§ Mr. Robert Sheldon (Ashton-under-Lyne)
I beg to move,
That this House takes note of the 1st to 36th and 41st Reports and First Special Report from the Committee of Public Accounts of Session 1987–88 and of the Treasury Minutes on those Reports (Cm. 307, 323, 367, 410, 502 and 509), with particular reference to the following Reports:—
Today we are having our annual debate on the public accounts reports. They do not cover all the matters that we have discussed; they are the matters on which we have had a reply from the Financial Secretary to the Treasury, who, acting on behalf of the Treasury, produces the Treasury minutes for us.
- 16th: Monitoring and Control of Charities in England and Wales
- 20th: Ministry of Defence: Fraudulent expenses claims; Meteorological Services
- 26th: Community care developments
- 31st: Naval warship and weapons procurement
- 32nd: Review of the operations of the Land Registry
Our last debate was on 3 December last year when we considered the 54 reports tabled in the motion. This time, we are dealing with 38 reports and six Government replies. There are fewer this year because, first, it is only 11 months since the last debate and, secondly, as a result of the election, we took rather less evidence during the year. I must put the House on notice that we are likely to bring significantly more before it next year.
As on recent occasions, we have chosen five reports to highlight in the motion. The way in which we selected those reports reflects the lessons which can be learnt and should be drawn to the attention of the House because substantial sums of money are involved and particular interests should be explained and discussed. A number of other reports are likely to be mentioned in the debate.
I must give my personal thanks to Committee members. It is an extraordinarily hard-working Committee, frequently interviewing two Departments each week. That means that there is a vast amount of paperwork and the work is now undertaken by the Committee far more assiduously than it has ever been during the period that I have been associated with the Committee, which, like that of the hon. Member for Scarborough (Sir M. Shaw), goes back over 20 years. That work has borne fruit in the reports now before the House.
A number of hon. Members have left the Committee. The hon. Member for Horsham (Sir P. Hordern), has become chairman of the commission which looks after the detailed operations of the National Audit Office and the Northern Ireland Audit Office. He considers such matters as pay, conditions and recruitment. I am also a member of that commission and, only this week, we visited Northern Ireland to see the National Audit Office there and to ensure that it has the appropriate impact.
The value of these reports—I cannot stress this too highly—is that we have unanimity in every report. That is important because we differ from other Select Committees, which have their differences from time to time. We achieve this unanimity because we are trying to protect the taxpayer. That matter is of overriding importance to us. We achieve that unanimity, not by diluting the force of our report, but by concentrating on whether the taxpayer is obtaining value for money. That is why we have such an impact and, I hope, always will have. The Financial 1198 Secretary to the Treasury will reply to the debate. He is welcome to attend our meetings whenever he wishes, but we know that the burdens of his office prevent him from attending frequently.
If the Committee and the National Audit Office are to work successfully, they must do so in a form of partnership. That is much easier to achieve now that the Comptroller and Auditor General is an Officer of the House. That is an important change. He is responsible to you, Mr. Speaker, and to the House. That was not so in the past and has been an enormous improvement. In the past, we had almost a branch of the Civil Service, which meant that recruitment had to be undertaken within the normal rules of the Civil Service.
Now the situation has changed and the staff are auditors and accountants in their own right. They have more in common with accountancy firms in the City and in provincial towns than they have with the Civil Service generally. This is as it should be. So successful are they that a number of them are being attracted by the City and other areas of the private sector, where they are paid higher salaries, because of their expertise. When the recruits sit their accountancy examinations, we find that they take about 80 per cent. of the top places when the results are announced. These are the recruits of the National Audit Office. It is a great success story and we should be proud of it. We can be proud of this part of Parliament in which we have some responsibility.
The PAC works closely nowadays with the National Audit Office's investigations. Our work is based upon detailed examination of all Government papers that deal with the work undertaken in the Department which is the subject of the report from the Comptroller and Auditor General. The NAO produces its report to the House, and the Government know that the PAC and the NAO monitor the action that they take in response to the Committee's reports. We know that under the National Audit Act 1983 the Comptroller and Auditor General has discretion in the investigations that he chooses to make. There are regular discussions with the Committee, which is a novel feature of the PAC's work. This is part of the process which involves annually a detailed NAO corporate plan and a detailed examination of the reports and areas of activity. The relationship between us has prospered as we have brought our views to bear. The NAO gives us its views on important issues within the areas that are under investigation.
The new NAO Comptroller and Auditor General, John Bourn, was appointed by the Queen after the relevant motion was approved by the House, and we have a happy relationship with him. We feel that he has proved to be a successful choice. The office has nearly 1,000 staff members and it needs to keep under review the value for money that is achieved by the Government. The staff members are comparable to the sort of staff that would be found in industry. They examine the way in which the Civil Service spends public money.
I visited the National Audit Office in Northern Ireland on Tuesday. The task of auditing Northern Ireland expenditure on behalf of the Committee is an arduous one. There are particular problems in dealing with expenditures in Northern Ireland, but there is power now to make reports on value-for-money investigations. Five years ago, before the National Audit Act 1983 came into force—this was prompted by my hon. Friend the Member for 1199 Norwich, South (Mr. Garrett)—we had the appropriation accounts. These were one or two voluminous reports that dealt with detailed matters.
We are now engaged in the process of getting value for money, and I shall say something about the way in which we go about that. Our prime consideration must always be to ensure that public money goes for the purposes which Parliament intended. Our purpose is to ensure that when the House votes money it goes to those whom Parliament intended to receive it and for the purpose which it intended. That must always be a prime consideration as we assure ourselves of the probity of the public service, and perhaps we take for granted too readily that probity.
I have met members of PACs from other parts of the Commonwealth. Their major preoccupation is to reduce fraud and corruption, and they want to know how we tackle the problem. Once fraud and corruption starts, it is extremely difficult to root out. The greater barrier to fraud and corruption in the public service is formed by honest individuals within the service. Once a group acts in concert to defraud the public, it is extraordinarily difficult to root out. Whenever we see any possibility of fraud or corruption we treat it as the most serious matter to come before us, and it is right that we should do so.
I am happy to say that these occasions are few and do not take as much of our time as they demand of other PACs in other countries. Thus we are able to deal more effectively and more usefully with the value-for-money parts of our operation.
§ Mr. Ralph Howell (Norfolk, North)
I am interested to hear the right hon. Gentleman's remarks. I ask whether he is being rather complacent. How can we be sure that we are getting value for money in the National Health Service, for example, when there is no real accounting system, which means that there can be no real auditing system? It has been arranged deliberately that there should be no inventory control in many sectors of the NHS. This is made clear in the 14th report of 1985. Having considered the situation in the Health Service over all the years of its existence, the Department still did not know whether there were too many nurses or too few. The comment was made that that was unsatisfactory. I questioned my right hon. and learned Friend the Secretary of State about this matter only the day before yesterday and he still could not say whether there are too many nurses or too few. The necessary information is not available and there is nothing on which to make comparisons. There is no proper accountancy system in the NHS or, I think I am right in saying, in any other sector of Government. I feel that complacency is being shown, and that talk of getting value for money is unrealistic.
§ Mr. Sheldon
I had not really moved to the question whether we are getting value for money. The hon. Gentleman is anticipating what I have to say about the problems of getting value for money. If he had waited a little longer he might have learnt rather more about the way in which we approach the issue.
I do not know whether the hon. Member for Norfolk, North (Mr. Howell) has read the PAC's 11th report, which deals with the internal audit of the Health Service. We set out what we need to have if we are to assure ourselves on these matters. In the past two years we have undertaken, with the co-operation of the Comptroller and Auditor General, a close and continuing examination of the NHS.
1200 The report on nurses was one of the early fruits of that work. We showed that the Department did not know whether there were too few nurses or too many. There was a report produced last week about the state of the NHS. It deals with whether it is being looked after properly. We cannot discuss the issue fully within this debate because we have not had a Treasury minute. There has been no opportunity to debate it properly. The important issue of operating theatres will be arising shortly. We are giving consideration also to family practitioners and doctors. We have suddenly moved into this area.
I am aware of the continuing interest of the hon. Member for Norfolk, North in these matters and I am pleased that we are able to deal with them. That is largely because of the way in which the NAO has superseded the old Exchequer and Audit Department. The value of the reports that are produced will become more widely appreciated.
§ Mr. Harry Cohen (Leyton)
I appreciate that my right hon. Friend has moved on from fraud and corruption to value for money. I revert to fraud and corruption, however, because he has said that there are relatively few examples of it. It would seem that there are some spectacular rake-offs as a result of fraud and corruption, especially that which involves the Ministry of Defence. Some of the large defence contractors, or defence monopolies, have taken the taxpayer for a ride. Investigations appear not to be bearing fruit and, in effect, the taxpayer is not recovering his money. What is the PAC doing in this area?
§ Mr. Sheldon
I was dealing with fraud and corruption as a proportion of the work that we undertake. I shall be dealing with specific instances that arise in two of the reports among the five which have been singled out. My hon. Friend and the hon. Member for Norfolk, North are right to attribute to these matters the importance that they deserve.
The elimination of fraud and corruption must be our major task. After that, we shall have time to consider value for money, economy, efficiency and effectiveness, all of which are written into the National Audit Act 1983. Economy is simply a matter of ensuring that we are not paying any more for what we are getting than we need to pay. That is a straightforward undertaking with which the accountants can usefully deal. Efficiency is a little harder because sometimes it is worth paying a little more to have something a little better. It is a trade-off between extra efficiency and how much more might have to be paid for that. Effectiveness is more difficult. We must ask, "What do the Government intend?" We do not question policy, which is the major difference between our Committee and other departmental Select Committees. We take the policy for granted, even though many of us may disagree with certain aspects of it. We ask what the Government are doing to make the policy more effective. When we know that, we can compare results with expectations.
All that actually lies at the heart of the auditing function. Every time that a civil servant comes before the Committee, we want to know about the programme that he sets out before us—when it was initiated, how he quantified what he wanted to achieve, when it would be achieved, how much money it would cost and his arrangements to monitor month by month, or year by year, how effectively the programme operated. It is the 1201 comparison between expectation and achievement quantified. That is important. There have been some disastrous experiences of the failure to do that. The civil servants did not know what they wanted to achieve, they did not know when they had achieved it, they did not know the cost and they did not know whether the programme had ended. We must avoid those horrors if there is to be proper public accountability. We must know, with some precision, what is expected, how much it will cost, when it will be achieved and that proper monitoring arrangements have been installed. In fairness to Government Departments, they are now aware of that and it is relatively rare for those expectations not to be built into the programmes that we examine.
I must mention the Treasury Officer of Accounts, Mr. John Beastall, and his Northern Ireland counterpart, Peter Small, who work closely with us and are valuable contributors to our discussions. The accounting officers take our evidence sessions seriously and spend a great deal of time preparing for them. I am conscious of the amount of time that we take from those senior civil servants, who have many other activities to undertake. I know that when they are informed that we will take evidence, they spend a great deal of time—several days or even more—preparing for their appearance before us. The easiest thing in the world would be to browbeat those civil servants, as do some of the Congressional committees. However, that is not the way that we take evidence. Part of our major task is to ensure that we improve the administration of the way in which money is spent. We understand the problems of the accounting officers and I and my colleagues try to take them into account in our questioning.
I am not sure about the number of reports that will be published this Session and whether we will beat the previous record of 52 reports in the 1985–86 Session. Of course, it is not the number of reports that is so important. Indeed, we used to combine all reports into one big report. It was unwieldy and few people were interested in it. The way that we do things now—one report per subject—makes them more digestible. People then know what they are doing and can go about it rather more quickly than if they had to wait for an annual report.
§ Mr. John Garrett (Norwich, South)
My right hon. Friend knows that I greatly admire the functioning of the PAC under his chairmanship. In many ways, it has carried out the improvements and the changes that many of us have wanted for a long time. Today we are considering 38 reports, of which five have been selected for particular debate. The Committee often produces 50 reports in a year. Does my right hon. Friend agree that some of them are rather superficial? Would it not be far better to concentrate on, say, half the number in much more detail?
§ Mr. Sheldon
I fully understand my hon. Friend's point, as it is one that arises from time to time. Part of our job is to ensure that Departments expect supervision of their work. If there were only a limited number of reports, we would not get round many of the Departments. That is the way that the Canadian House of Commons operates. Some of its Members visited our Parliament two years ago and said that they were unhappy with the system and that their relationship with their Comptroller and Auditor General was little short of disastrous. Their relationship 1202 with the other Members of their House did not appear to be that good either. They came here to find out how we handled matters. There could be no greater tribute to our work than the fact that they returned two years later to examine our work in greater detail because they had been so impressed with the way that we operated. Their Committee produces fewer reports, which the various Departments do not take seriously because it could be a few years before the Committee dealt with those Departments again.
One of our great strengths—and this applies especially to the large Ministries such as the MOD—is that Departments know that we will come to them again and again on matters such as procurement and that we take a continuing interest in what they are doing. For example, if they tell us that they have dealt with certain problems, they know full well that the next time that they come before us they will be confronted with that statement and be held to account for it.
I grant that the Committee might be working far too hard, and for the benefit of those who work with me I should dearly like to find some way to limit the load. I fully understand both sides of the argument and we shall continue to keep these matters in mind.
It is likely that there will be a larger number of reports this year than in the record year of 1985–86. The National Audit Office is, rightly, planning a gradual increase in the number of value-for-money studies, and we welcome that. We want it to become active in many areas. It is probable that a number of those reports will not have the great depth that the Committee rightly requires. We have it in mind to ask certain questions and, if we receive fairly satisfactory answers, we will leave it at that and not necessarily produce a report on each occasion. The alternative would be to set up a sub-committee, but we are very much against that because we believe that all of us must have responsibility for the expenditure of public money and the examination of the way in which it is spent. We have always been against any division of responsibility within the Committee.
I must say a few words about the way that we review past actions. One of the features of the past year has been the large number of representations from inside and outside the House asking for examinations of all sorts of matters. Indeed, some have asked us to consider future matters, and I have to remind them that we essentially consider the past, monitoring whether money has been spent effectively, economically and efficiently. We are trying to learn lessons and to offer lessons to Departments in the expenditure of moneys. Of course some lessons are valuable, because they highlight some points that are worth examining. We discuss with the Comptroller and Auditor General how they might fit into his rolling programme. That is also an important development.
§ Mr. Toby Jessel (Twickenham)
On matters in which the Public Accounts Committee has taken an interest, will the right hon. Gentleman, on behalf of the Public Accounts Committee, accept my warmest congratulations on its excellent reports on Ministry of Defence schools of music? They were thorough, effective and crucial in the representations that were made to Her Majesty's Government on the survival of the royal military school at Kneller hall. The Public Accounts Committee's reports were extremely important and had a bearing on the result that was obtained. The Royal Military School of Music at 1203 Kneller hall was saved, as a result of which it continues to produce the finest military bands in the world, which are the envy of every other nation.
§ Mr. Sheldon
The hon. Gentleman has given the House part of the lesson that I was about to give. I might as well introduce it now. The interest of many hon. Members and of those outside alerts the Committee to certain matters that are worthy of further consideration. The hon. Gentleman's case is precisely within that definition. Because of his efforts, we realise—[An HON. MEMBER:There were others as well.] Yes, there were others as well.
Because of the efforts of the hon. Member for Twickenham (Mr. Jessel), we realised the full extent of the problems involved, and carried out a more detailed investigation than we might otherwise have undertaken. We found that the Ministry of Defence proposals and the way in which it carried out its examination were woefully inadequate. We were able to satisfy ourselves that alternative methods were better. The fact that it pleased the constituents of the hon. Member for Twickenham is a bonus for him, and it is a pleasure for us that we were able to deal with the matter effectively and sensibly.
As the activities of several Government Departments are hived off agencies will come into being. It becomes important to consider how they will be dealt with and who will appear in front of us. We must have before us the person who makes the final decision. We do not want to be fobbed off with seconds or, God forbid, thirds. We want in front of us the people who are to make crucial decisions. With agencies, it is a more complicated matter, because an agency might be a minor body in which the permanent secretary might make the major decision, or an agency's chief executive might make a final decision on a major spending matter. We content ourselves by saying that we must have the main person responsible. We have sent a note to the Treasury detailing our interest and concern and putting forward our recommendations.
I now refer to the Government's response to our various proposals and recommendations. We shall soon begin to quantify matters. The quantification of proposals and acceptances is not an exact science. For the record, I point out that the National Audit Office, which I asked to produce figures for me, said that, in 1987–88, out of 161 specific recommendations or findings, 153 were agreed by the various Government Departments involved. I suppose that that is a success rate of 95 per cent. But let us not make too much of it, because it depends more on the importance of the recommendations than on the numbers. However, it is a sign—no more than that—of the way in which our reports are treated and accepted, and we value that. An essential part of our task is to make sure that we not only get value for money and proper accountability but try to improve administration in the way that I mentioned.
I shall deal with one or two reports apart from the five that are set out on the Order Paper. I begin with the report on the monitoring and control of charities in England and Wales. We would not have had that kind of report, say, five years ago. The Committee considered that it was important because there is a clear Government responsibility dealing essentially with value for money. Nobody is questioning whether any certification work has gone adrift—for example, fraud or corruption within the Charity Commission.
1204 Charities are big business. There are more than 150,000 of all shapes and sizes. They spend over £10 billion a year —frankly, when I first saw that figure, I thought that there had been a mistake—and hold assets of more than £2.5 billion. They enjoy tax concessions and get support from public funds worth an extra £2.5 billion a year. Obviously, by their nature, they have a special place in the minds of the general public. It is crucial that charities be seen to be not only above fraud but perfect in their operation, or as near to perfect as we can get them. The Public Accounts Committee was disturbed that charities were not properly controlled and efficiently managed and that there were major gaps in the Charity Commission's control and monitoring systems. We found that the register of charities was seriously out of date, unreliable and ineffective, and that there was no computerisation of records. All that they had were brown folders and they were not undertaking their responsibilities. Paragraph 9 of our report states:All registered charities are required, under the Act or by the Commission, to submit annual accounts to the Commission. But the NAO found that this requirement was being widely ignored, with little attempt at enforcement by the Commission. And less than a third of the accounts received had been professionally audited.Paragraph 14 states that we found that an NAO
test examination indicated that the Commission examined only 4 per cent. of the limited number of accounts received from charities".Two thirds of charities' accounts were not submitted in the past five years. We found that administrative charges varied from 0.5 per cent. to 20 per cent. in top charities. Apart from the top 21 charities, some charities were charging 95 per cent. for administration. That is clearly fraud, unless something has gone wrong. One of the advantages of our report is that it stimulated many other people to investigate further. We discovered charities that really were rackets. People were going from door to door, saying that they were from a registered charity. It is the easiest thing in the world to become a registered charity. All that one must say is that one's objects are charitable, not whether what one is doing is charitable. That is an absurdity. There is no need to submit any accounts, because nothing happens. One can go from door to door, pick up money, and put it in one's pocket. That is shameful. There is now a new broom in the Charity Commission, and we wish him the very best.
Something could have been done. I can understand problems with staffing, a lack of money for computerisation, and a vast amount of work to do. Because charities could not do everything, it did not mean that they should do nothing. That was one of the saddest aspects that occurred to the Committee. There could have been a sample examination, for example, and there could have been an undertaking to publicise the charities that had not published their accounts. The Commission could have threatened to do that. There were many possibilities that fell between doing nothing and doing everything. That would have satisfied at least part of the criticism. The Committee was gravely concerned at the risk of fraud, abuse and maladministration. We considered that such organisations needed to be much more positive and purposeful.
Since we produced that report steps have been taken to tackle some of the problems, and we are happy to have prompted some action. Like many other bodies, when the Charity Commission knew that we were examining this area, it took steps to discover the true position and 1205 produced its own report. That happens frequently with the work of the Public Accounts Committee. One must not compare the position that we discover with the position as it should be, but with the position that might have existed had we not announced our intention to examine. The very announcement of that intention often prompts changes. My hon. Friend the Member for Norwich, South (Mr. Garrett) will be aware of that. I am delighted when bodies say to us, "Things are not as bad as they used to be", and I make no criticism of them, but I am aware that much of the progress is a direct result of the understanding that the Committee will take its examination further.
We are pleased that action is being taken, and pleased with the Treasury minute, which endorses the Committee's anxieties and fully accepts the need for revised priorities and firm action in the areas identified. The change in senior management in the Charity Commission and the fresh impetus in its work appear to be leading to continuing improvement. We look forward to those aims being vigorously pursued.
§ Mr. Ian Gow (Eastbourne)
Is this the first occasion on which the Public Accounts Committee has investigated the Charity Commission?
§ Mr. Sheldon
I know of no previous investigation. The Home Office, which had responsibility for the Charity Commission, never regarded it as having the importance that charities should have. The great thing about our country is the way in which the charitable impulse is readily catered for. We need only a disaster or information about something terrible happening for a great deal of money to come forth, even from very limited pockets. That is a great tribute to the response of the British people, but we must ensure that the money goes to the right people to carry out the right task.
§ Mr. Tim Smith (Beaconsfield)
I am sure that the right hon. Gentleman is right when he says that with such large sums—about £10,000 million a year—the potential for abuse, and indeed for a major scandal, is great, but does he agree that, although the Committee was right to criticise the Charity Commission, the fact is that the law under which it operates is wholly unsatisfactory? For example, there is no requirement for a charity to produce audited accounts, so there is no external check on its finances, and the Charity Commission itself is under-resourced. Might it not be a suitable candidate to become an executive agency?
§ Mr. Sheldon
The hon. Gentleman is right to say that there is a fundamental need for a change in the law. The Government accept that, but the problem now is one of time. I agree that audited accounts must be produced, or an alternative found for smaller charities, but whatever happens the legislation will take some time, and in the interim I am anxious that people's confidence in the value and work of charities should not be diminished. The Committee was conscious of the need to retain respect for charities, most of which are perfectly well run. I did not want there to be a gap between what was wrong in the past and what will be as near right as one can get it in the future. We have handled the matter reasonably well, and it is for the Government to produce their proposals. We hope that they will not be too long delayed.
1206 The Committee's 20th report related to fraudulent expenses claimed in the Ministry of Defence, mainly fraudulent travelling, and subsistence claims made by its ordnance searchers staff. The amounts of money were difficult to determine. We identified more than £203,000, but the true sum may have been millions of pounds. The important matter was not that the money was obtained fraudulently by people who regularly went home every evening but still claimed subsistence in hotels and other accommodation, but that the claims were countersigned by military personnel.
It goes without saying that the Public Accounts Committee is always greatly concerned about evidence of fraud by public servants who handle public money. This was a serious and shocking case, and there was evidence of long-established local malpractices and management connivance. But, following police inquiries, the Director of Public Prosecutions advised that criminal prosecutions could not be sustained. Although the Ministry of Defence considered disciplinary action, none was taken and nothing has been recovered. The Public Accounts Committee found that astonishing. It regarded as extremely disturbing the scale of the fraud, the blatant control failures and the weak disciplinary approach and delays of the Ministry of Defence. What disturbed us most was that military personnel who were responsible for civilian employees were conniving in the operation. We were sad that the vigorous action that was vital was not taken, and the public standards which rest on the truthfulness and integrity of supervisors were found to be sadly lacking.
In the Treasury minute, the Ministry of Defence assured the Committee that serious fraud cases should normally be followed by prosecution or disciplinary action, and that the effort needed was not sufficient reason for not pursuing such action. It is easy to say that it would cost more to get the money back than the amount of money at stake, but that can never be the argument when one is dealing with public money. With private money, we may decide individually that it is not worth throwing good money after bad. But that argument cannot easily be sustained in the public sector. Taxpayers' money should be more rigorously controlled than our private money, about which we may decide as we think fit.
We are pleased that the Treasury minute accepts that such cases require prompt, vigorous action and that it has taken decisions to improve internal control. That emphasises what we considered to be the deplorable handling of the cases that we examined. I hope that the Financial Secretary will be able to say whether there has been any success in recovering money and what has been done to give all Departments guidance on disciplinary action in serious fraud cases.
The 26th report deals with community care developments. We noted the Government policy that elderly, mentally handicapped and mentally ill people should, as far as possible, be cared for in their own homes or in the local community. Most of the 8 million elderly, mentally handicapped or mentally ill people are cared for in their own homes, but 220,000 people live in residential homes and 155,000 in National Health Service accommodation. The implementation of a policy of transferring from hospital into the care of local services run by the NHS and the local authorities demands a certain relationship between the two bodies, but we found that relationship to be inadequate.
1207 We examined the success of the transition from hospital into community care and placing people in their own environment. We found a complex administrative framework involving local authorities, NHS hospitals and family practitioner services, and the danger that patients could be transferred to the community without appropriate services being in place. In one case, people were being discharged from hospital, sent to their homes, sent back to hospital in an ambulance and then sent back home. Joint planning and finance schemes were not as effective as they should be.
The funding mechanisms needed to be improved to provide practical ways of moving people to the community without penalising those who wish or need to stay in hospitals. The Committee also examined the rapid growth of residential care for the elderly, many of whom have been financed by supplementary benefits, which amounted to £500 million in 1986. That support was provided irrespective of any assessment of the need of the claimant for that sort of care. Almost a quarter of those receiving benefits could have stayed in their own homes had community support services been available. What is more, it could have been done more cheaply and more in line with the claimants' requirements and wishes.
We were concerned that those in residential homes might not be receiving good value for the money paid to the proprietors, and that the registration and inspection of homes were inadequate. We were told that, if value for money was not being obtained, that would prompt the elderly to go elsewhere. I shall read one question put to the accounting officer—at 1786 in the 26th report—by my hon. Friend the Member for Birmingham, Hodge Hill (Mr Davis). He asked:Have you done any comparisons on the basis of value for money as between private residential homes"?He then went on to ask:you say you do not bother about value for money because you leave it to the customer, the person who is receiving supplementary benefit … Do you think that is realistic?Mr. Partridge replied:Yes, it is realistic.My hon. Friend asked further:
Have you ever heard of the fears of elderly people of being victimised if they complain about what is going on in a private residential home"?Therefore, the claim that one can receive value for money by asking elderly people to make their protests and to take their custom elsewhere, if they are not satisfied, was not only unrealistic, but it disturbed us that this was the view held by the official concerned. We have all been to these homes and know that these people would not take their custom elsewhere. Many of them dare not make a squeak of protest. The House may recall that this report led to a number of further examinations, one of which showed what happened in some of those homes. That added to the force of our argument that these homes need to be looked at more fully and more regularly. We said that the registration and inspection of homes was inadequate. I am pleased with the response that we have received. The Treasury minute promises further consideration of the need for care assessment, which is essential to achieve not only the right care for the elderly, but, of course, value for money for the taxpayer.
The Treasury minute promised an increase in the minimum number of inspections from one to two a year, 1208 and that the question of the reasonableness of charges would be researched further. That would seem essential to ensure proper value for money.
Our report on this was issued before Sir Roy Griffiths' report, "Community care: Agenda for Action", was published. The Griffiths report recognised the need for fundamental changes in the funding and administration of community care. The recommendations of that report are still under consideration by the Government. However, whatever changes are made, they need to ensure that individuals receive adequate and appropriate forms of care that also provide good value for money, which was a point made by the Public Accounts Committee.
The 31st report, "Naval Warship and Weapons Procurement", followed up earlier Public Accounts Committee reports on the Ministry of Defence's management of torpedo programme and design and procurement of warships and management of Trident programmes. Those are substantial expenditure programmes. It is bona fide because we must have a Ministry of Defence examination of at least one of its reports in our regular annual reviews, because of the amount of money involved as well as the lessons that need to be learned.
The torpedo expenditure programme is more than £5 billion and the programme for Trident is more than £9 billion. There is a long history of poor value for money in defence procurement. We now know that up to half of defence expenditure on procurement was not anticipated at the time that these defence contracts were considered.
It is important to look first at the question of torpedoes, because the Public Accounts Committee has lived with them for more than 20 years. If one were to start from scratch and consider whether it was worth spending £5 billion on a torpedo programme, or whether it would be better to get them off the shelf from America or somewhere else, few of us would have any doubt. We have had extremely poor value for money. Paying £5 billion for a weapons system would be appropriate if it were a weapons system that would determine many conflicts at sea or elsewhere, but torpedoes do not come into that category. They are not so crucial as to require that amount of money when they can be obtained elsewhere so much more cheaply.
Perhaps I may start with the way in which the Ministry of Defence has been operating, because we acknowledge the Department's efforts in response to earlier Public Accounts Committee criticisms. We know that the MOD is pursuing possibilities for introducing competition for the first time in main torpedo production contracts in the light of Marconi's previous monopoly position. We were encouraged by the way that Mr. Peter Levene is studying those contracts and trying to introduce competition wherever possible. Clearly the proof of the pudding will be in the eating, and we shall not be eating very much for a few years yet, but the process, the examination and the instructions that he has given have been satisfactory. The Committee would like to see, especialy in those large elements of expenditure on weapons procurement where one cannot get competition—for example, for a submarine —competition in the subcontracts that are placed, which is important. Further to that, Peter Levene has assured us that he is encouraging those firms that have not previously considered themselves as defence contractors to enter the field. The difficulty of entering the field is obvious to 1209 anyone in industry, but given the right encouragement this can be done, and that will introduce competition in a way that would not be possible otherwise.
We are pleased, too, with the way in which Mr. Peter Levene is trying to eliminate gold plating. That is the system whereby one waits for the very latest update and then tries to incorporate that into one's weapons system, so that one has the very last word. The importance of Mr. Levene's work is that he sets a date so that one will not get something which is right up to the minute, but something that will work in the time scale required. It is no use having a weapon that is never ready because it is always being updated. Almost equally important is the fact that, once one starts adding to and altering specifications, control of costs is lost. That is a lesson that we have had again and again. We find that the way in which Mr. Levene is tackling this is satisfactory, and we hope that it will lead to results in the next few years.
We felt that it was important for the Ministry of Defence to have a strategy for reconciling the conflict between the objectives of securing competition and preserving a viable warship building industry, and for it to give warship builders sufficient information for them to plan efficiently.
We welcomed evidence that financial control and project management of the main programme for Trident appeared to be operating reasonably, and that the programme costs had been reduced overall in real terms. We noted the constraints on competition in Trident work, particularly submarine production, but we were concerned at the lack of control on the size and cost of the atomic weapons establishment programme, which is not charged to the main Trident programme, although it is obviously vital to its successful completion. The atomic weapons establishment programme increased from nine projects, valued at about £134 million, in 1980 to 32 projects in 1986 with an estimated cost of £1 billion plus on a worst cost basis. Cost increases and delays illustrate the dangers of departing from accepted control procedures, which I mentioned earlier.
The MOD should have ensured from the beginning that arrangements at the atomic weapons establishment were as good as those for the main programme and that adequate co-ordination existed between the two programmes. The Committee was worried that the resulting reliance on the use of existing aging facilities at the Atomic Weapons Establishment and, taking account there of staff shortages, identified warhead production as a major risk to the Trident programme.
On all that we have received Treasury minute 501. On torpedoes and warships, it generally welcomed and accepted our comments. On Trident, it said that competition was sought where feasible and competitive subcontracts would be secured for submarines; that the works programme had been brought under effective control; that old atomic weapons establishment services can be used until new ones are ready, and that staffing will be kept under constant review. Obviously, a programme as big as that will be kept under constant review by the PAC. We would be failing in our duty if we did not go at least that far.
Let me deal now with the fifth of the reports that have been singled out for special mention—the review of 1210 operations of the Land Registry. The main point is that the Land Registry's business lies at the heart of land and property transactions. Therefore, the speed and efficiency of its operations are important to almost everybody. It is not so much its work as the impact that that has on other people's transactions and operations that is important. It really needs to be efficient, like the Companies Registry and other such bodies, not so much in its own right but because of its effect upon the rest of business and other communities.
On the face of it, the registry is a profitable organisation, spending £90 million a year and collecting fees of £140 million. That is a nice business to have. What did it do? Under Treasury rules, it was prevented from using that income to meet a major upsurge in demand. As a result, there was a large backlog of 400,000 unprocessed cases and long delays. It had 8,000 staff but its productivity had fallen well below 1982–83 levels. It is hard to think of any other area of clerical activity where efficiency would be reduced as much as that. There were continuing staff shortages and the registry was trying to regain lost ground from 1982–83 and computerisation had been delayed. Productivity was less than it was six years ago. I know that it had some problems then, but this was, after all, a number of years later. Despite that poor service, customers had been significantly overcharged in recent years and the fees needed to be reduced. Fairer and more flexible fee-fixing arrangements were required.
Such a monopoly, which has its effect on the community, is a serious matter and we recommended improvements in those and other areas. The Committee emphasised the importance of strengthening the registry's planning and management to speed up its response to increasing demand. We recommended a review of its management structure, organisation and location. There is no reason why it should be where it is. It could be in any part of the country. Speaking personally, not as Chairman of the Committee, may I say that it is sad that we have far too often accepted that congestion in the south-east means that people must be paid a bit more. That makes the area more attractive, more people come and they need to be paid a bit more again. It is a vicious circle that the Government and others should be able to break.
The Treasury minute was published only a few days ago. It accepted in virtually all respects the concerns expressed by the Committee and the recommendations made. Funding has been changed from 1 April 1988 to allow the registry greater freedom to use its full resources to meet changing work loads. Staff numbers are being increased and training improved. Output is being improved to cut the backlog as soon as possible. Higher standards of productivity, service and cost-effectiveness are being built into forward plans and computerisation is now moving forward. Fee arrangements are being closely watched and the need for fresh legislation is being pursued. There is a firm commitment to strengthening planning and management to meet increasing responsibilities and the registry is now being considered for agency status under the Next Steps initiative. We hope that that will lead to improved work by the registry. We shall wait to see and, like all the examinations that we undertake, we shall keep it under review.
I should briefly mention a couple of other aspects. In reply to the hon. Member for Norfolk, North, I mentioned the internal audit in the NHS. Also important is internal audit in Government Departments. The need for internal 1211 audit is becoming greater. It is not just certification that is important; it should be undertaken for value for money. It should be undertaken—not every firm does it—to ensure that a Department is as effective and efficient as it should be. One way of doing that is not to wait for the National Audit Office to produce a report every now and again, but for the firm to undertake the work itself. If Departments do that, when the National Audit Office comes, a useful relationship can develop between the Department concerned, the National Audit Office and the PAC. It should be able to ensure that adequate quality and quantity of resources will be provided and proper aims met.
Then we dealt with the Export Credits Guarantee Department. That has a number of uncertain debts and obligations because it has not carried out what we felt was the proper way of applying the Bank of England guidelines to the money that was lent overseas. Now there is an indeterminate amount of debt of doubtful quality. The sums of money can be substantial and we found that it had failed to meet one particularly important requirement.
A report that has only just been published, which is not strictly the subject of today's debate, relates to the royal ordnance factories. That will be covered in a subsequent debate. I would only briefly point out that the need for Government Departments to value their properties properly and effectively is of great importance. We need to ensure that whenever public money is accounted for it is done properly and that we have proper valuations. We may be going further into that in other areas, but the royal ordnance factories report stands on its own. Because there has been confusion on this, I would just point out that the royal ordnance factories were the subject of a report that was produced before the recent outcry and our further examination was a consequence of that.
Those are the matters that we have discussed and deliberated upon at great length. I am happy to say that we had a good working relationship within the Committee and with people outside. It is one of the great pleasures that we have such a happy relationship. It means that the effectiveness of our work can be that much more precise, accurate and valuable, and long may it remain so.
§ Sir Michael Shaw (Scarborough)
I am glad to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who properly covered the wide area dictated by the motion. The Public Accounts Committee has done a lot of work and made a number of reports. The right hon. Gentleman has dealt with those which are of particular significance. One must take cognisance of the fact that the debated covers a year's work. Some of the reports are more than a year old and some of the Treasury responses are already nine months old.
We used to be very upset that our reports were not debated more quickly by the House, but I have since changed my view. One must accept the facts as they are and as they are developing within the Committee. As the right Member for Ashton-under-Lyne mentioned, in the old days the Chairman did virtually everything and ordinary Committee members had very little to do. I am glad to say that under the right hon. Gentleman's leadership that attitude has changed and all are brought fully into the discussions and the examination of witnesses. Indeed, it is hard to conceive of our working much more 1212 efficiently than we do. That is largely due to the right hon. Gentleman's leadership and I take this opportunity to thank him on behalf of the Committee for all that he has done.
Another change has been that the Committee no longer meets in secret. Now that we meet in public, the impact of our activities is far more immediate. That must be a good thing. The reports of the National Audit Office attract a certain amount of publicity and reaction, which sets the ball rolling. We then cross-examine witnesses and if we deem it necessary—we do not always do so—we prepare a report of our own which, in its turn, has an effect on the public and certainly on the Department concerned. The effectiveness of our work is thus far more clearly centred on the work that we do upstairs. It is significant that, as we discuss these reports, we already know the reactions not just of the Treasury but of the Departments concerned. A great deal has happened in relation to those reports before they are debated in the Chamber. This debate is therefore much more of a tour d'horizon, seeing how the system is working and picking up one or two special points in the year's work. Sometimes certain trends also appear which need picking out and emphasising.
Now that our meetings are nearly always open—not quite always, as some matters have to be discussed in private—there is the danger that members of the Committee may be tempted by the desire for publicity which, I am afraid, is never very far from the minds of Members of Parliament. I believe, however, that members of the Public Accounts Committee can take credit for the fact that we put that temptation aside and genuinely try to get on with the business of examination rather than headline-seeking or party politics. So far, I believe that we have been successful in that respect—here, again, our Chairman has given a very good lead—and long may that continue, because if ever we cease to abide by that precept the value of our Committee will largely disappear.
A major change this year has been the departure of Sir Gordon Downey. We wish him well in his future activities. He has played a notable part in developing the National Audit Office in its new form. I also join the right hon. Member for Ashton-under-Lyne in welcoming Mr. Bourn and hoping that relationships will be equally fruitful in the future.
§ Mr. Tim Smith
Does my hon. Friend agree that publicity for the Committee's work and reports is a great help? If we can expose some of the maladministration and inefficiencies of Government, that must be a good thing. And will it not be even better when the television cameras come to the Public Accounts Committee and the public can see for themselves the complacency of the accounting officers and the "Yes Minister" answers that we sometimes receive?
§ Sir Michael Shaw
I entirely agree. That is why I welcome the fact that our meetings are open these days. If they receive the publicity that they so often merit, that is certainly good, but if members of the Committee began attending meetings bent on seeking publicity for themselves or sensational headlines that would be a very bad thing. Frankly, after a number of years in this place, I am thankful that certain Members were never appointed to the Public Accounts Committee.
I should like to deal with certain specific reports, beginning with the seventh report. That report deals with 1213 the BBC external services, in which I believe strongly. They do an extremely good job. One has only to travel abroad to realise their importance. I draw attention particularly to paragraphs 29 and 31. Paragraph 29 states:we cannot emphasise too strongly that the BBC External Services should, in common with other second-tier bodies funded by grant-in-aid, be directly accountable to Parliament through the audit of the C & AG".I stress that point because the BBC is not examinable by the National Audit Office due to the terms of its charter and the way in which it draws its money from licence fees rather than from the Government. The external services, however, draw their money from the Government and it is right that they should be examined by the CAG and the NAO. To examine the external services accounts, we must have all the information and not just part of it. It was noticeable that in the past the BBC had refused access for the Exchequer and Audit Department, as it then was, but happily, according to the Treasury minute, there has now been agreement.
I emphasise this as a general principle as well as a specific one. Whether one is considering the BBC external services as a separate department within the BBC or a particular business function run by a local authority, if there is not access to all the information it is all too tempting to feed into a department being paid for by someone else overheads which should not exist in that department. It was therefore absolutely right that the CAG should insist on looking at all the facts and figures. Almost every year we have an argument with the Treasury and others about how much money is to be spent on the BBC external services. I wish to ensure that every penny that possibly can be used goes towards putting the message across to people abroad in the way that has been done in the past. There should never be any danger of any of that money being used to pay for overheads which, strictly speaking, should not be suffered by that department.
The 10th report deals with internal audit in central Government. The right hon. Member for Ashton-under-Lyne has already dealt with this and we have examined it in considerable detail over the years. I am glad to say that over the years we have noticed—whether as a result of our nagging or for other reasons—a great improvement in the internal audit service. In the past, it was regarded as just a temporary function of civil servants as they moved through the department and up to higher things, and I thought that that was a most unsatisfactory way to proceed. They were birds of passage, passing their time as quickly and as best they could, and then moving on to other things, and they had no expertise in internal audit, despite the importance of their having that expertise.
Things are now much better. The whole subject of internal auditing is taken much more seriously. The internal audit should be a vital management tool in the hands of the finance officer. I hope that this fact has been realised. It is significant that now, according to evidence given to us, the ideal period for somebody to work in the internal audit department is five years, and in that five years it is expected that full training will be given. I expressed doubts about whether all the high-fliers regarded this as seriously as they should, and suggested that they might try to avoid it as not being their cup of tea. I was assured that it was taken seriously and the finance officer, Sir Peter Middleton, whom I was questioning, said 1214 that he would use his power to the utmost to make sure that my doubts were unfounded. On page seven, at paragraph 2185, he said:
You will see the statistics for people being promoted who have done internal audit improving quite noticeably if you give it another five years. There are two reasons for this: one is that we have been promoting a lot of people within internal audit as we have been improving the grading and secondly, they have not been out long enough to have been promoted in many cases.That is in interesting contrast to the earlier evidence that we took. I hope that it is true. If so, there will have to be a different atmosphere within the Civil Service because there will be more emphasis on those who enter it, and those who proceed, expecting to be makers of policy. There will be fewer of them, and more people learning the skills of management because in many cases Departments are there to manage rather than to make policies. I know that the function of Departments is neither one thing completely nor the other completely, but more of a mix, and it may be that, as a result of what is happening, we shall get the right mix in the end.
The 11th report deals with the internal audit of the National Health Service. We did not spend too long on taking evidence, but it is an important report, and I have thought about it a great deal since we took our evidence. I asked questions when we took that evidence. The internal auditors at district level are appointed at district level and they work entirely within the district level. We have regions and districts and I know that there are arguments about whether that is the right set-up and whether the regions should exist. I am not arguing about that, because it is a matter of policy, but if we have regions and regional auditors, it is worth looking at whether the regional internal audit system should be aligned all the way down the line with the district audit system. That should not stop the district auditors having close contact at district level with the chairman and director, but there should be a much more direct contact with the regional internal auditor. That would be of benefit to everyone, and would ensure that everything is done as it should be. That is just a thought and a reflection arising from our questioning and study of the NHS internal audit.
The 26th report deals with the community care developments. The right hon. Member for Ashton-under-Lyne dealt with that in some detail, and rightly so, because it is one of our most important reports. I shall not go over the details again, save to say that many people are involved in community care and their number is growing rapidly. That means that we have to get our treatment of them right, and that the money that we spend on their care must be spent to the best advantage. It is not for us in the Public Accounts Committee to look at the policy, but it is our duty to see that the money is spent in the best way.
As a result of talking to various people, I have become worried about whether the resources and the planning are adequate to the growing needs of community care. In particular, I am worried that the responsibility for community care lies with no one authority. It is a joint responsibility, and I hope that the Government will look as carefully as they can at the way in which joint responsibilities are carried out. All too often, people tend to say, "Well, it is the other chap's duty to look after this or that." I hope that the final responsibility is clearly defined in every case.
1215 During their life, those in care may move from Government responsibility to local authority responsibility, and back to Government responsibility. I hope that those lines, and the responsibility, are clear. I also hope that when people are moved back into their homes or outside institutions full plans are made for their safe arrival in their new homes and that there are adequate safeguards to ensure that they are looked after. I am by no means convinced that in certain cases I have seen that is always so.
I am convinced that the work that we do is essential to the smooth running of Government. There is a job to be done and it is important that those of us who decide to join the Public Accounts Committee do not decide to do so just for a month or two, or even a year or two. If we join the Committee we must be prepared not only to put in the time to study reports, but to put in a number of years' service. The value of seeing the same pattern repeating itself is inestimable because of the influence that we can bring to bear on the Departments whose staff we interview. This is an important matter. We have seen it all before, and probably long before any of the witnesses started in that Department. That puts us at a great advantage—an advantage for the Government and for the country as a whole.
§ Mr. D. N. Campbell-Savours (Workington)
When the hon. Member for Scarborough (Sir M. Shaw) said that we had seen it all before, I was reminded of the fact that he is the most senior member of our Committee, with many years of responsibility for examining these matters. I listened intently to his contribution; if he saw me discussing something with my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) that was because we were talking about his reference to arrangements for audit at district, as opposed to regional, health authority level. Perhaps the hon. Member for Scarborough would care to raise the interlocking arrangement he mentioned in future proceedings on the matter.
Tonight I want to discuss other reports that are not on the Order Paper but which we are in a position to mention. I do not expect authoritative answers from the Minister today, but perhaps he will write to me about some of these issues in the future. I particularly want to discuss something that I have frequently spoken about over the years, drawing on a little new material, as is my wont each time that I discuss it.
I am concerned about defence contractors and procurement irregularities and fraud. In the appendix to our 35th report, we set out several cases of fraud against the Ministry of Defence which were allegedly perpetrated by defence contractors. Having considered all those cases together, I shall give the House my overview of them. The first case, which concerned the Aish company, resulted in £421,000 being refunded to the MOD; yet no prosecution was brought, for reasons of insufficient evidence.
The third case, which involved Thorn-EMI, resulted in £69,000 being refunded to the MOD, and again no prosecution was brought, as a result of a decision of the Director of Public Prosecutions that there was insufficient evidence. Case number 4 involved Rolls-Royce, and case number 5, involving Marconi, is now the subject of investigation by the DPP's fraud investigation group. In 1216 the sixth case, the name of the company is not identified, but as in the seventh, eighth, ninth, 10th, 11th, 12th, 13th and 14th cases, it was concluded that there was insufficient evidence of fraud.
The DPP refused to bring action in all those cases. Cases 16 to 24 also resulted in no action being brought by the DPP—but he instituted proceedings in two cases, which, interestingly, involved only companies that had gone into liquidation. Another case was brought against an official who had accepted a couple of electric kettles and a toaster. The prosecution was brought for minimal offences.
An examination of the prosecution policy of the DPP shows that in cases of major defence fraud no prosecutions ever seem to be brought. In case number 16,
the MOD police investigation in 1986 revealed a prima facie case against the firm and/or its directors on fraud based charges involving about £40,000. However, the Crown Prosecutor decided that the evidence was not sufficient to justify a criminal prosecution.I brought another case that made me angry to the Public Accounts Committee some years ago—that of Dowty Rotol. In that case, almost £500,000 was handed back to the MOD. There was clear evidence of fraud; I interviewed the chap who was involved in it through having been asked by his company to participate in it. Today he is unemployed. He was one of my five whistle blowers. He cannot find a job and has never been compensated. I want to know why no prosecution was brought in that case.
My preliminary view about defence contractors and fraud is that the DPP has decided that when it might be said that the reputation of a company could be damaged in overseas markets the DPP will not bring proceedings for fraud in a British court of law whenever possible. The list of cases I have mentioned shows that all the companies operating in export markets which were involved in fraud were not the subject of legal action by the DPP.
I quote from the case of Dowty Rotol:It was referred to the Director of Public Prosecutions who ruled, nine months later"—following a great number of parliamentary questions from me—that it was not in the public interest to institute criminal proceedings.What precious wordsnot in the public interest".In these cases, they mean that, when a defence contractor has markets overseas and its reputation may be damaged, no prosecution for fraud will be brought against it, even if there is prima facie evidence of major fraud having been committed.
Let us compare this with what happens in the United States of America. We suggested in our report that the Ministry of Defence should consider examining the hotline system in America—a system that enables people to ring in with information about Government Departments—especially the Department of Defence—to alert the American equivalent of our National Audit Office to fraud in the places in which they work. I quote from a General Accounting Office report that I picked up in Washington about three weeks ago. Referring to the hotline, it says:
In its nine years of existence the GAO toll-free fraud hotline has received over 94,000 calls, of which 13,992 have warranted further review. Seventy per cent. of the latter were received from anonymous sources. Some of these were from Federal employees. Altogether calls from Federal employees 1217 totalled 26.2 per cent. and the majority of cases were reported to have taken place in California, with Washington DC coming in second place"—that is, in the administrative head state of the United States.
It is worth considering what all this fraud reporting has meant. Here I am using another document produced by the GAO in America, a report entitled "Defence Procurement Fraud: Justice's Overall Management can be Enhanced". The Americans have set up a system called the FACT system. It provides an overview of all fraud inquiries and investigations and legal proceedings against defence contractors. The problem with the system is that it does not collect all the information. The report questions its ability to attract all the information that is available about prosecutions of American defence contractors:
For the period October 1 1983 through to May 31 1987 the FACT system showed that Justice received 680 defence procurement and DOD-related fraud referrals involving 1,184 subjects for bribery of Government officials, conflicts of interest, anti-trust violations and procurement fraud. Of the 680 referrals 599 were sent to the US Attorney offices for action, 75 to the criminal division, six to another Justice headquarters litigation division. As of September 1987 211 referrals have been accepted, 183 referrals declined and 286 referrals were pending action. As of January 1988 the FACT system showed that Justice components obtained indictments on 180 subjects, of which 113 were convicted, 5 were acquitted and 62 are pending final court action.I read this into the record to point out that they mean business in America. They bring actions in the courts; they do not sit down and work out whether a particular defence contractor's reputation might be damaged in foreign markets. If the law has been breached and a way can be found of prosecuting, the Americans prosecute—they do not dither like the DPP in this country.
I shall now deal with the question of whistle blowers who ring in on the hot line. Some are identified and they are in a particularly difficult position. We have had a number of whistle blowers in this country. Burgess Cooper from Dowty Rotol has been unemployed since blowing the whistle and may never find employment again. Other whistle blowers have been Don Pitman of Thorn-EMI and Jim Smith of Aish and Company. We now have Mr. Thrower in Preston, the man who gave information to me and to members of the Ministry of Defence police about allegations of fraud in Marconi.
It is interesting to examine the pressures that are exerted on people who have decided to be whistle blowers unless the state steps in to give them some form of protection. Don Soeken, an American psychologist, has done research on whistle blowers. He examined 233 whistle blowers in the United States of America and found that 90 per cent. of them had lost their jobs or been demoted, 27 per cent. faced law suits, 26 per cent. faced psychiatric and medical referral, 25 per cent. admitted to alcohol abuse, 17 per cent. lost their homes, 15 per cent. were divorced during the aftermath, 10 per cent. attempted suicide and 8 per cent. went bankrupt. The pressure on whistle blowers is extensive.
In the United States of America, an organisation called the Government Accountability Project has been set up to help whistle blowers. We do not have such an organisation here, although we need one. Whistle blowers are crucial to the Ministry of Defence in establishing what is going on in defence contractor companies.
1218 That brings me back to the report of defence procurement irregularities. If the Committee is to do its job properly, we need to be assured that we have the resources and procedures to ensure that information about defence contractors which are involved in fraudulent activities is made available to the people who can either prosecute or bring rapid action. Unfortunately, I have no confidence in the current arrangements. I have confidence in the new arrangements which Mr. Levene has introduced on the general question of defence procurement and in the substantial training that is carried on in his department.
However, if the Director of Public Prosecutions repeatedly fails to bring action against fraudulent defence contractors, the morale of those who are responsible for investigating those matters in the Ministry of Defence police and in Mr. Levene's own department will drop and those people will lose confidence. They rely on the Director of Public Prosecutions to bring legal actions, but he has failed in his public duty by bringing so few actions. I hope that every pressure will be brought to bear on him to review that position.
I want to deal now with the 33rd report and particularly with the evidence that we took from Her Majesty's Customs and Excise about VAT collection and fraud. The hon. Member for Scarborough referred to publicity. When I raised the matter, considerable publicity surrounded my allegation—and many of my colleagues may not have believed what I was saying. It subsequently emerged that the allegation was true.
The appendix to the report states:Offences are normally investigated for criminal proceedings when one or more of the following conditions apply: the evasion of at least £75,000".I had uncovered the fact that the policy in operation was that, if someone was involved in a VAT fraud for a sum of less than £75,000, the chances were that he would not be prosecuted and a deal would be done behind closed doors whereby the money would be repaid. I understand that that system is called compounding. It is defined in annex A:
Compounding is one of a range of sanctions available to the Commissioners of Customs and Excise. It is a process whereby as an alternative to taking legal proceedings for an offence under the Customs and Excise Acts, they may offer the alleged offender the option of being prosecuted or settling out of court.The people concerned are invariably respected in their local communities. They will want to do a deal with the Revenue or with Customs and Excise because they do not want their names to appear in the newspapers in connection with a prosecution. However, they are the very people we should be prosecuting. I know that such prosecutions will cost a lot of money, but it will be a rapidly reducing sum, because the day that Customs and Excise announces that it intends to start prosecuting people for much smaller amounts of VAT fraud, many of the people involved in such activities will quickly pull their socks up because they will be frightened by the prospect of being mentioned in the local newspapers in communities in which they may be church wardens or chairmen of Rotary clubs.
The Government should look carefully at the principle of compounding and be a little more liberal in their attitude to prosecution. The Government's talk about the resources not being available is not the issue. We should frighten small VAT fraudsters into cleaning up their act by making it clear that we intend to prosecute. If the 1219 Government do so, they will quickly find that there is a rapid reduction in the number of people and small firms involved in VAT fraud.
It is invariably small firms that are involved. Large firms find it hard to cheat in that area because employees often want to break ranks. Such frauds often take place in small companies in which the chap who does the books is the proprietor or has some special relationship with the proprietor. We should be far more rigorous in our prosecution policy.
I turn now to our 22nd report. Our introductory paragraph states that that reportconcerns the arrangements for the employment of works consultants by government departments and health authorities where the PSAhas been the biggest spender. Our report expressed concern about the arrangements for hiring such consultants. We were not convinced that competitive tendering had been the order of the day in all cases. However, we stated:
We welcome the very recent reduction in the PSA's competitive tendering threshold to projects valued at more than £1 million. We acknowledge that it may not be cost-effective for PSA to abolish thresholds completely.The whole question of consultants has come up in a number of reports in the past 12 months. For example, allegations were made, in which I played a part, about irregularity in the award of contracts for docklands development.
Development corporations are another area that we should consider. The PAC may well end up doing a full-scale inquiry at some time. All I am doing now is alerting those people who might be considering such matters to the fact that the Committee will inevitably have to consider development corporations. I make particular reference to the Milton Keynes development corporation. We all know what has happened in Milton Keynes. A development corporation was set up—I believe by a Labour Government—and a lot of public money was spent. Although I do not agree, I understand that the Government wanted to switch emphasis from development by a public sector organisation to development by the private sector. Although I argue against that, I accept it as the Government's ideological position.
When development corporations are wound up—the Milton Keynes development corporation will be phased out by 1992—a special responsibility is placed on the people who are responsible for that winding down to ensure that work is given out properly and fairly. One must ensure that, once work is awarded to the private sector, competition prevails and everyone has equal access to the cake. I am not convinced that that is the case in Milton Keynes. I am told that there, legal services have been given to a local firm of solicitors; that a landscaping contract has been awarded to a firm called Country Landscaping Design; that engineering contracts have been given to a company named Pell Frishman; that accountancy services are being provided by Touche Ross; that a national firm of estate agents is undertaking the strategic planning services; and that architectural services have been awarded to a firm called Planning Design and Development Limited.
Are the people who awarded those contracts absolutely sure that if, at some stage, the PAC examines the way in which they were awarded, and the way in which that work was tendered for, if it was, it will be satisfied that they are above suspicion? If not, let the people concerned get their 1220 house in order now. I give them advance warning that, in the event that an opportunity arises, I shall question them on those matters in detail.
Consideration should also be given to what will happen in 1992. I return to the subject of the Royal Ordnance factory land scandal, for want of a better description. I am told that, when Milton Keynes development corporation is wound up in 1992, a large acreage of land will be available for development. Some people put a value of £500 million on that land today. Let them know in Milton Keynes that that value is placed on it by someone here in Westminster. If that sum is not realised when the land is sold, uprated to 1992 values, then I shall be asking questions. We shall want to know that, in every way, that land, if its disposal is necessary, has gone to the private sector at its full market value.
I turn to the 18th report of the Committee, "Regulation of Heavy Lorries". When taking evidence, I sensed—as I believe did the majority of Committee members—that the Department of Transport was dragging its heels over the arrangements for weighbridges at British ports. Yet we know that in Kent there has been for a number of years a major argument that overloaded foreign lorries often enter the United Kingdom but manage to reach their destinations without being stopped by the police. Throughout the report, the PAC comments that the Department of Transport hid behind a lack of resources as an excuse for failing to deal with the matter. Several months ago, Kent county council produced a report showing that many of its own weighbridges were not even in working order. Such is the authorities' lack of priority in ensuring that equipment is maintained in perfect condition at all times to guarantee the maximum possible number of weight checks of vehicles entering Britain from the continent.
That report also drew attention to the fact that fitting improved suspension systems to all heavy lorries could save about £100 million annually in road maintenance. The Committee commented:We believe that DTp should have taken earlier and stronger action to encourage the use of vehicles which take advantage of available suspension systems and axle configurations which cause least wear.The Department of Transport has not responded or legislated for and required that the authorities put in place the equipment required and that transport companies ensure the fitting of equipment designed to minimise road damage. If they had done so years ago, millions of pounds worth of damage that has already occurred, the repair of which will inevitably have to be funded by the taxpayer, would have been prevented—and even less money would have to be spent in future.
This is a crying priority. The Department of Transport must act. I hope that it takes the report very seriously. During our proceedings over the past 12 months, it was one of the reports most debated behind the scenes and away from the Committee Room. It was felt that the Department's position was indefensible. If I might say so, it was a disgrace.
§ 6.4 pm
§ Mr. Michael Shersby (Uxbridge)
It is always interesting to participate in one of these debates, because the work of the Committee of Public Accounts is, from the 1221 point of view of most hon. Members and of the public, among the most important instruments in Parliament for ensuring that the taxpayer receives value for money.
There are 38 reports lying on the Table, constituting much material that could be examined in considerable detail by right hon. and hon. Members. I am only sad that there are not more of them present, as I see from looking around that most of the right hon. and hon. Members present are themselves members of the Committee. Although I have not in the past been greatly in favour of introducing television into the House of Commons, one factor that persuades me to change my mind is the hope that its introduction will cause some of our absent colleagues to take a greater interest in the Committee's reports and that we shall have an opportunity to examine them by the light of that wonderful medium and bring the oxygen of publicity to bear in sharpening up the accountability of Government Departments.
The Committee is an interesting one because it is by convention non-political. That it does not reach political decisions is an important aspect of our work and it contributes substantially to the agreement we reach over the reports that have been presented. I echo the remarks of my hon. Friend the Member for Scarborough (Sir M. Shaw) in paying tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for his unfailing courtesy and encouragement to all members of the Committee, which makes our work pleasurable as well as extremely interesting.
I shall focus on the 32nd report, "Review of the Operations of the Land Registry". Of all the reports we have considered and to which the Order Paper refers, this sticks in my mind because we were able to discover what was undoubtedly a most unsatisfactory situation. When the PAC examined the chief land registrar and his colleagues on 1 February, it was concerned to discover that there was a backlog of nearly 1 million items representing four months' work. Every right hon. and hon. Member knows only too well the importance of the registry's work to the average citizen. The evidence we received pointing to that considerable backlog was, I repeat, a matter for great concern.
The Committee was told that the cause of the backlog was a massive surge of work occurring between 1986 and 1987. However, having taken fully into account that surge, which is a matter of fact, we were disturbed to discover that, instead of productivity improving, it was deteriorating, and that in 1985–86 it was 6 per cent. less than in 1982–83. The levels of productivity ranged from 3.07 per cent. in Peterborough to 2.01 in Harrow—which, incidentaly, happens to be the office serving my constituents living in Hillingdon. The chief land registrar told the Committee that the reason for those variations was varying conditions. One was the difficulty of recruiting suitable people of the right calibre in the south-east of England. Another factor, at the Harrow office in particular, was that the conveyancing work was especially complex because that office is responsible for work involving properties in central London.
I am the first to admit that there is a considerable problem in recruiting suitable staff of the right calibre in a town such as Harrow. That points to the need for the Government to look urgently at the location of the Land 1222 Registry's offices around the country. If ever there was a case for moving them to areas where recruitment is easier and properties less expensive, this is it. But it is gratifying to note the improvement in productivity in 1985–86 and in 1986–87.
One measure taken by the Land Registry to deal with the backlog has been the transfer of responsibility for two of the London boroughs, Hillingdon and Hounslow, to Swansea—a somewhat novel development, but one that perhaps can point the way to the future and bring improvement in its train.
We are told that at Harrow—that hard-pressed office —a measure of computerisation is to be introduced, and we hope that that will result in a reduction in the backlog there, but I found it astonishing to sit in the Public Accounts Committee in 1988 and to learnt thata measure of computerisation was to be introduced.Why was it not done years ago? Why is an organisation like the Land Registry still operating manually, with a quill pen system, when all around it are businesses operating very satisfactorily with modern computerised methods? I believe that the average property owner has the right to expect an office of this kind to use modern business methods, and to have a high standard of management with the resources at its disposal to do such a complex and responsible job.
At the time when we examined our witnesses, the registry had accumulated a surplus of some £84 million. That was in March 1986; by April 1987 the surplus had risen to £110 million. As the registry is a statutory monopoly, I think it particularly important—and I know that my colleagues agree, for they say so in the report—that the public are not overcharged for its services. But as our Chairman has pointed out in the report and subsequently, that has clearly happened. It is not good enough that a Government Department, responsible for the organisation, should have allowed it.
Fees have not been properly aligned with costs. We were told when we took evidence that lower fees were in prospect when a new fee order was approved. We understand from the Treasury minute that we have received that that order has now been made, and I hope that those who use the registry's work will pay less for its services in the future.
As I have said, the Land Registry's work is of great importance to everyone. The substantial backlog, poor productivity, large accumulated surplus and higher than necessary fees were features of the session in which we took evidence from the chief land registrar and his colleagues, and. I am glad to see that the position has been recognised in the Treasury minute. Alternative resource control measures have been introduced with effect from 1 April this year, and substantially more staff have been recruited to improve output and to reduce backlog.
We are told that a radical review is under way to establish what further activities can be moved from the south-east, and that plans for further transfer of responsibility for registration in certain London boroughs and south-eastern counties are being developed. I hope that my right hon. Friend will be able to tell us the extent of that development, what progress is being made and how much longer it will be before we hear about it. It is also encouraging to learn that the fees order has been approved and that that will reduce the ad valorem fees for most applications.
Paragraph 27 of the report bears quotation. It says:
1223In giving evidence to us, the Land Registry seemed to assume that the current level of activity, with its pressures on the Registry's performance and efficiency, is only temporary and that the level of transactions will return to 'normal' in two years or so. We do not think it is safe to assume this will happen, since changes in the pattern and volume of business could persist. If the present level of activity continues, we believe that planning and management will need to be strengthened to enable the Registry to respond much more quickly to increasing demands … We accordingly recommend that the position be reviewed and further consideration given, as necessary, to the management structure, organisation and location of the Land Registry.I emphasise my belief that an urgent review of the registry's management is needed, and if ever there was a case for a change in the way in which it is run, it is made in the report. I hope that my right hon. Friend will be able to say whether the Government have yet reached a preliminary conclusion on whether the registry is to become an agency. It was established by Act of Parliament in 1862 and I believe that the time has now come to change the way in which it operates—to turn it into an agency and to ensure that it has the resources, the management, the modern business methods and the proper supervision that will provide a first-class service for all our constituents, so that they no longer have to put up with the delays and backlogs of recent years.
§ Mr. Terry Davis (Birmingham, Hodge Hill)
There have been several references to the unanimity that usually, indeed always, surrounds PAC reports; but it would be a careless observer who concluded that the unanimity of our reports reflected identical views. The speech by the hon. Member for Uxbridge (Mr. Shersby) illustrates my point: although we may agree about the report on the Land Registry, we certainly differ on the conclusions that we would draw as party politicians. I shall not, however, pursue the hon. Gentleman's point, because I wish to touch on several other reports.
As one of the newer members of the Committee, I associate myself with all that has been said about our Chairman. I had been a member of the Committee some years ago, in 1979, and I thought that I knew my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) quite well before I returned to the Committee a year ago. I can only say that the respect in which I held him before my return has been greatly enhanced—if that were possible—in the last 12 months. I have become a great admirer of the deft way in which he chairs our proceedings. The highest compliment that I can pay my right hon. Friend is to say that, although I thought his predecessor Lord Barnett very good, he is even better.
Just before my return to the Committee, there was a change in the appointment of the Comptroller and Auditor General. The House debated the appointment. I had some reservations about Mr. John Bourn's appointment as Comptroller and Auditor General, although I was not one of those who voted against the recommendation of my right hon. Friend the Member for Ashton-under-Lyne. All members of the Committee have, during the past year, come to respect the work of Mr. John Bourn. I have also formed a very high opinion of the work done by his deputy, Mr. David Myland, and all the other National Audit Office staff. We sometimes forget that it is the more junior members of the NAO staff who really do the work. I am sure that Mr. John Bourn agrees with that 1224 view, and I must tell the House that I have formed a very high opinion of the NAO's reports and the work on which they are based.
The shortage of hon. Members present to debate these matters has been commented on. I think that it would be much better if, instead of one all-inclusive debate involving 38 reports, there were several perhaps shorter debates on individual reports. Almost all of these reports are important. That is not surprising because there is a sifting process. It must be noted that not every investigation by the NAO results in a report, so reports are done only on matters which it considers significant. There is a second sifting because the PAC does not take evidence on every NAO report. It follows, therefore, that if we have taken evidence on an NAO report and produced a report of our own, there must be some significance to the subject.
It is obviously impossible to deal with more than a handful of the 38 reports before us. It might be better if we had debates by Department, and included PAC reports in debates on the reports of departmental Select Committees. That is a personal suggestion—I am not speaking for my colleagues.
During the past year, I have several times wished that we had more time for our work by being able sometimes to return to a subject because there have been times when accounting officers have not been able to satisfy us. Some have not come properly prepared and have been unable to answer all our questions. They are always willing to send information later, but that is quite different from being able to ask questions about that information at the time. Because the Committee meets twice a week, and because we have such a busy timetable, it is not practicable to recall witnesses very often. We have done it only once or twice during the past year. I appreciate that asking an accounting officer to return is a sort of sanction and that we do not want to do it too often, but I sometimes wish that it was possible to take evidence on a memorandum which we have received afterwards.
My right hon. Friend the Member for Ashton-under-Lyne said that fraud is rare. I agree. We have come across few examples of proven fraud during the past 12 months. My right hon. Friend mentioned the expenses paid by the Ministry of Defence to some of its staff. There are questions to be asked about decisions that were taken then and the Ministry apparently doing so little, or nothing, about it. There were no prosecutions and no disciplinary action.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to VAT frauds, which were the subject of our discussion with the chairman of Customs and Excise, and my hon. Friend rightly said that several decisions have been taken to compound those frauds. I disagree slightly with his assertion that the frauds were committed by small firms rather than large ones. My understanding of the evidence was that the frauds subject to investigation by the investigation division—which is supposed to be the elite—of Customs and Excise were frequently committed by large firms. Indeed, we were told that some were committed' by large-scale criminal organisations. The decision to compound the fraud is therefore all the more surprising.
We should contrast the treatment of such significant fraud with that of small business men who make mistakes. I drew the Committee's attention to a self-employed newsagent in my constituency who had recently set up in business. Although the newsagency belonged to a large 1225 business, he was on self-employed terms. The man made a mistake with VAT, and it was agreed to be a mistake by Customs and Excise. Nevertheless, he had to pay the VAT and a penalty. There was no doubt about the man's integrity, and when I compare the treatment he received with that given to large companies which commit VAT frauds involving many thousands of pounds, I am surprised by what appears to be public policy.
§ Mr. Campbell-Savours
My information, which I repeated, that small companies are more likely to be involved came from the person who told me about the £65,000 threshold. He went to some length to tell me that, in his experience, large companies are not involved.
§ Mr. Davis
I am grateful to my hon. Friend. Perhaps we are quibbling about the definition of large and small. I am talking about self-employed business men and he is talking about small companies. I was comparing one-man business with large companies. I suspect that my hon. Friend is talking about something in between.
Several examples of what I can only describe as fiddling came before the PAC. It would not be too strong to describe some of them as cheating. I refer to our evidence about "Financial Support for the Fishing Industry in Great Britain". The Government operated a Common Market scheme for the decommissioning of some fishing vessels. I am not questioning the motivation of the policy. It was decided that there was excess capacity, and that decommissioning grants should be paid. But the Marr company received £591,000 in grant as a result of returning a ship to fishing solely to qualify for grant. The vessel was doing seismic work at the time of the application. It returned to fishing for exactly 100 days and then went back to survey work. Members of the PAC will remember that, to qualify for grant, a ship had to fish for 100 days during a certain time. It was clear to me and, I think, other members of the Committee that that company had fiddled. It returned a ship to fishing for just as long as it was necessary to qualify for £591,000 worth of grant.
There are several small examples of cheating, and the Committee is right to draw attention to them. My hon. Friend the Member for Workington mentioned Ministry of Defence contractors, who often work on an even bigger scale. My hon. Friend's pursuit of those people, who are fiddling the taxpayer, should be admired.
The hon. Member for Norfolk, North (Mr. Howell) intervened in the speech of my right hon. Friend the Member for Ashton-under-Lyne to call into question our enthusiasm for value-for-money studies done by the NAO, and the hon. Gentleman referred specifically to the National Health Service. He has done that before. His concern for value for money in the Health Service takes on the appearance of a vendetta against it. Our experience in the PAC during the past 12 months suggests that there is a great deal of inefficiency and much money-wasting in many other Departments, not least the Ministry of Defence.
If I were to part company from my right hon. Friend the Member for Ashton-under-Lyne, it would be in respect of his regard for some of the accounting officers who come before us. It would be easier to single out those accounting officers who have impressed the Committee rather than those who have not impressed us.
§ Mr. Davis
My hon. Friend says, in effect, that the Chairman could not be so blunt.
Some of the civil servants who come before us appear to regard their role as being to defend the indefensible. Those who come before us and admit that mistakes have been made and that matters could have been better administered receive much kinder treatment and more sympathy from Committee members than those who pretend that everything is for the best in the best of all possible worlds.
My right hon. Friend referred to the fraud involving subsistence allowances and expenses at the Ministry of Defence. It is important to note that the permanent under-secretary at the Ministry of Defence told us thatAfter going into it now with great thoroughness I think that the decision that was taken not to pursue disciplinary action against these men was on balance the right one.I give that as one example of senior civil servants who are accounting officers and appear to take a much more relaxed view about inefficiency than Members of the House of Commons.
It is fair to say that there is far too much complacency among some senior civil servants. Hon. Members have referred to the National Audit Office report on community care developments and the report from the Public Accounts Committee. My right hon. Friend referred to the unrealistic attitude taken by the second permanent secretary at the Department of Health and Social Security, as it used to be. He appeared to think that the question of value for money, given the substantial amounts being paid through income support or, as it was formerly, supplementary benefit, to people who run private residential homes, should be decided by people resident in the homes. In practice, it is simply unrealistic to think that such elderly people can judge whether they are receiving value for money.
I asked the accounting officer what could be done to ensure value for money. He replied:We would say that profiteering in private homes, if it exists, is something that we would look to the market to rectify. If they charge too much then one would expect … people to be able to go elsewhere.That is not the real world. If accounting officers take that attitude, we must question whether we are ever going to obtain value for money.
Similarly when the accounting officer was asked whether it was more cost-effective for taxpayers and ratepayers to provide for people to live in private residential homes or, alternatively, to provide for them to live in local authority homes, he was unable to tell us whether any study or comparison had been undertaken in any part of the country. That was a most unsatisfactory reply.
I refer to those accounting officers only as examples, but the complacency sometimes exhibited in the evidence that we took can also be seen in other respects. The National Audit Office report on community care developments referred to the shortage of district nurses and occupational therapists. It stated that there would be a shortage by 1994 if current recruitment and training patterns remained unchanged. The Committee asked a few questions about that and concluded that it was concerned that the shortages in nursing and therapy professions would adversely affect the implementation of plans and the 1227 standards of care provided. In new sums then we may also have been complacent to some extent because we underestimated the facts, based on the information given to us. Only this week, I was told that, in east Birmingham, 700 people are waiting to be assessed by occupational therapists. People whose condition is classed as urgent have been waiting four months to be assessed. The social services department says that the reason that those people are waiting in the most dreadful circumstances can only be attributed to the lack of occupational therapists.
There is, therefore, not only a need for the Committee of Public Accounts to maintain the work that it undertakes, but to be a little more questioning, within the limits of time—the Chairman is always anxious that we should bear in mind time constraints—than we have been, even in the past 12 months.
Mr. Ian Cow (Eastbourne)
It is a matter of deep regret to you, Madam Deputy Speaker, as it is to the hon. Member for Birmingham, Hodge Hill (Mr. Davis), that our debate has been deprived of any representative of the Liberal party, but, although it is a matter of regret, it is not a surprise, either to the hon. Gentleman or to me.
This is the first occasion on which I have spoken in a debate on the reports of the Committee of Public Accounts since I became a member of the Committee. I was pleased to become a Committee member for three reasons. First, it has given me the opportunity to serve under the chairmanship of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I join Opposition Members and my hon. Friends in paying tribute to his chairmanship. Anyone who wishes to be instructed in the art of chairmanship would do well to come to our Committee when it is in public session and take a few lessons from the right hon. Gentleman.
Secondly, I was pleased to become a member of the Committee because I have always believed that one of the areas of highest priority of the House is to scrutinise public expenditure. I have always believed, and still believe, that there is a greater duty on those who spend other people's money to take care of that money than there is on us to take care of our own money. This place is a trustee for the proper spending of other people's money.
Thirdly, I was pleased to become a member of the Committee because I believe that it carries out effectively its task of scrutinising properly the spending of public money. That is why our debate is important.
There is another truth. The need for scrutiny of public expenditure will not diminish as the years go by. Only this week, my right hon. Friend the Chancellor of the Exchequer told us that the Government had in mind to spend £167 billion in the coming year. That is a greater sum in real terms than any Government have ever spent in this country, in war or in peace. Hence, although one might have believed that, as the proportion of public expenditure to total national wealth falls, there might be a diminished need for scrutiny of public expenditure, precisely the opposite is the case.
Further, whether our time in the House is long or short, I hope that there will always be those willing to serve on the Committee of Public Accounts, who will be vigilant in the defence of the proposition that other people's money requires continuing protection.
1228 I wish to devote my remarks to only two reports. The first is the 16th report which deals with the Charity Commission. I agree with the right hon. Member for Ashton-under-Lyne that sometimes the complacency and even self-satisfaction of the accounting officers who come before the Committee is a matter of the deepest regret. I shall illustrate that general proposition by reminding the House of the evidence given to the Committee by the former Chief Charity Commissioner. First, I shall remind the House of the Committee's unanimous findings. Secondly, I shall contrast the findings with the words of the former Chief Charity Commissioner. The Committee found thatthe Commission's register of charities is seriously out of date and unreliable and is ineffective … The Commission has adopted … a passive attitude to its registration responsibilities … We are disturbed at the … failure of the Commission to obtain annual accounts from charities … We feel that the Commission is too complacent … We regard it as unsatisfactory that the Commission has not devoted greater resources to monitoring and investigation work.My hon. Friend the Minister for Trade is right to be in his place, and I am extremely glad that he should be there. It is not only he who has entered the Chamber, for sitting next to him is my hon. Friend the Member for Thanet, South (Mr. Aitken). Mercifully, both my hon. Friends are vigilant when it comes to public expenditure. They might be worthy successors to myself on the Committee of Public Accounts one day. However, I do not wish to be diverted.
I move to another finding of the Committee, which reads:we are astonished that the Commission has no qualified accountants on its staff.A devastating exchange took place between a member of the Committee and the Chief Charity Commissioner, and we are able to read the precise words which were used. The hon. Member for Redcar (Ms. Mowlam) was in her place, as usual, during the cross-examination. First, let the House be in no doubt about the name of the former Chief Charity Commissioner. His name is Mr. Peach. He is a Commander of the Bath, no less. This is the exchange which took place:After five years as Chief Charity Commissioner do you think it would be unfair to describe this report as a massive indictment of the Charity Commission?Those were the words of the hon. Member for Eastbourne on 28 October 1987. The reply was as follows:It would be indeed unfair.The hon. Member for Redcar, whom I almost describe as my hon. Friend, is being reminded of the very words that she heard on that day. I say to my right hon. Friend the Financial Secretary to the Treasury, who is to reply to the debate, that anyone in his old regiment or mine who gave that reply when an indictment of that sort had been read out and found proved by jury would have been the subject of the most harsh disciplinary action.
It has always been a matter of consternation to me that ministerial responsibility for the Charity Commission should rest with the Home Office. Legion are the merits of the Home Office—there is no dispute about that—and my hon. Friend the Member for Thanet, South will be the first to pay tribute to my right hon. Friend the Home Secretary. Nevertheless, it is difficult to understand what can be the logic in having ministerial responsibility for the Charity Commission falling with my right hon. Friend the Home Secretary and, unless I am mistaken, with my noble Friend Lord Ferrers. Am I right in thinking that Lord Ferrers is Minister of State, Home Office? I believe that I am. There 1229 is no need to have anything but praise for my noble Friend and my right hon. Friend, but I suggest to my right hon. Friend the Financial Secretary that logic requires that responsibility for the administration of the Charity Commission should be transferred at the earliest possible date from the Home Office to the Treasury. That is where the responsibility belongs.
In the report which was published in May 1987, the Comptroller and Auditor General stated:Charities"—it was the right hon. Member for Ashton-under-Lyne who reminded us of this—are big business.Yes, they are. That was said in April 1987, and even the Home Office would agree that we are now in November 1988. In that interval, charities have become even bigger business. The tax relief from which charities benefit is not one which diminishes as the years pass, save, of course, when the rates of taxation are reduced. Substantial benefit is still given—in my view, rightly—to charities. My right hon. Friend the Financial Secretary has no need to consult my right hon. Friend the Home Secretary. When he replies, I ask him merely to agree with the excellent suggestion that responsibility for the Charity Commission should be transferred with effect from 6 April next year to the Treasury.
A matter of deep concern was recognised in part of the Treasury's response. We must have confidence in the proper administration of charities or we shall have some awful scandal, as a result of which those who currently give generously to charity will be sceptical about continuing their donations. It is a matter of great urgency that we should do all that we can—we cannot do everything—to prevent improper conduct by charities, and we can do much more than we have been doing. What I am about to say is a criticism of the Home Office, not of my right hon. Friend the Financial Secretary, who stated in the Treasury response:The Commissioners share the Committee's concern that in certain important respects the Central Register of Charities is deficient.The next sentence reads:They"—that is the Charity Commissioners—
have long recognised that an up-to-date computerised Central Register would provide a much-improved source of basic information about registered charities to the public.This is all elementary stuff. Fairly modest businesses in Britain have computers. These are businesses that are not responsible for £10 billion for which the Charity Commission is responsible. If relatively modest businesses —I have no doubt that some of them are run by Labour Members in the new entrepreneurial spirit of the age, with others being run, no doubt less efficiently, by Liberal Members—can have computers, why cannot the Charity Commission? Why should the commission be such a hopelessly inefficient body? I welcome the undertaking that has been given by my right hon. Friend the Financial Secretary that we shall have legislation before the end of this Parliament to deal with these matters. When we come to the Gracious Speech in three weeks' time, I hope that we shall find that there will be a measure to reform the law of charity that will give greater powers to the commission.
I know that my right hon. Friend will tell the House that he cannot anticipate the Gracious Speech. Well, if it 1230 is not in the Gracious Speech now, he has three weeks in which to include a commitment to reform the law on charity in the coming Session. If he were to do so, I assure him that there would be widespread support from both sides of the House—even from the Social and Liberal Democrats—for an urgent measure to update the law on charities and to give greater power to the Charity Commission.
We are fortunate to have in the Chamber my hon. Friend the Parliamentary Under-Secretary of State for the Armed Forces. We are happy about the arrival of Ministers of the Crown. My hon. Friend the Minister for Trade is one of the most distinguished military historians ever to serve in this place. It is, therefore, timely to deal with matters relating to the Ministry of Defence.
We have heard a really amazing story. The right hon. Member for Ashton-under-Lyne rightly referred to the episode of the 90 civilians employed by the MOD, whose task in life was to journey all over the kingdom—even to Wales and Scotland. I think that only Northern Ireland was spared such a visit. They sometimes travelled by motor car, sometimes by train, sometimes apparently by both—occasionally on the same journey at the same time —and sometimes, no doubt, by air. They made those journeys over some considerable time. Hon. Members need not take my word for that—harken not to me but to the Comptroller and Auditor General. So that this may be preserved for all time, what that gentleman said can be found in his report, which is available in the Vote Office. He said:The losses statement—that is, the losses in the MOD—on page 11 includes a sum of £203,416 relating to the falsification of travel and subsistence claims by certain MOD staff. In 1984 MOD Management Information highlighted the fact"—my hon. Friend the Member for Norfolk, North (Mr. Howell) will wish to pay particular attention to this—that the searchers unit was absorbing 10 per cent. of the Army's total civilian travel and subsistence expenditure.So 10 per cent. of all the costs of travelling, for example, all the way to the Falkland Islands and the whole of the subsistence and travel costs of the Ministry of Defence —the Army, the Navy, the RAF, the Royal Marines, the Territorial Army Volunteer Reserve—was being absorbed by those 90 people, not in some banana republic in central America but in this United Kingdom. What on earth is happening?
What did the MOD do when that astonishing saga came to light? Hold on to your seat, Madam Deputy Speaker, this is what it did—nothing. It was to that absence of action that the Committee drew particular attention. The hon. Member for Redcar was at my side when that great saga unfolded before the Committee.
To say that I am looking forward to my right hon. Friend the Minister's reply—he used to serve in the MOD and is therefore especially well qualified to comment upon such doings—is an understatement. I must say a word of praise for my right hon. Friend. I have a deep affection for the Treasury—a Department in which, for 10 glorious weeks, I served. I very much welcome my right hon. Friend's prompt decisions. I even offer one word of praise for the MOD. However, the decision not to prosecute any of those involved was not taken by Ministers. That was disgraceful. A decision not to prosecute in such a serious case of fraud should always be taken by Ministers. They were not consulted, which was quite wrong.
1231 I very much welcome the assertion in paragraph 55 of the Treasury response:The MOD accepts that in future Ministers should be consulted before disciplinary action is ruled out in any case of serious fraud.I congratulate the Government on that decision. I welcome the reminder that the Treasury has sent to all Departments about the PAC's concern with fraud of any sort and its belief—which, I am pleased to say, is also the Government's—in the importance of maintaining effective controls to prevent fraud.
If we seek evidence for the belief that the PAC has an important influence on good government, we can find it in the reports that we are debating. It should be a matter of pride in the House that the Committee can be effective and vigilant, and it is a matter of pride to the Committee that it has the right hon. Member for Ashton-under-Lyne as its Chairman.
§ Ms. Marjorie Mowlam (Redcar)
I echo the last words of the hon. Member for Eastbourne (Mr. Gow), paying tribute to the Chair of the Committee. New members of the Committee find it a little forbidding to learn its regulations and my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has been incredibly helpful. It is certainly forbidding to be faced with accounting officers or permanent secretaries who are doing their utmost—and in the most complacent way—to avoid answering the question. I have to admit that it gives me some degree of pleasure to ask them over and over again a question that, first, they do not want to answer and, secondly, they do not think they should be asked, anyway. That is one of the few pleasures of serving on the Committee.
My right hon. Friend referred to value for money. It has been made clear to new Members that we serve on the Committee not in any party-political sense but to evaulate Government policy in terms of value for money. We have to evaluate whether Government policy works effectively, whether it is being implemented economically and efficiently. Those are the criterion for evaluating the policies before us.
My difficulty with many of the reports is that in considering value for money as defined in the reports it tends to mean the lowest common denominator of cheapness. It tends to be volume or quantity, because they are easy to measure. As the Committee Chairman pointed out, we tend to evaluate policy on the basis of economic effectiveness and cost benefit and value per head, rather than look at the much more difficult to measure, but essential, criterion of effectiveness. We must ask, "Is the policy effective in terms of the Government's objectives?"
I readily acknowledge that that is a difficult thing to measure, but some of the reports that came before us came to terms with that test and others did not. One report that has been referred to by many hon. Members which does not come to terms with measuring qualitatively the effectiveness of the Government's objectives is the report on community care policy. If we examine that report, we see that the policy objective we are evaluating is whether the Government—it is odd that the Government should have such an aim—have provided a better service, so that the patients' interests come first. We are told that that is the community care objective that we are evaluating. The problem that appears when we try to evaulate that policy 1232 objective is that it is not defined in a way that allows us to do it. For example, if, as the report clearly shows, we want to determine whether community care has been properly implemented, we must know what community care means.
Perhaps it seems a simple, naive question, but, in Committee, I asked the accounting officer whether I was correctin understanding when you defined community care that you talked about the quality of service and in that you were including such things as nightline services, counsellors for the caring, covering for counsellors"—that is, when they are off duty or 24-hour cover—would you include laundry services, would you include meals, would you include training, … would you include warden services?The answer that we got from the civil servant was:
I do not want to go right through that list but I would not accept all the width of that list".After several questions, we did not get from the accounting officer a clear definition of community care. Without a clear definition, we cannot evaluate whether the Government's policy is properly implemented. Our job is difficult, and as a result we cannot evaluate the effectiveness of the community care programme. We are told that community care is working for the 8 million people concerned—the mentally handicapped, the mentally ill and the elderly—but, if there is no agreement between the NAO, the Department and the PAC as to what the policy objective is, we shall have great difficulty in doing our job properly.
Another report that came before the Committee was much more constructive in defining the policy objectives that we were examining. I refer to the report on the efficiency of DHSS front desks. We were trying to work out whether they served their clientele well. The NAO decided to have a public opinion poll of clients to see what is happening and whether clients consider that the service is meeting their needs—that is, whether the objective is being met—and whether they consider that they are getting the service that they demand. Clients were asked, "How long do you have to wait at the counter and how long do you have to wait for a letter?" The Committee got some frightening results in relation to the five to six hours that many people sit waiting in DHSS offices, but we were able to do our job properly because we had a clear measure of the effectiveness of Government policy.
When we look at the reports that were presented today and those that will be presented in years to come, unless we clearly define effectiveness, not just economically or in terms of a cost benefit analysis, quality will be a much more difficult thing to measure. Unless the PAC and the NSO come to terms with that, we shall not clearly evaluate the policy objectives of whatever Government are in power.
I wish to highlight one report, and that is the 28th report on matters relating to Northern Ireland. It focuses on the DHSS fraud investigation branch in Northern Ireland. It considers how efficiently the fraud investigation branch works in Northern Ireland. When we are considering the Government's objectives for benefit fraud investigation branches, it is useful to see what their purpose and functions should be. In non-party terms, the Government's policy objectives are to maximise the efficient use of taxpayers' money, to be sure that they correctly label people benefit scroungers, and to judge the public sector by the kind of results that it produces. We shall see whether the Department works in that way.
1233 According to the PAC's 28th report, such policy objectives are clearly not being met, bearing in mind what is happening on the ground in the DHSS in Northern Ireland.
The first problem that we face—it greatly concerned the PAC—was the DHSS ratio, set out in 1984, between benefits saved and administrative costs. We discovered that, for every pound it spent, it got £6 back in benefit saved. A 6:1 ratio is good and, we assume, efficient for the fraud investigation branch. However, we find that the potential value of the fraud investigation branch in performing its service is severely hampered by staffing. The number of staff in that DHSS branch in Northern Ireland is 10 per cent. below what is expected, and that has been the case since 1986. When the Committee asked why the figure was as poor as that, we were told that the Department has to be cash-limited and that, therefore, it must prioritise. In the Committee, it was not clear whether the Department is spending money efficiently in terms of getting the same ratio in the fraud investigation branch. There was no evidence to suggest that it would get better returns than 1:6 if it had proper staffing.
There is another problem in the DHSS in Northern Ireland, and it is repeated in many other Departments. I refer to the difficulty in knowing how to measure a Department's efficiency. A good example is the fraud investigation branch. If we want to know whether it is functioning efficiently—that is, if benefit scroungers, as they are labelled, are being caught by the fraud investigation branch—the obvious measure would be the total amount of benefit saved. That seems to be quite clear. However, the DHSS in Northern Ireland records only the number of what it defines as effective cases—that is, cases in which it has discovered or prevented fraud. We have no base line or no clear measure, since it defines as its policy objectives what it succeeds in achieving. Hon. Members will accept that that is not a fair measure of whether that Department is functioning efficiently.
The Department also faces great difficulty in knowing the exact number of people whose benefit is saved. Even though there has been an increase in the number of cases being dealt with by the Department, many cases do not involve prosecution and do not go before the Director of Public Prosecutions. In fact, 58 per cent. of cases that the fraud investigation branch discovers never go to the DPP. Apparently, such cases are too weak to stand up in court.
There is clearly a strong case for an inspectorate randomly to examine cases not taken to court to ensure that they are prepared properly and that the fraud investigation branch figures for non-effective cases are accurate and not exaggerated in any way.
In the short time that I have served on the Public Accounts Committee, it has discovered some serious problems which I hope that I have illustrated with the cases that I have brought to the attention of the House. It is difficult to ascertain value for money solely in economic terms. The National Audit Office is considering developing measures so that we can begin to ascertain quality much more effectively.
§ Mr. Richard Page (Hertfordshire, South-West)
As a relatively new member of the Public Accounts Committee, I shall be brief. Serving on the Committee is refreshing, in that we have no party political bickering, which is unusual for the House, and all members of the Committee work as a team with one aim: to ensure that the taxpayer gets value for money. They do so even though some members may not agree with the policies that are being implemented.
There is an old story about the four ways of spending money. First, when one spends money on oneself, one is desperately worried about quality and cost. Secondly, if one spends money on someone else, one is worried about cost but not too worried about quality. Thirdly, if someone spends money on me, I am worried about quality but I could not care less about cost. Fourthly, if someone spends someone else's money on someone else, quality and cost go out of the window. The latter method of spending money reminds me of some of the accounting officers and some of the reports that appeared before the Committee.
Like everyone else, I pay tribute to the excellent Chairman of our Committee. I do so from the heart, not because I hope that he will call me earlier in some of our investigations. I also express my appreciation of the National Audit Office which so lovingly presents its reports to us.
One worrying aspect of the reports has been mentioned in Committee, and I have no reservations about mentioning it here. That is the requirement that the National Audit Office must agree a report with the Department under investigation before it can be published. That could be viewed in the same light as a criminal having to agree the charges on which he is arraigned before the trial can begin. The National Audit Office should be able to highlight—perhaps in a different colour or underlined—the areas of disagreement and should not be tied down by the process of plea bargaining. That process may weaken the report and the advice given to members on how to direct their questions.
The fact that the Land Registry and the Charity Commission have been the subject of many speeches shows the anxiety felt in the Committee about the appalling state of both bodies. On the 32nd report, almost all hon. Members will have had examples of the tardiness of the Land Registry. Its operations are a growth activity. We are told that, during the past three years, there has been a 66 per cent. increase in operations. That must have been expected by the Land Registry, but its representatives seemed to be surprised by the increase and thought that it was unfair. May I counter that with some simple arguments?
First, several years ago, about 1 million council houses were sold. The figure has increased considerably, and it cannot be a surprise that some of those people will now wish to move home. It has not come out of the blue. That, together with the Treasury forecast of great economic activity, means that the Land Registry will have much more work, and it should have been more alert to the demand.
The minutes of evidence show our dismay with the progress being made, with productivity struggling to creep back up—despite computerisation—to the 1982–83 level. The Committee was worried that the Land Registry was not effectively tackling the staggering backlog. We were told that the Plymouth office had managed to attain 2.48 1235 units of work per person per day by January 1988. In an appendix to the report, we see that for 1993–94, when the great majority of titles will be on computer, the target is 3.05 units per person per day. I do not know whether the House regards that as satisfactory. It means that during the next six years that office will try to improve its efficiency by less than 4 per cent. a year. One wonders whether it will ever catch up with the staggering backlog.
We derive some comfort from the reaction of the Treasury. It states:The Registry has taken steps to set even more demanding targets as part of the improved resource control measures referred to above.I hope that those targets are more demanding than the figures quoted by the accounting officers who appeared before us. If they are not, I have no confidence in the backlog being tackled effectively.
I refer to the Committee's 16th report, on the Charity Commission, with some diffidence. I was unable to attend the hearings as I was stricken in bed. I was doubly upset not to be present because I am the national treasurer of a well-known charity and I am glad to announce that its administration expenses are under 6 per cent. Any donations to that charity will be effectively and expeditiously applied. But it would be wrong of me to promote the Leukaemia Research Fund.
I shall not discuss the report in too much detail, because many right hon. and hon. Members have mentioned it. It highlights an almost staggering indifference among charities—with one exception—to the Charity Commission. One member of the Committee asked whether it was not deplorable thatonly 23 per cent. of the sample of the NAO had submitted any accounts to the Commission within the previous five years and only 9 per cent. of those who had not submitted accounts had been sent any reminder by the Commission.That is unbelievable; it makes the commission a laughing stock. Although I welcome the Government's response, of establishing a computerised register of charities, I find it incredible—as my hon. Friend the Member for Uxbridge (Mr. Shersby) said in relation to the delayed computerisation in the Land Registry—that in 1988 a file of more than 150,000 charities is not already computerised. I wonder, because of the billions of pounds involved in charities, whether that is a sufficient response to discharge the burden of trust that is put upon the Commission. I find it incredible that today we are told that they should think it should be computerised. It is almost being held up as a dramatic and tremendous advance. I must say that I find that especially shameful.
The last point which I want to emphasise in this report is that of the investigation and the quality of the investigators. There is something especially wrong when fraud and abuse are perpetrated on charities—funded as they are by the goodness and generosity of people. We should be seen to be vigilant in the protection of that trust. Again, I express surprise that the Charity Commission does not have one qualified accountant. I am delighted to read in the Treasury's report that an accountant has been appointed to identify those types of charity which most need scrutiny so that available resources can be deployed with greatest effect.
It is encouraging that there will now be 14 officers able to investigate the cases. I understand from the report that they will investigate some 1,000 cases a year. I work that out to mean that in a fairly normal working week each of those 14 investigating officers will investigate a case every 1236 three days. I am not qualified to comment on whether three days is the average time needed to investigate a charity account, but it is obvious that the Charity Commission is relying on whistle blowers to initiate an investigation. The process is reactive and not proactive.
I echo the words of my hon. Friend the Member for Beaconsfield (Mr. Smith), who raised doubts about the suitability of the funding and of the structure to handle the monitoring of this vast area of public generosity. I must say that the Treasury minute is a sticking plaster and not the major operation that is needed to resolve the problem. I have no doubt that the activities of the commission will come before the House time and time again until matters are satisfactory.
I say with great deference and respect to my hon. Friend the Member for Eastbourne (Mr. Gow), whose skill, knowledge and wisdom are renowned in all corners of the House, if not the land—certainly in Eastbourne— that it will not matter a row of beans whether the commission is taken out of the Home Office and put into the Treasury until the restructuring has taken place, because it has at present all the ingredients of a major disaster. The Government ignore that danger at their peril.
§ Mr. Page
Hon. Members can see that the opportunities for debate in the Public Accounts Committee are endless, and it is with restraint, and almost tact, that I do not stretch my few words even further to tackle some of the 30 other reports. I would like to believe that the sample put before the House tonight is indicative of the work that the Committee has done and the value that the Public Accounts Committee offers both Parliament and the country.
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)
The House will be grateful to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) for his presentation of these reports. On behalf of the Opposition, I say that we wish to be associated with the kind comments made about my right hon. Friend and wish to express our thanks for the sustained hard work that both he and the Public Accounts Committee have put in during the past year.
The hon. Member for Scarborough (Sir M. Shaw) referred to the Chairman's personal approach to the Committee and the way in which he involved all members and contributed to the good working atmosphere. The hon. Members for Uxbridge (Mr. Shersby), For Eastbourne (Mr. Gow) and for Hertfordshire, South-West (Mr. Page) associated themselves with those kind and bipartisan remarks. As I said this time last year when we were debating PAC reports, the bipartisan way in which the Committee carries on its business is important to the authority that it lends to the reports when published and, of course, when they come to the House.
It is not possible to deal with all the Committee's reports tonight, but the Committee has highlighted matters that it wishes to draw to Parliament's attention. There are three themes to which I shall make special reference. The first is the frequency with which the Ministry of Defence features in Public Accounts Committee investigations and the second is the 1237 Government's privatisation programme. I shall also spend a little time considering the resources that are devoted to the prosecution of fraud across a range of Departments.
Before dealing with those matters, I offer a word of encouragement to my hon. Friend the Member for Workington (Mr. Campbell-Savours). I know that there are Conservative Members, and perhaps one or two Opposition Members, who feel that my hon. Friend does not need too much encouragement, but I offer it to him anyway. I strongly welcome the remarks that he made about urban development corporations being an appropriate subject for investigation by the Committee. I am convinced that there is cause for concern in the way in which some of those bodies are operating, and the public good would benefit from a long hard look at those bodies by the Public Accounts Committee.
My hon. Friend the Member for Workington referred to the issuing of contracts which I believe is a serious matter. In local government and in most public authorities, the authority decides what it wishes to tender for, and the tender is issued to people who are interested in bidding. The body issuing the tender then chooses which bid is the most suitable. That practice has always pertained in public authorities to avoid corruption. But some urban development corporations are doing it the other way round—choose the developer first and then discuss with him what is to be developed. There are obvious causes for misgivings in adopting such a policy, and a long hard look by the Public Accounts Committee would be timely.
I pay compliments to the speeches of other hon. Members on the three themes that I have chosen to discuss. The Ministry of Defence features in five reports covering the school of music, service hospitals, fraudulent expense claims, naval warships and weapons procurement and procurement irregularities. I presumed that the report on procurement irregularities would be about the auxiliary oiler replenishment ships and Harland and Wolff, but on closer investigation I found that it was not, and that was disappointing.
The 31st report draws the attention of the House to the need for the Ministry of Defence to draw a balance between preserving competition in naval procurement and securing the lowest possible price. So far, the Ministry of Defence's response to the reasonable point made by the Public Accounts Committee has been unsatisfactory. Almost at the same moment as the Committee was issuing its 31st report, the Under-Secretary of State for Defence Procurement came to the Dispatch Box to announce that the entire frigate programme for the year would be placed with one yard—and one yard only—thus denying orders to all the others. That decision is the exact reverse of the statement that the PAC has attributed to the Ministry of Defence.
The Ministry of Defence has not responded in a measured and open way to the Committee's request and that failure to respond, particularly about setting out its future procurement programme, is not only damaging to the warship building industry but may have disastrous long-term consequences for our national defence capability. The PAC was right to single out that report for debate and I hope that the points that it made go home.
The second report and theme with which I wish to deal is the Government's privatisation programme. Those 1238 matters are referred to in the Committee's 34th report. That expresses some doubt—a modest way of putting it —about whether the Department of Trade and Industry will be able fully to recover the £382 million of taxpayers' money that it sunk into Rolls-Royce before privatisation. The Committee makes a nice point about the value of sales incentives, which I hope that the Government will take on board. It says:departments should ensure that the taxpayer's interests are protected as effectively as future shareholders' interests.That is important.
I should have thought that that point, regardless of political arguments about the rights and wrongs of privatisation, goes to the heart of such exercises. It is particularly important in the case of Rolls-Royce, because, as the Government have admitted, in that case there was no intention to secure a wider and deeper share ownership, which is the intention that has sat alongside some other parts of the Government's privatisation programme. Indeed, the Committee also has some points to make about wider share ownership, in particular about setting objectives before the exercise is embarked on rather than waiting until the exercise is halfway through and seeing where it is taking the Government.
Because the report is now some months old and was widely commented on when it came out, one would hope that the Government, and in particular the Treasury, had had a chance to consider the points made and, in the context of privatisation, to respond. But we know that next year we shall, among other things, be debating the 48th report which deals with the Ministry of Defence's sale of the royal ordnance factories. That report clearly says that the Treasury has learned little from previous PAC reports. It says:the Ministry of Defence did not themselves explore the possibility of redevelopment at Waltham Abbey and Enfield or obtain an alternative valuation of these sites based on the assumption that their redevelopment might be approved in the future. We note that BAe could make a substantial gain on their sale or development without benefits accruing to the taxpayer beyond the sale price paid by BAe.That is the very point that was made in the context of Rolls-Royce some months before.
The Committee goes on to recommend, absolutely properly, thatin any similar sales in the future, any feasible planning permissions likely to increase property values should be obtained before offers are invited.Let us face it; if we were dealing with our own property, not that of the state, each and every one of us would make sure that we knew the real value of what we were selling before we sold it. It is a pity that the Government have not done the same with public property.
My third point relates to the resources devoted to the prosecution of fraud, not just financial resources, but energy and commitment. Indeed, my right hon. Friend the Member for Ashton-under-Lyne referred to the difficulties that the Committee occasionally comes up against in that area.
Five reports seem to have some bearing on that matter —the 28th report on Northern Ireland, the 33rd report on Customs and Excise investigations of fraud and smuggling, the 16th report on charities and two reports relating to the Ministry of Defence, one on fraudulent expenses claims and one on procurement irregularities. A common theme which runs through each of those reports, even though they relate to different areas of public 1239 endeavour, is that all of them, to different degrees, say either that there are insufficient resources or that there is insufficient vigour in the pursuit of fraud.
My hon. Friend the Member for Workington referred to specific cases of fraud by defence contractors. I want to add to what he said, but to put it in a slightly different context, although I agree wholeheartedly with his comments.
My hon. Friend the Member for Redcar (Ms. Mowlam), who has special responsibilities for Northern Ireland, rightly referred to the report on the work of the fraud investigation branch and made some pointed comments. The PAC says:We do not accept the argument put forward by DHSS for leaving staffing vacancies in FIB unfilled for almost two years".The report adds:We are firmly of the opinion that such additional staff as are considered necessary for fraud investigation work should be appointed without delay.Having made that point about resources for social security frauds in Northern Ireland, the Committee goes on to make an even more worrying point:We strongly recommend that special exercises should be mounted from time to time to ensure that social security offices and other benefit branches are not closing cases which should be submitted for prosecution.The House should consider the circumstances that lie behind such statements and the nature of fraud investigation work in social security benefits in a community such as Northern Ireland which is riven with problems. The Chairman of the PAC rightly referred to the special difficulties that pertain in Northern Ireland.
When the PAC makes the case for extra resources, they should be allocated. I should have thought that the Government would willingly respond to that. I suspect that they may be less enthusiastic in responding to some of the other points that I intend to make about the pursuit of fraud. The Government have always been enthusiastic about pursuing poor communities and working-class fraud.
Let me move on to a point made by my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) about big companies being treated in one way and smaller organisations being treated in another. That relates directly to the 33rd report dealing with Customs and Excise issues. The report makes two points strongly. It says:We are concerned that staff shortfalls are a continuing feature, especially in London and the South East.There are two conclusions to be drawn from that. The first is that the case is made out for resourcing, as it should be, and the second is that it could be argued, as the report does, that there is a need to relocate to somewhere such as Newcastle upon Tyne—
§ Mr. Brown
At least in the northern region—and to ensure that proper resources are allocated.
The report also expresses concern on the subject of scale and the fact that it is easier to pursue smaller matters than larger ones. I am sure that we do not want that situation to continue.
Many Members have referred to the 16th report, which deals with the Charity Commission and was also highlighted for debate. I strongly agree with the key conclusions of that report. I am especially concerned to 1240 note that the Public Accounts Committee, given the very moderate language that it uses when presenting its views, felt the need to state so boldly:We are gravely concerned at the risk of fraud, abuse and maladministration involved in the massive and increasing resources devoted to charities.That is a very strong way to put it. As has been pointed out by Conservative Members, the report says:We regard it as unsatisfactory that the Commission has not devoted greater resources to monitoring and investigation work and has never established a system of positive inspection of selected charities";and:Given the need for expert analysis of accounts and financial information, we are astonished that the Commission has no qualified accountants on its staff and apparently sees little need to recruit any.We understand that there has been a response to that, but it is an extremely serious state of affairs and it is impossible for any of us who care about the role of charities in our national life to leave things in their current state. It is a question not just of the resources to pursue fraud but of willingness to pursue these matters and to carry out the proper monitoring function that many of us believed that the Charity Commission exercised. I am convinced that if this issue is not addressed at once the House will wish to return to it, perhaps through the Public Accounts Committee.
That brings me to the two reports concerning the Ministry of Defence. The report dealing with fraudulent expenses claims is as clear cut as one could ever expect to see. The disgusting thing is not just the fraud, which is disgusting enough, but the failure to follow it up properly when it was discovered and, as the Chairman of the Public Accounts Committee pointed out, the involvement of Army officers. The affair does not reflect well on the services and the Committee was right to highlight the report for debate.
That leads me on—I was going to say "nicely", but that is probably the wrong word—to the 35th report, which also deals with fraud in the Ministry of Defence although in a slightly different way. The report stresses the need to keep the matter in proportion in terms of the Ministry's total budget—a nice point and properly made—but states:We note that all the prosecutions undertaken arose from relatively straightforward cases of employee misbehaviour rather than from complex corporate fraud; that several prosecutions were either not undertaken or were unsuccessful because of the insufficiency of the evidence; and that the strength of the MoD Serious Crime Squad is only 28.That brings us back to the point made by my hon. Friend the Member for Hodge Hill about the tendency of those responsible for prosecutions to go for the type of case that can at least be brought to a conclusion and not to embark on cases which might be more complex and difficult, most likely through lack of resources to see the case through to a satisfactory conclusion. Despite the comment about keeping things in proportion, the Public Accounts Committee has issued a clear warning to which the Government must respond.
Having set the issues in the various reports about the prosecution of fraud in their context, I wish to refer briefly to the way in which fraud is dealt with elsewhere. The establishment of the serious fraud office earlier this year was carried out in such a way that it can handle only about 60 of the most serious and complex cases at any one time. The criteria for selection are therefore bound to be fairly 1241 narrowly defined—they will be cases in which the facts are very complex or the sum at risk very substantial or in which there is great public interest or concern.
In my view, that is not satisfactory. The best way to prevent fraud must be to ensure that such massive resources are devoted to its detection and subsequent prosecution that the incentive to undertake the crime is dramatically diminished. While staffing levels in organisations such as the serious fraud office and the other bodies that I have mentioned still oblige them to choose priorities, preventing them from pursuing all the cases that they would wish, crimes of fraud will continue. It is not just a question of the serious fraud office—there is also justifiable concern about staffing levels in the fraud division of the Crown Prosecution Service.
In conclusion, I repeat on behalf of the Opposition our thanks to all hon. Members on both sides of the political divide who do such good work for the whole House in the Public Accounts Committee.
§ The Financial Secretary to the Treasury (Mr. Norman Lamont)
There was a slightly mean article in The Guardian today referring to last year's debate as an exercise in self-congratulation. Given that such debates are not attended by many non-members of the Public Accounts Committee, I am not sure who else could do the congratulation, but I am certainly prepared to join in, as I believe that the congratulations are extremely well deserved. The Public Accounts Committee does a most valuable job. It spends a great deal of time on subjects such as external trade measures for agricultural produce, prison service farms, repayment arrangements for works expenditure of United States forces and other matters which do not often hit the newspaper headlines but in which the Committee rightly takes an interest as they often raise considerable issues in terms of efficiency and finance.
I join the hon. Member for Birmingham, Hodge Hill (Mr. Davis) in his remarks about the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I particularly appreciated his opinion that the right hon. Gentleman had been an even better Chairman than his predecessor the noble Lord Barnett—I only hope that the remark will not spoil a long-standing and beautiful friendship.
§ Mr. Lamont
I have to confess that I knew that the mean article had been written not because I read The Guardian but because I happened to have lunch with the man who wrote the article. When he drew my attention to it, I made it clear that I did not regard it as the most welcome of comments.
The Public Accounts Committee has come a long way since it was first appointed in 1861. Not very much has escaped its eagle eye since then. In its second report in 1872, the Committee expressed its agreement with the Comptroller and Auditor General in his criticism of the Army for exchanging a consignment of surplus bricks for blasting powder when the bricks should have been sold 1242 and the proceeds paid into the Exchequer. That episode is paralleled by some of the reports that we have been debating tonight.
I notice that the severity of the Committee could also be tempered with mercy. In its 1882 report, it concluded that the sum of £14.16s.2d paid in connection with the Dundrum lunatic asylum, Ireland, was not properly chargeable against the Vote, but since the officers responsible admitted the error, the Committee was disposed to agree that they should not be personally charged. We have had rather more severe judgments tonight and in some cases that is quite right.
The right hon. Member for Ashton-under-Lyne reminds me, if I needed reminding, that I am not just the person who has to reply to the debate annually, but a member of the Committee. I am aware of that, because I receive not only the working documents, but letters inquiring whether I am the source of leaks. I can reply to the right hon. Gentleman's latest letter by saying that I assure him that I was not the source of the leak on the report about which he was worried, and, although I know that motive is not necessarily good evidence in deciding who committed the crime, I cannot think of anybody who would have had less motive for leaking that report.
The right hon. Gentleman said that there are rather fewer reports being considered today than there were this time last year, because of the intervention of the election, among other things. None the less, we are considering a staggering 38 reports, and that poses quite a problem for me, even though the Committee has kindly starred five of them. I feel a little like the fielder in a cricket match who is told to go to a boundary and when he asks the captain which part of the boundary he should field on is told, "All of it.".
The right hon. Member for Ashton-under-Lyne and my hon. Friend the Member for Eastbourne (Mr. Gow), among others, have commented on the 16th report. I must correct my hon. Friend on one point. I was never a member of a regiment, which may account for my very short stay in the Ministry of Defence. Extremely serious issues were raised to do with the monitoring and control of charities, as a number of hon. Members have pointed out. Charities enjoy considerable tax privileges in law. They play a vital role in our society, in arts, social welfare, housing, education and, as the right hon. Member pointed out, huge sums of money are involved. Like him, I could hardly believe the figures when I looked at them. The total income of charities is some £12 billion and there are about 160,000 of them. Therefore, it is vital that the integrity of the charitable sector is secured and protected.
I share the concern that in certain respects the arrangements for preventing, protecting and dealing with the abuse of charities has been seriously defective, and is in need of reform. That is why my right hon. Friend the Home Secretary announced in January the acceptance of the recommendations made by Sir Philip Woodfield in his scrutiny report on the supervision of charities, and the Government committed themselves to legislation. My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said that the Treasury minute is merely a sticking plaster when what we need is surgery. Although I cannot agree that a Treasury minute is mere sticking plaster, I assure him that we shall be introducing comprehensive legislation which will deal with many of these problems and implement many of the recommendations in Sir Philip's report.
1243 The report had recommendations directed to the realisations of the responsibility of trustees, reducing correspondingly the responsibility of the commissioners, but increasing the scale of their activities in respect of malpractice and detecting inefficiency. Sir Philip made recommendations for the clarification and strengthening of the commission's powers of investigation and intervention when there has been maladministration.
On the point raised by my hon. Friend the Member for Beaconsfield (Mr. Smith) about audited accounts, Sir Philip recommended that all the accounts of charities other than the very smallest should be audited and that they should be available to the public. He also made recommendations enforcing their submission to the commission. He recommended the tightening of controls on fund-raising, particularly when there may be manipulation of expenses or excessive remuneration—a point made by the right hon. Member for Ashton-under-Lyne.
The result of these recommendations will be that, as the Committee very much wants to see, greater resources will be devoted to monitoring and investigative work, the register will be computerised and accounts will be more frequently examined and action taken. Some of the recommendations require legislation. Our detailed proposals will be set out in a White Paper to be published early next year. Meanwhile, many of the recommendations not requiring legislation are being implemented, and these changes will mean that the commission is on course to become much more effective both in supervising and monitoring charities. This is already apparent in the increased scrutiny of accounts, from 4 per cent. at the time that the report was made to 20 per cent. by the end of the year.
We share the Committee's concern that the register is deficient. It recognised that an effective register is essential to the strategy of providing information relevant to monitoring and investigation. We need to develop a database of information about charities as a whole. For this reason, as the right hon. Gentleman acknowledged, consultants are conducting a study into the method of setting up a computerised charity data base.
I agree with the Committee that the risk of abuse of charitable status under the present supervisory system is unacceptable. I understand that the commissioners are taking urgent measures to improve the monitoring and supervising of the charities in advance of the legislation. The staffing allocated to monitoring is to be increased further. My hon. Friend the Member for Hertfordshire, South-West referred to a figure of 14 and this is to go to 39 by the end of this financial year. I share the concern that the poor level of submission of charity accounts prevents this exercise of monitoring. I also share the view that the accountability of trustees for the stewardship of funds for which they are responsible would be enhanced by the regular submission of accounts that have been professionally audited.
In short, the Government back the reforms, and agree with what the Committee has said. That is why, this week, we have invited Parliament to approve a winter supplementary to raise the money available to the commission to carry forward the proposals arising from the scrutiny study and to put them into effect.
The right hon. Member for Ashton-under-Lyne spoke about the relationship between the Public Accounts Committee and the agencies and he has written to the 1244 Government recently about this, setting out the Committee's views. The Government entirely agree with the Committee about the importance of proper arrangements for ensuring that these agencies are accountable to the PAC and the House, and we are considering what the right hon. Gentleman said. By and large, we agree with it, and we shall reply in detail fairly soon.
The hon. Member for Workington (Mr. Campbell-Savours), who has apologised for not being able to be here for the end of the debate, asked several questions, and perhaps it would be for the convenience of the House if I replied to them by letter. He raised a point that was also touched on by the hon. Member for Hodge Hill, who commented on the practice of compounding by Customs, and the decisions about when to prosecute. This is a difficult problem, and I shall draw it to the attention of my hon. Friend the Economic Secretary to the Treasury. Customs always prosecute professional criminals, fraudsters, second offenders, those who have committed substantial fraud and offenders in special positions of trust. Experience shows, however, that comparatively small-time fraudsters are rarely, if ever, sentenced to long terms of imprisonment. They tend to be given suspended sentences or fines which can be considerably less than those imposed in out-of-court settlements. From the Exchequers' point of view, the current practice is more in the public and taxpayers' interests. More substantial penalties are obtained and taxpayers do not have to pay the costs of trials. That is the guiding principle behind the practice.
I shall reply by letter to what the hon. Member for Workington said about whistle blowers.
The hon. Member for Newcastle upon Tyne, East (Mr. Brown) remarked on some of the comments made by the PAC about privatisations. He particularly referred to the capital injection before the flotation of Rolls-Royce. That injection was given on the basis of professional banking advice and was consistent with successful flotation. The advice we had was that the health of the company and the flotation would be endangered, and the market's view of it would be bad, if we had riot given the injection. We recovered the full proceeds through the flotation—
§ Mr. Nicholas Brown
Does the right hon. Gentleman accept that the implication—although it was nicely put —of the PAC report at the time was that the chairman of Rolls-Royce twisted the Government's arm pretty far up their back for an extra cash injection before privatization, without which he said he would not have felt able to privatise at all?
§ Mr. Lamont
The negotiations were tough: I was the person involved. I remember them extremely well, and neither side got exactly what it wanted.
Several hon. Members referred to the 26th report on community care developments. It is an extremely comprehensive report with myriad recommendations for joint projects between local and area health authorities. The report covers joint financing, monitoring and the effectiveness of community care, and makes certain pointed comments about the fees charged in residential care.
The Government are fully committed to promoting the development of high quality community services so that people do not have to stay in hospital longer than 1245 necessary and are helped to live as independently as possible in the community. That is not a cheap policy, which is why we share the Committee's view that one of the key objectives must be value for money. It is all the more necessary because resources for community care have expanded considerably, having had, as the Committee emphasises, a significant contribution from social security funds.
It was in this connection that Sir Roy Griffiths was asked to review community care and Lady Wagner carried out her independent review of residential care. The Government are considering the recommendations in both reports. I appreciate that our conclusions have been long and are anxiously awaited, but these are difficult issues. Our conclusions relate to some of the points made by the Committee.
My hon. Friend the Member for Scarborough (Sir M. Shaw) touched on joint projects and financing between local and area health authorities. The Government are firmly of the view that there is scope within existing structures for health and local authorities to continue to improve ways in which they plan and work together. There are many examples of successful and innovative projects of this sort. We agree with the Committee that we need fully effective joint planning arrangements; they do not exist in all parts of the country. We need to get the rest up to the standards of the best.
The Department of Health shares the Committee's view of the importance of improving control over the financing of these joint finance schemes. The Department has written to the regional and district health authorities asking them to ensure that the procedures comply with the Department's guidelines. The Department of Health also recognises the need to improve information and monitoring systems and the performance of local authorities with them. I very much agree with the point that the right hon. Member for Ashton-under-Lyne is reported to have made in Committee about how one cannot rely only on the consumer to evaluate value for money. Resources must be put into independent assessment of how effective and up to standard these institutions are.
The right hon. Member for Ashton-under-Lyne also commented on the rapid growth in residential care for elderly people. Hon. Members may be interested to hear that in 1986, the latest date for which statistics are available, almost half the people living in residential care and nursing homes claimed no income support payments to meet their fees. They paid them from their own resources. Decisions about how financial support should be given to people in residential care and nursing homes cannot be made in isolation. The present system of setting national limits, which the Committee examined, is under consideration as part of the Griffiths report. Research carried out for the DHSS showed that basic charges for residential care homes were considered reasonable in more than 80 per cent. of cases that registration officers were asked to assess. Had the limits been set for homes at the levels recommended by registration officers, expenditure would have been somewhat higher.
I turn now to the point made by the Committee and repeated by the right hon. Member for Ashton-under-Lyne about clinical assessment of the need 1246 to put people into accommodation, some of whom could carry on their lives in the community. I am advised that the research quoted by the Committee and which formed part of its report shows that more than 90 per cent. of a sample of elderly people claiming income support in homes in four areas were assessed as needing residential care on admission and up to two years later. The 23 per cent. of claimants referred to by the Committee who could remain in their own homes were not from the whole sample, but from the group of people who had come in from the community rather than from hospital or from other forms of care. By the time of the study, only 7 per cent. of those people were assessed as being capable of managing at home.
As the right hon. Member for Ashton-under-Lyne acknowledged, we have acted swiftly to deal with a number of specific points. There is now a requirement for a record to be kept of social security payments received on behalf of residents by the proprietors of nursing homes. I believe that that is a necessary step and I therefore welcome it. Although we are awaiting the Griffiths report, there is much that local authorities and other providers of care can do to improve standards. I hope that they will realise that and not wait for the report's conclusions.
Several hon. Members referred to the 20th report, which deals with fraud among Royal Engineers Regiment ordinance searchers. My hon. Friend the Member for Eastbourne said that he was agog while waiting for my answer. I hope that his rapture will not be modified when he hears my reply. Perhaps I should not joke about the matter as I agree that this fraud was a sorry business. I share the anxieties that the Committee expressed and I agree with much of what has been said today.
The hon. Member for Workington alleged that action was never taken in cases of fraud. That is going too far. In a recent case at the Clyde submarine base, which caused some anxiety to several hon. Members, a number of people received prison sentences as a result of action brought by the Ministry of Defence.
In any case with which one is dealing, the key point is the availability of clear evidence. In the case of the Royal Engineers Regiment, the Director of Public Prosecutions decided that the evidence was insufficient to justify a prosecution, bearing in mind that the trial would have been lengthy, complex and expensive. Greater confidence in obtaining conviction would have been needed to justify proceedings. The Ministry of Defence similarly concluded that the evidence would not sustain disciplinary action.
The commanding officer, who called in the Ministry of Defence police, had been in the post for only two months, so no criticism could be made of his actions. Of the other officers in the unit, the most immediate supervisors were two troop commanders. Evidence against one troop commander was put to the Director of Public Prosecutions who concluded that the evidence, which did not suggest personal gain, was unlikely to secure a conviction. By the time that the decision was made, the individual concerned had retired from the Army.
No evidence was put to the Director of Public Prosecutions about the other troop commander. Any disciplinary action has to rely on the available evidence and not on speculation or supposition. After considering the evidence, the military authorities took the view that such action was not merited. One must remember that the supervisors were not the instigators of the abuses in the unit, which were of long standing. Strong views were 1247 expressed about the matter in Committee. Frankly, it is debatable whether the decision was correct. The standard of management fell short of the level that one would expect of public officials and the supervisors took insufficient action to check what was happening.
The right hon. Member for Ashton-under Lyne asked whether action was being taken to recover the outstanding money. I cannot tell a cheerful story about that. The Ministry of Defence has written twice to those concerned, seeking repayment. The Ministry of Defence has no powers to enforce repayment against the 42 searchers who are implicated in the case, or against those who have left, without recourse to civil law. As it is clear that the individuals will not repay the sums voluntarily, civil action is now being considered. The Ministry of Defence will have to weigh in the balance the legal advice that it has received on the evidence and the prospects of success in the case.
I agree that it is a profoundly disturbing case. The Treasury has reminded all Departments of the seriousness with which the PAC rightly views fraud and it has reminded them of the role of the serious fraud office, which can take over investigations from Departments. The Treasury circulates information about fraud that has been discovered so that Departments can apply the lessons to be learnt. Finally, we shall shortly issue further guidance to all Departments, making it clear that in cases of serious fraud Ministers should be consulted before disciplinary action is ruled out.
I should also have added that travel and subsistence procedures have been tightened up. All staff in the Ministry of Defence have been made aware of the requirements for handling the disciplinary aspects of serious fraud cases. When evidence of fraud is clear, steps will be taken to secure prosecution or disciplinary action. Any recurrence of fraud will be made more difficult as a result of the steps that we have taken, although I do not dissent from some of the points that have been made on the matter this afternoon.
The hon. Member for Newcastle upon Tyne, East and the right hon. Member for Ashton-under-Lyne touched on the 31st report, which deals with defence and warships. The hon. Member, in whose constituency Swan Hunter is situated and who always stoutly advances the case for his constituency in the House, made several comments about procurement policy, competition and batch ordering, particularly as applied to the type 23. I appreciate his constituency vantage point, but I must say that competition and batch ordering have saved the taxpayer considerable sums.
The right hon. Member for Ashton-under-Lyne referred to the Trident programme. Most of the points that he made are covered in the Treasury minute. He also referred to the capital works at Aldermaston—the advanced weapons establishment programme—which were a source of anxiety to the Committee. The works are an extremely important aspect of the Trident programme and the Ministry of Defence, in concert with the Property Services Agency, has already taken a number of measures to improve management and control, the main one being the introduction of a single experienced contractor working on an incentive basis to provide comprehensive co-ordination of the remaining stages of construction and fitting out. The right hon. Gentleman will be aware that the Trident programme as a whole—and he is right to zero in on particular aspects of it—remains on course to enter service in the mid-1990s on the due in-service date.
1248 A number of hon. Members raised the question of the Land Registry, such as my hon. Friends the Members for Uxbridge (Mr. Shersby) and Hertfordshire, South-West. I share the concern that has been expressed. The steady growth in owner-occupation, the right-to-buy provisions and the increasing frequency with which people move home have all contributed to the problems at the Land Registry.
In July last year we authorised additional resources for the Land Registry. As the right hon. Member for Ashton-under-Lyne acknowledged, from April this year we exempted the registry from gross running costs control which, as the Committee wanted, enables the registry to draw more readily on its fee receipts to finance the resources it requires.
To meet the rapid growth and to take the pressure away from its offices in the south-east where recruitment and retention have been difficult and where conveyancing has been especially active, the registry has opened four new offices, in Telford, Coventry, Hull and Leicester, in the past two years. Two further offices are planned for 1989. A further 1,000 staff—mainly local additional recruits—are now working in the new locations.
The registry has continued to give priority to pre-contract and pre-completion applications. It is the post-completion applications for substantive registration of new owners and mortgagees where the turnround times have been extended. However, the additional staff who are now being recruited and the new work initiatives which are directed to increasing productivity will lead to reductions in the backlog in the near future. Provided that there is not an unexpected increase in the work load, the changes that have been made should have considerable effect. My hon. Friend the Member for Uxbridge asked about agency status for the registry. We believe that it is right that the registry should remain in the public sector, but we regard it as a potential candidate for agency status, and that is now under review. Agency status could provide the further management and financial freedoms that are necessary to promote improved performance.
The hon. Member for Newcastle upon Tyne, East, apparently in order, referred to Royal Ordnance and the report—
§ Mr. Lamont
I am sorry, that remark did not imply anything. None the less, the hon. Gentleman surprised me by referring to the report on the disposal of the Royal Ordnance factories. The Government will reply on that in detail and I believe it would be a discourtesy to the Public Accounts Committee if I were to go into that matter in detail now. I am not sure that the hon. Gentleman did a great service in raising the matter at this stage. However, I can assure him that his arguments will prove to be ill-founded.
The price received for the sale of Royal Ordnance was the outcome of a keenly fought competition in the latter stages of which no fewer than six firms were involved. The price achieved was considered to be a good price by merchant bank advising the Ministry of Defence, and was regarded by the Government as representing a satisfactory return to the taxpayer. Any talk about sales of sites is speculative and dependent upon planning permission being received—it has already been turned down. In any case, any property gains must be balanced against the costs 1249 of relocation and of decommissioning and against the fact that the buyer of Royal Ordnance may have taken on loss-making parts of the business and loss-making contracts. The price achieved for the business of Royal Ordnance as a whole was achieved for a going concern, to be managed and developed by British Aerospace, in the best long-term interests of Royal Ordnance and its work force. We shall reply fully in a Treasury minute to the Committee.
Finally, I should like to join the hon. Member for Newcastle upon Tyne, East in thanking again the members of the Committee and those who have participated in the debate. The Treasury, of all Departments, very much appreciates the work of the Committee, which underpins our own objectives.
§ Question put and agreed to.
That this House takes note of the 1st to 36th and 41st Reports and First Special Report from the Committee of Public Accounts of Session 1987–88 and of the Treasury Minutes on those reports (Cm. 307, 323, 367, 410, 502 and 509), with particular reference to the following Reports:—
Sixteenth, Monitoring and Control of Charities in England and Wales;
Twentieth, Ministry of Defence: Fraudulent expenses claims; Meteorological Services;
Twenty-sixth, Community care developments;
Thirty-first, Naval warship and weapons procurement; and
Thirty-second, Review of the operations of the Land Registry.