industries, because that would be better than pursuing that matter through the Monopolies and Mergers Commission, which is appointed and irregulated. We have discussed this matter before, and no doubt we shall come to it again. I am sorry that so far that is not done. As time goes on, the work of the National Audit Office may increasingly turn towards questioning the way in which the Government set about producing public goods and services. Quite rightly, it has moved a long way from accounting in a strictly accounting form for the correctness of the accounts to value for money.

If it is the object, as it must be, to provide free health care for the poorest in the land, is the way in which the National Health Service is conducted at the moment the most efficient way of providing that? I hope that that and similar questions will come within the remit of the C and A G.

I notice that in this financial year the C and A G proposes to have five sessions on the five reports on the Health Service.

Mr. Speaker

Order. It is perfectly in order to draw attention to that, but not to go too far on it.

Sir Peter Hordern

I do not propose to do so, Mr. Speaker, and I do not wish to detain the House for a moment longer than is necessary.

This sort of examination is bound to raise considerable issues of principle that may be discussed in the House. Parliament cannot suffer by being better informed on these issues, and I am glad to see that the C and A G is pursuing such a role. The selection of Mr. Bourn with his experience in the Ministry of Defence gives me great encouragement. That is because, of all the Departments of State, possibly the Ministry of Defence requires more supervision than any other Department. Over the last few years a disgraceful amount of money has been spent on some weapons.

Mr. Julian Brazier (Canterbury)

At the risk of instantly becoming the most unpopular Member, I suggest to my hon. Friend that, without a shadow of doubt, the greatest single waste in a defence project has been on Nimrod. The reason we went down the Nimrod—

Mr. Speaker

Order. That would not be a good thing to suggest in the context of this debate.

Sir Peter Hordern

My hon. Friend has a very good point but I have a better one — the one which I mentioned. In deference to you, Mr. Speaker, I shall not drag on the debate. But, my goodness, the Ministry of Defence is certainly a Department to examine.

I am glad that Mr. Bourn has been appointed to this task because of his considerable expertise. I congratulate the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) on selecting him.

10.40 pm
Mr. Graham Allen (Nottingham, North)

Public expenditure tends to be a boring topic. I am delighted to see the large number of hon. Members present. It gives some hope for the future of public expenditure discussions in the House. I hope that hon. Members realise a point that is fundamental to parliamentary democracy. For 700 years, the power of Parliament has depended on the ability to collect and agree to the expenditure of moneys. My hon. Friend the Member for Norwich, South (Mr. Garrett) said that that power had been weakened during the past 100 years. This power is so fundamental that at one time we even had a civil war over the matter of the Supply from Parliament. In addition, we came close — perhaps not close enough — to abolition of the House of Lords in 1910 when expenditure was foremost in the minds of Members of the House of Commons.

The Prime Minister often expresses a cliché about government—it is not the Government's money but the taxpayers' money. Even more accurately, it is not the Government's money; it is secondarily Parliament's money. Until Parliament reasserts its control over that expenditure, we shall be far weaker than we need to be. The year 1866 may be seen as the zenith of our control over expenditure.

Miss Marjorie Mowlam (Redcar)

Was my hon. Friend here then?

Mr. Allen

I was not here then. But the matter was taken more seriously then than it is now. When the Exchequer and the Audit Department were merged, Gladstone said that that was the last portion of the circle of the control of public expenditure. Since then, there has been constant atrophy in the control of the House of Commons over public expenditure, with the Treasury acting like a jungle encroaching upon a deserted city, gradually reclaiming its territory. The territory is rightfully that of Members of the House of Commons. It is up to us to reassert some control. It was merely a fluke that my hon. Friend the Member for Norwich, South and my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) happened, over a decade, to do the research and work that coincided with the former right hon. Member for Chelmsford winning the parliamentary bingo game with his private Member's Bill which put the National Audit Act 1983 on the statute book. But for that fluke, we would not even have our present nominal control over public expenditure.

A measure of our weakness can be seen when we compare this Parliament's control over expenditure with that of the General Accounting Office in America, which has five times as many staff, employs specialists and offers a career structure. Members of the legislature or a major investigatory committee can refer a matter to it for investigation. For all its gloss and pomp, our Parliament, in relation to public-expenditure scrutiny, is no better than a third-rate banana republic. Parliamentary democracy is but a veneer unless we regain control of Government expenditure.

Yes, we have departmental Select Committees, but they do not meet for six months, they are not elected by the House and they cannot report to the Floor of the House as a matter of course. Yes, Parliament approves expenditure, but, as we saw last week, £47 billion can be nodded through — under a regime that allegedly maintains tight control of public expenditure—without any debate whatever. Yes, we have a parliamentary audit system, but half of public expenditure is exempt from that system, and the Audit Office is constitutionally and technically divorced from Parliament.

The Comptroller and Auditor General — the senior financial Officer of the House—is subject to the veto of the Executive, and that cannot be healthy for our democracy. Parliament should not and does not, make any claim to govern the country, but unless it claims to hold to account those who do it has no major role in our democracy. If that role is to be fulfilled effectively, the Comptroller and Auditor General must be seen to be wholly constitutionally independent of the Executive.

At a time when the two most notorious breaches of financial accountability are the Zircon affair and the Chevaline project, it is hardly fitting that the appointment of the former chief civil servant of the defence procurement staff can be put to the House and nodded through without so much as a biography being circulated to the Public Accounts Committee, or to ordinary Members of the House. Whatever the Prime Minister's involvement, for her to retain a veto on the appointment of the House's most senior financial servant is unacceptable, if Parliament is indeed to remain independent. I would gladly offer the right hon. Lady the chance to say that this is the last time that the Executive will have a say in the appointment of the Comptroller and Auditor General, if she were prepared to give the House such an assurance. I fear, however, that she is not.

Finally, let me say that I am sorry that we did not have a chance to speak to the amendment. If it had been selected, I would have hoped to divide the House. However, out of respect for my right hon. Friend the Member for Ashton-under-Lyne, and the representations made to me, I shall not do so. I extend every good wish to the new incumbent of the post of Comptroller and Auditor General. However, it will be up to the House, and to members of the Public Accounts Committee, to ensure that he is equal to the great honour that the House has bestowed on him.

10.47 pm
Mr. Ian Gow (Eastbourne)

Complaints by some Labour Members that this is an example of the Executive appointing the new Comptroller and Auditor General are manifestly ill founded. The very fact that the motion is before the House tonight, and that it is supported by the Chairman of the Public Accounts Committee—the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—shows that it is at the right hon. Gentleman's suggestion, a suggestion with which my right hon. Friend the Prime Minister agreed.

Furthermore, it is not the case that the Comptroller and Auditor General can be appointed either by my right hon. Friend or by the right hon. Member for Ashton-under-Lyne. On the contrary, he can be appointed by the House, and by the House alone. Hence, it is pure humbug for the Opposition to assert that here is another example of the Executive seizing power from the House.

Mr. Allen

Will the hon. Gentleman give way?

Mr. Gow

No, I will not.

I detect that the House would like to come to a decision on this matter. It is perfectly right and proper that it is to this House alone that the Comptroller and Auditor General is accountable and that the House should appoint him. I join the right hon. Member for Ashton-under-Lyne and my right hon. Friend the Prime Minister in supporting the motion.

10.49 pm
Mr. Tam Dalyell (Linlithgow)

I promise the House that I shall be brief.

Twenty-five years ago last month the House appointed me to the Public Accounts Committee and for five years I served under Lord Wilson, Douglas Houghton, and John Boyd-Carpenter. I am grateful to all three Chairmen, and not least to Sir Edmund Compton, then Comptroller and Auditor General, who was an expert in tutoring young Members in the ways of Whitehall. I am deeply grateful for that experience.

On 7 December 1987 — given that experience — I asked the hon. Member for Horsham (Sir P. Hordern), answering for the Public Accounts Commission, what criteria the commission uses in appointing an accounting officer for the National Audit Office under section 4 of the National Audit Act 1983.

I had warned the hon. Gentleman of the question and he gave me a long, courteous and considered reply that I will not inflict upon the House. In a supplementary question, I asked whether the Public Accounts Commission agreed that the successor to Sir Gordon Downey as Comptroller and Auditor General should help Parliament to scrutinise the £1,000 million budget of the security and intelligence services.

Mr. John McAllion (Dundee, East)

That is a good idea.

Mr. Dalyell

It might be helpful if I say that it is not my idea—the stable from which ideas come is often rather important — it is the idea of the outgoing Comptroller and Auditor General, Sir Gordon Downey. It was reported in the serious press that he would like to offer his help for the "scrutiny" of the "£1,000 million budget"—those are his words — of the security and intelligence services.

In reply, the hon. Member for Horsham said: That is not a matter for the Public Accounts Commission. The hon. Gentleman may, however, wish to pursue his inquiry with his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) the Chairman of the Public Accounts Committee."—[Official Report, 7 December 1987; Vol. 124, c. 15–16.] I do not normally write formal letters to my parliamentary friend of many years, but I have done so on this occasion to ask for his opinion.

This is also the opportunity to ask someone else's view—an important one—the view of the Prime Minister. Would the Prime Minister care to reflect—such things should not be answered off the top of the head—on Sir Gordon Downey's suggestion? Does she have any sympathy with the idea that Sir Gordon, or his successor, should offer their services to scrutinise the security and intelligence services?

Mr. Jerry Wiggin (Weston-super-Mare)

On a point of order, Mr. Speaker. It would appear that the hon. Gentleman is beginning to veer away from your strict instructions—

Mr. Speaker

Order. Please allow the Chair to decide on that.

Mr. Dalyell

I will not, on purpose, deal with any contentious matters, and the Financial Secretary to the Treasury—a former Minister at the Ministry of Defence—will be relieved to know that I will not mention any of the things that he might expect me to mention.

I ask the Prime Minister for her view—she may wish to put it in writing or make a statement at some convenient time—on the serious question posed by the outgoing Comptroller and Auditor General. We know that he does not make such remarks or gestures without thinking about them. He believes that the £1,000 million budget of the security and intelligence services should be scrutinised. On such an evening as this it is legitimate to ask for the Prime Minister's view. I will leave it at that, without being contentious.

10.54 pm
Mr. Nicholas Brown (Newcastle upon Tyne, East)

In common with other hon. Members who have spoken, I should like to begin by wishing the retiring Comptroller and Auditor General, Sir Gordon Downey, well. He is a distinguished civil servant and, as our Comptroller and Auditor General, a distinguished Officer of the House. In welcoming his successor, Mr. John Bryant Bourn, to what will be his new post, the House will want to emphasise the distinction between a civil servant and an Officer of the House. The Comptroller and Auditor General is our official, and we expect him to operate independently of the Executive, especially of the Treasury.

The partnership between the National Audit 01fice and the Public Accounts Committee is linked with an all-party Committee of the House, which prides itself on the unanimity that backs its reports. The independence of the Executive and procedure by consent sit here alongside each other; they are necessary partners. Without independence from Government — publicly perceived independence from Government—the Public Accounts Committee could not scrutinise the Administration with complete and unquestioned integrity.

Alongside that point sits a less obvious one: without all-party consent, the authority of the Public Accounts Committee's conclusions would be devalued. The material under consideration would be less than the weighty and considered view of the Committee.

There is the quite distinct issue of getting the Government to respond to the Public Accounts Committee's conclusions, and that is a matter of controversy. However, it does not undermine the importance of having a Public Accounts Committee that can provide Parliament with a detailed, thorough, factual basis for our controversies in these matters. It is important in the Committee's investigation and certification work — the recent investigation into the Property Services Agency is a good example of that—and it is even more important in the Committee's consideration of value for money in sectors such as defence procurement and public investment in Northern Ireland.

Recurring issues such as the evasion of vehicle excise duty, which we discussed in the House recently, throw light on a completely different aspect of the Committee's work. Whereas it is for the Committee to discover a state of affairs, it is for Government to respond and for the Committee to reply if the Government response does not meet the point.

For all those reasons, the independence of the office of Comptroller and Auditor General is important to the House. That importance lies behind the amendment tabled by my hon. Friends. The House has regard and respect for my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) in his work as Chairman of the Public Accounts Committee. I know that he will take careful note of the amendment and the sentiment that lies behind it.

At some later stage, after further consideration has been given to these matters, perhaps an opportunity will be found to give the House a chance to consider the issues involved in changing the method of appointment. For the parliamentary Opposition, the key principle is independence of the Executive. I think that that would be the point of view of all parliamentary Oppositions. The Labour party intends to give effect to this principle when in government. We shall seek to change the method of appointment so that there is no ambiguity between the role of the Executive and that of the House.

Having made that statement of principle and commitment, I make it clear that my remarks are directed at the principle alone. To Mr. John Bryant Bourn I extend a warm welcome to his new job and assure him of our whole-hearted support as he investigates the Government.

10.57 pm
The Financial Secretary to the Treasury (Mr. Norman Lamont)

I join hon. Members in paying tribute to Sir Gordon Downey. Everybody agrees that he has been outstanding in his job. The hon. Member for Norwich, South (Mr. Garrett) referred to one Comptroller and Auditor General who had described himself as "an instrument of the Treasury." That description certainly could not be applied to Sir Gordon Downey.

I am grateful to the hon. Member for Newcastle upon Tyne, East (Mr. Brown) for his remarks about Mr. Bourn, who I am sure will be an extremely worthy successor.

Many of the comments that have been made concerned the procedure for the appointment. The procedure is new. It is the first time that the appointment will be made in this way. As the hon. Member for Norwich, South said, the procedure stems from the National Audit Act 1983, in which he played a considerable part.

The hon. Member for Norwich, South referred to the history of the Comptroller and Auditor General as one of continuous encroachment by the Executive — the Treasury—on his empire. Even the hon. Member for Norwich, South would have to concede that 1983 was a break point and a step forward. The legislation underlined the independence of the Comptroller and Auditor General and provided for Parliament and Government to have a say in his appointment. The arrangements that are being criticised now are different from those that applied in the past — for example, when Sir Douglas Henley was appointed in 1976, it was purely a Government decision. The arrangements that have been criticised are not what the hon. Gentleman argued for at the time, but they received something of a welcome from Lord Barnett at the time. He acknowledged that an improvement had been made and thanked the Chief Secretary to the Treasury for recognising and implementing in his new clause, broadly what I should like to see." —[Official Report, Standing Committee C, 9 March 1983; c. 61.] He accepted and welcomed that arrangement at the time.

The new arrangements provide for the House to be involved in two ways. First, an obligation is written into the legislation for the Government to consult the Chairman of the Public Accounts Committee. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) confirmed that that happened. Secondly, there is the procedure for the motion for an address to be moved by the Prime Minister in the House. This is the first time that the new procedures have been used. We believe that they represent an improvement. They represent the joint and legitimate interest of Parliament and the Executive in the decision and in the address to Her Majesty.

Mr. Dalyell

I appreciate that the Financial Secretary to the Treasury is in no position to give an answer to my question about scrutiny of the intelligence and security services, but are the Government at least prepared to consider the matter? I emphasise that the suggestion comes from the outgoing Comptroller and Auditor General.

Mr. Lamont

Accountability for the security services was fully explained on 19 January by the former Chairman of the Public Accounts Commission in response to a question from the hon. Gentleman. The former Chairman said: The duties of the Comptroller and Auditor General in regard to the security services are covered by long-standing arrangements that were endorsed by the Public Accounts Committee. Expenditure on the secret service is accounted for by the Cabinet Office. The Comptroller and Auditor General does not examine the records relating to this expenditure, but, instead, receives personal certificates from the responsible Ministers of the Crown to the effect that the payments were properly made from the secret Vote in the public interest. He then certifies the Appropriation Account to this effect. If there is other expenditure on intelligence and security services that might be borne in other Votes, they will then be subject to full audit by the Comptroller and Auditor General." —[Official Report, 19 January 1987; Vol. 108, c. 593.]

That is the procedure, and it is long-established.

Mr. Dalyell


Mr. Lamont

I shall not add to that. I have responded as fully as the hon. Gentleman could reasonably expect.

I was making the point that the procedure is for shared responsibility. Contrary to what was argued by the hon. Members for Norwich, South and for Nottingham, North (Mr. Allen), it is right that it should be a shared responsibility. Government and Parliament have a shared interest in value for money. That is the first point. The second point is the Comptroller and Auditor General's unique access to Government papers. The third point is the Comptroller and auditor General's independence. Hon. Members have referred to his independence from the Executive, but we must also consider his independence from Parliament. It is not appropriate that the Comptroller and Auditor General should be directed, either by the Executive or by the House. The Comptroller and Auditor General enjoys a high degree of independence because of the professional task that he has to undertake.

Mr. Allen

Will the Minister concede that the Comptroller and Auditor General is an Officer of the House —in name, at least—and therefore that it would be logical for the House to appoint him? Does the Minister agree that since 1983 any fears that the Government—especially the Treasury—had about the National Audit Office have been allayed by its operation in the intervening years and that the watchdog veto that the Government now have could easily be relinquished so that Parliament could appoint its most senior financial officer itself.

Mr. Lamont

I agree that fears have been allayed. However, I stick to my point that the Government have a legitimate interest.

Mr. Campbell-Savours

What is it?

Mr. Lamont

I have already outlined the three reasons. I stick to my point that it is extremely important that the Comptroller should enjoy a high degree of independence. That is embodied in the existing arrangements under which he operates. He is subject to certain financial controls by Parliament but not to Parliament's operational control. The Comptroller determines the National Audit Office examinations to be carried out, and their extent and content are for him to determine. It is because of his independence that his salary is paid directly from the Consolidated Fund without the annual approval of Parliament. It is to underline his independence that he appoints his own staff. It is for the same reason that he can be removed from office only by Her Majesty the Queen on an Address from both Houses of Parliament. All those arrangements are designed to emphasise his independence not only from the Executive but from parliamentary direction.

Sir Peter Hordern

Will my right hon. Friend acknowledge that the estimates of the National Audit Office have to be approved by the Public Accounts Commission and that that gives an element of parliamentary control?

Mr. Lamont

My hon. Friend is absolutely right. He will recall that I said that the Comptroller was subject to a degree of financial control by the House of Commons, but not to operational control.

Mr. John Garrett

We shall scrutinise the right hon. Gentleman's words very carefully tomorrow. Is he making up policy as he goes along? What he has just said takes us back to before the 1983 Act. He now claims that the Executive has a legitimate interest in appointing an Officer of the House whose job it is to examine the financial management of Government Departments. That is outrageous.

Mr. Lamont

The hon. Gentleman is misrepresenting what I said. In no way do we wish to turn the clock back to before 1983. I went out of my way to welcome the 1983 Act, and to say that it was a step forward. All that I would say is that the Government have the same interest in value for money as the House. There is also the legitimate question of the independence of the Comptroller and Auditor General. That is the key point and that is why the responsibility has to be shared.

The procedure ensures that no candidate can be appointed who is not acceptable both to the House and to the Government and helps to secure the independence crucial to the discharge of this very high office. I commend the motion to the House.

Question put:

The House divided: Ayes 178, Noes 9

Division No. 120] [11.10 pm
Alison, Rt Hon Michael Heseltine, Rt Hon Michael
Allason, Rupert Hogg, N. (C'nauld & Kilsyth)
Amess, David Home Robertson, John
Amos, Alan Hordern, Sir Peter
Arbuthnot, James Howarth, Alan (Strat'd-on-A)
Arnold, Jacques (Gravesham) Hunt, David (Wirral W)
Arnold, Tom (Hazel Grove) Ingram, Adam
Ashby, David Irvine, Michael
Baker, Nicholas (Dorset N) Janman, Timothy
Baldry, Tony Jones, Robert B (Herts W)
Beaumont-Dark, Anthony King, Roger (B'ham N'thfield)
Beggs, Roy King, Rt Hon Tom (Bridgwater)
Bennett, Nicholas (Pembroke) Kirkhope, Timothy
Benyon, W. Knapman, Roger
Bevan, David Gilroy Knowles, Michael
Blackburn, Dr John G. Lamont, Rt Hon Norman
Boscawen, Hon Robert Lang, Ian
Boswell, Tim Latham, Michael
Bottomley, Peter Lawrence, Ivan
Bottomley, Mrs Virginia Lee, John (Pendle)
Bowis, John Lennox-Boyd, Hon Mark
Brandon-Bravo, Martin Lilley, Peter
Brazier, Julian Lloyd, Peter (Fareham)
Bright, Graham Lord, Michael
Brooke, Hon Peter Lyell, Sir Nicholas
Brown, Nicholas (Newcastle E) McFall, John
Bruce, Ian (Dorset South) McLoughlin, Patrick
Burns, Simon McNair-Wilson, M. (Newbury)
Burt, Alistair Major, Rt Hon John
Butcher, John Malins, Humfrey
Butler, Chris Mans, Keith
Butterfill, John Maples, John
Campbell, Menzies (Fife NE) Martin, David (Portsmouth S)
Campbell-Savours, D. N. Mates, Michael
Carlisle, Kenneth (Lincoln) Maxton, John
Carrington, Matthew Mayhew, Rt Hon Sir Patrick
Carttiss, Michael Michael, Alun
Cash, William Millan, Rt Hon Bruce
Chope, Christopher Miller, Hal
Clarke, Rt Hon K. (Rushcliffe) Mitchell, Andrew (Gedling)
Conway, Derek Mitchell, David (Hants NW)
Coombs, Anthony (Wyre F'rest) Moate, Roger
Coombs, Simon (Swindon) Morris, M (N'hampton S)
Cope, John Moynihan, Hon C.
Cran, James Murphy, Paul
Davies, Q. (Stamf'd & Spald'g) Nelson, Anthony
Davis, David (Boothferry) Neubert, Michael
Davis, Terry (B'ham Hodge H'l) Newton, Tony
Day, Stephen Nicholls, Patrick
Dewar, Donald Nicholson, David (Taunton)
Dixon, Don Page, Richard
Dorrell, Stephen Paice, James
Dunn, Bob Patnick, Irvine
Durant, Tony Peacock, Mrs Elizabeth
Emery, Sir Peter Porter, David (Waveney)
Evennett, David Portillo, Michael
Fairbairn, Nicholas Powell, Ray (Ogmore)
Fallon, Michael Raffan, Keith
Fenner, Dame Peggy Raison, Rt Hon Timothy
Field, Barry (Isle of Wight) Redwood, John
Forman, Nigel Rhys Williams, Sir Brandon
Forsyth, Michael (Stirling) Ridsdale, Sir Julian
Forth, Eric Ross, William (Londonderry E)
Foster, Derek Rowe, Andrew
Freeman, Roger Shaw, David (Dover)
French, Douglas Sheldon, Rt Hon Robert
Galbraith, Samuel Shephard, Mrs G. (Norfolk SW)
Gale, Roger Shepherd, Colin (Hereford)
Garel-Jones, Tristan Smith, Rt Hon J. (Monk'ds E)
Gill, Christopher Smith, Tim (Beaconsfield)
Gow, Ian Speed, Keith
Gregory, Conal Speller, Tony
Griffiths, Nigel (Edinburgh S) Stanbrook, Ivor
Hamilton, Hon A. (Epsom) Stern, Michael
Hamilton, Neil (Tatton) Stradling Thomas, Sir John
Hargreaves, A. (B'ham H'll Gr') Summerson, Hugo
Harris, David Taylor, Matthew (Truro)
Haynes, Frank Tebbit, Rt Hon Norman
Thatcher, Rt Hon Margaret Wardle, C. (Bexhill)
Thompson, D. (Calder Valley) Watts, John
Thompson, Patrick (Norwich N) Wheeler, John
Thorne, Neil Whitney, Ray
Thurnham, Peter Widdecombe, Miss Ann
Townend, John (Bridlington) Wiggin, Jerry
Tredinnick, David Wilshire, David
Trippier, David Wood, Timothy
Twinn, Dr Ian Yeo, Tim
Waddington, Rt Hon David
Wakeham, Rt Hon John Tellers for the Ayes:
Wallace, James Mr. David Lightbown and
Waller, Gary Mr. Richard Ryder.
Abbott, Ms Diane Parry, Robert
Allen, Graham Smith, Andrew (Oxford E)
Cohen, Harry
Fyfe, Mrs Maria Tellers for the Noes:
Garrett, John (Norwich South) Mr. Dennis Skinner and
McAllion, John Mr. Ian McCartney.
Nellist, Dave

Question accordingly agreed to.

  2. c1205
  3. LIAISON COMMITTEE 160 words