§ Mr. Robert Sheldon (Ashton-under-Lyne)
I beg to move,
That this House takes note of the 34th to 41st Reports of the Committee of Public Accounts of Session 1988–89, of the 1st to 32nd Reports of Session 1989–90, and of the Treasury Minutes and Northern Ireland Department of finance and Personnel Memoranda on those Reports (Cm. 963, 964, 1057, 1101, 1150, 1235 and 1247) with particular reference to the following Reports:1988–89
Thirty-sixth, Further matters relating to Northern Ireland;1989–90
First, Financial problems at universities;Sixth, Sale of rover Group to British Aerospace plc;Thirteenth, Ministry of Defence: Further examination of the Sale of Royal Ordnance plc;Sixteenth, Financial Management in the National Health Service;Thirty-first, Quality control of road and bridge construction.The last public accounts debate was a little less than a year ago. We are moving to a tradition of holding over the debate for the overspill of the Session or shortly afterwards. The last motion referred to 48 reports; this time there are 40 reports and eight Government replies. We have chosen a few reports to highlight to which special attention should be drawn, although obviously many others will be mentioned during the debate.
My first task is to thank members of the hard-working Public Accounts Committee. Two Members no longer serve on the Committee. The first is Ian Gow, whose absence we greatly deplore. He carried out incisive questioning and was a valuable member of the Committee. All members of the Committee regret the occurrence that led to his departure from the Committee and the absence of his wise counsel during our investigations.
The other Member who is absent from the Committee is my hon. Friend the Member for Motherwell, North (Dr. Reid). Like so many others, he has been moved to the Opposition Front Bench. A large number of Opposition Members on our Committee have moved to the Opposition Front Bench—my hon. Friends the Members for Wrexham (Dr. Marek), for Glasgow, Cathcart (Mr. Maxton), for Huddersfield (Mr. Sheerman), for Redcar (Ms. Mowlam), for Normanton (Mr. O'Brien) and for Rhondda (Mr. Rogers). It looks as though the Public Accounts Committee is fulfilling, on the Opposition Benches, the role that the Government Whips Office fulfils in recruiting to the Government Front Beench. This is a compliment and we value it, but we face some difficulties in finding replacements.
I welcome the Financial Secretary to the Treasury. He is always welcome. The roles of the Treasury and the Public Accounts Committee have several similarities. We are both anxious to get value for money and to ensure that taxpayers' money is used properly. We are grateful to the right hon. Member for St. Albans (Mr. Lilley), who left the Committee in the last reshuffle.
The most important aspect of the Committee's work is unanimity. During the time I have had the privilege of being Chairman, there have been well over 300 reports, and every one has been unanimous. It is an enormous advantage to have unanimity. The Government have to take note of our reports, because hon. Members have 1409 come to identical conclusions. Our reports are not mushy. Some Committees can produce unanimous reports because they sink their differences in the ambiguity of wording. Members of the Public Accounts Committee are outspoken at the beginning of our discussions and at the end.
Unanimity is crucial. It comes from our respect for the taxpayer. We do not produce partisan views when we question witnesses and discuss reports. We have the enormous advantage that we do not look at policy. We take policy for granted, however much personally we may object to it. Policy is laid down. We want its economic, efficient and effective implementation. I have been pleased to see the large amount of work that my colleagues put into investigations. That was not always so. I am grateful for the investigations by my colleagues into certain matters, rather surprising the National Audit Office and me with their thoroughness.
The National Audit Office and the Public Accounts Committee are very much a partnership these days. The Committee depends on investigations by the National Audit Office, based as they are on detailed investigation of Government papers and accounts. We build on them with evidence from accounting officers and then produce reports for the House. Treasury minutes respond to our reports. We welcome the new form of Treasury minute, whereby each of our recommendations is followed by a response from a Government Department via the Treasury. Under the National Audit Act 1983, the Comptroller and Auditor General has complete discretion in the investigations that he undertakes. There is discussion with the Committee and our views are inserted in reports. We hear well in advance of matters that will be investigated.
I thank the Comptroller and Auditor General and his staff. The office has undoubtedly improved enormously since the days of the Exchequer and Audit Department. Previously, there were civil servants trying to be auditors; now, there are proper auditors. In fact, one of our problems is that the auditors have become so good that the City and other private enterprises want to take many of them. Because of the different rates of pay, a number of people leave the National Audit Office. However, because of interest in the job, its importance and the initiative that staff are allowed, we are able to retain people despite the rather lower levels of pay. We are grateful to them for all they do. We have meetings at the National Audit Office to see how they are progressing. The Public Accounts Committee is always a critical Committee, so we cannot be filled with uncritical admiration for them. Nevertheless, we are filled with admiration for the way in which they carry out improvements.
The Comptroller and Auditor-General for Northern Ireland, Bill Jack, and his staff, do a valuable job. I have chosen the Northern Ireland report as the first one to mention. I do not think that we have given it enough attention in our Committee debates. I am glad to see some Northern Ireland Members here, and I hope that they will comment in due course. The CAG for Northern Ireland makes his reports separately from the appropriation accounts, but there are some reports from the 1410 appropriation accounts. We do not have to wait for an annual publication, as reports are now published twice a year.
We also thank Treasury Officer of Accounts, John Beastall, and his Northern Ireland counterpart, John Dowdall, for their attendance at our sessions, and the accounting officers who come to give evidence. We are very much aware of the amount of time that they give in coming before us to give evidence. We know that they take their responsibilities in this seriously and that reputations can be made and —I hope rarely—unmade as a result of their failures or—which is far more common—their successes in dealing with public money.
The 36th report of 1988–89 is entitled "Further matters relating to Northern Ireland". Typically, we have about two investigative sessions a year and look at six or seven matters concerning Northern Ireland. I will concentrate on one matter, but to bring it into perspective, I will mention some of the matters that we have considered previously.
The most important was the De Lorean investigation some years ago. It led to our appreciation of the work done by the Northern Ireland Comptroller and Auditor-General. That report was fully up to the standard of anything that we have produced and led to some important matters. The Committee investigated the way in which the money was disposed of, which led to other interesting aspects.
We did not take evidence from either of the Ministers involved. Under the Labour Administration, one Minister started the whole process, and under the Conservative Administration, the other Minister gave substantial sums. The question was whether we should have them before us. I thought that it would be wrong to do so, and I still think that.
Under normal circumstances, we have the enormous advantage of looking at the issue, although we do not, of course, disqualify ourselves from hearing evidence from Ministers in future. However, when a Minister comes before us, personalities will play their part. Even more importantly, the Minister who started the process would be able to claim that it had not been continued in the way that he would have wished and the Minister who was involved at a later stage would say, "If only I had been there at the beginning, I would have handled it differently." We must avoid such a situation.
The person who always comes before us is the accounting officer of the day. He or she may be new to the post, but he or she holds the responsibility for the Department in the same way that the Financial Secretary will be responsible for his reply. Although he is fairly new to his position, I am sure that his reply will be interesting and we look forward to it. Our system provides the continuity of responsibility without which we could not sensibly operate. We have responsibility not for the people who come and go, but for the Department itself, so we are able to carry out proper investigations.
The De Lorean report led to various other matters, one of which was the role of the nominee directors. We found that there were nominee directors at a time when money was being passed over from the United States. We asked the Treasury what the role of a nominee director was and we had to wait an inordinate time for the answer. I cannot recall the exact time, but I know that it was six months or longer before we found out the answer.
Once one has raised such questions, one starts to wonder what the nominee directors are doing. There are a 1411 number of them in various industries. The Government appoint them and a nominee directorship is regarded as a bit of a perk in some quarters. One has to have someone quite good in the job, but one does not think of them as having the responsibility to inform the Government when things are going wrong, as they may often do. The rather light-hearted approach became a far more serious investigation and led to a further report.
A couple of years ago, we investigated road accident compensation. We found that pavements were being dug up—or something was happening—and that people were tripping over. Most of us have had a constituent who has made a claim after tripping up, but I can recall only a handful of such cases. Yet we found that in Northern Ireland there were streets in which there was a claim in almost every house. The following year, we asked how it was going, and we found that matters were worse.
Not so long ago, such matters were put out to private insurers. They thought that they could do a better job themselves, but they found that they were spending far more money on the claims. In one sense, it was not their fault, because the courts decided the amount of compensation. However, it is the responsibility of the Department of the Environment in Northern Ireland to ensure that the roads and pavements are kept up reasonably so that claims do not arise. We know about the problems in Northern Ireland as our colleagues tell us about them. We are also aware of them from the unfortunate statements that come all too frequently.
We understand that there are particular difficulties, but people in Northern Ireland, rightly, want the maintenance of the same standards that we expect in the rest of the United Kingdom. We do not make concessions on that, and it would be wrong to do so. I am sure that the Northern Ireland people feel the same as we do.
I want to refer again to the 36th report from 1988–89. In 1973, it was decided to promote a nursery to grow shrubs and plants for housing estates. That was a sensible proposition, as every housing estate needs plants and shrubs, and flowers would be needed for events such as lord mayors' functions. That happens in many local authorities in Great Britain.
It was decided that, instead of buying plants from outside, the nursery would grow them. The stock had to be valued at the end of each year and it was thought that as plants grow, they tend to be worth rather more at the end of each year than they are at the beginning. An average valuation of a 10 per cent. increase was put on each plant and shrub.
In March 1982, local government queries were raised and it was pointed out that plants vary. Some plants do not grow well, whereas others grow considerably and become far more valuable. A range of increase for each plant and shrub from about 10 per cent. to 40 per cent. was settled. Those that had done well would have an increase of 30 per cent. or 40 per cent. and those that had not done as well would have an increase of only 10 per cent.
Each year, the value of the small stock grew until it reached £570,000 in 1985. I am surprised that it did not happen earlier, but at that stage, several people began to find that a surprising figure. The nursery seemed to be a real profit centre. If it was doing so well, why did it not abandon the rigorous control of discretionary purchases and spend a little more on armchairs, desks or whatever? It was then decided that there should be an independent valuation, because £570,000 seemed such a large amount. 1412 An independent valuer was called in and valued the £570,000 of stock at £45,000. The problem was that people thought that the nursery had done well, but it had not.
The report says that the local government auditor was informed about the need for a more realistic stock valuation system. That was in place until the production of the figure of £570,000.
In question 4196 I asked:As a result of this over-assessment of the value of the stock what decisions were made which should not have been made? Was any expenditure incurred, for example, because they thought they were doing so well in making substantial sums of money?Obviously, that must affect the way in which the operation was carried out.
In the end, because of the difficulty of separating the fresh purchases from the old, it was decided to abandon the scheme. Sadly, people were dismissed. If it had been properly managed, it might well have been cost-effective.
In paragraphs 4 and 5 of the report, we say:
It is clear that if at any time the Division directly responsible for the nursery had taken stock, or if the Finance Division had properly verified the figure for stock, the disparity between book and actual values would have immediately become apparent. We asked therefore why both Divisions failed to carry out these essential procedures and the Department replied that neither Division had sufficient knowledge of what was involved and that it could neither excuse nor justify these failures.In paragraph 5 we say:We are astonished".That is a word that I cannot ever recall using. The Public Accounts Committee's language is always restrained. We have a schedule of adjectives which has never gone as far as that. We understate. We are not putting people in the dock in order to sentence them to some horrible end; we are trying to improve the administration. That is crucial. Our task is to hear the evidence, not to indulge in attacking witnesses as they come before us.
I am reminded very much of the congressional system of inquiry, which many of us will have seen, where the chairman bangs his gavel and says that he has heard enough. It is easy to intimidate witnesses. That is not what we try to do. We try to discover the facts and to improve the administration. Nevertheless, in this case we had to say:We are astonished by these admissions and the confirmation that those responsible failed over a period of many years to carry out their fundamental duties.
§ Mr. Seamus Mallon (Newry and Armagh)
The first parliamentary question that I tabled on my election here was on that very matter and I have a growing—if I may use that word—interest in it. The reality is that the dogs in the streets of Northern Ireland, even those visiting some of the trees, knew that something was wrong. That was drawn to the attention of Ministers here and the Housing Executive board, yet the matter was not finally dealt with until it was considered by the Public Accounts Committee, and that aspect of the matter still disturbs me.
§ Mr. Sheldon
I accept that the matter should have come to the Public Accounts Committee much earlier. It was only because of the Housing Executive's failure to undertake the sort of work that it should have done that prevented that happening.
In paragraph 8 we say: 1413The C&AG referred not only to indadequate provision for plant deaths and the appreciation of non-existent stock as causes of the deficiency, but also to the unsatisfactory state of the nursery's stock records"—which does not surprise me—
and the lack of control over the issue, receipt and custody of stock.We go on to say in paragraph 10:We deplore the absence of basic, essential controls on the issue, receipt and custody of the nursery's stock and we note that it is probable that further, unquantified losses were incurred because the nursery was not cost-effective.This is not a large sum of money in the national scene, but we often consider smaller matters because they highlight the way in which we should approach such problems.
In the end, because of the difficulty of separating the fresh purchases from the old, the sale price was much less than the valuation of £45,000. We could not find out exactly, because the records were not as good as they should have been. I went into the matter diligently, because I thought that it would be useful to discover how much of that £570,000 was returned in the sale. It was almost certainly less than £30,000, and it may even have been as little as £3,000. I have no knowledge of that, but it was certainly much less than the valuation, that we know.
The nursery has now closed down, but what happened is a warning not to ignore any aspects of one's work, even though they may not be central. They must all be made subject to the same kind of control as the larger and more important areas.
§ Rev. Martin Smyth (Belfast, South)
I accept the right hon. Gentleman's argument. Does he agree that, since the Comptroller and Auditor-General does not get the books until much later, he does an excellent job in the circumstances, and that that supports the argument that we have sought to lay before the House—that a Select Committee is needed to scrutinise at an early stage the different Departments' work in Northern Ireland?
§ Mr. Sheldon
I have no comment to make on that. My task is to take the policy for granted and to ensure that it is carried out in the most efficient, effective and economic manner.
That is our report, and I am sure that it was well received by those who wanted to see the problems of Northern Ireland brought into line with the situation in the United Kingdom. However, Northern Ireland is not alone in such misjudgments. I am sorry to say that we have a fair number, some of which I shall refer to.
The most important aspect of this is that we do not view with great pleasure the examination of matters which come before us where it is felt that inadequate action has been taken. As I said before, our task is to improve matters for the future.
§ Mr. Michael Latham (Rutland and Melton)
The right hon. Gentleman may be about to stress this, but in view of what he said about the Committee's careful language, which is absolutely right, it should be placed on record that the accounting officer himself in this case said, "They are appalling cases."
§ Mr. Sheldon
There is no question about that. We had the full support of the Departments in Northern Ireland. They learn a great deal from our work. A good accounting 1414 officer will usually welcome our investigation in so far as it justifies the action that he or she would wish to see in improving their own financial management. It is the kind of co-operation which we most importantly welcome, because it is that which leads to action being taken. If that were not the case, I am sure that we should be more extreme in our language. Government Departments have an interest in trying to improve the effective use of public expenditure; that is why they co-operate with us even though we may disagree, as we do strongly in a number of aspects.
The first paragraph of our first report 1989–90 entitled "Financial problems at universities" says:Following reductions in Government grant in the early 1980s, our predecessors in Session 1985–86 noted that continued financial constraints were expected to present universities with serious problems. This underlined the importance of sound financial management and the need for a review of the responsibilities of the University Grants Committee".In paragraph 2(a), we say:We are greatly concerned at the serious financial mismanagement at University College, Cardiff in the period up to 1987. The breakdown of financial control, the attitude of those charged with proper stewardship of its funds and the disregard of proper procedures brought a major academic institution to the verge of insolvency.That is most serious.
Paragraph 2(d) states:
We believe strongly, however, that the UGC should have taken earlier and more positive action to identify, appraise and tackle the financial difficulties at Cardiff. They were well aware of the difficulties facing universities as a result of grant levels; and indeed they assured our predecessors that they would be discussing with universities exactly the sort of staffing problems that lay at the heart of Cardiff's troubles. We consider that they took too passive a role in concluding that they were unable to challenge the College's view that no staff reductions were necessary and that there would be no consequent financial problems.In paragraph 2(e), we stated:
We believe that the UGC's information systems left them too much in the dark about developing problems at universities; and we are concerned that their failure to take decisive action in the initial stages allowed the financial and other problems at the College to become more deeply entrenched and added to the eventual cost of rescuing it from insolvency. We also consider that the UGC made an error of judgment in not reporting these problems to Parliament in their annual survey at the first available opportunity.In paragraph 2(g), we stated:
we welcome the establishment of the new Universities Funding Council, with an expanded role, a more positive remit and greater powers and responsibilities.In paragraph 2(h) we state:We expect the Council quickly to build up the planning arrangements, financial management and information systems, and the capacity for monitoring and analysis which are essential for the effective allocation and oversight of the grants to universities.That is really the point. We found that there was a failure to get the financial management and information systems into place. There was not the monitoring or analysis that we believed was essential for the proper allocation and oversight of grants to universities.
We understand the severe problems and the reason why the Universities Funding Council involved itself rather less than it might have done. The council was conscious of the need for academic interference to be reduced to a minimum, but there is a difference between that and having responsibilities to ensure that universities are financially solvent and financially able to deal with their affairs. The council should be aware of that.
1415 What is the point of a Universities Funding Council which does not know when a university is in trouble before that arises? After all, the council is giving grants and handing out money to universities. It should not hand out money without knowing what universities are doing.
In a subsequent investigation, the report of which has been published but is not before us today because we have not had a Government reply, it is clear that the funding task of the Universities Funding Council must be tied in with a knowledge of what is happening so that it at least can take action and perhaps tell a university that it needs more money or that it should be taking advice on how to reduce its commitments. We know that universities are in a tight financial position; speaking as an Opposition Member, I would have something to say about that, but that is not the role of the Public Accounts Committee. It is up to the Universities Funding Council to take the requisite action. We will consider that report in due course.
I want now to consider the sixth report of the Public Accounts Committee, entitled "Sale of Rover Group PLC to British Aerospace PLC". We have produced an interim report and we have not dealt with all the matters. We learned that, in 1975, Rover was facing bankruptcy and was taken into public ownership. In August 1988, the Government sold the 99.8 per cent. which they held to British Aerospace for £150 million after provision of £547 million in the light of Government debt and investment programme.
We examined the Department of Trade and Industry and its financial advisers, Baring Brothers, and we have produced an interim report which deals simply with the facts as we saw them. We are going to set out our conclusions and recommendations in a further report. All I intend to do now is to pose a number of the questions to which we hope to append conclusions after the Select Committee on Trade and Industry has completed its examination and we have taken the matter further. The questions are posed from our interim report.
Why was there not acceptance of competition to get the best price? That is obviously a matter of particular importance for the Public Accounts Committee, whose task is to get the best price in all privatisations or sales of Government assets so as to protect the taxpayer. There were four expressions of interest to control the Rover assets—from Ford, Volkswagen, Lonrho and Melton Medes. We asked the DTI why it decided that there would be no competition and that British Aerospace would have certain advantages at the beginning in examining and deciding whether it wanted to take the company over for a negotiated price.
We asked whythe threat posed by competition more than outweighed the benefits of a limited competitive tender of the kind that they and Barings had initially been in favour of.The Department replied that itrecognised the advantage of competition in giving a benchmark against which to measure prices, but had concluded that a public auction would be damaging to the Company.On that basis, we examined the Department in our taking of evidence. So far we, have no conclusions; I simply have questions and the Department's answers, which will lead to further questioning and conclusions later.
We asked Sir Peter Gregson, the permanent secretary to the Department of Trade and Industry:why did you not follow up the four other expressions of interest? There were four other companies that were interested 1416 in acquiring the Rover Group. Why did you not follow them up? … In the beginning you were prepared to take them whenever they came, but at the end you were only prepared to take them if the negotiations failed. There is a clear difference over time. Why was this? … How could a firm offer be made if you were not giving them information on which to base those offers?The House may recall that the information was not given to the other companies in the same way that it was given to British Aerospace.
Sir Peter Gregson replied:A company could have made an offer on the basis of publicly available information. If a company did not choose to do that and wished to have the kind of confidential information which could only be obtained in a negotiating situation then that company would have to wait until the exclusive negotiations had come to an end.We asked about Mr. Baring's judgment about that, and he said in response to question No. 108:If we had been concerned simply to get the best price and if we had not been concerned with the possible risk of failure, if we were perhaps slightly less cautious than the Government appeared to have been in this case, then we would certainly have gone for the limited competitive tender.I asked:So to get the best price, competitive tender was the route?The reply was:Yes, but it involved some risk.That was the Government's view, and it will be examined further in due course.
At question 114, I asked about the valuation. The valuation was very important. We were concerned that an up-to-date, comprehensive valuation was not required. I said:But it was not a comprehensive valuation of all the assets and the earning potential of the Rover Group.Sir Peter Gregson replied:I believe that the important consideration here was not the breakup value of this company but the profitability of the company. There was ample evidence of that. There really was not a great deal of point in assessing the value of the plant and sites in very great detail if the whole purpose of the disposal was that the plant and sites should continue on a productive basis.I said:So you had neither competition, nor valuation and you went into negotiation with those elements lacking?Sir Peter Gregson replied:
I would not accept that there was no valuation.That was the problem. We have seen it in respect of several sales of assets. Perhaps one is selling an asset at a value which is subsequently worth more than one thought at the time. That has occurred again and again. One of the big advantages that we said that the Government should have was put originally by the hon. Member for Horsham (Sir P. Hordern) who used to be a member of the Public Accounts Committee and is now Chairman of the Public Accounts Commission. It played a part in almost every examination of the sale of public assets.
The hon. Member for Horsham asked why we were selling them all at one go. That somebody wishes to sell assets has nothing to do with the Public Accounts Committee. We are interested only in getting the best price available. We said, "If you sell them in tranches and you get it wrong, you may get it right subsequently." I instance, of course, the sale of gilts. At the beginning of the year, the figures are comparable, because the amount of money that the Government raise from the sale of gilts is roughly comparable to the amount of money that they are getting from the sale of their assets. I had dealings with the Government broker as I had certain responsibilities at one 1417 stage in my time at the Treasury. At the beginning of the year, one goes to the Government broker and discusses what is to be sold and for how much—£100 million, for example—and what sort of coupon there will be. It is planned through out the year. One sees how the market is reacting, so one sells.
That is not the way in which these sales are conducted. We might have thought that the best way to do it would be to obtain somebody with appropriate expertise. If we are to embark on the sale of assets, we should have someone with special expertise rather than the ad hoc arrangements that were made. However, that has gone now. We need to think in terms of trying to get the best price. If we fail, at least some further amounts may be obtained later. One of the problems is that the Treasury likes to know at the beginning how much it will get throughout the year. That is a limiting factor. It is much more important to protect the taxpayer, and that is obviously the Committee's task.
Another aspect is clawbacks. I shall refer to them in respect of the Royal Ordnance plc. If one sells something, it could be difficult to get a proper valuation. I understand the difficulties, particularly in valuing land. At least if there is a clause that we can share—not take over—in the unexpected sums of money that might be realised, which is also important, we can protect the public interest.
Some people say, "You will not be able to do that easily, because it will depress the value of the shares." Public money is different from private money. Somebody in a private company can take chances and so on, but when it comes to dealing with public money, there must be confidence that one is getting the best price for assets. There is an obligation upon all of us—not just the Public Accounts Committee—to make sure that the public feel that they are not being ripped off. Sometimes we might have a worse deal as a result, but the public will at least know that we have tried to get the best value for that money. That is crucial.
A lot of nonsense has been spoken about the leak of the confidential memorandum. It was assumed that we would always keep it quiet. The fact that a Department asks that a matter before the Public Accounts Committee be kept confidential may not mean that it will stay confidential. We investigate. We call witnesses before us, and they must give reasons why it should be confidential. If we think that the reasons are not right, we release it untouched. If we think that there is justification, we may decide to exclude certain parts of it. That is our duty or obligation. There may be serious reasons for the taxpayers' interests why certain matters should be confidential. The media condemnation was unjustified. We never reached that kind of decision—they never came before us to make that decision. It would be wrong to decide to release something before we even hear the case.
Very few matters that we take in private are not released in whole. Those that are kept back are usually to do with defence, the date of implementation of a new kind of weapon, cost and so on. There are just a few asterisks to meet that. In general, we are very open. The hon. Member for Scarborough (Sir M. Shaw) will recall that all our sittings used to be in private. It is only recently that we 1418 have had the strong view that our sittings should be open, because we want to examine openly the matters that come before us.
I now refer to the 1989–90 Session, 13th report, "Ministry of Defence: Further Examination of the Sale of Royal Ordnance plc". In April 1987, the sale of Royal Ordnance plc to British Aerospace was concluded. Rather unusually, I should like to quote from the 48th report, Session 1987–88, because we had our preliminary investigation into the sale of Royal Ordnance plc then. That report deals with the price that was realised, £190 million, and the sale included land at Waltham Abbey and Enfield, which was sold to British Aerospace without any clawback provision for the taxpayer.
At paragraph 3(v), we said:We are concerned that, prior to deciding on the sale of RO, the MoD 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".That was before we knew anything about a valuation of Waltham Abbey or Enfield. It was without the advantage of hindsight. The Committee has the enormous advantage of hindsight. My colleagues and I try very hard to put ourselves in the place of the witness at the time the decision was made. However, this was something we did before, so there was no hindsight at all.
We said: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. We recommend that in any similar sales in the future, any feasible planning permissions likely to increase property values should be obtained before offers are invited.That is of enormous importance. That aspect will arise again and again in respect of land. Values of up to £450 million were attributed to the sites. We found that values were substantially less than that, but there should have been a much bigger gain to the Government as a result of that sale.
I should like to give some examples of the questions that we asked. The late Ian Gow provided a splendid example which many of us well recall with both pleasure and sadness. However, I should like to quote from a question asked by my hon. Friend the Member for Motherwell, North. We were trying to establish what sort of valuation had been made of those two north London sites but were not getting very far, because we encountered all sorts of complications.
One of the most dramatic moments in the investigations carried out by the Public Accounts Committee came when my hon. friend declaimed in a rather more uncommon way than is usual. I should explain that each hon. Member now has only 15 minutes in which to make his or her contribution—nowadays, it is always "his" contribution. Our Committee meetings are so well attended and my colleagues' examinations are so thorough that we must all be limited in that way. It did not happen in the past, but it does now.
My hon. Friend was frustrated at not receiving a crucial answer about the method of valuation. Finally, he banged his hand on the table in a way that we can all remember and said—I shall not attempt to imitate his accent although one or two of my hon. Friends from Scotland might be able to do so— 1419I only have 15 minutes, Sir Michael. I am going to ask you again. We have heard that potential use value … is different from use value … I am asking you, in the context of planning permission … whether you carried out a potential use value valuation on the land'Sir Michael replied:
We did not seek a valuation on conjectures about planning permission and the particular form that that use might take.My recollection of that answer is slightly different. I thought that my hon. Friend got the answer, "No," but perhaps it was elaborated on subsequently. One's memory is always a little subject to uncertainty. The important thing was that, in difficult circumstances, we got an answer to that question.
Our report refers to the role of the Treasury. It is interesting to note that, in April 1988, a year after the sale to British Aerospace in April 1987, the Treasury issued new guidelines to Departments on procedures relating to the disposal of surplus land. Our report states:These guidelines state that with potential for development should normally be sold with the benefit of planning permission; but where this is inappropriate because of delays and uncertainties about the planning position, it may be appropriate to seek to secure from the purchaser any increase in value attributable to the grant of planning permission after disposal terms have been agreed.That is exactly what we said before we knew about the failure to achieve for the taxpayer some of the moneys that we thought should accrue to him.
Paragraph 35 states:we consider that the Department might have been in a better position to evaluate the bids received if they had carried out a further revaluation as at about 1986;The value of land was changing rapidly at that time. The paragraph continues:invited bids for the Company both with and without a clawback provision; and if they had obtained an estimate of potential development values, particularly for Waltham Abbey and Enfield (even though this would have been conjectural) before deciding whether any special measures, such as clawback provisions, were necessary to protect the taxpayers' interest. In the Committee's view, consideration of a clawback provision for the Waltham Abbey and Enfield sites would have been prudent and need not have resulted in continuing Departmental involvement in the business decisions of the Company.I am pleased that some account has been taken of our views on this matter. We look forward to seeing the guidelines implemented.
Paragraph 24 of the Treasury minute that deals with this matter states:
The aim should be to secure, in a cost-effective manner, an assessment of both the existing use and, where relevant, the potential development values of property.We welcome that reaction.
I refer now to "Financial Management in the National Health Service" and to the 16th report of Session 1989–90. We spend £12 billion on the national health service, which has 14 regional authorities and 190 district authorities. We have looked at the national health service fairly extensively in the past few years, in a manner that we did not previously. I know that several Committee colleagues welcome that, and play a useful and constructive part in our examinations.
I refer to one or two of our past examinations to show the range of our interests. In our 50th report of the 1987–88 Session, which considered operating theatres, we found that only 50 to 60 per cent. of our operating theatres are in use during the working week—I am not talking about evenings or weekends—and that was at a time when people 1420 were waiting up to two years for certain operations. With one or two exceptions, most of us are non-specialists, so that came as a bit of a surprise, especially in the light of the bottleneck in the operating theatres. We found out why it was happening and posed some useful questions to try to improve matters for the future.
I know from a recent press report that the Government have taken action on consultants to ensure that their services are properly employed. One problem with consultants is that their terms of appointment are set by the regional health authority, whereas their practice and their work is in the hospital.
Our 18th report dealt with hospital building. We discovered that it can take up to 15 years to build a hospital. A major problem with public sector construction is the enormous amount of time that it takes to get things done. I was in New York city this spring and had the impossible recollection that its hospital had been built in only one year. I thought that that must be wrong and that it was just a failure of memory. I therefore went to see how long it had actually taken to build it and discovered that it had taken only just over 50 weeks to construct from ground to finish in 1931. That is remarkable.
Of course, that is not a typical example, but it shows how far short our construction is falling if it can take 15 years for us to build a hospital, and there is then the delay in commissioning it and getting patients in. Something is seriously wrong.
Our 40th report of 1987–88 considered estate management. We found a number of crumbling buildings and a general failure to repair them, which in the end costs far more. However, more important than that was our discovery that central management in the national health service had tried to establish the condition of its estates by sending out a questionnaire to its 191 district health authorities. Only 113 replied; that means that one third did not even bother. What is the function of a management board if it does not even get answers to queries?
This is a most serious matter. It made us realise that something must be fundamentally wrong. If the central management of the national health service is failing to get the kind of replies to which one would think any such organisation should be entitled, the chief executive cannot discover that which he has a right to know.
§ Mr. Michael Shersby (Uxbridge)
On the interesting point about the value of the national health service estate, does the right hon. Gentleman agree that asking about the value of a department's estate is what I might call the Public Accounts Committee's $64 question? When considering the evidence, it struck me as extraordinary that the national health service does not know the value of its own estate when, from all quarters, one hears about the pressure to build more hospitals. The right hon. Gentleman may remember that we discovered several buildings capable of renovation in areas where there was pressure for new building. Could he say something about that, because I found it a fascinating insight into what was going on?
§ Mr. Sheldon
The hon. Gentleman is absolutely right. It was a fascinating insight into the failure to know something about one's own business. If one is trying to be a chief executive of a body, one should know something about the business involved. There is no question but that we have brought about—I should say we are bringing 1421 about; it is too early to say that much has been accomplished yet—some improvement. We saw Mr. Duncan Nichol on those matters.
One report to which I refer frequently is that on premature retirement in the national health service. The Government decided as a matter of policy—it is open to them to do so and we do not question it—that the administration of the NHS was too top-heavy. Quite rightly, they said that it was necessary to bring about premature retirements and give redundancy pay to reduce the number of executives in the NHS. That failed to meet all our objectives.
Ever since then, in 1983, whenever someone comes forward with a plan, scheme or programme of any kind I like to know the objective at the beginning. I want people to quantify the objective as much as possible. Some objectives cannot be quantified too much, but I want it to be quantified as much as possible. I ask people when they are going to achieve the objective. At the end of the period of the plan, I want to compare the objective with the achievement. At the same time, there must be a monitoring system so that, if something disastrous is going on, it can be brought to a stop or changed. That is of crucial importance.
In the case of premature retirements in the NHS, it was not known how many people were likely to obtain or opt for retirement. We found that, in one regional authority, about 340—I am speaking from memory—opted for premature retirement. In another authority of comparable size, only one tenth of that number—25 or 30—opted for premature retirement. At the end of the exercise, it was not possible to say how much money had been saved. Nor could we be sure that some of the people who had taken early retirement had not been re-employed in the authority. We knew that some had been re-employed, but we did not know whether some had been re-employed by the same health authority. We strongly suspected that that was the case, but we could not prove it so we gave people the benefit of the doubt.
In such cases we must be sure that we have proper management and that we align budgets with need rather better. Our task is set out in paragraph 14 of the report:We attach great importance to timely and effective financial monitoring. We note the recent improvements made in financial reporting and expect the better flow of information to lead to tighter budgetary control throughout the NHS.We welcome the Treasury minute on that. We know that obviously there is a shortage of suitable staff in the higher levels of the NHS, and we wish Duncan Nichol well in recruiting such people. We hope that there will be some improvements in the proper control of the whole of the NHS.
I now come to the 31st report of the Committee entitled "Quality Control of Road and Bridge Construction", Session 1989–90. We spend about £1 billion each year on motorways, trunk roads and bridges. Remedial work is carried out using concrete or bitumen. It is interesting that we still do not know whether concrete is a better substance than bitumen for road surfaces. I understand that certain other countries made that decision long ago. One would have thought that, with the help of the Transport and 1422 Road Research Laboratory and other bodies, we might have come to a firmer conclusion than we have reached so far.
There is a relationship between the cost of building a road and the cost of building including the premature repairs and traffic delays. In paragraphs 10 and 11 of our report, we point out one of the major problems:Quite apart from the misery, inconvenience and frustration caused to the travelling public by the need for largely unforeseen and unplanned remedial work, we are not satisfied that the Department have taken proper account of the true costs involved. Whilst premature maintenance costs need to be considered in the context of total construction costs, we believe that it is distorting the argument for the Department to suggest that the only alternative to their present course is to try to eliminate all risk of any remedial expenditure.I do not argue with that. We say that when one builds a road one must take into account the cost of putting it right. I regret that I received the minute containing the Treasury's response only two days ago. We have examined these matters for a long time, yet it was brought to my attention only yesterday.
In yesterday's Daily Telegraph I noticed an adverse comment on the work of the Public Accounts Committee. I must say that I regretted that. We normally leave it to the Treasury Minister to respond and it is very rare that action is taken in advance of his response. The article shows that the Parliamentary Under-Secretary at the Department of Transport anticipated the Financial Secretary. It pointed out thatthe vast majority of roads do not give rise to unexpected problems.That is obvious. It is not our task to look at things that go right. Our task is to see whether we can improve things that go wrong. I am sorry that it was a Treasury minute; I could have understood if it had been a departmental notification. I have not had time to go into it as thoroughly as I would wish.
Paragraph 148 of the minute points out:traffic delay costs could be smaller when maintenance is premature since traffic flows will be lower … Costs and delays inevitably arise from maintenance,If one talks about a "premature" repair, one implies that the repair should have come later. If I have a repair done to my washing machine within six months, presumably it means that I will not need to have it repaired later on. However, the point is, "Was the washing machine right at the beginning?" The question is, "Was the road right at the beginning?" If it was not, how much extra would it have cost to get it right? I am sorry that we had that item.
Even though the Parliamentary Under-Secretary said several things about the Public Accounts Committee with which I do not agree, I was pleased to note that the Treasury minute goes a long way towards meeting our objections. I welcome that. In paragraph 146 it says that the Department willintroduce as soon as practicable an improved and computerised reporting system to cover all cases of defects and premature maintenance.I welcome that. It is what we asked for and we have got it.
Paragraph 147 says:The principle of 'whole-life' costing is being introduced in setting highway design and construction standards—this takes account of both forecast maintenance and traffic delay costs.I welcome that.
Paragraph 151 says: 1423The introduction of a five year rolling programme … is assisting in these tasks. Assessment of the whole life cost of roads and bridges will also help to identify the cost implications of alternative timings for maintenance.I welcome that.
Paragraph 155 says:Amendments to the Specifications for Highway Works are being introduced to secure improvements in the construction of concrete roads.I welcome that.
Paragraph 162 says:The Department accepts the Committee's view that it must further seek to improve its effectiveness in managing this area of its business.That refers to poor workmanship and sanctions to deal with it.
The minute also states that the Department of Transporthas therefore appointed an independent consultant to carry out a wide-ranging review which will take into account the Committee's views and recommendations. The Department is also introducing new methods of selecting and appointing consultants who supervise its contracts.We welcome that.
Perhaps the Under-Secretary is unaware of the role of the PAC. It displays a unanimity of view and it is trying hard to improve the quality of the administration of the Department. We are not sniping at it, but we are trying to seek definite improvements. I am pleased to note that the Treasury minute accepts that.
Some might argue that the improvements made were already in train and indeed a great many of our recommendations are accepted even before we put them. As soon as a Department knows that we are going to investigate, it carries out an investigation itself, which is extremely valuable. We do not try to score points about that; we could, but that is not our job. If someone takes action before we report on the matters that we are likely to report on, we welcome that. We seek to encourage that. I hope that that practice will always prevail.
We all suffer greatly because of problems on our roads. On Sunday, when I came down the M6, I encountered four major roadworks, none of which was less than five miles long. Obviously, I am very aware of the importance of repairs.
The task of the Committee is to deal with the various reports produced. We get a great deal of pleasure from the fact that we are able to deal with them competently and adequately. I could mention one or two other reports at some length—for example, that on the Crown prosecution service concerning decisions to continue prosecutions which vary throughout the country. There was also a report on hospital buildings and some of the associated problems, with which I have dealt in part only, as well as a report on the control and management of the Metropolitan police estate. That is an important report, which demonstrates that estate management should be introduced, as it should be in many other areas of our activities.
There were also reports on the National Seed Development Council and the failure to receive the proper sale proceeds.
It is important to mention the publicity services for Government Departments. I welcome the Treasury minute that dealt with that and I am pleased to note that the Treasury has accepted the view about dealing with such publicity to ensure that there should be clear objectivity by 1424 Departments when preparing it. That important issue was clarified and the message has gone out to all Departments, which we welcome.
Once again, I should like to thank my colleagues for bearing with me during the long evenings we spent together. I look forward to continuing our efforts on behalf of the taxpayer—that, after all, is our interest.
§ Sir Michael Shaw (Scarborough)
As always on these occasions it gives me great pleasure to acknowledge, in common with the entire Committee, the tremendous work done by our Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). Normally on these occasions we refer to one another as honourable friends to demonstrate the unanimity about which my right hon. Friend has rightly spoken.
At the outset, the right hon. Gentleman mentioned that Opposition Members are all too briefly with us as they move onwards and upwards. What happens to those former members of the Public Accounts Committee who must be feeling the push from underneath? Will they recirculate and come back to us before long? We all work as a good team as we pick up on each other's points and we form an effective questioning force under what has always been the very capable and tactful leadership of our Chairman, for which we thank him.
It would be remiss of me not to recall the sad loss of the former Member for Eastbourne, Mr. Ian Gow. He was a wonderful member of our Committee. He had an extremely shrewd brain and although it was not always immediately apparent, he was very kind. Some of the ways in which he put even the most casual question, however, made an accounting officer give it serious consideration. I imagine even the lightest question from him was regarded by such an accounting officer as one of threatening importance. Alas, we shall have him with us no longer.
It is important to remember that the Committee has helped to bring about a number of significant changes in Government accounting and organisation. The right hon. Member for Ashton-under-Lyne has already mentiond internal auditing and non-executive directors and it is also important to remember the "next steps" agencies, the importance of value for money as well as targeting jobs and responsibilities within Departments. In all those areas the PAC, along with other Committees of the House—let us not forget them as well as the work undertaken by Government Departments and their attitude to our work, which has always been welcome—has made a significant contribution.
I first joined the PAC in about 1973. I did not stay long, but I came back in 1979 and I have been a member ever since. I have seen many changes in the way in which we conduct our proceedings. In the old days, the questioning was largely undertaken by the Chairman—we were lucky if we put a question in the entire two hours of the sitting. The reports of the Comptroller and Auditor General were fairly sparse and in no way comparable to the present ones that form the basis of our inquiries. Today the effect of the work of the Comptroller and Auditor General and of our reports within Government circles is much greater than it was. Certainly the Comptroller and Auditor General does more preparation than in the past. The same can be said of the Committee members before we go to our meetings.
1425 Although it is not for me to say, this might be the last time that I take part in these annual debates as I do not intend to stand at the next election. In that context, I hope that I am allowed to say that the standing and importance of the PAC has never been higher.
I echo the thanks that our Chairman gave to the Comptroller and Auditor General, Mr. John Bourne, and his staff. Without their help and comprehensive, thorough reports, our work would be impossible. I welcome the opportunity that we now have to go along to the National Audit Office to discuss matters of particular importance when they arise. While we retain our independence, our work results in great benefit for all.
I have said in earlier debates that the greatly improved Comptroller and Auditor General reports that we now receive, the greater thoroughness of our questioning and presentation of reports and the fact that our proceedings are normally open to the public give greater impact to our work generally and to our reports in particular. Publicity concerning the various issues arises when our reports are published. That is an advantage over the old system, when our meetings were held in secret.
The matters that we discuss are important and must receive attention immediately. So as we deliberate subject by subject, the media deal with each item, instead of having to deal with an assortment of subjects arising in one day's debate. By that means we can have wider influence than used to be the case.
Looking back over the year, I select for comment two items, one of which was dealt with by the right hon. Member for Ashton-under-Lyne, that of Northern Ireland. I have always had much sympathy for those with responsibility in that area. The conditions under which they operate cannot be regarded as in any way normal. The physical unrest and deep sectarian divisions create problems beyond my experience. But, as the right hon. Member for Ashton-under-Lyne said, danger lies in the fact that we may cease to apply, in considering the reports of the Comptroller and Auditor-General for Northern Ireland, the same judgment as we apply to reports emanating from the Comptroller and Auditor General.
Whatever sympathy we may have, because of the problems of those working in Northern Ireland, we should do them a disservice if we failed to deal with the matters that they bring to us with the same critical eye as we give to other issues. We owe that duty not only to those who live and work there but to those who have invested, and others who hope to invest, large sums in Northern Ireland. Remember, the object is to try to make things work there as smoothly and normally as possible. That will happen only if we set the highest standards of inspection to the reports that come before us.
Regrettably, some extremely sad reports come to us. Occasionally one tends to say, "Never mind, it is Northern Ireland." That is the wrong attitude to take. We must examine the issues and say, "Let us try to get things right." From the reports that have come to us from the Comptroller and Auditor-General and the witnesses who appear before us, it is clear that all concerned are trying to improve matters. I believe that it will not be long before we see improvements. That will be justification for the seriousness with which we tackle the issues.
1426 One is bound to feel sad when considering the report on, say, roads and the system of stocktaking the stores scattered throughout Northern Ireland. It was clear that the system of stocktaking was inadequate. Happily, the notes that we are receiving, particularly following the cross-questioning of witnesses that I conducted, show that the stores are under much better control. The system generally has been much revised, with the internal auditor now seeing that reports go direct to the top man rather than to an intermediary. Because of more effective stock control, less stock is required. That is always a good sign. If stocks can be reduced, that is a sign that the business is being run more efficiently.
As I say, many of the reports are depressing. Particularly depressing was the report about the plant nursery, and I shall comment on only a few points about which I asked questions. Obviously, no system should be allowed to continue if nobody is taking stock and stocks are increasing year by year. That way lies disaster. Indeed, had the organisation been in private hands, disaster would have occurred more quickly. One must express worry when Mr. Murray, the auditor, said that it had never entered their heads that people were not taking stock. He described that as "a fundamental error." The mind boggles at the thought that an auditor did not check to see whether somebody was taking stock. We find such fundamental problems arising time and again.
I hope that I am not being optimistic when I say that, as a result of our inquiries, things are beginning to improve. Indeed, we must proceed on that hope, just as I hope that officials are proceeding on the conviction that we shall continue to make inquiries into their activities.
My second point about Northern Ireland concerns the land registry. Although a serious lapse has been evident, we can learn from it in other areas. The land registry was set up and the same fees charged for a long time. A witness said:Fees were not revised in the intervening years because it was mistakenly believed that the registry was operating at a surplus, when in fact it was not covering its costs.Why was it not covering its costs? The answer to that question was terrifyingly frank. We were told, in effect, that there had just been a mistake, and they were all sorry about it. It is terrifying to think that those who filled in the accounts did not realise that they should have been adding sums for headquarters costs. That state of affairs continued for a long time.
I cross-questioned witnesses on that issue because, although it was a basic error, it covered a significantly wider sphere. If an agency is established—the land registry, although not an agency, was a type of agency —one must consider the fees and departmental expenses. That is where the wider sphere comes in. In this case, those making up the accounts were correct, except that they did not add a big sum for departmental expenses, remembering that those involved at headquarters were anxious, for obvious reasons, to spread their expenses over as many branches as possible. The differences were enormous. When we cross-questioned the witnesses about the expenses of headquarters that could be relied on as being part of the land registry, Mr. Murray said:In normal circumstances I would not spend much time overlooking the land registry".His assistant, Mr. Mackenzie, said that he spent perhaps 5 per cent. of his time on the land registry. Look at it as we would, we could not see that the enormous difference in 1427 the cost of overheads that had been missed out was justified by any facts concerning the services rendered by head office. I hope that that is now being examined more cautiously; there is a formula, but I doubt that it is accurate.
The other report that I wish to mention is "The Next Steps Initiative". This is a first-class initiative, and I am greatly encouraged by the fact that it is being brought in carefully—at times slowly, perhaps, but that is better than rushing into it without getting it right; big costs may be involved if we do not get it right.
The Public Accounts Committee said in paragraph 3(v) of its conclusions:We note that, consistent with the Government's priorities for Next Steps, the agencies established so far were set more demanding financial and operational targets accompanied by additional flexibilities on financial matters and staff and pay to enhance their ability to operate more efficiently … We agree with the conclusion of the C & AG that, if continued, this early demonstrated commitment on the part of the parent and central departments to the thrust of the initiative augurs well for the success of Next Steps".I entirely agree.
The example of the cross-questioning in the Northern Ireland report makes me wonder whether we are being careful enough to ensure that, in certain cases, we are not simply creating another department to be looked after by the Department itself. I put that question to the representative of the Office of the Minister for the Civil Service—what a mouthful that is—and asked him,to deal with the problem of what has been described as the people back in the departments syndrome. The responsibility still lies with the Minister for the agencies so far as Parliament is concerned.(Mr. Kemp) Yes, correct.So he will want his civil servants to brief him on statements, on questions and anything relating to an agency.(Mr. Kemp) That is right.That means to say therefore that the Department back home will tend to formulate a staff that will double bank the agency so that they can get the information from the agency and use it and check and put forward to the Minister.(Mr. Kemp) I hope very much not.I hope not too. It has been admitted that there is an interface, but if it is not carefully guarded, that interface can grow and there can be additional expenses.
Talking of expenses, departments such as town halls have a lot of fixed expenses to meet. I have noticed that the more that they can feed them out to their various departments and agencies, the more they are prone to do so. That is why they do not like getting rid of them and turning them into private enterprise efforts: then they have fewer places in which to put their overheads. I trust that nothing of that sort would be allowed to happen in Departments of state.
I thank the Chairman of the Committee for all the work that he does, and for the enormous effort that he puts in. Above all, I thank my colleagues on the Committee for the way in which they try genuinely to examine the problems, rather than seeking to turn the process into a political fight. That is the essence of the Public Accounts Committee; long may it continue.
§ Mr. Alan Williams (Swansea, West)
As a new boy on the Committee, I shall make an extremely brief contribution, although I should add in my defence—in case I wander into a slightly longer speech than some might wish—that mine is a renewed rather than a new 1428 membership. I was a member of the Committee as far back as 1966, when—as was pointed out by the hon. Member for Scarborough (Sir M. Shaw)—things were somewhat different.
What is still enjoyable, however, as the hon. Member for Scarborough pointed out, is the "consensus" way—if I may use the "in" term—in which the Committee members approach the task of analysis. It is significant that this is the first time since I became a member that we have sat in "confrontational" postures to discuss our work.
As a new Committee member, I already have my collection of yellow cards from our Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). However, let me say while I have his good will —for I see him smiling—that on one of his foreign tours he must have bought a Brussels watch: I think that it is operating on metricated minutes, which, as everyone knows, are far shorter than the imperial minutes on the watches of the other members of the Committee.
It is a matter of deep regret to all of us that our late friend and colleague Ian Gow is not able to take part in our discussions today. We all miss his charm, wit and friendliness, as well as the pungent relevance of what he had to say.
I am a living embodiment of the contention that all is onward and upward amongst Opposition members of the Committee. As an ex-industry Minister, I should have liked to take part in the discussions on Rover; but, as I was not a member of the Committee at that stage, it would have been rather presumptuous of me. I shall therefore save my comments until—as I hope—we examine the matter again.
I shall confine myself to two issues. My right hon. Friend the Member for Ashton-under-Lyne referred to the criticism that he felt was due to the University Grants Committee for allowing University college, Cardiff to get into the predicament in which it now finds itself. The fact that the Committee has had to focus on that has to some extent made life more difficult for the new administration, which is having to cope with difficulties that it did not create. Its operations are clouded by the £4.4 million of repayable grant that had to be taken to ease the college out of difficulties that should never have existed in the first place.
It is to the credit of the new administration that, in the last year, it made a surplus of £4.8 million before provision to its capital account, and anticipates a surplus of £4.5 million this year. There has been a remarkable turnaround since we had our chance to discuss the fortunes of the college. Indeed, I am delighted to hear from the principal that about 25 per cent. of the £4.4 million has already been repaid, and that within six months the debt will be less than £3 million.
As well as dealing with the administrative consequences of the tragic circumstances in which it found itself, the college is making a massive inroad into the financial problems that it was forced to inherit. It is doing so against the background of rapid expansion. It is spending—not over-optimistically—£20 million on expansion, new building and the introduction of local area network facilities for the newly emerged University of Wales Institute of Science and Technology and Cardiff university college and it shows all the signs of completely shaking off the clouds that it inherited from the previous administration.
1429 One interesting point, which was raised when I had discussions with the principal, was that when the Universities Funding Council makes its projections—colleagues at the National Audit Office may like to consider this and discuss it with the UFC—such discretion is used that comparisons between universities may be invalid or difficult to sustain. The principal said that that applied to the way in which inflation and staff costs are treated for future projections. University authorities may use their discretion about the precise formula that they use. The principal said that Cardiff used the UFC's most pessimistic scenario for its projections. He demonstrated the scale of such differences by saying that a 1 per cent. difference when assessing the situation means a £1.5 million difference in staff costs over five years, and a £3 million difference in overall costs in the same period.
If further analysis and reports to the Committee are to be undertaken, I hope that the UFC will consider whether it can make projections more consistent.
As a Welshman I wish to mention a matter which is of some local inconvenience to the people of Wales, and to those who choose to visit us or to come to Wales on business trips—the problems of the Severn bridge, which are mentioned in the report on roads and bridges. It will be no surprise to hon. Members to hear a Welshman say that we regard it as a sad saga.
The Friday before last people had to queue for more than three hours to cross the bridge in a westerly direction. It is not merely a question of inconvenience and cost. It upsets lorry schedules and it affects commercial drivers, who have limits placed on the hours that they are allowed to drive. However, there are wider implications than boring inconvenience. What is most galling is that the situation is unnecessary, and that came out in the report. I shall mention later the Treasury minute based on the report, but the National Audit Office report states clearly that in 1961, at the last minute, just as construction work on the foundations of the bridge was about to start, the Department of Transport introduced a new design. It was novel, and it presented new technological problems.
The NAO also said that, having introduced the new design, the Department proceeded to ignore its guidelines, procedures and standards. The Department did not carry out the calculations that would usually have been expected for a bridge design. Sadly, eight years later the bridge was showing signs of corrosion and fatigue.
I am sure that the Chairman of the Committee shares our bewilderment that, far from that being a source of hand-wringing in government, section 148 of the Treasury minute, to which I referred, states that, because corrosion was discovered early in the life of the bridge, it should have been a matter of great rejoicing. According to the Treasury, as there was less traffic crossing the bridge when the corrosion was first discovered, it was less of a problem than it would have been if it had been discovered later. The problem is that we have had to put up with it for the intervening 20 years, so I do not find the Treasury's argument very persuasive, and £17 million has had to be spent on the bridge.
The permanent secretary told us that much of the work done on the bridge was to strengthen it against wind 1430 damage, damage from collision with a ship and to accommodate two and a half times the planned vehicle load.
As the National Audit Office report points out, 52.5 per cent. of that £17 million was used for remedial work and only a quarter was used for anything to do with strengthening or increasing the capacity of the bridge. Three quarters of the work that has had to be carried out on the bridge was remedial, and was due to what is described in the report as "design faults". So we are back where we started in 1961, when the Department of Transport at the last minute ignored standards, practices and procedures. The resultant design faults are still blighting the lives of motorists virtually 30 years on.
A fascinating coincidence—not lost on the users of the bridge—is that when the toll was increased recently, according to the report, the increase was needed to raise £50 million to carry out the balance of the work needed on the bridge. Tolls were increased to raise less money than had been demanded to carry out the remedial work. In other words, if the bridge had not needed remedial work, the tolls would not have had to be increased. The bridge needed remedial work because of design faults and it had those faults because the Department did not do its job. I find those circumstances hard to reconcile with the statement made in the House by a transport Minister who said:The work is designed to upgrade the bridge for the future; it is not in any sense a reflection upon the quality of the original design of the bridge, which was built fully in accordance with the standards that then applied."—[Official Report, 27 November 1989; Vol. 162, c. 543.]One wonders who was briefing the poor man. I am sure that he would not have made that up, and I am sure that he would not readily have come to the House with a statement so contrary to the facts. No Minister wants to give the House information that he knows is blatantly incorrect.
As is revealed in the National Audit Office report, the people of Wales now face cost and inconvenience because a Ministry failed to do its job and to carry out its responsibilities in the way that everyone in Whitehall thought it was carrying them out.
The Treasury is hedging its bets in its response. Paragraph 158 states:The Department found no evidence that standard checking procedures were not fully complied with"—which is rather different from saying that they were, which is what one might have hoped that the Treasury would say.
It is difficult to be precise about events which happened over thirty years agothat is even more dubious, it raises even more question marks—but it was not necessarily practicable nor appropriate fully to apply standard procedures to an innovative design.The NAO, therefore, has it all ways. There is no evidence that the Department did not carry out its normal procedures, though the Committee and the National Audit Office criticised it for not doing so. However, the Department virtually implies that the Treasury would have criticised it had it carried out the normal procedures because, it says, the normal procedures were not necessarily appropriate to the new design. Which posture is the Department adopting? Is it saying that it did carry out the normal procedures or that it did not and that the Treasury is glad that it failed to carry them out? We are left in the dark. All we know is that the motorist is still paying 1431 for errors that need not and should not have arisen—errors which were the direct result of departmental incompetence, as demonstrated by the NAO report.
The House will understand the feeling of many people in Wales that they should not have to carry the cost of that incompetence and that it ought to be borne by the Department that imposed those errors upon them.
§ 7 pm
§ Mr. Michael Morris (Northampton, South)
I, too, pay tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of our Committee. I have been a Committee member for 11 years. During that time there have been two Chairmen, both of them Opposition Members who have brought a penetrating mind to that job. If this is to be the last public accounts debate for my hon. Friend the Member for Scarborough (Sir M. Shaw)— though I personally doubt it—I should like to say to him that his acumen, too, has been of an extremely high order.
Two qualified accountants sit on the Public Accounts Committee. However intuitive and good the rest of us may be, it is important that colleagues with up-to-date experience of the latest accounting practices should sit on the Committee. My hon. Friend is not the youngest member of the Committee, so it is a great tribute to him when I say that he is very much up to date with what is happening and that it shows in his questioning of witnesses.
I ask the House to reflect on the Public Accounts Committee's role in the years ahead. Its role may change, as may the nature of this debate. The PAC is the watchdog of the legislature and the Administration. The Committee carries out its investigations after the event; it does not challenge the policies of the Government of the day. It accepts policy objectives and examines what has happened. That is a strong starting point. As the right hon. Member for Ashton-under-Lyne said, the Committee is greatly supported by the Comptroller and Auditor General and the staff of the National Audit Office. About 1,000 people, most of them highly qualified, are beavering away. In their green reports they produce material that, on the whole, is of a high standard. I hope that they will not mind me saying "on the whole". There have been instances when the reports have veered into policy areas and when they have gone too far towards producing policy proposals. As a person who has a modest area of woodland, I have to declare an interest when I say that when I look back at the forestry report and see the present level of planting it is obvious to me that it has been unduly influenced by some of the activities in north-east Scotland.
I am concerned about the nature of what I call the green reports—the National Audit Office reports—in the sense that they are, quite incorrectly, seen by the media as the work of the Public Accounts Committee. That is unfortunate. It is not clear to the public that the Public Accounts Committee still has to look at those reports and decide whether it agrees with them. We shall have to overcome that difficulty.
My Committee colleagues know that I have strong feelings about the presentation of our reports. The format of our reports has changed a great deal while I have been a member of the Committee. When we visited the United States about eight years ago I was impressed by the fact 1432 that there the conclusions are brought to the front of reports. A little persistence has resulted in the Committee's conclusions now being printed at the front of its reports.
Moreover, it seemed to me to be illogical that one had to be a ferret of considerable ability to find the Treasury's response to the Committee's conclusions. I refer to the Treasury minutes. I am delighted that the Committee's recommendations are now listed in the Treasury minutes and that the answers are given there. I thank the Treasury Bench for having achieved that change.
The Committee can still learn from what happens overseas. When they look at the front of any of the Committee's reports, the public can be forgiven for wondering what they are all about. I refer, for example, to the Committee's first report on financial problems at universities. I believe that there would be merit in the Committee doing what our cousins across the water do; it should highlight the three key points on the front cover.
There is no doubt that our work is successful with the civil service, but I do not know whether it is entirely successful with the Government of the day or the House. Part of the problem, I believe, is that we still conduct too many inquiries. There is little merit in a plethora of inquiries; the Committee would do better to conduct in depth fewer inquiries.
Ever since I became a member of the Public Accounts Committee I have taken a great interest in the national health service. I can almost reel off the number of NHS reports that the Committee has published. If, however, I did not have the most marvellous filing system in the East Cloisters, I should be unable to delve into the Committee's inquiries six, seven or eight years ago. One of the challenges for the Committee is to collate that great bank of knowledge and recommendations, some of which will become highly relevant as changes occur. At the moment the Committee depends entirely on the accounting officer's memory. The usual answer is that he was not in post at the time, so he cannot help. We are unable, therefore, to rely on the Department. Moreover, the memory of those in the National Audit Office is not quite as long as the memory of Committee members. The challenge that we must face up to in the months and years ahead is to effect a link between the present and what happened six, seven or eight years ago.
The same point could be made about privatisation. The Committee has considered privatisation and the disposal of Government assets in many of its reports. We must pool together all the lessons that we have learnt from those reports.
I believe, too, that the scope of the Committee's considerations needs to be reappraised. My hon. Friend the Member for Scarborough referred to Government agency agreements. There is little doubt that the Committee will have to consider closely the relationship between a Government agency, the Department and the expenditure of public money. My hon. Friend mentioned overheads. The whole structure will have to be looked at closely.
As we come to the end of the era of privatization—there is not much left to privatise—there will be public sector bodies which are not agencies or normal Departments but which still have public money in them. When we passed the National Audit Act 1983, nationalised industries were kept outside, mainly due to the chairmen of those industries. The time will come in the near future when we should reassess our scope in that area.
1433 We need to look at Europe. It may be just circumstantial good luck, but on the Order Paper today from the Leader of the House is the new structure for analysing the work of the EEC and the directives that come to us. In the new Session we shall have three Select Committees looking at draft directives split across three broad subject areas. It does not need me to re-emphasise to the House the importance of the EEC and its relationship with this Parliament. I plead considerable ignorance of our relationship with the European Court of Auditors and how the linkage will work in relation to the ever-increasing importance of Brussels. In our new Session we should have a deliberative discussion on the linkage with our work in Europe.
I want to deal with two of the reports, which both cover the same area: the first report on the financial problems at universities and the 16th report on financial management in the national health service. The report on the universities is principally about Cardiff but that has been covered adequately. I want to emphasise the recommendation that we made about universities generally. In paragraph (f) we make it clear that we remain concerned at the serious financial difficulties facing many universities. We emphasise the fact that the Universities Funding Council should monitor what is happening and we recognise the importance of the restructuring exercise that is in hand. The report says:On both these matters we expect the Council to keep Parliament fully informed on progress and results.That is a crucial paragraph and should not be forgotten.
The 16th report on the NHS is also about financial control. It picks up the aims of resource management initiatives. It explains the importance of case histories and regrets the slippage that occurred during 1988–89 and 1990–91. The response in the Treasury minute says that action is being taken.
If I have a worry that I wish to share with my colleagues, it is that in both higher education and the NHS —outside defence they are the two large areas of public expenditure—the aim seems to be to achieve a financial "level plain". In my judgment, that is the wrong way round. The philosophy of the Public Accounts Committee over the years has been to ask people what their objectives are. Their objectives are concerned not with finance but with policy. Currently, those policy objectives appear to be subsumed by the financial objectives. We run into great difficulties as a Government and a nation if we allow the accountancy element to dictate policy rather than the other way round.
The Chamber is fairly sparsely attended, but I should tell my right hon. Friend the Chairman of the Committee that it is time that we had a deliberative session on the scope of the Committee, its relationship with Europe and the financial dimensions involved.
§ Mr. Terry Davis (Birmingham, Hodge Hill)
I should like to join other Committee members and say that I regret the tragic loss of Ian Gow from the Committee and the House. As several hon. Members have said, we shall all miss his incisive and perceptive style of questioning. The Committee benefited from his example, especially those of us who are younger and less experienced. I was a particular beneficiary because I sat next to Ian Gow and benefited 1434 from his whispered comments, many of which would not bear repetition in the House. He was always ready to say what he thought about a witness in terms that were as incisive and perceptive as his questioning.
I should like to join other Committee members in expressing my appreciation for the work of the National Audit Office. As years have gone by we have all learnt increasingly to appreciate its work. It is not patronising to say that the quality and standard of its reports and the work behind them has improved tremendously over the years. Every year we find that they are better and better and more informative. They go far beyond the old style of reports, which were concerned only with ensuring that civil servants did not abuse the taxpayer by taking his money. That is, of course, an important part of the work of the National Audit Office and it must ensure that there is no question of fraud. However, its work has gone beyond that now. We are concerned about value for money, as is the National Audit Office.
My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said that many of our recommendations are put into effect before we make them. The same can be said to a greater extent of the work of the National Audit Office. Many of the faults, defects and errors of Government Departments are corrected before the NAO reports on them. That is to be welcomed because we do not want a lapse of time. We want them to be corrected as quickly as possible. However, the NAO does not always receive the credit that it deserves. Having talked to members of staff, I know that they recognise and accept that. They do not resent it because they are inspired by the spirit of dedication to public service. They are happy to see that things are put right. Nevertheless, this is an occasion on which to point out that the full benefit of their work cannot always be appreciated because we do not always know how many stable doors have been shut before they have been opened.
I should like to join other Committee members in expressing our appreciation for the work of my right hon. Friend the Chairman. We all recognise his skill and the leadership that he provides. I would not say that both sides of the Committee appreciate his work because, as he said, we do not work in that way. We all appreciate his skill in choosing who shall ask a question next. In an unguarded moment he once confessed to me that he sees himself much as an American football coach, playing Committee members as appropriate and bringing them in when he thinks that a witness deserves them. I am sure that he will particularly miss Ian Gow's contribution in that respect. As the hon. Member for Scarborough (Sir M. Shaw) said, we all appreciated his contribution. He was much too self-effacing in his remarks. Also, we shall miss the hon. Member for Scarborough if he is to leave the House at the next election.
The hon. Member for Northampton, South (Mr. Morris) made some interesting suggestions about the way in which we can improve our work and the presentation of our reports. It is a great misfortune that we confine ourselves to one debate a year. In that debate we are expected to consider many reports. This year we are expected to consider 40 reports, but it is sometimes more. That is too much to digest and too much to debate. I am not suggesting that we should have a debate for every report, but some reports would merit their own debate. For example, the report on the quality control of road and bridge construction would have merited a debate. A case 1435 can be made for having a series of debates in which we might take several reports together. This year, we have had several reports on the national health service, and it would have been useful to have a debate on those reports as a group, in which we could have drawn out common suggestions, themes and criticisms of NHS management.
The hon. Member for Northampton, South drew a comparison between the problems of the national health service and those of universities. That has been one of the themes of this year. The health service and universities are suffering from a similar problem, and too often we assume that it is overspending. I wish that we could spend more time asking whether they are underfunded rather than overspending, because that can produce the same result of expenditure exceeding income. Perhaps we should consider whether they are receiving enough money, not simply whether it is being overspent.
I link that with the objective of value for money. Too often, we fall into the trap of assuming, as sometimes do the National Audit Office reports, that value for money means spending less. Sometimes, we get better value for money by spending more. I give as an illustration a question that I put to the chief executive of the national health service management executive, and I was disappointed that he did not seem to understand the difference. If the national health service spends 2 per cent. more and treats 5 per cent. more patients, is not that better than spending 2 per cent. less and treating 5 per cent. fewer patients? It is a real cost improvement if more money is spent and more patients are treated because it comes from higher productivity and the unit cost is less. In our questioning and reports, we do not place the right emphasis on getting real value for money, which may result from increasing the amount spent by a Department or service.
I was delighted that my right hon. Friend the Member for Swansea, West (Mr. Williams) assured us that University college, Cardiff is doing much better and resolving its financial difficulties. However, that university is an example of it being better to take two reports together. Our first report, entitled "Financial Problems at Universities", was occasioned by the difficulties at University college, Cardiff, in which I took a personal interest. We have a Treasury minute, which is why it is included tonight, but we do not yet have the Treasury minute on the 36th report, entitled "Restructuring and Finances of Universities". Those reports would have made a good debate, because the report on University college, Cardiff and its problems leads naturally to the more general and wider problems of other universities.
Although many of the witnesses who appeared before us in the past year were rightly criticised, the Universities Funding Council was the least impressive of the bodies that we examined. I draw the attention of the House to some of the comments that we made in our first report, which arose from the difficulties at Cardiff. In the report, which was published on 15 January, we said:We believe strongly, however, that the UGC"—as it was then called—should have taken earlier and more positive action to identify, appraise and tackle the financial difficulties at Cardiff. They were well aware of the difficulties facing universities as a result of grant levels; and indeed they assured our predecessors that they would be discussing with universities exactly the sort of staffing problems that lay at the 1436 heart of Cardiff's troubles. We consider that they took too passive a role in concluding that they were unable to challenge the College's view that no staff reductions were necessary.We expressed our respect of the independence of universities and said thatthis does not mean that the UGC should have abjured sufficient control to be able to assure themselves of competent financial performance by universities.We added:We also consider that the UGC made an error of judgment in not reporting these problems to Parliament in their annual survey at the first available opportunity.We then commented on universities generally and said:
We remain very concerned over serious financial difficulties facing many universities. We expect the new Universities Funding Council to monitor developments closely and to intervene as necessary to ensure a high standard of financial management … We expect the Council quickly to build up the planning arrangements, financial management and information systems, and the capacity for monitoring and analysis which are essential for the effective allocation and oversight of the grants to universities. We look to the Council to secure prompt and determined action where required by the public interest, whilst recognising also the responsibility and autonomy of the universities themselves in such matters.We ordered that report to be published on 15 January 1990. The evidence on which it was based had been taken on 11 May 1988, and I revert to the point made by the hon. Member for Northampton, South that sometimes we should try to issue these reports more quickly. When we received the Treasury minutes in April 1990, the Treasury told us that
The monitoring of all universities' financial position has been improved by: UFC requiring institutions to produce annual financial forecasts, which are then analysed; institutions presenting their accounts in a uniform format according to newly-agreed conventions so that they can readily be analysed and compared with previous forecasts; financial relations between UFC and the institutions being governed by financial memoranda which set out conditions under which Exchequer grant may be paid; and the UFC establishing an internal audit unit and generally strengthening its financial expertise.Unfortunately for the Treasury, we had taken evidence between our report on the problems at Cardiff and their general application and the publication of its minute. We had taken evidence in February, only six weeks after we had prepared our report on Cardiff's problem. The Treasury minute published in April bears little relation to the evidence that we were given in February, only two months before, by the chairman of the Universities Funding Council, as is shown in our report, which came out quite recently.
In the report, we say:The Funding Council needs to act vigorously in discharging its new responsibilities and ensuring a high level of accountability to Parliament for the financial control exercised over university expenditure and the economic, efficient and effective use of resources.We make other comments, conclusions and recommendations, culminating in the statement:
The Funding Council must take vigorous, prompt and effective measures to resolve these matters.The echoes of the first report are in our 36th report. Between May 1988 and February very little had improved or changed; indeed, I find it difficult to see any improvement or change. I do not believe that the Universities Funding Council has done anything like enough, and it did not have to wait for our report. If it had followed the suggestion and encouragement of my right hon. Friend the Member for Ashton-under-Lyne to put the greater part of recommendations into effect before they 1437 were made, we should have expected some progress to be made between May 1988 and February 1990, but I regret that we did not see such progress.
Therefore, it would be a good idea if, from time to time, we took reports together, as the hon. Member for Northampton, South suggested, to consider recommendations made a few years before and what happened when we took evidence at a later date. That would improve not only the work of the Committee but, much more important, the performance of Departments and accounting officers. Perhaps sometimes it is a good idea to go back to see what was recommended by our predecessors perhaps five or 10 years previously and how much has been done, rather than simply considering rather bland and flattering Treasury minutes that promise much but produce very little.
§ Mr. Michael Latham (Rutland and Melton)
I am pleased to follow the hon. Member for Birmingham, Hodge Hill (Mr. Davis), who makes a signal contribution to our discussions in the Public Accounts Committee. As he said, he sat next to our friend, Ian Gow. The highest tribute that I can pay the hon. Gentleman is that he and Ian made a fine team in putting witnesses on the spot, in the interests of taxpayers. They worked well together in our Committee. Ian might well have been speaking at this moment almost where I am standing.
Many hon. Members, particularly the Committee's Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), referred to Northern Ireland and the Northern Ireland report. One sentence in the 36th report sums up the way in which Ian Gow went straight to the kernel of the problem. On 14 June 1989, he asked the accounting officer, Mr. Blease:Does it come as a surprise to you if members of this Committee have read with disbelief the report of the Comptroller and Auditor General?Mr. Blease replied, "No." Ian put his finger on the deplorable failure of administration which had taken place in that case, and in many other cases—a failure described by the accounting officer as "appalling". I echo the comment of the right hon. Member for Ashton-underLyne—who was properly given support by the Ulster Unionist party as he said it—that we do not expect third-world standards of administration from parts of the United Kingdom. I used that expression in questioning as well. As the right hon. Gentleman said, we expect and demand as a Committee exactly the same standards of administration in any part of the United Kingdom and we trust the Comptroller and Auditor-General for Northern Ireland to bring these cases before us, as Dr. Jack does now and as his distinguished predecessor, Mr. Calvert, did before him. All of us remember debating the disgraceful events involving the De Lorean report, to which the right hon. Member for Ashton-under-Lyne referred. It was one of the most serious failures of administration and of spending control ever to come before the Committee in the more than 100 years of its existence. The Committee rightly drew attention to that failure in its lengthy report, which the House felt necessary to discuss in a separate debate.
I have listened carefully to this debate, as I have listened to many over the seven years in which I have been a member of the Committee. There is always a danger, 1438 which we have not wholly avoided today, of being like soldiers pinning medals on to our own chests. There is always a danger that we shall say, "We are all doing very well. Everyone is very happy. If people were not happy, the House would be packed and Members would be moaning about the Committee's failure. The fact that people are not doing that suggests that the Committee is doing its job well." I am glad that my hon. Friend the Member for Northampton, South (Mr. Morris) and other hon. Members have made it clear that, while we have important work to do, we must never be complacent about it. We must always look for ways of improving and refining it in conjunction with the National Audit Office, which does such a signal service on behalf of taxpayers, and under the guidance of our Chairman.
Other than my direct constituency work of bringing the problems of my constituents before the House—which we all have to do, as it is an essential part of our duties—I believe that the work that I do on the Public Accounts Committee is far and away the most important thing I do in the House. It is the only thing that makes any difference. About 80 per cent. of what I do in the House is probably wasted, and perhaps 50 per cent. is harmful. The work that I do on the Committee is beneficial to taxpayers generally, for only one reason: because of the structure of public service, the method by which the National Audit Act 1983 was drawn up and the Committee's work, the Committee can bring the accounting officer, the permanent secretary, the Sir Humphrey Appleby, before it, and he has to come personally.
One report which no one has discussed and which is probably not widely known is described as the second special report. It was published a few months ago and in it we set out the revised terms of appointment of accounting officers. Publishing the report provides a useful service to the public, who can see what accounting officers and permanent secretaries have to do. I should like to quote from paragraph 11, because it is an important point about which the public should know. The report states:If a course of action is in contemplation which raises an issue not of formal propriety or regularity but more widely of prudent and economical administration, it is the duty of the Accounting Officer to draw the relevant factors to the attention of his Minister and to advise him in whatever way he deems appropriate. He may think it right to refer to the possibility of criticism by the PAC. If his advice is overruled, he should ensure that both his advice and the overruling of it are apparent clearly from the papers.I have talked to Ministers many times about that matter and several have said that that is no idle threat. On several occasions, they have made suggestions to the accounting officer, to the permanent secretary, who has said, "No, Minister. We cannot do that because I am the poor Charlie who has to go before the Public Accounts Committee and explain it away, not you. We must not do that." I asked Sir Peter Gregson when he appeared before us during the Rover inquiry whether the process of giving a written minute to the Minister had taken place. He said that it had not happened. I have asked that question on other occasions, for example, during the De Lorean affair. This is a strong power for members of the Committee. It enables an accounting officer to persuade politicians, of whatever Government, that they cannot take actions that would look bad in front of the Public Accounts Committee.
Perhaps the Committee's principal strength is not the unanimity to which the right hon. Member for 1439 Ashton-under-Lyne referred or the back-up of the Comptroller and Auditor General, which is essential; it is the fact that the Committee is properly resourced. The House has devoted a lot of time—I remember the 1979 debates—to considering whether we should strengthen the Select Committee procedures. The debates took place when Lord St. John of Fawley was setting up these Committees as Leader of the House. Distinguished Members, such as Mr. Enoch Powell, took the view that such Committees were potentially detrimental to the House because they would take people away from the Chamber and allow for a consensus approach that would take away from the flow of party conflict. There are distinguished Members of the House now who still take that view and periodically express it.
There has been such a danger in the reports and the proceedings of some departmental Select Committees. To some extent, it depends on the subject that they have taken. If they take highly partisan subjects, they are likely to produce highly partisan reports or reports with a 7:6 majority. They often do so on the basis of the views of the expert witnesses and advisers who have been hired for the inquiry. By passing the National Audit Act and making the Comptroller and Auditor General's Department responsible to the House, the House has said, "Here is a properly resourced, fully staffed and efficient Department that does all the work in advance." On several occasions, led by the right hon. Member for Ashton-under-Lyne, the Committee has not been prepared to continue an inquiry because a Department has come to us disagreeing with the words in a green report. The Committee cannot operate on that basis. We have to have an agreed report in front of us. Then we can proceed.
As the right hon. Member for Ashton-under-Lyne and other members of the Committee remember, we have sent some of those great mandarins away with their tails between their legs because we have not been prepared to put up with them arguing about the text of the Comptroller and Auditor General's report when it should have been agreed in advance. On one occasion—no names, no pack drill—a permanent secretary took me out to lunch to get my advice on how to appear before a Public Accounts Committee. I gave him my advice, he thanked me very much for it, and shortly afterwards he retired from Government service.
Our work will become increasingly important. We often have to deal with the work of, for example, the Ministry of Defence, where billions of pounds have been wasted by inefficient procurement, poor management and so on. The Committee has greatly welcomed the appointment of Sir Peter Levene and much of his work as Chief of Defence Procurement.
As I sit in the Committee Room, under the chairmanship of the right hon. Member for Ashton-under-Lyne, two afternoons a week, most weeks of the year for the past seven years, it makes me mad to have to look again at examples of deplorably sloppy administration and of money being wasted, whether it is just a few hundred thousand pounds in Northern Ireland, such as happened in the nursery—which is none the less important—or billions of pounds in the Ministry of Defence. It is being wasted at a time when I, like all other hon. Members, have to go to surgeries in my constituency where I meet constituents who are not receiving pensions or social security and who are getting into difficulties over housing, 1440 over the community charge or in other areas. There is no money to deal with that because much of it is being wasted in faulty administration.
This may be my last speech in this debate. I believe that this is the role with which Members of Parliament especially have to deal. We have to go to the Committee and we have to read learned tomes from the National Audit Office. Finally, we have to say to ourselves that we are elected to represent ordinary people and it is their money that is being misspent. We must say, "I do not care, Sir Humphrey Appleby, whether you were there when it happened or not. You are the person who must explain to us why it went wrong and, above all, what you are going to do to get it right." That is why my hon. Friend the Paymaster General is sitting on the Treasury Bench now. That is why, when my hon. Friend the Financial Secretary winds up the debate, he and the Paymaster General will be taking governmental responsibility in their replies. I hope that when they go back to their Department they will say to their officials—who work very hard—and to all those in other Departments, "Look, at the end of the day. 1 have got to take the flak on the Government Front Bench. Please go away and smarten up your administration."
§ Mr. David Trimble (Upper Bann)
I congratulate the members of the Public Accounts Committee on their work. I am a new Member of this House. On making my first acquaintance with PAC reports and on reading through them, I have been greatly impressed. I have also been impressed by the way in which the Committee members have carried out one of the primary functions of the House —scrutinising the work of the Executive. Having read the high quality of the reports that they produce, it is slightly disappointing to come to this debate and to see acres of green on the Benches.
I intend to concentrate on the matters relating to Northern Ireland that are highlighted in the reports. However, before I come to those, I have a passing comment relating to the first report in 1989–90 on "Financial Problems at Universities". That has already been touched on by several hon. Members and there has been particular reference to University college, Cardiff. It has been said that it was remarkable that the University Grants Committee, as it then was, seemed to be either ignorant or reluctant to act when matters at Cardiff were getting out of control.
Belfast is a lot further away from Cardiff than London is. However, as a former university teacher, I must tell the House that the fact that Cardiff was running out of control was common knowledge in the common rooms of Belfast long before the UGC or the Government acted. I find it rather sad that matters turned out as they did. The Government bailed out University college, Cardiff on condition that many of the senior staff who were responsible for administration had to have their careers prematurely ended. I notice that the same penalties were not publicly applied to those in the UGC who had been turning a blind eye to the situation for several years.
The hon. Member for Rutland and Melton (Mr. Latham) referred to the comment made by the permanent secretary of the Department of the Environment in Northern Ireland on the cases mentioned in the 36th 1441 report, which related to the nursery. The permanent secretary said, "They are appalling cases." The chief executive of the Northern Ireland Housing Executive said:there had been a degree of negligence at every level involved in the management and control of the nursery …and that itdid not receive adequate attention at the highest level.He was asked:what was the highest level at which you regard responsibility? … Where did the buck stop?The chief executive replied:The buck stops with …The text peters out in three dots. He continued:If something similar were to happen now, the buck would stop with me".The comment about "appalling" cases was made in reply to a question from the Chairman of the Public Accounts Committee, He said:These are two very bad cases. We hope we will not have to be dealing with this sort of thing again.Eight months later, they were.
The 26th report of 1989–90 deals with the Northern Ireland Housing Executive's essential-car user scheme. Under the scheme, essential-car users were entitled to a high allowance per mile and to low-interest car loans. The executive was promiscuous in the number of people it designated as essential-car users. At first, there were 1,084, but after a while the executive realised that too many had been designated and the number was reduced to about 500. The 584 or so disappointed former essential-car users threatened legal action, which was settled by the executive at a cost of £1.2 million in compensation. The executive had handled the matter in such a sloppy way that it had to pay out that sum. That was far more than was lost through the nursery scheme, which was described in the 36th report.
The case of the Housing Executive is especially galling to hon. Members who sometimes have to press the executive about the housing needs in their constituencies, only to be told that insufficient funds are available for this or that development. It is galling to see the millions of pounds that the executive has managed to lose. Money has been lost in other places as well. Other hon. Members have referred to the claims made by people who have allegedly tripped while walking along the footpath. It would be wrong to give the impression that the fault lies with the courts in Northern Ireland. It lies with the executive and with the Department of the Environment for failing to defend cases that were plainly spurious. Once word got round that all one had to do was to make a claim and that, like "Monopoly," one could pass "go" and collect more than £200, everybody was on to it in some areas.
We see such cases occurring again and again. As well as commenting on the individual cases, we should say that there is a need for a more radical approach to the way in which the administration of the executive is conducted. The Chairman of the Public Accounts Committee commented on the De Lorean case and referred to the rather curious position of the two directors appointed by the Government to serve on the board of De Lorean. As hon. Members are aware, the Northern Ireland Housing Executive is not a normal housing authority. Unlike all the other housing authorities in the United Kingdom, it is not under the control of a local authority or of elected representatives. There are three elected representatives on 1442 the board, but the majority of the members are not elected, but appointed. The main criteria for selecting the persons to be appointed are that they will ignore the views of the elected representatives and will acquiesce in the views of the management of the executive. If one appoints to a board people whose chief qualifications are that they will do nothing and that they will acquiesce in what the administration does, it is not surprising that such situations develop.
Those familiar with the Upper Bann constituency will understand why I could not help feeling that there is a remarkable contrast between local councillors and Ministers, civil servants and chief executives, such as those of the Housing Executive, when it comes to the sort of negligence that leads to the losses with which we are dealing. If a local councillor were to act in a negligent manner he would be surcharged, but if a Minister ignores a situation—the hon. Member for Newry and Armagh (Mr. Mallon) told us that the nursery was the subject of his first parliamentary question when he came to the House, so Ministers were not ignorant of the situation—there is no surcharge, despite there being clear negligence. It is remarkable that people who serve without remuneration in local authorities can be exposed to considerable financial penalties, whereas persons who serve in the House and elsewhere, for a respectable financial reward and with considerable opportunities for earning on the side, should be responsible for the same or even worse losses without any penalty falling on them.
The hon. Member for Rutland and Melton referred to the penalty of having one's conduct adversely commented on by the Public Accounts Committee. That clearly is a penalty of sorts, but it is quite different from the penalty on councillors. Something should change in that respect.
I am sorry to refer to the hon. Gentleman again, but he said, and I entirely agree, that the Committee expects the same standards of administration in Northern Ireland as elsewhere. One way of achieving that is to ensure that Government Departments and other bodies in Northern Ireland are subject to the same disciplines as Departments elsewhere. The same standards will not be achieved without the same disciplines. Part of the problem in Northern Ireland is that bodies there are not subject to the same disciplines as bodies elsewhere. With the honourable exception of the Public Accounts Committee, the conduct of those Departments is largely ignored. Despite our continual efforts to persuade the Government to establish a Select Committee, as proposed by the Procedure Committee, nothing has been done. I hope that that road block will be removed so that we see the same disciplines applied in Northern Ireland as here.
The same report deals with cleaning and portering services in hospitals, which are the responsibility of the Department of Health and Social Services in Northern Ireland. My concern here is that the Department's response to the Public Accounts Committee's conclusions is weak in a couple of cases. The Committee refers to guidelines for the operation of the cleaning services and concludes that the DHSS should ensure that guidelines on good practice on any health-related subject are implemented. Unfortunately, the response is weak. The Department merely note the Committee's comments and says that where appropriate it will set up mechanisms to monitor the implementation of such guidelines. Such a weak response makes one unsure about whether such guidelines will be implemented.
1443 The Committee's third conclusion on cleaning services in hospitals was that low unit costs, which in some areas are remarkably low, should he examined to ensure that a proper quality of service is being maintained. The Department's response to that conclusion was to remain virtually silent. It just says that the variations in high and low unit costs had been investigated and then goes on to refer, as if as a solution to the problem, to the present competitive tendering initiative imposing a discipline. I wish that it were possible to be confident that competitive tendering would cure the danger of a low quality of service, but, if anything, I fear that competitive tendering is likely to result in lower services than we have at the moment.
Looking through the minutes of evidence, I was struck by a comment made by the hon. Member for Rutland and Melton. He said that in England opposition to competitive tendering had been minimised because most tenders in NHS hospitals in England had been won by in-house organisations employing the same people who had done the work before. If only the same were the case in Northern Ireland. Far too often in Northern Ireland, the in-house tenders have been overridden in favour of outside tenders which gives real reason to believe that a lower quality of service will be delivered.
The Department's response to the Public Accounts Committee's conclusion on competitive tendering was that substantial savings were expected, but there is considerable doubt about whether there will be substantial savings and we fear that any savings that there may be will be swallowed up in other losses. For example, the Southern health and social services board in my constituency, which is responsible for cleaning and portering services in hospitals and which claims that it is achieving some savings through competitive tendering for cleaning and similar services, is moving to new headquarters. It decided not to move to new headquarters in Craigavon but instead to go to Armagh at a higher cost—some £2 million. I hope that the relevant Minister will take heed of that and act accordingly.
I conclude as I began, by congratulating the Committee on the thoroughness of its work, and I hope that more time will in future be devoted to its work.
§ Mr. Michael Shersby (Uxbridge)
I add my tribute to the late Ian Gow, a dear colleague whom we shall all miss for many years to come. My abiding memory of him on the Public Accounts Committee was asking the question that he used to ask the accounting officer at the very beginning of his contribution, "On what day did you take up your appointment?" By getting the answer to that question, he was able to fix firmly in the minds of members of the Committee the date from which that accounting officer had responsibility for his Department. His questions were always penetrating, and his contribution to the Committee's work is a great tribute to his memory.
Listening to the debate, it is evident to me that my hon. Friend the Member for Northampton, South (Mr. Morris) was right when he said that the Committee's role is changing. This is one of the more interesting debates that we have had because we have talked about the way in which the Committee works and that is of interest not just to us as Members of Parliament but to the British public and the British taxpayer.
1444 It is all the more important that my hon. Friend should have made that point, because the British taxpayer can now watch the Committee at work and see what he or she is getting by way of value for money in return for the taxes that are paid. That must be one of the most important advances that has been made by Parliament since the Committee was set up in the last century.
One of the most interesting sessions that the public had the chance to watch on television was the Committee's examination of Sir Peter Gregson, the permanent secretary to the Department of Trade and Industry, when he was giving evidence on the sale of the Rover Group to British Aerospace. That episode rivalled anything in "Yes Minister". Sir Humphrey Appleby is in serious danger of being replaced or retired. Sir Peter gave a masterly performance in a remarkable session.
We have not yet published our final report on Rover Group, but we have published an interim report and a report on the leak of evidence which was published by The Guardian. This evening I am in the somewhat curious position of being able to comment on the sixth report of the Public Accounts Committee on the sale of Rover, but I do not have the advantage of having at my disposal the Treasury minute which sets out the Government's views. That will have to wait until the final report appears in due course.
Several of my colleagues have already referred to the effect of the Committee's work on the civil service. I am an occasional lecturer to the civil service college, and I have been impressed by the extent to which civil servants, as part of their training, are helped to understand the work of our Committee. That is valuable in maintaining the high standards in the British civil service.
I have just returned from Zimbabwe, where I had the privilege of being a member of the delegation to the 36th Commonwealth parliamentary conference. Together with several other members of the Public Accounts Committee who were also members of that delegation, I attended a fascinating session on the work of Public Accounts Committees in other Commonwealth Parliaments which proved to be one of our most interesting sessions. My hon. Friend the Member for Rutland and Melton (Mr. Latham) and I were fascinated to learn that, in Zimbabwe, the Committee has the power to have police present at hearings, to fine accounting officers who have not done their job properly and to have them arrested by the police afterwards. That has not proved necessary in Britain yet, and I hope that it will never be. However, it is interesting to note that some of our Commonwealth colleagues find it necessary to adopt more draconian measures than ours.
The most fascinating investigation which the Committee has carried out in recent times has been into the sale of Rover Group to British Aerospace. The motor industry and motor cars have provided us with some of our most interesting work over the past few years. I pay tribute to my hon. Friend the Member for Rutland and Melton for the quite extraordinarily effective work that he carried out when we investigated the affairs of the De Lorean motor company.
In our sixth report on the sale of Rover Group, we considered the fact that, in 1975, the British Leyland Motor Corporation was making heavy losses, was facing bankruptcy and was taken into public ownership. In August 1988, the Government sold their 99.8 per cent. shareholding in the company to British Aerospace for £150 1445 million, after providing a cash injection of £547 million in recognition of the company's debt and to support its investment programme.
From 1975 to the sale, the taxpayer had provided £2.9 billion in non-interest-bearing capital to support the company. My memory of my 18 years in this House is punctuated by periodic attendances in the Chamber to listen to debates in which Industry Ministers of both Labour and Conservative Governments sought to persuade hon. Members that they should vote yet another large tranche of our hard-pressed taxpayers' money to support British Leyland. A staggering sum of money was invested in that company—unfortunately to very little effect. We could all see the considerable difficulties which the company experienced until the time when the Government were obliged in August 1988 to take it into public ownership to prevent it from going bust.
When we came to the point of examining the sale of the company to British Aerospace for £150 million, it was perhaps not surprising that the Committee was anxious to be clear beyond all shadow of doubt that the Government's actions were justifiable and that the taxpayer was getting value for money for the sale of that very considerable asset. That was the basis of our investigation.
As I have said, the Committee has not yet published its final report, but the interim report is before us this evening and I can therefore pick out one or two of the salient points which will doubtless feature in the final report.
Last December, we examined the Department of Trade and Industry and its financial advisers on the sale and we had before us as witnesses the permanent secretary to the Department and his colleagues and a representative from Baring Brothers—otherwise known as Barings. We questioned them on the arrangements for the sale and the adequacy of the financial terms that were eventually agreed.
As the basis of our examination, we used a report and separate memorandum from the Comptroller and Auditor General which concluded that Rover Group was worth substantially more than the price that was agreed with British Aerospace. The purpose of the interim report is to deal only with the facts relating to the exclusivity and conduct of the Department's negotiations with British Aerospace and the handling of the relations with Parliament and the European Commission. As I have said, the conclusions will be set out in another report. The exclusive nature of the deal which the Department of Trade and Industry did with British Aerospace is the subject of this interim report.
British Aerospace first expressed interest to the Department in buying Rover Group in February 1988. We were told that its interest was conditional on the granting of exclusive negotiating rights, and the chairman of Rover Group told the Department that, in his view, such exclusivity would be in the company's interest. He was obviously very concerned that open competition would cause a repeat of the uncertainty that had damaged the business in 1986, during the negotiations with General Motors and Ford which, the House will recall, were abortive.
As a result of the chairman's view and the events that took place in 1986, the Department considered that 1446 competition would put the Government in a better negotiating position and might lead to better sales terms. However, it accepted that competitive bidding would lead to uncertainty and might so damage the company's prospects that the Government would have to consider extensive contingent liabilities under what are called the "Varley-Marshall-Joseph" assurances which are named after former Industry Ministers. The assurances would not allow Rover Group to be left in a position where it could not meet its obligations. They were worth £1.6 billion as the contingent liability. We must take that huge sum of money into account when trying to fathom out what determined the Secretary of State for Trade and Industry to agree to the exclusive deal and sell Rover Group to British Aerospace.
The Department received legal advice that the exclusive negotiating rights granted to British Aerospace should amount to no more than a statement of intent to deal exclusively. The negotiating rights would leave the Department free to take account of any other offers that it might receive from potential bidders. In fact, we were told that approaches were made by four other interested parties —Ford of Europe, Volkswagen, Lonrho and Melton Medes, which is a Nottinghamshire company.
The Committee asked the Department why it believed that the threat that competition posed more than outweighed the benefits of a limited competitive tender of the kind of which it and Barings had originally been in favour. In evidence, the Department told us that the Government had carefully considered whether to proceed on that basis. They recognised the advantage of competition in giving a benchmark against which to measure prices, but they concluded that a public auction would be damaging to the company.
That belief, which was shared by the company, was based on the experience of 1986, when interest by Ford and the consequent loss of confidence by dealers and customers resulted in a decline in the Rover Group's market share from 18.4 per cent. in January to 15.8 per cent. in February 1986. That market share was never recovered.
As I recall the evidence and the climate in the Public Accounts Committee, that information certainly had a substantial bearing on exclusivity—that the creation of uncertainty in relation to a motor company can result in a substantial and rapid loss of market share which it is extremely difficult ever to recover. The chairman of Barings made it clear to us that that decision was a matter of judgment by the Department. It is not a matter of certainty; it is a matter of judgment.
We found ourselves considering a very interesting matter indeed. We noted carefully that an initial deal for the Rover group was concluded with British Aerospace in one month. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) talked about the time that it takes to build a hospital—15 years—but the speed with which the Rover Group was sold to British Aerospace was quite breathtaking—one month.
We therefore asked the Department why it was in such a hurry to sell the company, given that it was simply the Government's wish to dispose of it within the lifetime of this Parliament. We were told that the Government took the view that, if they could end the uncertainty about the future of the Rover Group which had persisted for a considerable time, it would clearly benefit the company. Of course, they were anxious to relieve themselves at the 1447 earliest opportunity of the contingent liabilities under the Varley-Marshall-Joseph assurances, which were very substantial indeed.
The taxpayers who watched the Public Accounts Committee taking evidence at the meeting on 4 December must have been aware for the first time that those large contingent liabilities still existed and that they might have had to put their hands into their pockets once again. That did not happen, because the company was sold.
We also pressed the Department of Trade and Industry on why it did not opt for a public flotation to test the market. That had been done before. We were told that, after extensive analysis, it had concluded that it was not a viable prospect and that trying to sell the shares on the open market was not really a serious runner.
We looked closely at the money involved. It has been talked about a great deal in the press and on radio and television. It was not just the £150 million that British Aerospace paid for the company that interested us: it was also the assets which the company acquired in return for the £150 million and what happened to them. At the end of the day, all that added up to a net cost of £460 million to the British taxpayer, because it included a debt write-off of £469 million, further assistance in the form of regional assistance, the easing of tax restrictions and the payment of British Aerospace's costs. It also included withdrawal by British Aerospace from the Columbus project.
We had to consider whether the spending of £460 million of British taxpayers' money could be justified in the very speedy disposal of that company to British Aerospace. We had it in mind that, because the Department did not have the benefit of competition to determine a fair price, it had nothing to act as a benchmark or a valuation of the assets in negotiations with British Aerospace. The Committee was told that the aim was to assess a fair price for the company on a going concern basis, taking account of past losses, including interest of £2.7 billion, injections of public funds of £2.9 billion, and potential liabilities under the Varley-Marshall-Joseph assurances of substantially more than the £1.6 billion that I have just mentioned.
The company had achieved a profit—not a very big one —of £27.9 million before tax and interest, which it hoped to improve in subsequent years, but only at the expense of a £1.5 billion capital expenditure and restructuring programme. In looking at the episode, one must take into account those two huge figures, the £1.6 billion contingent liability and the £1.5 billion capital expenditure and restructuring programme. They are very large sums of money indeed.
Clearly. any company considering the acquisition of the Rover Group from the Government would have had to think carefully about whether the modest profits of the company would justify taking what must be considered a fairly substantial commercial risk, bearing in mind the uncertainty of the motor industry, the fact that far more cars are being produced than there are customers to buy them, and the fact that, all over Europe, Governments are supporting and propping up motor companies by subsidies of one kind or another, whereas if there were no subsidies in the free market there would undoubtedly have been a considerable rationalisation of motor manufacturing capacity some time ago.
We had to look at all those figures and try to balance them. I cannot say more than that. I cannot pre-empt any decisions that the Committee may come to in its wisdom, 1448 on which it will report to the House in due course. However, I can refer to the sale of the company's assets, which were quite substantial. I think that they amounted to about £106 million. That matter must be considered, together with the purchase price of the company.
The right hon. Member for Ashton-uncler-Lyne referred to the absence of a clawback provision, something with which we are all familiar. When an asset which belongs to the taxpayer is disposed of and it is subsequently proved that it has been disposed of at a price lower than it should have been, there is often provision for clawback. We asked why, in the case of the sale of the Rover Group, no provision had been made in the sale and purchase agreement for clawback within a prescribed period.
In reply to our questioning, the Department of Trade and Industry told us that the Government had imposed a repayment clause in relation to the main core of the Rover Group's business and on the tax losses on the company's trading, but they had not extended those arrangements to the disposal of surplus sites and the disposal of stakes in the associated companies. I should not be at all surprised if the Public Accounts Committee had more to say about that when it eventually makes its final report on this matter.
It was therefore with considerable concern that the Committee, in studying the final memorandum from the Comptroller and Auditor General, noted that the £150 million price of the Rover Group did not have to be paid until 30 March 1990. We are all familiar with the offers that are made nowadays by just about every motor company—one does not have to pay any interest for a year. We are not so familiar with such a situation when it comes to disposing of public assets, yet it appears that that is virtually what happened—the company did not have to pay until the end of March. I can only guess that there must have been some considerable arm twisting to persuade British Aerospace to buy it and for the Government to have accepted that condition.
The Committee asked why that fact had not been publicly announced. We were told that those matters were referred to in the proper place in relation to parliamentary scrutiny and control of the estimates and expenditure under various legislation. Vigilant though Members of Parliament are, it has been known that perhaps not all of them scrutinise the estimates as carefully as they should; they may therefore miss, deep within them, a fact such as that which we felt was so material to our consideration of the Rover Group. If such a sale is ever again contemplated, the date on which payment is due should be made known to the House. Hon. Members should not be left to discover it by accident from a close scrutiny of the estimates with a large magnifying glass.
The House will have to await the final chapters of this interesting episode. I believe that the Committee did a powerful job in flushing out much of the information that the public had a right to know. On this occasion, it did so with the television cameras switched on. I have subsequently met many people who are not as well informed about what we do here in Parliament as hon. Members, but who said that they found it the most fascinating investigation by a parliamentary Committee.
That greatly encouraged me. It convinced me that television has been a welcome innovation into the proceedings of the House and the Standing Committees. I hope that we shall see far more of the work of our Select 1449 Committees and our Standing Committees on television in future, because many people who cannot easily come to London to sit in the Strangers' Gallery can take a great deal of interest in what is going on. That is of considerable benefit to us, because they often send us information that we can use when questioning witnesses.
In conclusion, I pay tribute to our Chairman for the most skilful way in which he conducts our proceedings. I hope that this will not be the last such debate in which we shall hear a speech from my hon. Friend the Member for Scarborough (Sir M. Shaw), who is a wonderful colleague, and a skilful member of the Committee. I hope that we shall have another such debate before the end of this Parliament. I make the same remarks about my hon. Friend the Member for Rutland and Melton (Mr. Latham), who said in passing that this might be his last such debate because he is not seeking re-election to Parliament. I shall never forget his powerful contribution in our six-month inquiry into the De Lorean affair. It was a substantial contribution to parliamentary scrutiny of the Executive.
§ Mr. John Battle (Leeds, West)
Unlike most hon. Members who have spoken in the debate, I have never been a member of the Public Accounts Committee, but I believe that its work is vital to good government and to the well-being of our constituents. This collection of reports has an impact on some of the poorest of our constituents, such as those on housing benefit, pensioners and those living in rented housing. The Committee's reports should be taken seriously by all hon. Members. I agree with the comments made by the hon. Member for Northampton, South (Mr. Morris) on the presentation of the reports and their number. He said that many of the reports are lost to time, buried in filing cabinets, and that they are not linked to later reports. As a result, the recommendations are not connected and are not taken as seriously as they should be.
I shall concentrate on four of the reports—the retail prices index report, which is the 34th report of the 1989–90 Session; the report on housing benefit, which is the third report of the 1989–90 Session; the report on housing association grant and housing needs allocation which is the 27th report; and the 16th report, which deals with financial management in the national health service.
I recall that a recent Government press release used the retail prices index almost as a unique selling point because the Government were anxious to claim that, because increases in social security and pensions which are to be announced in the forthcoming uprating statement, will be set at current inflation rates—at the rate this October—the poorest pensioners and those in receipt of social security benefits will receive a bumper bonus in April. However, that relies on the crucial assumption that inflation will be reduced by then. Furthermore, the briefing failed to mention that in the previous five years the rate of inflation when the benefits were fixed in October was lower than the actual rate of inflation when the benefit payments started the following April. In other words, for five years those on pensions and benefits have, in effect, been shortchanged.
If that is seen as a strong statement of the case, I refer hon. Members to the report on the retail prices index. In paragraphs 30, 31 and 32 the Committee draws attentionton 1450 to a computer error that led to an understatement of the retail prices index in 1986 and again in 1987. As the report states, that led to
many millions of people receiving lower pensions and benefits than they were entitled to receive.Paragraph 32 states:
The Government considered that the Exchequer should not benefit from the error and special compensation payments, totalling some £102 million, were made to recipients of specified pension and social security benefits. In addition, donations totalling £14 million were made to appropriate charities to reflect small underpayments to a large number of beneficiaries rather than incur disproportionate administration costs in meeting individual payments. Nevertheless, the estimated administrative cost of the compensation exercise was some £5 million.In other words, the cost of correcting the error and of giving the money to charities was £5 million. Although the report states that it involvedsmall entitlements to a large number",we are talking about weekly amounts being deducted from people's pensions and benefits, which could have had significant effects. It meant that the poorest in our society were paying the price for that computer error.
The language of inflation is changing. We do not just have inflation now; we have "headline inflation" and the "underlying rate" of inflation. It is almost as if there is a deliberate attempt to split the concept of inflation. We have already heard proposals to take mortgages out of the retail prices index. The Public Accounts Committee report refers to that—I am glad that it recognised the difficulties of doing so. There have also been proposals to remove all housing costs from the RPI. When that proposal is advanced, it might be worth reflecting on the fact that there is a rampant rents explosion. Rents are increasing far too quickly and beyond the rate of inflation, yet we now hear that housing costs may be deducted when calculating the rate of inflation.
There have recently been proposals to ignore oil price rises when calculating inflation. It seems logical to some—perhaps to those who believe that inflation could be brought down to zero—that if everything in life that increases in price were excluded from the calculation, inflation could be reduced. The easy way of bringing down inflation is by deflating the way in which it is assessed. Of course, we need a realistic measure of the price changes in goods and services. That is basic to any assessment, whether of housing benefit payments or hospital budgets. It is essential that people know where they stand, so that budgets can be assessed in the first place. But one does not arrive at that realistic measure by manipulating inflation down because its actual rise is so deeply embarrassing to a Government who are committed to abolishing it entirely.
We are awaiting the Treasury response to that report from the Public Accounts Committee. We should look forward to it but when the new means of defining the retail prices index is brought before us we should not forget that many millions of people depend on that assessment for their pay and their pensions. It is absolutely crucial to get it right.
There is a clear link between the report on the retail prices index and the third report of the Committee on housing benefit. In the Treasury minute in response to the housing benefit report, it is more than clear that there has been enormous difficulty with housing benefits because of a mismatch between Government policies in the Department of the Environment, which deals with the whole structure of housing and rent costs, and the practice 1451 in the Department of Social Security. I quote the conclusion of the Public Accounts Committee, which appears in the Treasury minutes:We find it unfortunate that an important measure … of controlling Housing Benefit expenditure—the power to ask the Rent Officer to determine a fair rent for tenancies entered into before April 1989—was withdrawn. We recognise, however, that policy in this area is mainly the responsibility of the Department of the Environment.The Treasury minute did not go on to add the conclusion of the sentence which said:
and trust that they were aware of the considerations which were of importance to the Department of Social Security.I remind the House that in March 1988 there were two Bills before the House on which I had the fortune or misfortune to serve in Standing Committee practically simultaneously. One was the Local Government and Housing Bill which dealt with the deregulation of rents. The other was the Social Security Bill, which dealt with fixing the formula for housing benefit repayments to local authorities. In another Treasury minute we read:DSS and the Department of the Environment maintain close liaison on issues such as this where their policies interact. The Government decided to repeal the power of local authorities to apply for registration of a fair rent for a regulated tenancy".The difficulty was that the boxed thinking of the Departments meant that one Standing Committee did not know the policy measures being dealt with by the other and which were incorporated in the Bill, which later became an Act. It was pointed out at the time that simply to deregulate rents would result in housing benefits being paid on astronomically high rents. That was not regarded as a problem in the Department of the Environment Bill but the DSS had not realised the impact of deregulating rents on its budget.
When one Department does not know what the other is doing, it is crucial that such matters are ironed out for one simple reason. If there is a difference between the level of the rent and the amount of housing benefit paid to those who are means tested in order to receive assistance to pay their rent, it is crucial to know who pays the difference. Is it the tenant, who is means tested and may be on full housing benefit? If such tenants find that they get rent increases they cannot pay they may receive notice to quit and are evicted. Or must the local authority pay the difference? In that case, other local authority tenants make up the difference because the amount falls on the local authority housing budget. I am glad that at last the issue of the abolition of fair rents has been picked up and that it has been acknowledged that a space has been opened up for exploitation of housing benefit by unscrupulous landlords. The report referred toabuse by landlords who require tenants to pay unreasonably high rents on which benefit is then paid.The key question of who pays the difference—the tenant or the local authority—must be answered because those entitled to full housing benefit as a result of means testing of their already low incomes should be the last people to pick up the difference.
In the report on housing association grants and housing needs and allocations we read a clear policy statement:Social housing is intended for those who cannot afford market prices or rents".Again, there is a clear conflict of policy. The Government encourage market rents, which in turn undermine social housing. In practice social housing is being priced out. Even housing association housing is driven to cut costs and increase rents. Although the Treasury response cannot 1452 and has not taken account of the recent instruction from the Housing Corporation to housing associations that they must compete for housing association grants, the impact of that action will be an increase in rents.
The assessment of housing needs is the assessment that local authorities make of their local housing resources. They must assess what their area needs. The assessment is submitted to national Government. Local authorities are then given, not a grant, but permission to borrow, in order to get on with the job of providing and maintaining the housing stock in their area. The assessment is based on the general needs index. I draw attention to the report, which stresses that the index is not sufficiently locally sensitive to changing needs and improvements and developments in housing. To give a practical example, if an authority in an inner city area such as Leeds has many houses with outside toilets it is given a weighting, because the houses need to be provided with inside toilets. But if the authority improves all those houses it will be penalised in the allocation. In practice, it is better to keep the houses with outside toilets because that increases the local authority's weighting.
I am glad that the issue of the general needs index has been raised, but the key is in paragraph 14 of the report. It shows beyond a doubt that the crucial issue is that of resources. It says:Because resources had been too limited and the process of 'damping' operated since 1986 had limited changes in the Index scores, the Department had only used the Index in an attenuated form since 1986.Paragraph 15 says:We regard it as unsatisfactory that the distribution of housing resources to local authorities has been based for so long on out-dated assessment of needs.That focus is most welcome. Again, the emphasis must be on the general lack of resources. I accept that, as the Chairman of the Committee made clear, the reports are written in restrained language. However, there has been a deliberate reduction in local authority housing budgets of two thirds in the past 10 years. My own authority needs and has asked for £112 million for this year's programme. It will be interesting to see what response we receive in the weeks and months ahead. In the meantime, I hope that when we consider housing needs we take account of the absolute shortage of housing and the needs of people for a decent, appropriate and affordable home.
Lastly, I wish to glance at the report on the health service. In the general statement in the Treasury minute paragraph 59 says:The Department of Health considers it most important that health authorities should be in a sound financial position when the White Paper changes are introduced and has made elimination of deficits a priority for 1990–91 through flexible and realistic planning.It seems that the entire response of the Treasury to the Public Accounts Committee report is based on the future projections for the White Paper. We are entitled to ask what that statement means. The Public Accounts Committee could be drastically overworked in the next few years examining health service reports precisely because of the changes in the White Paper. The issue at root is balancing the books for the deadline of next April when hospitals put forward their bids to be self-governing trusts and to opt out.
The PAC recognises the difficulties of planning using estimated pay and price inflation, which is calculated a long time in advance. The current policy that has been implemented augurs no real change in practice from the 1453 proposals in the report. For example, Leeds general infirmary—the LGI—has put in for self-governing status and it must balance its books by April. It has, however, overspent its budget for the first five months of this year and across the entire district health authority the deficit has now reached £500,000. That deficit has largely arisen from funding for Leeds general infirmary.
Unit general managers have been instructed to freeze staff appointments and to cut spending on drugs and equipment, and catering and portering services are to be reduced at Chapel Allerton and Newton Green hospitals. The director of finance has instructed that vacancies in hospital administration are not to be filled and that payments of bills are to be delayed where possible. That is precisely the opposite of the recommendation in the PAC report and the response to it by the Department of Health recorded in the Treasury minute. That minute makes it clear that where possible the payment of bills is not to be delayed. It is clear from the current budget plans and their implementation that ward closures and cuts in essential services represent the only option for Leeds general infirmary if it is to get its budget deficit under control or anywhere near balanced by next April.
The PAC report devoted a great deal of attention to condemning "crisis management". Paragraph 66 of the Treasury minute records that the Department of Healthshares the Committee's condemnation for the crisis management measures used in the NHS; such measures are never acceptable.Crisis management is happening now, but what of the future? The inflation estimates in the documents provided for the opting out of Leeds general infirmary and St. James's are miles from reality and the inflation figures for two areas of the same city have been estimated at between 5, 3.5 and 3 per cent. for the LGI and 7, 5.5 and 5 per cent. for St. James's for the years 1990–93. There is a real discrepancy and that is especially important when one considers that if the estimated inflation figure is not met the expected impact of the actual inflation will be provided for bya reduction in service levels".Recently the Leeds Western health authority has had to pay out about £1 million in compensation. I understand that only one third of a million may be met out of the local budget, but even that will mean a reduction in local services.
The Leeds health authority budget could be balanced if land and property were sold—the houses that Leeds general infirmary owns—but site sales to balance the books cannot be the way out of crisis management in the short term. That is not an appropriate programme for an expansion of services.
I hope that, before the trust proposals are put forward, the Department of Health will seriously consider the PAC report and the Treasury minute on it. I hope that those reports will be sent to the regional health authority so that it can consider them before submitting its details. If that does not happen, the same mistakes that arose over housing benefit and the computer error and housing rents will be repeated. Despite advance warnings, we shall find that, surprise, surprise, in future years the accounts of the self-governing hospital trusts and declining health service provision will provide the bulk of the work for the PAC. 1454 I hope that the Treasury will advise the Department of Health to look carefully again at the authority's proposals before they are proceeded with.
§ Mr. Richard Page (Hertfordshire, South-West)
First, I should like to endorse all the references that have been made by the Chairman of the Committee and other Committee members to our late colleague Ian Gow. Nothing that I can say can add to what has already been said, but we have a duty to ensure that his memory never fades so that the murderous creatures who brought about his death realise that they will never be able to achieve their aims with the bomb but only through the ballot box.
I am always surprised that this debate is not better attended and not subject to greater demand by hon. Members because the material source is rich and varied, as the hon. Member for Leeds, West (Mr. Battle) has just illustrated. There is no danger of galloping over the same old ground for the sixth or seventh time. One should never call the speeches of hon. Members boring, but a debate on a narrower subject tends to be somewhat repetitive when the same fact is examined in a variety of different ways. Perhaps we could learn something from the Bundestag, where debates that take us six or seven hours are limited to just three hours.
I cannot compete with the long service medals that have been paraded this evening. In comparison with 20 years or so of service, my three years on the Committee makes me a relative new boy. I was, however, taken by the speech of my hon. Friend the Member for Northampton, South (Mr. Morris), who spoke of the need to examine our procedures to see how they could link with the European Court of Auditors. The work of the PAC is subject to continual review and perhaps we should examine whether there should be a closer link with European methods of examining how various Government Departments work.
In the three years that I have served on the Committee I have seen various Departments and topics come round and round—I hesitate to say, like bad pennies. One issue, however, that does not come round time and again is the retail prices index, to which the hon. Member for Leeds, West has already drawn attention. I believe that it is some 10 years since it was subject to the scrutiny of the PAC. Apart from some criticism of the methods by which some information is collated—something that can be easily put right—the PAC noted:The assurance of the Central Statistical Office that the basic framework of the RPI ensures an extremely robust indicator for measuring consumer price inflation.It goes on to say, however, that it welcomesthe consideration currently being given to the development of a statistical reliability modelfor the index and the efforts to developa systematic methodology for assessing possible enhancements".That addresses the question whether the basket of goods representative of family spending four years ago is still accurate. It also leads one to question whether there is any regional balance or shopping types that should be taken into consideration. Perhaps the RPI should be targeted relative to the group to which it is applied. The obvious example is the pensioner whose weekly basket of purchases may not be identical to that of the average family. I do not wish to say anything further, but if we use an RPI on which 1455 decisions are made, it is appropriate that it relates to the group subject to those decisions rather than being a general index that may not be accurate.
The 29th report of the PAC concerns the Customs and Excise and specifically the disposal of drug smugglers' assets. I believe that that subject illustrates that constant dripping wears away the stone, as I first raised the disposal of drug smugglers' assets through Customs and Excise in the 22nd report of 1989–90. The response then was to the effect that the Treasury was not yet persuaded of the merits of the scheme, mainly because it did not think that it would be right that the resources devoted to drug smugglingshould depend on an unpredictable and fluctuating level of proceeds from seizuresand we were told that the discussions were continuing.
The matter having been re-examined this year, I am glad to note that it has moved on somewhat. The response now seems to be that Treasury Ministers have agreed to a scheme by which a proportion of the sums from drug smugglers' assets could be used in the anti-drugs context. We are told that, although 13 international confiscation agreements have been made, as yet no funds are flowing from the initiative. We can only hope that such procedures will be developed with the passage of time.
I appreciate the desire of the Minister to be cautious, wanting to proceed year by year. I hope that his efforts will be successful and will help to protect the youth of the country from the trafficking scum who would destroy it.
One of the most damning reports of the year was on the Energy Efficiency Office. Any body that sets itself up with such a title is leading with its chin, and I regret to say that we found little efficiency and not much energy. The report is damning because it questions whether the Energy Efficiency Office should have been in existence for the past five or six years. No targets were set, monitoring was suspect, to say the least, and there was no co-ordination among Departments to see whether there was any relative progress or whether best practice was spreading. The situation was summed up in a sentence in paragraph 10 of the report, which said, with that typical understatment that is part of the PAC's raison d'etre:we question whether the Energy Efficiency Office as presently constituted and run can secure the objectives set out by the Secretary of State and achieve value for money.I read that to mean that it has been wasting its time, and nothing that came out of the evidence convinced me to the contrary. But in the belief that hope springs eternal, the Committee added:We emphasise that we expect the Energy Efficiency Office to exercise close central direction and monitoring of the initiative and to provide advice to departments on best energy efficiency and practices.That must happen if that office, which should be a vital organisation, is to have any purpose, and need exist, in the future.
The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) referred to the 31st report, entitled "Quality Control of Road and Bridge Construction", which links, in my view, with the 28th report of the previous year on the backlog of maintenance of motorways and trunk roads. Like other hon. Members, I raise the issue because of the main roads that run through our constituencies and cause grief and aggravation. My constituency is bisected by the M25, at times the largest car park in the United Kingdom. I share my constituents' anguish and aggravation because of their belief that they are paying the price for the sins of the forerunners in the Department of Transport.
1456 The saga of deferred maintenance continues. The problem was highlighted in the report of two years ago. Our last report showed more clearly that not sufficient attention had been given to design life and quality of maintenance. The hon. Member for Birmingham, Perry Barr (Mr. Rooker), a member of the Committee exposed the lack of quality of maintenance. I recommend hon. Members in all parts of the House to read his cross-examining on page 7 of that report. He highlighted two cases, one of plinth-bearing replacements and the other of spaghetti junction, where there were impressive overruns—if one can regard any excess of expenditure of public money as impressive—of taxpayers' money.
Although sanctions are available to the Department, there is a feeling that they are being used sparingly. For example, we noted that, despite the many failures in producing the correct level of support in exercising maintenance contracts, the reliance by the Department on the sanction of banning contractors or consulting engineers from tendering had been imposed only once in recent years and that few warnings had been issued. I suggest that the Department takes a tougher line when dealing with overruns on contracts and with faulty and shoddy work.
The right hon. Member for Ashton-under-Lyne took issue with the Treasury minute on design life and the relevant cost of quality improvement on initial installation. I support him in that. The matter remains unresolved. I fear that the saga will continue to run as the whole question of the maintenance and repair of roads and bridges returns for consideration by our Committee.
I shall not go over that ground again, except to say that I found it remarkably callous that the Department's calculations did not take into account the heavy cost of delays incurred by the travelling public and industry. We must treat the travelling public with the correct attitude because they pay for the maintenance that in turn pays for all the jobs connected with the Department. More consideration of those who use the roads would not go amiss.
As I said, this whole debate contains a rich vein of information that need never run out in the time scale available to us. I have highlighted a few issues that are of importance and that I found interesting during the year. Other hon. Members have adduced their thoughts. I join others in expressing appreciation to our Chairman, the right hon. Member for Ashton-under-Lyne, for the gentle yet firm way in which he guides us. I am sorry that occasionally he finds it necessary to issue the 15–minute warning, but if he did not do so we should on many occasions not conclude our deliberations before midnight.
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)
Let me associate myself and my hon. Friends with the remarks made by hon. Members on both sides of the House about the late Ian Gow. Ian was cruelly murdered, and I condemn unreservedly both the murder and the murderers.
The Chairman of the Public Accounts Committee described Ian Gow as a valuable member of the Committee, and also referred to his hard work and wise counsel. He was an able parliamentary opponent. Following his resignation from the Government on a point of principle, he took a particular interest in Treasury 1457 matters, and was always available to bat for the Government side in our little skirmishes over taxation policies.
I shall miss Ian's contributions to Treasury debates very much. I found out that, as well as being a tough and formidable opponent, he was—as has already been said —a very kind and a very nice man. We are diminished by his death, and also by the manner of it.
I welcome the Financial Secretary to his new job. I hope that he is not offended by the level of attendance tonight; it is actually quite good for the concluding stages of a Public Accounts Committee debate, and I am sure that that is a tribute to him. We have all come to hear his debut from the Treasury Front Bench. I welcome him on behalf of the Opposition, and look forward to hearing his contribution later.
Let me also express my thanks to the Committee for its work, as I have done in the last three Public Accounts Committee debates in which I have replied for the Opposition. I especially thank the Chairman of the Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). The PAC is a hard-working Committee, but it is kept going by his diligence and enthusiasm as Chairman: that is very much appreciated. We also appreciate his approach to the work of the Committee—work that is considered, reflective and courteous, and brings about the unanimity that is so important to the integrity and power that the Committee's reports carry.
I congratulate my hon. Friend the Member for Leeds, West (Mr. Battle) on having got his hands on the Committee's papers, and also on being the only non-member of the Committee to take part in this debate. [HON. MEMBERS: "What about David Trimble?"] It seems that I am mistaken: the hon. Member for Upper Bann (Mr. Trimble) is also to be congratulated.
It was quite difficult to obtain copies of the Committee papers during the summer. While I realise that Committee members are familiar with them, if they were more easily available to those who do not serve on the Committee, perhaps other hon. Members would be more likely to take part in our debates. I rather agree with the hon. Member for Hertfordshire, South-West (Mr. Page): if more hon. Members realised what a seam there is to tap, there might be a better attendance and a broader range of contributions.
I was sorry to learn that the hon. Member for Scarborough (Sir M. Shaw) is retiring at the next general election; I wish him well in his retirement. He has been a regular contributor to our debates in this Parliament, and, if he is here for the next debate, I shall be able to wish him well again.
The Chairman described the Committee as a kind of "training scheme" for Labour Members from the 1983–87 intake who have gone on to take starring roles in our Front-Bench team. I am now something of an old lag: this is my fourth year of responding to these debates, and my third Financial Secretary. I do not think that I am wearing them down, as they have all gone on to greater things, and I am sure that the new one will as well.
There are certain recurring themes in these debates. The Ministry of Defence figures prominently this year, as it has previously; so do the affairs of Northern Ireland. The issue 1458 of fraud is perhaps not quite as prominent as it was in the previous two years, but it nevertheless features in some of the reports.
There are two further issues that are defined not by Department or by type, but in a more general way. The first is the issue of public expenditure foolishly forgone, which is dealt with in several reports. I am trying to introduce the word "Lamontable" into the English language to describe such public expenditure foollishly forgone, and I shall continue to do so. The word has not been taken up yet but, with grit and determination, I shall manage to get it into the dictionary.
The other feature which becomes all too clear from the reports is implementation of Government policy clashing with the best interests of the public purse. That is especially noticeable in the reports dealing with privatisation.
First, I shall deal with the report on matters relating to Northern Ireland. The Chairman of the Public Accounts Committee took us all back when he referred to the report on the De Lorean affair. He then invited us to get inside one of those De Loreans and go "Back to the Future", to examine similar affairs.
Reference was made to the paving stone accident claims in Northern Ireland. Hon. Members may recall that there was a time when just about every house in Belfast seemed to contain someone who had fallen down and had a claim against the state for injuring their knees. The previous Public Accounts Committee report dealing with social security matters in the Province could have been mentioned. That report set out the problems clearly, but conclusions seemed to be a little further away. I notice that the Treasury response to that report was not very encouraging either.
Other issues that the Public Accounts Committee will have to consider in future will certainly include progress on the AOR1 contract, compared with the original promises made.
The hon. Member for Scarborough referred to the land registry in Northern Ireland, which failed to put up the fees to cover its costs. That is a simple problem, but it should have been picked up long before it was.
Another report before us today deals with plants and with microfilm. Although the sum of money involved is not vast when compared to sums mentioned in other reports, the word "astonished" is used—and that is strong language from the Public Accounts Committee.
When studying all these issues, I found a key theme —it is supervision: checking and monitoring and intense and continuing audit. I suspect that that is not as easy to achieve in Northern Ireland as it is to say in a debate. I strongly support the hon. Member for Scarborough, who said that the tests that we apply to Northern Ireland should be no different from those we apply elsewhere in Britain. That is right but it is not easy, and the House should be aware of the difficulties while we keep that purpose firmly in front of us.
Before leaving the subject of Northern Ireland, it is worth referring briefly to the 30th report of the Public Accounts Committee about collection of the broadcast receiving licence fee—the BBC TV licence. It says:We are very concerned at the current level of licence evasion and regard it as unacceptable.I suspect that that was also said back in 1985. The report goes on to point out:
1459We note that, although only some I million households have black and white televisions 1.8 million monochrome licences were issued last year.That fact caught my attention and I am sure that of other hon. Members. What conclusions are we to draw from it? The Public Accounts Committee drew the obvious conclusion. When I read through that report I was reminded of the debate that we had earlier about the road fund licence and its collection. It said that the penalty for non-payment is less severe than paying the licence fee. We have been told that events have not moved on since the Public Accounts Committee last considered the matter. We seem to be getting stuck. 1 hope that the Committee will not come forward in the next Parliament, or three years into it, and tell us that it is worried about the level of licence evasion and regards it as unacceptable.
There must be a response to these licence issues, whether it be the road fund licence or the BBC's television licence, that goes further than letting the problem drift and noting that it is still a problem in two or three years' time. The problem is not unrelated to the problems in Northern Ireland, where the level of evasion is substantially higher than it is in other parts of the United Kingdom.
The most important report before us is the Public Accounts Committee's sixth report on the sale of Rover Group plc to British Aerospace plc. Both the hon. Member for Uxbridge (Mr. Shersby) and my right hon. Friend the Member for Ashton-under-Lyne said that this is an interim report which poses questions; it does not reach definitive conclusions about them. I fully accept that the Public Accounts Committee has more work to do. Nevertheless, they are powerful questions and to some extent almost lead to their own conclusions. Good and plausible answers will have to be given to them. The hon. Member for Uxbridge did his best to provide them in his speech.
The questions that my right hon. Friend the Member for Ashton-under-Lyne, the Chairman of the Public Accounts Committee, rightly raised were: why not accept competition in order to obtain the best price? There is a departmental response to that question, although how convincing the Committee finds it will be a matter for further consideration. The Department needs to justify its policy of exclusivity.
My right hon. Friend also asked what evidence there was that the public option would be damaging and why the other offers were not followed up in a closed competition. The Department said that competitive tendering involves risk. That is not the line that Conservative Governments usually adopt. Normally we are told that competitive tendering is good and that it should be embraced rather than thoroughly avoided, as it was in this case.
A number of other questions were asked. Since the Department did not have the benefit of competition to determine a fair price, the Committee asked why it did not carry out an evaluation of all the assets of the company. That was a fair question, and there was a response to it. The Public Accounts Committee will have to consider carefully precisely what assessment to make of that response.
A number of other questions fall into the same category. The Public Accounts Committee asked the Department why it was prepared to accept a settlement that the European Commission showed it was possible to improve. It asked the Department why it had based all its negotiations on profit forecasts at the lower end of the 1460 Rover Group's profit forecasts when the company was forecasting a range of profits in 1988 of between £37.5 million and £65 million. The Committee also asked about the Rover Group's stakes in nine associated companies.
A question that in particular caught my eye was the one which was put to the chairman of Barings. He was asked to explain the disparity between his company's evaluation of Istel at £8 million to £10 million and the fact that it was disposed of shortly after the sale for £39 million.
The Committee also asked the Department why it had not sold off the surplus land that was not connected with making motor cars before the Rover Group was put up for sale. The Department told the PAC that, at the time of the sale, there was only one such site—Bathgate—and that that remained the case. In subsequent written evidence, the Department confirmed that it had been aware of moves to close down a further three sites in time.
The Department told the PAC that it did not carry out an evaluation of the Rover Group's shares in these companies early in 1988 when British Aerospace made its initial offer for the company. The Department was unable to put a precise figure on the value to British Aerospace of the Rover Group's tax benefits—a significant issue.
My right hon. Friend also referred to the fact that, in the case of the sale of the Rover Group, no provision was made for the Government to claw back from British Aerospace within a prescribed period some part of any unforeseen financial benefits accruing from the sale of surplus sites or shareholdings, or the use of tax benefits.
The hon Member for Uxbridge referred to the date for final payment. He seemed to take that particularly seriously, and I share his view. The Public Accounts Committee asked the Department why it had not been announced publicly. The replies that the Department is giving to that and other questions relating to our relationship with the European Community do not show our country in a very good light. The Public Accounts Committee inquired why details of the additional £38 million were not reported to the European Commission. The Department replied that it thought it better not to draw attention to them at the time, since it did not want to take the risk of reopening the deal.
Anything that gives our Common Market partners misgivings about the way in which we conduct public administration is to be deplored. I seem to remember saying this to the hon. Member for Uxbridge last year, but, while I do not want to pre-empt the eventual findings of the Public Accounts Committee, there is clearly enormous cause for concern. I look forward with considerable interest to the outcome.
On the question of land sales and the valuation of assets, I must say that the Department could have been warned by the previous inquiry that the Public Accounts Committee carried out, into the sale, again to British Aerospace, of the royal ordnance factories. In its 13th report, the Committee concluded:Nevertheless, we consider that the Department might have been in a better position to evaluate the bids received if they had: (a) carried out a further revaluation as at about December 1986; (b) invited bids for the Company both with and without a clawback provision; (c) obtained an estimate of potential development values, particularly for Waltham Abbey and Enfield".It is bad enough for the issues to appear in the sale of the Royal Ordnance factories. To have those aspects reappear in a further privatisation exercise will take a great deal of defending before the Committee.
1461 In an effort to get the word "Lamontable" into the English language—it is a worthy cause, which I am sure has the wholehearted support of the House—I turn to the 31st report of the Public Accounts Committee, to which my right hon. Friend the Member for Swansea, West (Mr. Williams) referred. As he said, it is not simply a matter of inconvenience to road users when they find that the road or bridge on which they are travelling is taken up for maintenance. There are enormous costs for industry, not least the cost of lorry drivers who are on fixed time and are being delayed. As my right hon. Friend said, the whole thing is unnecessary. As he pointed out, the Treasury minute dealing with premature corrosion is almost Sir Humphrey Appleby "Yes Minister" stuff.
One of the advantages of having had to respond for the Opposition every year for four years is that I was able to consider the report alongside an earlier report on the maintenance and construction of motorways. The Department of Transport will have to take seriously the conclusions of the Public Accounts Committee's reports. In paragraph 2(iii), the Public Accounts Committee says:We are concerned that since there has been little systematic investigation of the causes and costs of premature maintenance, the Department may not be in a position to take full account of unforeseen repairs and premature maintenance in their cost benefit analysis or in setting standards for road construction.That is extraordinarily serious. We heard something similar to that when we were considering the motorway programme. I hope that that is taken seriously in both the Department of Transport and the Treasury. It surely represents public expenditure that should have been made to avoid substantially greater sums of public expenditure later.
Similarly, my right hon. Friend the Member for Swansea, West referred to the report on financial problems at universities, and my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) made an important point when he said that this report echoes an earlier report and referred to the gap between May 1988 and February 1990. It is not sufficient to know what is going wrong; we must address it and put it right. The tributes that were paid to those who are currently struggling with the problems at University college, Cardiff, were justified. Efforts are being made to respond to the specific problems that the report outlined.
A report that struck a chord with me because it related to an earlier report was the one on the Metropolitan police estate. Two years ago, one of the most horrific Public Accounts Committee reports that I have seen was produced on the financing of the Metropolitan police. The current report complements that earlier investigation. The Public Accounts Committee said:We consider that the poor condition of the Metropolitan Police's operational estate is unacceptable, and that this almost certainly hinders efficiency and effectiveness.That comment was made at a time when public concern about crime was rising substantially, as is crime itself.
The report continues:We are not satisfied that even within the funds available, effective management of the estate has been given the care and attention it clearly requires … We endorse the Metropolitan Police's acceptance of the fact that, though cutting back on maintenance seems an immediate, easy option, it is in the long term a damaging and expensive one.1462 That is a message that I try to convey to the Department of Transport; it is certainly right in this context.
The report continues:We are concerned that the Metropolitan Police have over the years built up an extensive land bank of valuable sites without having determined a clear strategy and timetable for bringing them into use.The Government's response to that and further points made in the report is to accept most of the Public Accounts Committee's findings and say that all will be put right when money is available. Money will have to be made available, or substantially higher sums will have to be made available later. Again, a little public expenditure that is forgone now will cost the public purse much more later.
§ Mr. Shersby
The report of the Metropolitan police estate was of considerable interest—I declare my interest as parliamentary adviser to the Police Federation. It has resulted in several sites that were held by the Metropolitan police estate either being developed for the purpose for which they were originally intended or being disposed of as part of a disposal programme. There are too many rundown police stations in London that need urgent attention, and money realised as a result of sales can be used for that purpose.
It might amuse the hon. Gentleman that, on one famous occasion, two members of staff were standing in the window of the National Audit Office. One said to the other, "I wonder who owns that site across the road." They decided to find out and discovered that it was owned by the Metropolitan police and that it was being used as a car park. The hon. Gentleman will be glad to know that it will be redeveloped as the new Gerald road police station, the purpose for which it was originally intended.
§ Mr. Brown
That is pleasing news. It is particularly pleasing that proceeds from the sale of those sites can be used to improve police stations or to develop other police stations. That is an obvious answer to the problem, but it is not one that obtains throughout public administration, as any councillor could tell the hon. Gentleman.
As it is "after eight", I shall briefly consider the report on the Royal Mint. I was much taken by this report because I originally thought that the idea was pretty daft. The report tells us:In 1987 the Mint launched the Britannia gold coin, which they expected to make a major contribution to their sales and profits. However, they significantly overestimated the demand for it and, despite advertising and promotion expenditure of over £3.5 million, it produced a profit of only £100,000 on sales of £63–64 million in 1987–88. We therefore asked the Mint why they had embarked on this enterprise.That seems a fair question. The answer is in the following paragraph:
We were told that it was a Ministerial decision taken in the early part of 1987".In other words, this was some daft idea of the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson). It might have had a better chance of success if the right hon. Gentleman had not gone on to slap VAT on gold coins and if there had not been a fall in the price of gold which reduced the bullion market overnight. These are the people to whom we entrust the management of the economy!
§ Mr. Robert Sheldon
Since then, it has become clear that the statement that we received from the Department concerned was in error about VAT. VAT had changed some years before.
§ Mr. Brown
That spoils what was otherwise quite a good shot. Never mind, the principle remains true—the idea was daft. Better care should be taken in weighing up the commercial prospects of these ventures before embarking on them, regardless of when VAT was imposed.
The last report to which I want to refer is of particular sadness to me. In the last Parliament, I served my right hon. and learned Friend the Member for Aberavon (Mr. Morris) as his deputy in the Labour party's legal affairs team. That duty brought me to serve on the Committee on the Prosecution of Offences Bill which set up the Crown prosecution service. The Financial Secretary to the Treasury will perhaps remember all that fairly well. I think that he was involved at some stage, although I cannot remember whether he was on the Committee.
The Crown prosecution service was set up in a bipartisan spirit. It was approved by both sides of the House. We all made speeches wishing it and the Bill well. Although there were questions we wanted to ask and points we wanted to explore with the Government, the Bill's passage was not unduly obstructed. However, the Opposition were worried about rates of pay for solicitors who were to work in the service. We felt that the Government had underestimated the costs of staffing and were underfunding the service. We expressed particular concern about the way in which the relationship between chief police officers and the Crown prosecution service would develop.
All those points have been picked up by the Public Accounts Committee. It saddens me that aspects that we thought would go wrong have gone wrong. The report states:We are disturbed at the very high cost of employing agent lawyers, especially where their performance has been less satisfactory".We hoped that staff of the Crown prosecution service would be wholly in-house and that it would not be necessary to employ agent lawyers, except in special circumstances.
The report continues:We were concerned to learn that, despite the steps taken to establish effective liaison between the Crown Prosecution Service and the police, consultation and feedback were still being hindered by inadequate communication and, in the view of the Crown Prosecution Service, the late delivery of files from the police.It was always important for the functioning of the new Crown prosecution service that the service and the police helped each other and understood the new relationship that was supposed to exist between the two. Clearly, that has not worked out as well as the Government and the Opposition hoped.
The Public Accounts Committee continues:We are disturbed at the large proportion of discontinued cases which were not dropped until the court hearing.The cost of that must be substantial. Clearly, it is up to the Crown prosecution service, to the police and to the court authorities to co-operate to ensure that there is a substantial reduction of such cases. I wholeheartedly endorse that recommendation by the Committee, which also says:
We were disappointed to learn that the Crown Prosecution Service had failed to secure the improved standard of case preparation it was expected to achieve over previous prosecution arrangements.1464 Perhaps the most serious and worrying point in the report is when the Committee says that the estimates have proved to be far too low. It says:Nevertheless, we are concerned that the estimates proved to be far too low and that the Service appears to be costing almost twice as much as the previous prosecution arrangements, with a staff requirement practically double the size originally envisaged. In these circumstances we find it surprising that, more than two and a half years after becoming operational, the service has not fully met the initial objectives set by the Government mainly because it still did not have enough staff.The Public Accounts Committee is exploring a worrying point there.
The duty of replying on such matters in the House falls to the Attorney-General, although, of course, the Crown prosecution service is still administered from the Lord Chancellor's Department. I hope that heed is taken of the report. The whole House wishes the Crown prosecution service well, but we want our wishes to be put into effect and not undermined, as seems to be happening.
I want again to express our wholehearted gratitude to the Committee for the substantial time that it has put into examining these matters on our behalf. I reiterate our thanks to the Chairman of the Public Accounts Committee for his leadership, and for the sense of direction and of unity of purpose with which he provides his fellow Committee members.
§ The Financial Secretary to the Treasury (Mr. Francis Maude)
I join all those who have paid tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for the distinguished chairmanship that he has brought to the Committee over the past seven years. Several members of the Public Accounts Committee and others have said that the role of the Committee may never have been more important. I have no doubt that that owes a great deal to the objective and determined way in which the right hon. Gentleman conducts his business. The whole House owes him a debt of gratitude for the work that he leads in that way.
The right hon. Gentleman referred to the high turnover of members of the Public Accounts Committee—especially of Opposition Members—and the hon. Member for Newcastle upon Tyne, East (Mr. Brown) referred to the high turnover of Financial Secretaries. He seems to have accounted for three so far in the course of the four debates in which he has taken part. I look forward to taking part in a great many more of these debates as Financial Secretary. I enjoyed this debate because it demonstrated how seriously the members of the Public Accounts Committee take their work and it emphasised the importance of that work.
There is one former member of the Public Accounts Committee whose absence tonight is conspicuous and tragic. I refer, of course, to our friend Ian Gow. I was proud to count him a friend and a colleague. He leaves a gap in our hearts that can never be filled.
My hon. Friends the Members for Scarborough (Sir M. Shaw) and for Rutland and Melton (Mr. Latham) predicted—I do not know whether gloomily or otherwise—that this debate may be their valedictory occasion as members of the Public Accounts Committee speaking in such a debate. The House owes both of them a debt of gratitude for their work. They have been distinguished members of the Committee and have brought to it great 1465 clarity of mind and expertise. I know that the Committee will miss that. I was going to say, "we". I believe that I am now a member of the Public Accounts Committee. I hope that I may be forgiven for not yet having appeared at a sitting as I became a member of it only on Tuesday of this week. I believe that I have a respectable alibi.
All Ministers, particularly Treasury Ministers, are conscious of the need to ensure propriety and value for money in the spending of taxpayers' money. The Public Accounts Committee has an exceptionally important role to play in both those areas. In the area of propriety and regularity, it is rightly concerned to ensure that the funds that the House votes to the Executive are spent only for the purposes that the House has authorised and are properly accounted for.
On value for money, it has been a major objective of the Government since they came to power to improve the economy, efficiency and effectiveness of public spending. In that respect also, the Government and the Public Accounts Committee have common objectives. The financial management initiative launched in 1982 is a continuing programme to promote efficiency and value for money by placing responsibility as far as possible at the level where operations and activities are managed and delivered. It therefore seeks to provide managers with a framework of objectives of output and performance measures, cost information, training and expert advice. Within that framework, managers are responsible for making the best use of resources and achieving the greatest value for money.
The right hon. Member for Ashton-under-Lyne referred in particular to six reports and I shall deal first with Northern Ireland and the nursery and the microfilming contract. All who have spoken recognise that the Housing Executive carries out a substantial and successful housing programme, sometimes in exceptionally difficult circumstances. But the Committee's criticisms were clear and stark and have been accepted. Remedial steps have been taken to ensure that nothing similar happens in future. The right hon. Gentleman said that it was unusual for the Committee to express its astonishment. I concede that astonishment registers high on the Committee's Richter scale. If I may say so, the words were not misused. The Government accept that there were important lessons to be learnt from that episode and I assure the House and the Committee that they have been learnt.
The second report referred to by the right hon. Gentleman related to the financial problems at universities, particularly at University college, Cardiff. The circumstances that led to the Department of Education and Science's intervention in the affairs of University college, Cardiff, were exceptional. Mismanagement by senior college staff put the institution in severe financial difficulties with an increasingly great deficit. As the Committee's first report acknowledged, when the Department had incontrovertible evidence in late 1985 of those exceptional circumstances from the then University Grants Committee, decisive action to remedy that was instigated.
It became clear that the only route to effective survival was the merger, which I understand had been long mooted with the University of Wales Institute of Science and 1466 Technology. That merger took place in 1989. It was supported by some extra funds, but subject to stringent conditions, to ensure a fresh start. Of the £11 million new funds, £4.4 million was in the form of a repayable grant to be repaid by the new institution using its best endeavours to sell surplus assets and by the recovery of certain other sums. The new institution has made a good start from difficult origins. To date, some £1 million of that £4.4 million loan has been repaid to the Exchequer.
Since the education reforms, monitoring has been undertaken by the Universities Funding Council and there have been several key changes. The lines of accountability have been clarified. The UFC has its own accounting officer and its relations with the universities are governed by financial memoranda. Universities are required to provide appropriate financial monitoring data and, in any case, now have a standard format for their accounts. The UFC has strengthened its financial expertise, including the establishment of an internal audit unit, to scrutinise all of those. In the unlikely event of another institution beginning to suffer the same kind of mismanagement, the UFC should be able to detect that quickly and act appropriately. However, under the Education Reform Act 1988, its powers of intervention are not unfettered. Parliament insisted that proper allowance should be made for the autonomy of universities.
I want now to consider the sixth interim report on the sale of Rover Group to British Aerospace. I have no doubt that the Government acted wholly in the national interest by conducting that sale. I also have no doubt that it was carried out in a correct, defensible and justifiable way.
The sale fulfilled our objective of privatising the company within the lifetime of the current Parliament. It was our aim to relieve the taxpayer of the liability represented by the Varley-Marshall-Joseph assurances, which at the end of March 1988 were estimated at £1.6 billion and which were set to increase substantially. It was our aim to achieve that sale on the best possible terms and to achieve a clean break that would protect from further risk the taxpayer who had, it is worth remembering, already contributed some £2.9 billion to Rover Group.
We also aimed to achieve privatisation without exposing Rover Group to the uncertainty to which it had proved so vulnerable in the past. All our objectives have been achieved and, most importantly, Rover Group is now flourishing in the private sector. It has committed £500 million of new capital investment. Its new range of models has been highly successful and, with the introduction of three-shift working at Longbridge, record productivity levels have been attained. The contrast with British Leyland's miserable and depressing history in the public sector could hardly be sharper.
§ Mr. Terry Davis
Is not it true that Rover Group was already making substantial profits when it was publicly owned?
§ Mr. Maude
It was making a very modest operating profit, but that took no account of the wider financial circumstances, which were still pretty dire.
The right hon. Member for Ashton-under-Lyne referred particularly to price and exclusivity. It is worth pointing out that Rover Group was sold for £150 million and one of the conditions of sale was the implementation 1467 of the corporate plan involving £1.6 billion of new capital investment and the undertaking that no further public assistance would be given to the group.
Exclusive negotiating rights were therefore granted to British Aerospace and the reason for that exclusivity was perfectly clear. Competitive bidding would almost certainly have given rise to political controversy which, we must remember, had previously been extremely damaging to the commercial prospects of Rover Group. It would have undermined the realisable value of the business and put the broader objectives seriously at risk. The European Commission decided that £150 million was a reasonable purchase price for the company and that the granting of exclusive negotiating rights to British Aerospace had been justified. I have no doubt that the terms of sale represented the best that could realistically have been achieved.
When talking about clawback, the right hon. Member for Ashton-under-Lyne made a good point. He said that there is a difference between public and private money. I cannot remember his precise words, but I shall check on them because they expressed a good deal of truth. Broadly speaking, he said that one should not take risks with public money and that is precisely the point about the exclusivity. He went on to say, I think, that one should not take risks even if that means that one might receive slightly less as a result. That is the whole point about the exclusivity. We had been through the unhappy episode of a possible sale to Ford and General Motors, with all the uncertainty and the political controversy, which, if I may say so, was prompted to a large extent by Opposition Members, and which had caused serious damage to British Leyland as the group was then known. It was perfectly justifiable, in the interests of the taxpayer and of the company, to avoid such controversy being renewed.
Over recent years, the PAC has taken a close interest in the privatisation of royal ordnance factories. We welcome that interest. It is right that, when public companies are privatised, the Committee should consider whether a fair return has been obtained for the taxpayer. I particularly welcome the Committee's 13th report. Its considered conclusions about the sale provide a welcome corrective to the more sensational claims that appeared in the media.
The company was sold as a going concern after a wide-ranging and open bidding competition. We are confident that the price that we received was a true reflection of its market value. Not one of the major commercial companies involved in the bidding thought it worth paying more than that for the company with all its assets and liabilities.
I now refer to the 16th report on financial management in the national health service. Like management as a whole in the NHS, financial management is now focused on implementing the recent reforms. The Committee's observations about financial management in the NHS have been at the forefront of planning for the reformed NHS. The reforms will demand sharply improved financial management. That requirement has been a feature of all aspects of their implementation. An upgraded system of financial planning and monitoring is being put in place, supported by a substantial investment of time and effort in staff training.
A principal objective of the new systems is to provide the means to ensure that health authorities keep in financial balance in the new competitive environment. An NHS that has its finances in balance will not seek to fund its activities at the expense of creditors. The monitoring of 1468 efficiency savings is part of the financial monitoring package. An objective of the reforms is to achieve better value for money. Continued pursuit and achievement of efficiency savings will play an important part in securing that goal.
Good financial management in the NHS requires the commitment of all managers from the management executive down, a clear expression from the top of the priority of such financial management, translation of that commitment and priority into systems that will support management in that task, and the recruitment, retention and training of suitable staff to operate the systems.
§ Mr. Michael Morris
My hon. Friend will be aware that in the recommendations is the poignant point that the health service has previously been a bad payer, particularly in relation to small businesses. May we have an assurance that, in respect of the Treasury, in the difficult financial climate at the moment, when a level playing field is supposed to be achieved, it will not be to the disadvantage of suppliers to the health service?
§ Mr. Maude
We should certainly expect it not to be such a problem in future.
I now refer to the value of the land and concern about whether the NHS knew of the value of its estate. One of the reforms to be introduced from April next year is capital charges intended to make the NHS take account of the value of its capital assets. As part of the preparation for the introduction of capital charges, all district health authorities have had to draw up asset registers recording the value of their land and other capital assets. The land has been valued by district valuers.
I now refer to the last report—the 31st report—on road and bridge construction. I first deal with the Chairman's point about delay in the most recent Treasury minute. It was laid before the House, and copies were provided for members of the Committee on Monday of this week, on the first day after the recess. As a newcomer, I understand that it is the long-standing practice not to issue Treasury minutes responding to Committee reports during the recess. I am sorry if the rather earlier timing of the debate after the recess has caused a difficulty.
There was criticism of maintenance being carried out earlier than forecast at the time of construction. There are three important general points to make about this premature maintenance. Premature maintenance costs are very small in relation to the cost of construction, and simply spending more money on the construction does not necessarily avoid premature maintenance.
Civil engineering, of course, inevitably involves risks. The bulk of premature maintenance referred to in the report was caused by factors that were unforseeable or uncertain at the time of construction. We do not knowingly or avoidably build defective roads and bridges.
A certain amount of action was taken in any event before the PAC report was published. Standards, specifications, materials and techniques were kept under constant review and improvements were regularly introduced when justified. A good deal of action has been taken since the publication of the report, including the introduction of an improved computerised reporting system for all defects and all premature maintenance, concentrating on the few cases where there is substantial evidence of significant failure, by consulting engineers or contractors to obtain all costs that are legally recoverable.
1469 An independent consultant was appointed to carry out a wide-ranging review of the means of redress of poor supervision and workmanship, including the use of sanctions.
Certainly problems have arisen after constructing some sections of modern trunk roads and bridges, but many of the problems identified by the Committee will not recur. We must not overlook the fact that maintenance of many roads and bridges is completely trouble-free. Government constantly strive to secure better value from the huge current investment in the roads programme. To meet the demands of modern traffic flows, we work at the frontier of engineering knowledge. New materials and techniques normally still offer significant net benefits, even after allowing for premature maintenance.
This has been a useful debate in focusing attention on the valuable work of the PAC. I should like to pay a final tribute to the work of the Committee and to that of the Comptroller and Auditor General and to the National Audit Office for its essential support. I thank all members of the Committee who have spoken in the debate and the two gallant hon. Members who are not members of the Committee but who have also made valuable speeches.
§ Question put and agreed to.
That this House takes note of the 34th to 41st Reports of the Committee of Public Accounts of Session 1988–89, of the 1st to 32nd Reports of Session 1989–90, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on those Reports (Cm. 963, 964, 1057, 1101, 1150, 1235 and 1247) with particular reference to the following Reports:
Thirty-sixth, Further matters relating to Northern Ireland;
First, Financial problems at universities;
Sixth, Sale of Rover Group to British Aerospace plc;
Thirteenth, Ministry of Defence: Further examination of the Sale of Royal Ordnance plc;
Sixteenth, Financial Management in the National Health Service;
Thirty-first, Quality control of road and bridge construction.