§ Mr. Robert Sheldon (Ashton-under-Lyne)
I beg to move,That this House takes note of the 40th and 42nd to 51st Reports of the Committee of Public Accounts of Session 1993–94, of the 1st to 40th Reports of Session 1994–95, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 2732, 2739, 2754, 2757, 2786, 2825, 2832, 2906, 2921, 2988, 2990, 3013), with particular reference to the following Reports of Session 1994–95:First, Ministry of Defence: The Major Projects Report (1993);Second, The Sports Council: Initiatives to Improve Financial Management and Control and Value for Money;Fifth, Council Tax Valuations in England and Wales;Twenty-eighth, Severance Payments to Senior Staff in the Publicly Funded Education Sector;Thirty-third, Foreign and Commonwealth Office: Overseas Representation: Irregularities at the Sana' a Embassy;Thirty-fourth, Lord Chancellor's Department: Qualification of Audit Opinion and Alleged Frauds on the Green Form Scheme.The Public Acounts Committee is presenting 51 reports to the House; 11 from the Session 1993–94 and 40 from the Session 1994–95. The number of reports indicates the amount of work that the Committee does—it is a large number and the Committee has been extremely busy, as is normal.
My first pleasant duty is to welcome the Financial Secretary to the Treasury to his post. We were very grateful to his predecessor, now the Secretary of State for Transport, for the way in which he welcomed the Committee's eighth report, on the proper conduct of public business. His welcome was of enormous help. The report paved the way, as we know, to some of the Nolan recommendations, which we watched with some interest. I look forward to the new Financial Secretary's contribution and I shall welcome him, in due course, to an early meeting of the Committee.
My next pleasant duty is to thank the Comptroller and Auditor General, Sir John Bourn; the Comptroller and Auditor-General for Northern Ireland, John Dowdall; and the Clerk to the Committee, Ken Brown, for helping to bring about the 51 reports which are being brought to the attention of the House.
Producing such reports is a burdensome task for members of the Committee, but it is essential. It is unquestionable that Gladstone got it right 130-odd years ago when he decided that the Public Accounts Committee should be set up. Surprisingly enough for those days, as well as for these, he decided that the Chairman should be an Opposition Member. I doubt whether that would have happened in any subsequent year. The choice of Chairman from the Opposition is central to the work of the Committee because it ensures that the examination is conducted with a more open mind than might otherwise be the case.
The evidence that the Committee gathers from accounting officers is of enormous importance. It monitors Government expenditure and looks for economy, efficiency and effectiveness. When permanent secretaries—accounting officers usually are permanent secretaries—come before the Committee, its members 717 have in mind the assessment of their abilities and standing. I suppose that that in some way makes the PAC almost unique—I think that it is unique—among Committees of the House. Accounting officers come before the Committee again and again and we are able to assess their value to their work.
I know how much we depend on those servants of the country to prepare for their meetings with the Committee. I am aware that it is a great burden on them, but the result must be to ensure that their responsibilities are scrutinised properly.
Unanimity is the most important aspect of the roughly 500 reports we have produced since I had the honour of becoming the Chairman of the Public Accounts Committee in 1983. We are utterly dependent on that unanimity which, strangely enough, is not difficult to obtain. We get it because, at the end of it all, we are there to protect the taxpayer. Anyone who came to our meetings would find it difficult to know, on most occasions, who was an Opposition Member and who was a member of the party in government—we are united in the defence of the taxpayer.
Even when we have discussed matters such as privatisation, which most divides the House, we have come up with unanimous reports, not fudged reports in which we try to show that we are agreed when we are not. We say that it is not for us to look at policy, but to examine how policy has been implemented. Although we may disagree with policies—very strongly, in many cases—we want to ensure that the taxpayer gets value for money once a policy is accepted. We have come out with important points even on issues on which we are obviously divided.
§ Mr. Tim Smith (Beaconsfield)
Does the right hon. Gentleman agree that the key point is that, over a number of years, perhaps going back to 1981, many lessons, which have been taken up in subsequent privatisations, have been learnt from Public Accounts Committee reports?
§ Mr. Sheldon
That is undoubtedly correct. Some of the most important lessons were set out by the right hon. Member for Horsham (Sir P. Hordern), who I am pleased to see in his place. He pointed out the need to sell the issues in tranches. That was a valuable point. Why did the Government sometimes insist on trying to sell everything off at one go? They do not do that with Government debt. Sensibly, at the beginning of the year, the Government study the situation and try a billion pounds here or half a billion there—they test the market. Government brokers become expert in testing the market; that is what they are for.
When it came to selling off public assets in the privatisation procedure, however, the Government did not proceed in the same way. We should have had the expertise that Government brokers have in gilts so that we could have got the best price at any time. The Government could have saved themselves much of the strong argument that they experienced on the Floor of the House and elsewhere. We have welcomed the changes—there have not been enough in my view—that have come about as a result of that useful part of our reports.
718 We have also considered many other aspects of privatisation, such as brokerage fees and advertising. Even in the areas that divide us most as individuals—this is a most important matter—we are able to come to unanimous conclusions.
The National Audit Act 1983 gave us legislative rights to propose matters to the National Audit Office for investigation. Our success—and the success of the National Audit Office—is not only what we uncover, important though that is, but what our presence as a Committee prevents. We act as a deterrent to what would incur our displeasure.
We have the recruitment by Sir John Bourn and his staff of those who have a much better reputation than was the case years ago. In the old Exchequer and Audit Department, they were civil servants who were usually recruited as executive officers at the age of 18 and given training which amounted to not a great deal more than book-keeping.
Now, the civil servants involved are proper auditors. They have Chartered Institute of Public Finance and Accountancy qualifications and chartered accountancy qualifications. The enormous difference is that now, when they go into Departments and have discussions with senior officers up to the level of permanent secretary, they are seen as equals. Previously, they used to be seen as executive officers. Firms in the City now want their services and angle for them. Some have been made tempting offers but, fortunately, we have been able to retain their services. When they go into Departments, they are much more hightly respected as a result.
There have been considerable changes during the past 20 years since the days of the old Exchequer and Audit Department. Almost without exception, institutions—including the universities, the judiciary and the civil service—have been under attack and pressure, and had criticism levelled at them, but the National Audit Office's reputation has steadily improved, year by year. The reports of the old Exchequer and Audit Department were perfunctory compared with those produced now, as were the initial reports of the NAO itself.
In its 12 years of existence, the NAO has developed. Whereas in the beginning it produced tentative reports, it now displays a mastery of the subject. It has impressed us all. I am visited regularly—far too often for my poor battered diary—by people from different countries who want to see what we are doing and how they can learn from us.
Parliament should be proud that the Comptroller and Auditor General is now an Officer of the House—that was not the case previously—as that does more to maintain standards of probity, as well as those of economy, efficiency and effectiveness, than anything else that we could have done. My hon. Friend the Member for Norwich, South (Mr. Garrett) realised that Gladstone's ideas had been whittled down, and he showed how they could be reformed.
I should like more changes in the work of the NAO. One of the areas it is to examine—it is starting to do so already—is the regulatory framework of the public utilities. There is a range of methods of regulating the utilities; the NAO will want to ask whether they are the most suitable. It will ask what lessons can be learnt from the successes of each regulatory operation.
719 Another success was our important report on the proper conduct of public business. I am grateful to the Secretary of State for Transport who, as Financial Secretary to the Treasury, gave the report a great welcome. The PAC report showed that there were great weaknesses in certain methods of dealing with fraud. Normally, fraud does not take up a great deal of the Committee's time—although it takes up more time now—but when it appears on the scene, it must take priority over everything else in our discussions.
I was pleased to see that, as a result of our eighth report and the evidence that I gave to the Nolan committee, the Treasury accepted that notes of dissent should be made available to the PAC. If a permanent secretary disagrees that an expenditure is correct, he can write a note of dissent. Previously, if the permanent secretary came before the PAC, the note could be held up as evidence that it was the Minister, not the permanent secretary, who had instructed the accounting officer with regard to the expenditure, but the Committee would know about the note only if there had been an investigation or if there was a question of fraud. In the case of the Pergau dam, the Committee was fortunate in that an examination, which allowed us to learn about the role of Sir Tim Lankester, was being undertaken. I note that he is to be moved. I hope that that has nothing to do with his notes of dissent. I wish that I could be completely happy about that one.
The safeguard that we now have is of great importance. Even if a note of dissent does not relate to a question of fraud, the Public Accounts Committee will now be able to receive details of it. I am a little worried that notes of dissent will become less common because people who might write them will be uneasy that details will come before the Public Accounts Committee and that that might prevent their having the success that they might otherwise have had if the matter had been dealt with between the accounting officer and the relevant Minister. I should like to offer some guarantee that that will not be the case. We will not seek to capitalise on notes of dissent. Such matters should be open, perhaps to the Comptroller and Auditor General, to ensure that notes of dissent are not handled in that manner.
I know that a number of notes of dissent have been written, and that even more are written at night but, in the cold light of morning, are not delivered to the Minister. There are some good reasons for that. The relationship between the Minister and the permanent secretary would obviously be weakened or even damaged by such a note of dissent.
Fraud and probity in the civil service represent a continuing aspect of our work. Value for money and saving money are important, but most important are standards in public service. We pride ourselves on those standards. The need to prevent any fraud arises from the fear that there can be collusion between a number of people. The great help that we have is the enormous reputation of standards of conduct in public life. The greatest protection is the honest person who is feared by anyone who tries to commit such acts.
The task of the Public Accounts Committee is essentially simple with regard to value for money. What is required—I made this clear when we first started with the National Audit Office—is to compare the objectives with the achievement; the input with the output. It is simple. There is a certain amount of monitoring, so if 720 people get it wrong at least they are able to stop it. We want monitoring phased so that, at any one time, we can see where we are. Sometimes it is not easy to quantify things, but almost always it is possible to quantify in some way. It is a wonderful discipline. That is what we try to achieve.
Many of this year's reports have lessons of one kind or another for us. The Committee's first report in the Session 1994–95 was "Ministry of Defence: the Major Projects Report (1993)". In paragraph 19 we say:We are concerned that some 80 per cent. of major projects were unlikely to achieve their in-Service date. We note that the Department have in the past tended to take an optimistic view of the in-Service date and that they are now taking initiatives to improve realism, such as 'three-point timings"'—the three points being the best case, the worst case and the most likely case. The report continues:The Committee intend to monitor the outcome of this initiative closely.The report deals with 25 projects totalling more than £25 billion. Although that is a small proportion of the total number of projects, the amounts of money are very large. Except on Trident, the overspend on each project was just less than £1 billion. What worries us most is the slippage, which is more than 30 months.
Mid-life updates occur when, half way through a programme, it is decided that improvements can be made in the weapons system. That creates a danger of slippage and cost overruns. We note that there is a five-year slippage, which is unacceptable. In paragraph 41 we say:Most of the upgrade programmes examined by the National Audit Office have been ambitious in scope.They have awide variety of proposed enhancements.We used to call that "gold plating", meaning improvements that exceeded what was essential.
The danger of being at the front end of technology is that one does not know how much that technology will cost or how long it will take to produce. If one continues on that basis year by year, one will seek further improvements and, in theory, never obtain the weapons system at all.
A line must be drawn somewhere, and we say that we must be sensible about drawing it. We say that that process hasled to the scope of programmes being reduced during their implementation to make them affordable.The Department starts off with great plans to improve the weapons system. Some way through, it realises that it has overdone the cost and starts scaling down the project. There is not only slippage, but a poorer result.
We say in paragraph 44:there had been very little dissemination of experience between the project officers involved in such programmes.We understand and hope that the Department will improve matters in that respect.
The Eurofighter is one of the most serious of our expenditures. The National Audit Office detailed a cost overrun at 29 April 1994 of £573 million. The latest overrun is £1.25 billion for the development programme alone—44 per cent. over estimate. Cost overruns of the whole project will probably be about £2.2 billion. That is phenomenally expensive, and it leads us to embark on a fresh examination of the way in which collaborative projects are undertaken.
721 Collaborative programmes involving several countries—in that case, Germany, Italy, Spain and the United Kingdom—unquestionably cost more than single-country programmes. At one time, it used to be reckoned that collaborative programmes cost 10 per cent. more. That figure is being revised. Language difficulties and pressure to obtain work in certain places add to the costs. We need to get that one right, because there will be much more international collaboration.
Ideally, one would have wished the smaller and well-defined programmes—the things that can be done more easily—to have come first, enabling us to learn lessons that would help with larger-scale expenditures. The trouble with smaller, well-defined programmes is that they can be done by individual countries, so there is less need for them, but we need to undertake some of them in collaboration. I believe that savings can be made there as well, because one obtains the advantages of scale and experience. That might be an approach to the large developments somewhere near the frontiers of technology in due course.
I shall now discuss our second report, "The Sports Council: Initiatives to Improve Financial Management and Control and Value for Money". We point out that the Sports Council receives £48.8 million grant in aid, which is 95 per cent. of its income, from the Department of National Heritage. We were worried about standards of propriety. In paragraph 24, we said:We are particularly concerned that the former Director General and Accounting Officer and the former Finance Director had conflicts of interest".They arose from the setting up of a private subsidiary company, which happens in several Government Departments. For good reasons, they set up subsidiary companies to deal with, perhaps, the marketing of one or two aspects of their work—and very good they are, too—but there must be a clear distinction between the work of the Government Department or Government-funded body concerned and that of the private organisations.
We say that there were conflicts of interestdespite numerous reports by this Committee drawing attention to such dangers.Clear dangers exist. At all stages there is a need to establish an arm's-length relationship.
We discovered that there was not an arm's-length relationship, and we noted specifically in paragraph 42 that, on the retirement of the director general of the council,the Trust Company appointedhimas their part-time Chief Executive without the post being advertised.He went from director general of the council to chief executive of the trust company without the post being advertised. It is obviously very dangerous to act in that way.
We say in paragraph 52:We are very concerned that the Council awarded a contract to Blenheim SportsCo Limited— another subsidiary company—for twenty years to manage the Council's annual exhibition as this does not allow the Council regularly to test the market.722 There was no testing of the market, and preference was given to certain people.
Although commercial spin-offs are desirable, they must be handled with great care. We have the enormous advantage of the standards in public life, which we must do our utmost to protect. The Committee fully accepts that.
The fifth report is entitled, "Council Tax Valuations in England and Wales". The council tax came into effect on 1 April 1993. Properties were placed in eight broad bands from band A, for properties worth less than £40,000, to band H, for those worth more than £320,000. The bands were slightly different for Wales. The responsibility for valuing properties rested with the Valuation Office Agency of the Inland Revenue.
It is important to get the banding right. The major problem that we have had with the council tax—as with the poll tax—is the weakening of the discipline of taxpayers. We must do our utmost to return to the position in which people did not, in the main, try to avoid their responsibilities as taxpayers. People's respect for the system is enormously important to us. It is important, for that reason also, to get the bandings right. Accuracy is important.
The banding was undertaken. We found that 2 million properties might be in the wrong bands—that slightly fewer than 1 million might be too high, and that slightly more than 1 million might be too low. When we examined the situation, we found that many appeals would not be resolved until more than two years after the introduction of the council tax.
The "Treasury Minute on the Fifth and Sixth Reports from the Committee of Public Accounts 1994–95" says:the aim is to settle appeals within 12 months",which is better, but there is a serious problem with the wide variation between the level at which the bands were set in different parts of the country.
Some bandings by the private sector were undertaken at 19p a valuation. That might appear to be a good deal, but if there is an appeal it is likely that it will cost 70 times as much to correct, so it could prove to be a rather bad deal. We note that the Valuation Office Agency has not yet analysed the number of appeals it has received to determine whether they relate to the private sector or to Valuation Office Agency valuations. We recommend that that be done to provide further assurance that common standards are adopted.
We note that the Valuation Office Agency was not able to record the time spent by its staff on the banding exercise, but it tells us that it intends to introduce a better time recording system to allow the work to be fully costed. We welcome that.
I shall now discuss two aspects of our report, "Severance Payments to Senior Staff in the Publicly Funded Education Sector". The first is the university of Huddersfield and the vice-chancellor's severance package.
There are 151 higher education institutions in England, 21 in Scotland and 16 in Wales. They are independent bodies that manage their own financial affairs. We are concerned at the way in which the whole undertaking was conducted. The root cause of the problems with the original severance agreement at Huddersfield was the decision made at the end of 1993 to exclude staff and student representatives from the membership of the 723 university council there. That led to considerable upset among staff. In consequence, there was a breakdown of trust between the governing council, the vice-chancellor, staff and students.
As a result, although the university is independent, the Higher Education Funding Council objected when a severance package amounting to more than £411,000 was given to the vice-chancellor—let us be open about this—to shut him up and get rid of him in the easiest way. The university used our public money to satisfy its own purposes. We cannot accept that.
Worse than that, there was a gagging clause in the agreement which insisted that the vice-chancellor should not say anything about the reasons for his dismissal or the amount of money that was involved. Luckily, we heard about it indirectly, partly from my hon. Friend the Member for Huddersfield (Mr. Sheerman) and partly from elsewhere. As a result, I stated clearly that gagging clauses cannot be justified. We cannot spend public money to enable people's positions to be changed on the basis that nobody will ever know about it.
The package included additional compensation and we understand that leading counsel for the HEFC advised that the settlement arrangements were irrational and excessive and could be ultra vires. As a result, we have agreed that, in nearly all cases, gagging clauses will not be allowed and that we must ensure that severance packages are justifiable and acceptable.
The second case involved the university of Portsmouth. The vice-chancellor there resigned after a no-confidence vote by the staff following an investigation into his expense claims. A settlement of £52,000 was paid to avoid possible legal action. We regarded that action as being similar to the first case and argued that public money cannot be used to keep people quiet. It might be done in private industry—that is its business—but taxpayers' money as voted by the House cannot be used to settle such matters. Purely as a consequence of that case, we came across the surprising fact that the former vice-chancellor had been paid an annual salary of over £17,000 as chairman of an NHS trust. The rate had been in accordance with a scale relating to the size of the trust and based on a notional time commitment of three and a quarter days a week. He got £17,000 for three and a quarter days a week and the rest of the time he was a vice-chancellor, for which he was paid £90,000. We stated:We are also surprised at the University's decision to pay the former Vice-Chancellor a salary of £90,000 a year while allowing him to continue with another important public sector job which had a notional time commitment of 3 1/4 days a week.It is important that the National Audit Office should have the right to examine all such organisations.
We examine just over half of the non-departmental public bodies. I would want us to examine all of them. The National Audit Office should be able to examine them all. That does not mean that private firms of auditors would not be involved. There would be many cases, perhaps almost as many as there are now, where the National Audit Office could contract with the private sector to carry out the audit, but it would remain in charge. That way there would be more consistency between audits. In addition, the National Audit Office has the standing to which I have referred and its involvement would give the House reassurance.
724 There is the problem that many private sector auditors make a fair amount of their money through consultancies. It is difficult for them if their efforts are not well received by companies and they fear losing the audit contract and the profitable consultancies that go with it. By all means let auditors keep those consultancies if they wish, but at least let the audits be undertaken under the auspices of the National Audit Office.
The next report with which I wish to deal is the 33rd report, which deals with the Foreign and Commonwealth Office and irregularities at the Sana'a embassy. "Irregularities" is a wonderful word for a disgraceful, scandalous fraud—one of the worst for some time.
A Mr. Ryan, who was a member of the diplomatic service, had access to a sterling account from which he could draw money and convert it into Yemeni rials. The money was changed at the black market rate. The report states:During 1993 the Foreign and Commonwealth Office became concerned about possible contractual and current irregularities at their post in Sana'a, in the Yemen. The existence of these irregularities was confirmed in November that year … Mr. Gerald Ryan … former Second Secretary, Management Officer/Consul in Sana'a was arrested.Mr. Ryan admitted to the police that he and the [...] accountant … had been involved in these irregularitio[...]He said that his share of the gains was about ikA),000 at the current exchange rate and he was released on police bail while under suspicion of false accounting and theft. The police discontinued the investigation after Mr. Ryan died on 24 December 1994. Mr. Ryan accepted that he made $50,000—about £30,000.
The Yemeni rials weredrawn from the post's sterling account at the official exchange rate. Enough of that was then converted at the higher market, or 'parallel' rate to replenish the … account and the rest pocketed by Mr. Ryanor his associate.
The report continues:The 'parallel' exchange rate was up to four times higher than the official rate.The Department estimated the potential for profiteering in this way to have been between £607,000 and £677,000.We will never know the exact amount.
That was not all that Mr. Ryan did. He was involved in other irregularities, such as issuing visas without following established procedures and interviewing clients and completing application forms, apparently without the receipt of a fee. That is serious because 405 visa applications were made and it can reasonably be assumed that he did not deal with them without any financial recompense. The report states:we find it astonishing that the management at Sana'a also allowed their staff to use public money to gain up to £670,000 from manipulating the local currency markets. And we are concerned that the Department did not inform us of other possible irregularities at Sana'a, possibly involving the use of Overseas Development Administration funds until after the evidence session.That is a serious matter. The report says that we were concerned thatthere were no job specifications for locally-engaged staff, that Mr. Ryan was able to recruit local staff known to him and that those appointed may not have been the best candidates.Mr. Ryan might have got his accomplices in that way.
The report then deals with the role of the ambassador. Mr. Ryan arrived in Sana'a in January 1989 and returned to the United Kingdom just over four years later, but there 725 were two ambassadors during that period. We asked why action had not been taken, because failures had been reported by internal auditors, but the warning signals had not been appreciated immediately. The report says:The Department told us that, although there had been much visiting, action subsequently taken had not been sufficiently decisive. Management of the post by the Ambassador, Mr. Marshall, had been defective.We therefore asked why he had not been removed, or some other pressure brought to bear. We were told that the Department knew about the management weakness in the initial period and about serious shortcomings in Mr. Marshall's performance, but that they were not judged to have reached an unacceptable level. One and a half years later, in January 1994, a visiting officer from the overseas accounts section found that many of the deficiencies reported by internal audit still existed. The report singled out several weaknesses.
The report says that the management by senior officers at the embassy was "appalling"—that was undoubtedly the right word to use—that that was the root cause of the problem, and that we looked forward to receiving information from the Department on the outcome of disciplinary proceedings as soon as it was available. I hope that we shall hear from the Financial Secretary about that when he responds.
The next report is the 34th report on the green form scheme. The criminal legal aid concerned amounts to £432. million. The accounts have been qualified for the fourth year in succession, which is an extremely serious matter. That part of the operation of the Lord Chancellor's Department had its accounts qualified year after year without proper action being taken. Payments to solicitors on green form schemes amounted to £141 million. We say:the Department has failed to resolve satisfactorily the problem of inadequately completed statements of means.Justices' clerks are supposed to have statements of means, which are used to decide whether legal aid should be granted. In our report, the justices' clerks say that, in too many cases, they are still failing to comply with regulations that have the force of law. We go on to say:We find this inexplicable given the Department's assurance about the continued co-operation of the Justices' Clerks Society.We strongly believe that that failure to carry out the law and comply with the regulations should not be allowed to continue.
We know that, in many ways, this is a blank cheque and that the Government do not carry out a proper investigation of the green forms. Moreover, an increasing number of solicitors advertise their services—that is perfectly sensible and no one is against it—knowing full well that the green form system is available. It therefore occurs to some of us that the two can be brought together: the green forms as a blank cheque and advertising for those blank cheques. This is a serious matter.
The idea behind the green form system is first class because people with limited means are helped to understand the law and to deal with certain matters, but the scheme cannot continue in that way. Either the law must be changed or we must insist that the justices' clerks obey the law. If justices' clerks in a court of law cannot obey the law, one wonders who can. The matter is totally absurd. There is a legal requirement and they must follow it. If for some reason which I fail to comprehend they cannot, we must change the law.
726 We note that a system of franchising is being set up, which will be available to firms whose control systems have been rigorously audited. We understand that, by March 1996, the board hopes to have between 1,200 and 1,500 firms, accounting for one third of the expenditure, in the franchising system. I hope that the Financial Secretary can tell us how that is proceeding.
On the wider question of legal aid and the high fees paid under it, I note that the Lord Chancellor is urging, in a Green Paper, a fixed rate for lawyers. That matter deserves further examination and, in the light of public expenditure constraint, that area cannot be left untouched. The Public Accounts Committee may wish to examine it in due course.
Time allows me to deal with just one or two other reports. I wish to comment on more reports this year than in most previous years, which makes it difficult to bring out the issues. Even if I picked out one of our less contentious reports, we could have a whole day's debate on it, but the very number of reports frightens people off a little and, as a result, the reports do not get the examination that they deserve.
I should say a word on a few of the other reports and, if I hurry through them, it is only because I think that the issues that concern us should appear somewhere on the record.
The third report deals with the Merseyside development corporation, which was set up in 1981 to secure the regeneration of the designated area. In August 1992, tall ships went to Merseyside, there was a grand regatta of Columbus, a splendid programme was held to commemorate the quincentenary of Christopher Columbus's trip to America and there was a gala concert and fair for the new world. In the event, neither the regatta nor the concert recovered its costs. Some £1 million was spent and the net cost was some several hundred thousand pounds.
The aspect that concerned us most was that there were major overruns on hospitality and publicity. Certain firms gained advantages from that expenditure and public money was used to purchase and distribute, free of charge, concert tickets worth more than £100,000. We say in the report:We note the Corporation's explanation of the terms of the additional £150,000 payment to a separate company formed to stage. the concert … four days before the concert. However, we find it astonishing that the Corporation were … required to bail it out at such short noticeby purchasing sponsorship tickets and rights. That was an obvious and notable failure.
Another failure to which I should draw attention was raised in the 19th report on business sponsorship of the arts in 1994–95. The programme director in charge of the scheme authorised payments totalling £175,000 to fictitious organisations. That is a serious matter. Mr. Nick Wood, an association programme director in charge of the scheme, authorised that programme having first constructed elaborate fraudulent documentation. He was prosecuted, found guilty of fraud and imprisoned. Some of the money was recovered, but some was not.
Our sixth report deals with the Wolds prison. A contract was given to Group 4 on the basis of best value for money, although it was not the lowest price. We have no objection to that, because contracts are sometimes not given on the lowest price, but one of the eight members 727 of the panel that recommended Group 4 left the Prison Service nine months after the contract was placed—to join Group 4.
Although the final decision was that of Ministers, a full explanation about why Group 4 was awarded the contract was not given. The Committee advised that, to avoid any question of impropriety,detailed reasons should always be recorded whenever a contract is not awarded to a tenderer who submits the lowest bid and is judged capable of meeting the key performance criteria. This would also provide a basis for informing the other short-listed firms why their bids had been unsuccessful, a practice we would recommend the Prison Service to consider.That applies to many cases. The award of a contract should be subject to greater openness and, when it is not given to the lowest bidder, the reasons for that decision should be given.
The Welsh Development Agency has caused the Committee a great deal of concern and has been the subject of lengthy discussion. Our 29th report on the WDA for 1994–95 is not as serious as some of our earlier ones on it—it has an exceptionally serious history. We note that Mr. Michael Scholar, from the Treasury, is now permanent secretary at the Welsh Office, and we look forward to his putting the Department into somewhat better order than it used to be in.
We were concerned about the acquisition and sale of a site in Aberdare to Tesco plc. We were concerned that, in a number of key areas, the WDA did not know what was going on when it should have done. The PAC's particular concern involved the sale of the Gadlys road site to Tesco plc. The agency received a late and unsolicited offer from Tesco and it did not notify that fact to other interested parties. We questioned whether it was wise that two directors of Tesco should have been directors of the agency with responsibility for deciding on matters such as the disposal of the Gadlys road site. We were deeply concerned that that action was not fair to the other offerers and that the agency appeared to have given preferential treatment to Tesco. The PAC noted:We consider that the assessment by the Welsh Office that the disposal of the … site was badly handled severely under-estimatesthe serious matter of probity in the public sector. We considered that the disposal had been handled in a totally unacceptable manner. I hope that we will not hear any more about the WDA and its failure to carry out its responsibility for the proper conduct of public money.
I must also mention Dr. O'Connell, a consultant who was paid for 11 years because no one could bring himself to dismiss her or to bring her case to a satisfactory conclusion. That consultant was paid year after year until the matter came before the PAC and we saw what had gone on. I hope that we will not discover any similar examples.
Hospital catering was also the subject of one of our reports. We discovered that people inherit the catering requests of the previous occupant of their bed. In the week after the previous patient left, the new person in the hospital bed has to have the same meals that his predecessor ordered. That is nonsense. Some hospitals manage to change the catering orders on computer on the same day. I could detail a few more nonsenses, but time is pressing and colleagues would like to speak. Such matters deserve further attention.
This year, the PAC has had to deal with more questions of fraud than in most other years, and I hope that they will take up less of our time in the future.
§ Sir Michael Shersby (Uxbridge)
I join our Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), in paying tribute to Sir John Bourn and his colleagues at the National Audit Office for the splendid work that they have done during the year and to the Clerk of our Committee, Mr. Ken Brown. I also pay tribute to our Chairman for the great assiduity he displays in his work and the impressive tour d' horizon of the reports of the Public Accounts Committee that he has given hon. Members.
This annual debate provides us with the opportunity to consider the PAC's outstanding reports, of which, as we have heard, there are 51. As I listened to the right hon. Member's speech, I could not help thinking that perhaps few members of the public realise what is involved in producing 51 reports. It might be appropriate to mention that the Committee meets twice a week when the House is sitting and sits on average for about two and a half hours. Any member of that Committee who is doing his homework will spend at least two hours preparing for each of its sittings. It is probably the busiest Committee of Parliament and, as the senior Select Committee, it carries considerable clout.
As usual, today the Chamber is populated by colleagues who are members of the PAC, including the Financial Secretary to the Treasury, whom we are pleased to see in his place. Also listening to our deliberations is that distinguished parliamentarian, my right hon. Friend the Member for Horsham (Sir P. Hordern), the Chairman of the Public Accounts Commission and a former member of our Committee.
I should like to drallo the attention of the House to the 34th report of the PAC, which deals with the Lord Chancellor's Department and the qualification of audit opinion and alleged fraud on the green form scheme. The Chairman of our Committee has already referred to it, but such is its importance that I should like to mention one or two other aspects.
Expenditure on criminal legal aid in 1993–94 comprised £194 million paid for legal proceedings in magistrates courts and £238 million for proceedings in the higher criminal courts—a total of £432 million. By any measure, that is a huge expenditure of British taxpayers' money and it is absolutely essential that it should be properly accounted for. Most awards of legal aid, which provide the authority for payments to solicitors and counsel, are granted in the magistrates court. It was in the light of the audit findings of those courts that the Comptroller and Auditor General qualified his opinion for the fourth year in succession. He did so because of the limited evidence available to ensure full compliance with the regulations relating to the granting of legal aid.
Grants to the legal aid fund total the staggering amount of £975 million. As hon. Members know, the fund is administered by the Legal Aid Board under the general guidance of my right hon. and noble Friend the Lord Chancellor. One of the schemes offered by the Legal Aid Board—the well-known green form scheme—relates to legal advice and assistance. Payments to solicitors under that scheme amounted to £146.6 million in 1993–94. The Legal Aid Board and the police are investigating allegations of fraud in claims for legal advice and assistance.
Given the serious nature and possible implications of the alleged frauds, the Comptroller and Auditor General reported the facts to Parliament. It was on the basis of his 729 report that the PAC took evidence from the Legal Aid Board and the Lord Chancellor's Department about the alleged frauds. We say in our report:we are dismayed that, after four years in which the Comptroller and Auditor General has qualified his opinion of the accounts and eight separate initiatives, the Department has failed to resolve satisfactorily the problem of inadequately completed statements of means.Despite all the efforts of the Department, in too many cases justices' clerks are still failing to comply with the regulations which, as the Chairman of the PAC has pointed out, have the force of law. To me, and I dare say to any hon. Member, that is an extraordinary situation. Justices' clerks, surely the most thoroughly respectable and upright citizens, are failing to comply with the force of law. The Committee considers that failure inexplicablegiven the Department's assurance about the continued co-operation of the Justices' Clerks' Society.It is still not possible to find out whether legal aid should be granted and, as a result,irregular expenditure is likely to result".The PAC is seriously concerned that the Lord Chancellor's Department has no means of enforcing the regulations. It is a matter of urgency and I hope that my hon. Friend the Minister will tell the House whether the legal aid regulations are enforceable.
§ Mr. Tim Smith
Does my hon. Friend agree that there are two tests before someone can obtain legal aid? First, one has to ask whether it is in the interests of justice that the individual should do so. Secondly, there is a means test. As the Lord Chancellor's Department and the justices' clerks seem unwilling to deal effectively with means tests, is it not about time that the responsibility was taken from them and given, perhaps, to the Benefits Agency or another body that is more familiar with implementing means tests?
§ Sir Michael Shersby
My hon. Friend is right. I have considerable sympathy with his suggestion. There is much concern about the matter in my constituency and in my hon. Friend's. I can say that about my hon. Friend's constituency without a shadow of doubt because I am one of his constituents. There is general concern, however, that stems to some extent from the publicity that has been given to some high-profile cases such as those of Jawad Hashim and the Maxwell brothers. It is unacceptable to most ordinary citizens that grants of legal aid were made in some cases, given the large sums of taxpayers' money that were involved. Contributions were assessed on insufficient information about the applicants' claims to financial resources. We must remember the huge sums of public money that are at stake and the anger that has been expressed in certain newspapers—especially in the London Evening Standard but in many others—about a scheme that seems to most people to be extraordinary in its implementation.
I put several questions to the distinguished civil servant who is the permanent secretary to the Lord Chancellor's Department. Sir Thomas Legg is also the Clerk of the Crown in Chancery. In one instance, he replied that he could not say why grants of legal aid were made improperly becausethese assessments, or the lack of them, were made by the courts and here we are talking about 500 magistrates' courts that are dealing with over half a million applications a year.730 I asked Sir Thomas if the Lord Chancellor has responsibility for the operation of the magistrates courts. He replied in a fascinating way. He said that it was "yes and no." He told me that my question required a two-part answer. I wondered whether I was listening to one of those wonderful Gilbert and Sullivan operas all over again. I was told that the magistrates courts are undertaking an essentially judicial function in granting or refusing legal aid and that they are not in any sense part of central Government.
It seems that members of the staff are not civil servants. They are not part of Sir Thomas's Department. They are not subject to the Department's direct control. Central Government, in the form of the Lord Chancellor's Department, grant-aids 80 per cent. of the expenditure of the courts, but it does not control the courts' administration in any detail. That is done by more than 100 local magistrates courts committees. According to Sir Thomas, they are fiercely independent of central Government. There we have it. Fiercely independent people are responsible for an extremely important job that is not, unfortunately, being done very well.
We are told that the Department and the Legal Aid Board have together produced a comprehensive guide that sets out what they consider to be the proper application of the interests of justice criteria, to which my hon. Friend the Member for Beaconsfield (Mr. Smith) referred. It seems, however, that the various sets of guidance have not yet proved to be effective, bearing in mind the huge sums that are involved. I was assured that the Justices' Clerks Society is well aware of that view. I was told thatif the present system, by which legal aid is granted by the magistrates' courts, cannot be seen to deliver propriety and regularity then the Lord Chancellor will have to consider taking that function away from the courts and vesting it in other hands.I hope that my hon. Friend the Financial Secretary will tell the House about the progress that the Lord Chancellor is making. Has he considered recently taking the responsibility away from the courts? If not, why not? After all, the record to date cannot be said to be very good. Public concern must be responded to urgently.
The PAC was told by the Legal Aid Board that over the past three years, there have been 12 prosecutions following alleged fraud on the green form scheme. It appears that 90 firms of solicitors have been reported to the police and about 90 to the bureau dealing with complaints about solicitors for abuse of legal aid. That is an unhappy situation. After all, we are dealing with an important profession.
The Legal Aid Board told the PAC that it has recovered £250,000 and was withholding £550,000 pending the outcome of inquiries. It appears that it has secured agreements with individual firms to refund a further £85,000, which has not yet been paid. Of all the cases investigated over the past two years, the board estimated that the loss through fraud would be between £1.9 million and £3 million. That is a significant sum. I am sure that my hon. Friend the Financial Secretary will expand on the Treasury minute, which we have studied, which takes the matter a little further forward.
The 30th report, entitled "Entry into the United Kingdom", is one of the most important to come before the House. It deals with issues that affect almost every citizen. The decisions of the immigration service of the Home Office, which turn on whether many millions of passengers arriving each year at airports and ferry ports have valid 731 documents and are entitled to enter the country under our immigration laws, are of the greatest interest and concern. The report is of especial interest to my constituents because my constituency is adjacent to London airport. The House will know that Heathrow is in the borough of Hillingdon. That fact brings some special and expensive problems to the local authority, especially in caring for unaccompanied child refugees at a cost of much more than £1 million a year to council tax and income tax payers.
When the PAC examined the permanent secretary at the Home Office on this and other matters he told me, in answer to my questions, about the steps that are being taken to ensure the detection of child refugees when they leave the airport or vessel. Their entry into the United Kingdom appears to be a growing problem. He made the important point that the problem rests not so much with unaccompanied children but with such children who claim asylum. There were 357 in 1994. The rate at which they came in increased during the year. It was 69 in the first quarter of 1994, rising steadily to 109 in the final quarter. Heathrow is the principal port of entry.
After a good deal of correspondence with the Home Office, I was glad to be told that surveillance officers will be operating at the gates of airports and that closed circuit television will be used to detect young people when they arrive by aircraft. I hope that my hon. Friend the Minister will tell us what financial assistance can be provided to the borough of Hillingdon. As I have said, substantial sums are at stake.
I strongly believe that it is important for the House to. approach the question of unaccompanied child refugees, bearing in mind the considerable problems that it poses for them and for those who have to care for them. I am glad to know that steps have been taken to investigate the possibility of the young persons concerned being repatriated to their country of origin—only, of course, where it is safe to do so—so that they can be cared for there instead of in the United Kingdom.
On the more general question of preventing illegal entry, I am glad that the immigration service has introduced a computerised suspect index at major ports. It provides the immigration service with almost immediate access to some 340,000 entries. It will even allow for the different way in which foreign names are spelt, so it looks as though we shall have some fairly sophisticated equipment to help with the difficult problem that is faced by the immigration service at Heathrow and elsewhere.
One or two of the comments in the Treasury minutes deal with these particular problems. The first is that on unaccompanied minors. In minute No. 84 of the Treasury minutes, which were published in Command 3013, we are told:The Immigration and Nationality Department continues to address the issue of children abandoned in the United Kingdom. A specialist section was established in May 1995 in order to consider asylum applications from unaccompanied minors. The Immigration and Nationality Department has agreed to co-operate with the British Red Cross Society in its project to establish a register of unaccompanied children to facilitate the restoration of family contacts and eventual reunion with their families. Additional measures and options to combat abuse of the immigration control, such as improved surveillance, procedures for documents/visa issue and extending the Airline Liaison officer programme are being considered and, where appropriate, pursued with the Foreign and Commonwealth Office.I ask my hon. Friend to ensure that the investigation that is being carried out includes co-operation with the London borough of Hillingdon, which has unique experience of dealing with that difficult problem.
732 I just want to say how much I, and other members of the Committee, support the work that the immigration service is doing to build up its intelligence work so that it is able to detect the changes in the method used by people to gain illegal entry. The increasing use of forged documents is becoming a significant problem, which must be tackled with all the sophisticated technology that is available. The measures that have been taken have led to a significant increase in the number of immigration offenders detected, but there is no room for complacency. It is necessary for the service to use all the resources at its disposal if this illegal flow is to be stemmed.
The Committee also recommended that the immigration service keeps the size of the detention estate under review so that sufficient places are available to meet any increase in asylum cases and the number of passengers detained for further inquiries. Therefore, I was pleased to see from the Treasury minute that action is being taken to enhance the quality and size of the immigration service's detention estate, and to make more efficient use of available facilities. The Treasury minute tells us that there will be an increase in the total number of detention places available by mid-1997. It also tells us that it is intended to replace the 95-bed detention centre at Harmondsworth with larger, purpose-built accommodation. That move is very good, and long overdue. The immigration service also shares the Committee's concern about the use of police cells, which, as everyone who has studied this matter knows, are unsuitable for the detention of immigrants while their cases await examination.
Visa regimes are another important way of preventing illegal immigration. Pre-entry controls are supposed to transfer the problems back to the originating country. The PAC heard evidence to the effect that, out of 1 million applications for visas in 1994, 60,000 were refused. The controls that operate on entry into the country form the second line of defence, but the visa regime will, in my opinion, be effective only if our high commissions and embassies overseas are adequately staffed and entry clearance officers have sufficient time to interview each applicant properly. There also need to be adequate intelligence staff to investigate the information that is obtained, quite frequently from local sources.
Two weeks ago, I was in Sri Lanka for the annual general meeting of the Commonwealth Parliamentary Association and took the opportunity to visit our high commission in Colombo and to discuss those matters in some detail with the visa officer. I was concerned to find that there is no intelligence officer in post in Colombo. Sri Lanka is a comparatively small source of illegal immigrants to the United Kingdom—there are about 1,000 a year, which is pretty small compared with a number of other countries—but if forged documents are to be detected, it is vital that adequate entry clearance and intelligence officers are in post overseas. I hope very much that my hon. Friend will look into that matter. I pay a warm tribute to the work of those entry clearance and intelligence officers overseas. A number of them are young officers, who have a difficult job to do in deciding that very emotive and personal question of whether a person should be granted a visa.
It is interesting to note that, between 1989 and 1993, the number of immigration offenders identified has steadily increased. Between those dates, the figure rose from 7,000 to 10,300. The Home Office told the Committee that, in 1994, the figure had gone up to 12,727. 733 The proportion of people who were subject to further examination and subsequently refused leave to enter has also risen. The figures are quite dramatic. In 1992, 16,937 out of 60,623 passengers stopped for further examination were later refused leave to enter. In 1993, the respective figures were 19,000 and 63,000. In 1994, they were 23,000 and 66,000. Therefore, I hope that the Government will continue to make available to the immigration service the resources that are clearly necessary to deal with this rising trend.
The 27th report, dealing with general practitioner fundholding in England, is an important report because it is the first time that Parliament has, through the PAC, examined closely and at first hand the work being done by GP fundholders, and most important of all, the impact of the scheme on patients. It might be of some interest if I mention briefly to the House the evidence that we received from the national health service executive about the effect on patients. The report said:Many GP fundholders taking part in the National Audit Office survey said that they had achieved a wide range of benefits for their patients.The report went on to say that GPswould not have said services had improved as a result of fundholding unless they believed this to be the case; GPs have been amongst the biggest critics of services provided by hospitals and other health services. They told us they had found that GPs had painted a realistic picture of the level of services provided and had demanded improvements in service, and that GPs had been quite successful in doing that … there was evidence that the impetus of GP fundholders had often led to faster turnaround times on pathology results and faster response times on discharge letter … The Executive stated that GP fundholders were often leading the way in relation to open access to physiotherapy, X-ray and reduced waiting times.All the evidence that we received from the executive was very impressive, and led us to conclude that the fundholder service was working extremely well.
We also asked the executivewhether all non-fundholding GP patients received all the benefits that patients of GP fundholders received. They considered that the fundholding scheme had not operated to the detriment of people who were registered with non-fundholding practices.That, too, is important evidence.
The Committee was concerned about value for money; so we asked the executivewhether the extra costs of administration would yield better value for money. They told us that GP fundholders were out performing non-fundholders in terms of coping with the ever increasing pressure on the drugs budget and that over the three years 1991–92 to 1993–94 they estimated that GP fundholders had saved in the order of £70 million on the costs of drugs.That report should certainly be taken into account in consideration of the organisation of the national health service.
We also took account of the executive's view thatfundholders have been achieving a faster delivery of patient care and improving the range and level of care; but that other initiatives, such as the Patient's Charter, will also have contributed to downward pressure on, for example, waiting times for hospital appointments.There we have it: the GP fundholding scheme has not operated to the detriment of patients of non-fundholding GPs. It is working well, in conjunction with the patients 734 charter, to achieve shorter turnaround times, shorter waiting lists and a better standard of medicine in our country.
As this is a highly political matter, I make no apology for stating that the PAC's work is not party political. One of our great attributes is that we try to examine impartially all the matters that come before us. I hope that all politicians who must decide whether the GP fundholding scheme is a good idea will pay attention to the interesting and useful report from which I have quoted.
I regard it as a great privilege to serve on the PAC. It is the one parliamentary Committee whose members have access to precise, factual information, and to an agreed report from the National Audit Office on which we can question witnesses. That is a powerful means of ensuring effectiveness, economy and efficiency in Government, and value for money for the taxpayer. When things go wrong, we can identify the mistakes and ensure that the Departments concerned learn the lessons. We always look forward to the Treasury minutes, which usually accept our recommendations. It would not stretch the figures too much, I think, to say that the PAC's work saves the taxpayer an average of well over £200 million a year.
§ Mr. Mike Hall (Warrington, South)
I congratulate my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) on his tour de force in opening our annual debate. As he said, we are considering 51 reports, which shows the depth and extent of the Public Accounts Committee's work in ensuring probity in the spending of money by the authorities to which Parliament has voted that money.
The report on general practitioner fundholding, referred to by the hon. Member for Uxbridge (Sir M. Shersby), reveals a number of problems to which the hon. Gentleman did not draw attention. It shows, for instance, that fundholders currently have nearly £100 million in their balances, which they are not required to spend for four years. That is a great deal of money, which would be much better spent on patient care. The report also points out that 20 per cent. of fundholders have underspent their 1993–94 allocation by more than £100,000. That money, too, would have been much better spent on patients.
Mr. Langlands pointed out in his evidence to the Committee that the establishment of GP fundholding had cost the NHS £150 million—money that would have been better spent on health care than on bureaucracy. I am glad that Mr. Langlands placed that information on the record, especially for the purposes of my hon. Friend the Member for Darlington (Mr. Milburn).
In opening the debate, the Chairman of the Public Accounts Committee mentioned the 33rd report, which concerns irregularities at the Sana'a embassy in the Yemen. Those irregularities concern me, as they have clearly cost the taxpayer a great deal of money. The financial transactions carried out by Mr. Ryan probably imposed a direct cost of £300,000 on the taxpayer, and Mr. Ryan's profits were probably of the order of £600,000, although the amount is difficult to quantify. The cost of the investigation of the fraud was some £41,000, and 17 visits were paid to the Yemen at a cost of some £100,000.
Another part of the report draws attention to the fact that while Mr. Ryan was in the Yemen he negotiated the lease for the ambassador's dwelling in Sana'a. The 735 embassy is the most expensive in the diplomatic service. For a five-year period, it will cost the British taxpayer £1.35 million. It is clear that Mr. Ryan received what is known as a backhander for the contract. I find it astonishing that such an amount of taxpayers' money should be spent on an embassy, but I am even more astonished that a five-year lease cannot be renegotiated to save money for the taxpayer. That in itself is a disgrace.
We were not helped by the evidence of Sir John Coles, the permanent under-secretary of state and head of the diplomatic service. Just before the hearing, he submitted a note to the Committee saying that issues involved in some of the disciplinary hearings were sub judice, which made it impossible for the Committee to follow certain lines of questioning. I considered the attempt to constrain the PAC's role undesirable and criticism was made by the Committee itself.
The evidence given by Sir Jones Coles began straightforwardly: one ambassador had been removed from his post with no enhancement. By the time we finished taking evidence, however, two ambassadors had disappeared with enhancements at a cost to the public purse of £221,000 for the first and £131,000 for the second. They were given those enhancements so that they would take early retirement because they were incompetent at the job that they had been charged to do. That cost to the taxpayer could clearly have been avoided.
When we asked Sir John Coles why it had taken rigorous cross-examination to extract information from him, he came up with a number of less than convincing answers. He apologised for slightly misleading the Committee, saying that it was simply due to his "own poor memory": he did not set out to mislead the Committee, but his memory in regard to pension enhancement was defective and the facts had slipped his memory. He said that he was sorry if his evidence sounded evasive and stated:I appear to have misled the Committee. That was an unconvincing body of evidence, and the report is damning. I believe that the two ambassadors involved in that pitiful example of poor expenditure of public money should have been sacked rather than being told to take voluntary retirement or compulsory redundancy.
Out of that inquiry, 153 recommendations for improvements to the internal audit of the diplomatic service have been brought forward. I hope that every one of them is being carried out and that when the Financial Secretary sums up the debate he will be able to give us that assurance.
The 23rd report of the Public Accounts Committee was published on 17 May 1995 and entitled, "Value for money at grant-maintained schools in England: a review of performance". It contains the second set of evidence that the PAC has taken on the issue of grant-maintained schools. Clearly, a number of issues remain to be resolved in the GM school funding sector. The PAC has drawn attention to the double funding of GM schools, where the Government overestimate the central service charges of local education authorities and underestimate the amount of money that they delegate in their local management of schools budget. That means that when the Government recover the annual maintenance grant paid to GM schools from LEAs they take more money than necessary from the LEAs and give it to the GM schools.
736 That inflated payment to GM schools is made at the direct expense of other schools in the LEA. That is robbing Peter to pay Paul. In Tower Hamlets and Lambeth, two regions of high deprivation in London, state schools were badly affected by that double funding. The PAC has called straightforwardly forthe central services element of annual maintenance grant … to reflect accurately local education authorities' delegation of central services to schools.We are pleased to note that the Government have taken that on board. Clearly, earlier action would have allowed authorities in Lambeth, Tower Hamlets and elsewhere to have the right level of funding available for schools remaining with the local education authority.
If we have a state system of education, it is essential that all schools in that system are treated fairly, and that all pupils receive a fair amount of grant per head in each school. The example that the PAC has identified has been reluctantly taken on board by the Government and we hope that within the next two years the practice will have been removed. We are assured that new schools coming into the GM sector will not benefit from such double funding.
One of the other problems with grant-maintained schools is the lack of declarations of pecuniary interest by governing bodies. In 22 of the 70 schools visited by the National Audit Office, there was either no register of pecuniary interest or the register had not been kept up to date. The Public Accounts Committee is charged with ensuring probity in the expenditure of public finances. One of the best ways of doing that, where school governing bodies are involved, is to ensure that each individual member declares a pecuniary interest, so that when a governing body awards a contract there is no conflict of interest and no question mark over the probity of those schools' actions.
I have been told that a number of hon. Members are lining up to participate in the debate and to ensure that my remarks are succinct and to the point. To go back to pecuniary interest—
§ Mr. Hall
I am sure that that echo of encouragement will reflect on the points about pecuniary interest. Wherever contracts are awarded, whether it be in state schools under the local education authority or in grant-maintained schools, it is essential that a register of pecuniary interest should be maintained so that people who could be involved in the contract do not take part in decisions to award contracts to companies for which they work.
Clearly, we are concerned about some aspects of that matter in the incorporated and further education sectors. That approach is recommended by the PAC and its adoption by the Government would be a positive step. I look forward to hearing an assurance from the Financial Secretary that under the regulations of non-departmental public bodies it is a requirement to establish a register of pecuniary interest to ensure probity in the administration of public affairs.
Another example to which the Public Accounts Committee drew attention in relation to grant-maintained schools was their ability—or, currently, their lack of ability or legal power—to borrow money. We are assured that, where money has been borrowed or leased, its 737 legality may be questionable and that the Government are examining the matter. In evidence, the PAC has been told that when GM schools are given permission to borrow money, so long as the governing body has acted properly, within the scope of its functions and procedures, with honesty and without ulterior motive, and it has reasonably carried out its business in a commonsense way, it will be protected from the risk to its assets. That is straightforward. If the governing bodies have done it properly, there will be nothing for them to worry about.
I am still concerned about what will be used as security for the loans that GM school governing bodies may take out. Will it be the school buildings? Will it be some other form of security? If a loan is not paid back but defaulted on, what will happen next? We want some assurances from the Government that they have followed that aspect through. If GM schools start to take out large loans on school buildings, the value of the school playing fields or some other asset, and then default on their loans, we shall start to experience problems with the delivery of education. We want to be sure that that will not be the case. I do not want to be a member of the PAC in the future, to be asked to sit in judgment and to find out that loans have been defaulted on and that the Treasury has underwritten them and paid them off.
Another aspect of grant-maintained school funding that is of great concern involves evidence given to the PAC by the chief executive of the Funding Agency for Schools. Under cross-examination, he conceded that if they opted out of the national pay scheme head teachers and deputy head teachers in GM schools would be entitled to have what is commonly known as a company car and private medical health insurance as part of their remuneration.
Having spent a lifetime in education before coming to this place, I think—and I cannot be faulted for believing—that if money is available for company cars and private health care for heads and deputy heads, the money involved would be better spent directly on education provision. It is not the state's role to provide private health care for head teachers in the state sector. That is a totally inappropriate use of public funds. I look forward to the Financial Secretary saying some words about that when he responds to the debate.
Clearly, we want confirmation that double funding has now ended, that the annual maintenance grant is calculated accurately in relation to the LEA's expenditure on central services and takes into account how much money it delegates to its schools, and that schools which remain within LEAs are not disadvantaged by preferential finance going to schools in the GM sector. It is a straightforward view that schools in the state sector should all be equally and adequately funded.
The 40th report of the PAC has already been mentioned by my right hon. Friend the Member for Ashton-under-Lyne. It deals with the suspension of Dr. Bridget O'Connell and it is a woeful tale of inadequacy. The sums involved are quite substantial, given that one individual is involved. The final settlement will have cost the taxpayer just short of £600,000—a total of £593,409, which includes £439,259 in pay for doing nothing for more than 12 years, £105,000 in settlement of the legal case out of court, and £11,000 in legal expenses and enhanced superannuation benefits assuming that Dr. O'Connell will live to the age of 75.
738 Dr. O'Connell was suspended in 1982 by North East Thames regional health authority because she did not get on with the staff in the paediatric unit where she worked and in the hospital generally. It took 12 years to resolve that personal difference in the hospital. It is astonishing that things could get so far and that the chief executive of the national health service management executive, Mr. Langlands, had to settle out of court. Clearly, the NHS management executive did not have a leg to stand on.
In my cross-examination of Mr. Langlands, I suggested that he "sued for peace". He did not agree with my analysis of what had happened, but said that he thought that the settlement was the best value that could be gained for the taxpayer after the case had gone on for so long. The case should have been resolved a great deal earlier.
The other extraordinary aspect of the case is that the evidence from Sir Duncan Nichol, the former chief executive, and from Mr. Langlands himself shows that the NHS does not like gagging clauses in severance contracts. However, under examination Mr. Langlands confirmed that there was a gagging clause in Dr. O'Connell's contract. He said that he did not like it, but that he was not too concerned about it because he knew that the case would hit the headlines. He was certainly right about that. In all fairness, it was not the NHS executive that asked for the gagging clause, but Dr. O'Connell's solicitor. It would have been better if the NHS executive had resisted that request and published the details in full. It would have saved the Public Accounts Committee a great deal of time and effort.
I hope that the case will prove to be an isolated one. We have received an assurance from Mr. Langlands that he has trawled the NHS to ensure that there are no other examples of people receiving full pay for 12 years and enjoying the full benefits of pay increases year after year without turning a tap for the health service. There has been poor management and weak procedures. We want an assurance that the weak procedures have been sufficiently strengthened to ensure that nothing like this case could ever happen again at the expense of the taxpayer.
I wish to refer next to a report that I have mentioned previously in the House, entitled "Merseyside Development Corporation: Grand Regatta Columbus and Fanfare for a New World Concert"—the third in this series of PAC reports. I am extremely disturbed by the report and astonished at the amount of taxpayers' money that has been lost through the incompetence of the MDC. The concert and the regatta were the brainchild of the chairman, Sir Desmond Pitcher, who is coincidentally also chairman of North West Water.
As the PAC Chairman has already said, the two events cost the taxpayer and private business £1.1 million. They actually exceeded the permission on expenditure granted by the Department of the Environment. A letter from the Merseyside task force dated 3 March 1992 stated:Further to my letter of 23 January, my Headquarters have now agreed to MDC's proposals as set out in your letter of 20 December. However, they do not consider MDC to be underwriting expenditure but rather estimating a potential financial contribution.There is then the key sentence:My colleagues have been reassured by your having estimated the maximum possible contribution in a worst case scenario, by your recognition that MDC expenditure will have to be met from within the EFL, and by the scope that exists for MDC to prune costs if necessary.739 The cost referred to was about £200,000. The letter then said that if the MDC expected to spend any further money on the regatta, approval from the Department of the Environment should be sought first.
That was a clear instruction about the maximum that the DOE expected the MDC to spend or lose. The letter clearly said that if further contributions were required, approval should first be sought. The warning was clear even before approval was sought because the MDC had spent money on the regatta and the concert before it wrote to the DOE seeking permission.
On 12 July 1992, in an estimate of what the two events would cost, the MDC in a handwritten memorandum estimated the loss for the concert to be £187,840. The MDC knew that the event would lose money, yet it proceeded with the concert. It did not cancel it, nor were strict measures taken to mitigate the losses. The MDC carried on with the concert, but in a rather peculiar way. Four days before the concert took place it signed a deal with a private shell company, with a share value of £2, to take over the whole of the financial responsibility for the concert and the regatta.
With the stroke of a pen, the MDC transferred the losses from the public purse to the private purse. That was deplorable. It knew that the events would lose money, so it moved the debt from the public to the private sector. Private business on Merseyside was left £375,819 out of pocket. That is a phenomenal amount of money which the MDC wrote off with the stroke of a pen for an event that. was the brainchild of its chairman.
Questions must be asked about the clear lack of supervision by the Department of the Environment. Questions must also be asked about the role of the Merseyside development corporation, which has played fast and loose with public money. From the response by the Treasury to date, it appears that nothing is to be done.
In addition to those losses, the MDC gave away £100,000 worth of tickets. Hospitality was overspent and the whole thing was a complete shambles. However, three and a half years later, not one member of the board has been removed from office and the chairman is still in place. The time has come for action. First, the private sector should have its losses reimbursed. Secondly, disciplinary action should be taken within the MDC so that future activities will be kept within the terms of its charter to oversee the economic regeneration of Merseyside, rather than fall in blindly with the wishes and whims of its chairman to produce glossy brochures about fanfares which prove to be a heavy cost on the taxpayer.
I end with the report entitled, "The Proper Conduct of Public Business", the eighth report of the 1993–94 Session, which draws attention dramatically to the failures identified by the PAC. It states:In recent years we have seen and reported on a number of serious failures in administrative and financial systems and controls within departments and other public bodies, which have led to money being wasted or otherwise improperly spent. These failings represent a departure from the standards of public conduct which have mainly been established during the past 140 years. This was the period following the publication of the Northcote and Trevelyan Report. The PAC has considered 51 reports this year and it is obvious that there are still serious problems with the proper conduct of public business. However, it is not the final tale of the PAC's work over the past 12 months because a number of reports are yet to come before the House. There are to be reports on fraud in the 740 Metropolitan police, the royal palaces, the Mount Vernon sale, the sale of county hall and the incompetencies of the Child Support Agency. Those are five major reports that we can look forward to debating in 12 months' time. I hope that there will then be a far better picture of the proper conduct of public business within the United Kingdom.
§ 6.8 pm
§ Mr. Chris Davies (Littleborough and Saddleworth)
Thank you, Mr. Deputy Speaker, for giving me this early opportunity to complete the last of the three key initiation rites required to become a fully fledged Member of Parliament. It is almost three months since I passed the first and most important test, when the people of Littleborough and Saddleworth elected me to represent them.
I want to begin my speech with a few words about my predecessor, Mr. Geoffrey Dickens. In a parliamentary career spanning 16 years, he became a familiar figure on the Conservative Benches. For 10 of those years, I was his political opponent locally, and, in truth, found that our views rarely coincided—but I always knew that he was not a man to underestimate.
From the moment of his election, Mr. Dickens made his home in the constituency. His total commitment to the area that he represented was never in doubt, and he will long be remembered locally as a Member of Parliament who served his constituents well and as an individual who had the ability to mix comfortably with people from all walks of life and all backgrounds.
Mr. Dickens was literally a larger than life figure. His opinions made him a popular speaker at Conservative party conferences, although they were perhaps not always welcomed by some hon. Members. I understand that, from time to time, the views that he expressed here were heard with amusement, but Geoffrey Dickens possessed a most important virtue—that of being able to tell a joke against himself. It was a characteristic of the man's humanity which was much to be admired.
We should not forget that Mr. Dickens also became known as a leading parliamentary campaigner against the sexual abuse of children, helping to bring the issue to public attention more than a decade ago. His campaign gained support across party lines, and his efforts deserve full and proper public acknowledgement. For seven months, he fought cancer with cheerfulness and courage, and his death robbed his family of a much-loved husband and father, and the House of one of its real characters.
A hard-fought by-election projects a constituency into the spotlight. I am sure that most of my constituents will have been pleased about the way in which their local area was portrayed, as visiting journalists found that their impressions of Oldham and Rochdale, which were perhaps perceived as grim, dark and oppressive places, were proved false, and that the towns and villages of Littleborough and Wardle, Milnrow and New Hey, Shaw and Crompton and Lees and Saddleworth, all proved to have a distinctive character.
Far from being dark, grim and oppressive, those places proved cheerful. Journalists discovered that, from a doorstep in almost every part of the constituency, one can see over the rooftops to the south Pennine hills.
My constituency is indeed an attractive area. That fact was brought to the fore by television coverage of the by-election. I admit to nursing a desire to see its further 741 enhancement by the removal of the electricity pylons which mutilate some of its finer views and the replacement of the barbed wire fences with restored stone walls, but with up to 10 million people living within an hour's travelling distance of the constituency, and especially the south Pennines, the countryside is fragile and under constant threat from those who seek to use it for commercial advantage.
Activities that were once acceptable when the area was part of the cradle of the industrial revolution are no longer acceptable when the population grows and the open countryside recedes. Those activities must now be curbed.
I cite, for example, the problem of the planned recommencement of quarrying in New Hey, which I strongly believe is no longer an appropriate activity now that traffic density is so much greater and lorries are so much larger. I seek greater protection for the countryside from such developments, and in particular, for our sites of special scientific interest, a topic partly dealt with by the Public Accounts Committee in its 11 th report, on which I shall comment later.
Our hills and moorland are beautiful and precious and deserve special protection, but they are bereft of people, and it was the people of Littleborough and Saddleworth who elected me. During the by-election campaign, I spoke out strongly for change, for investment in public services—especially education—for those in politics to be more honest about the problems we face as a society, and for all hon. Members to look more to the long-term needs of our country—and, indeed, of our planet.
The House provides opportunities—many opportunities, perhaps—for individual Members to raise matters of concern on behalf of their constituents. I certainly intend to use those opportunities to the full, but I have long nursed the gravest doubts about whether the institution itself is capable of performing the essential functions that my constituents and others have the right to expect from their legislative assembly.
Parliament should ensure that legislation is sensibly considered and emerges clear and effective, but few of my constituents believe that the chaos of rail privatisation demonstrates for a moment that it succeeds in doing that. Parliament should ensure that it provides real challenges to the policies and practices of public and private sector organisations when that is needed.
Although I greatly admire the work of the PAC and the Select Committees, I fear that they are exposed as toothless tigers in the face of even the slightest Government resistance. Parliament should be able to challenge the Government when Executive power is abused, but that will never be the case so long as the whipping system prevails in the larger parties, and there is no proper separation of powers. My first few days in this place have done nothing to dispel these concerns.
To walk into the inner sanctum of the Members' Dining Room and look up at the pictures of Gladstone and Disraeli is to be reminded that so much of the present House of Commons was moulded in their day; but that day was 120 years ago. Those Prime Ministers in their time were reformers who worked to broaden the franchise. I wonder whether they would be pleased to know that in the last years of the 20th century, the people of Britain still do not possess votes of equal value, and that our democratic system is so flawed that, for 16 years, it has 742 kept in place a Government opposed by 57 per cent. of the voters, and denies millions of Liberal Democrat, Green and even true socialist supporters the representation in the House to which their votes should entitle them.
I found from the Library that I am the 68th—only the 68th—person to be elected as a Liberal or Liberal Democrat Member of Parliament since the end of the second world war, yet the votes that my party won at the previous general election alone would have entitled it to more than 100 Members of Parliament under any system that genuinely purported to be democratic. It means, I fear, that the very basis of representation in the House is a sham and a disgrace.
The House of Commons may be a cosy club for those who are here, but radical reform is needed if it is once again to do the job for which it is intended, and to wipe away some of the cynicism with which it is now regarded by the majority of people in this country.
As we have heard, however, there is much to admire in the work of the PAC. I am pleased that it has turned its attention to matters such as the protection of sites of special scientific interest. Of the almost 3,800 such sites in England, just four are in Oldham, and one, I understand, in Rochdale, covering the south Pennine moors. They represent the basic minimum area of habitat that needs to be conserved if the range and distribution of plants and animals in this country is to be maintained. It must therefore be a matter of great concern that nearly a quarter of these exceptional areas have been damaged in the past seven years alone. That is on the basis of English Nature's figures, which I think are generally accepted to be an underestimate of the true situation.
Within its limited remit, the PAC report makes some reasonable suggestions. Although I have some doubts about recommendations that, for example, English Nature should be finding ways to reduce the average payment made in return for a management agreement, I generally endorse them. However, surely more consideration should be given to the promotion of positive conservation measures within such agreements, rather than simply paying owners not to cause damage in the first place. I commend to the House the ideas for the protection of SSSIs in the draft wildlife Bill being prepared by Friends of the Earth.
The PAC's 42nd report deals with renewable energy research. The PAC is absolutely right to ask rigorous questions about the way in which public money is being spent, even though the £20 million a year spent on such research is tiny in comparison with the money poured into nuclear research and subsidy for many decades. I fear, however, that the Committee's narrow remit prevents it from taking the wider and longer-term view which should be so essential in energy matters. The basis of our economy continues to rest on the exploitation of finite resources laid down over millions of years. We continue to use that precious asset as though it were infinite, with no attempt in our national accounts to make allowances for depreciation. The present exploitation of our limited gas reserves demonstrates that short-term approach only too well.
The potential for energy conservation in this country is still said to be immense: sufficient to reduce energy consumption by 50 per cent., I am told. Such a programme would conserve the country's resources, generate employment and reduce energy costs. But so long as our finite energy resources continue to be treated 743 as infinite, market forces alone will never encourage such investment and energy conservation measures to take place.
In recognition of the fact that the protection of our environment and the earth's resources is a duty for all of us in elected positions, many enlightened local authorities are now including environmental impact statements in reports, so that councillors may take account of the full long-term consequences of their actions, which so often fall outside the narrow scope of a local authority's balance sheet. The metropolitan borough of Rochdale is one authority which now conventionally makes use of environmental impact statements. Indeed, the metropolitan borough of Oldham, of which I am still a member, is starting to do the same.
I would feel happier about the PAC's recommendations if its conclusions took account of environmental impact in the same way. I hope that the Committee will consider such a course in future. It would be a step which might well influence its future judgments, and would deserve a warm welcome.
§ Mr. Alan Williams (Swansea, West)
I congratulate the hon. Member for Littleborough and Saddleworth (Mr. Davies) on surviving the ordeal of the maiden speech. Everyone who comes to this House says that it does not matter how experienced one is in public speaking or in broadcasting, making one's first speech in the House is a very intimidating experience. The hon. Gentleman spoke with great clarity and strength of feeling. There is a tradition that one is non-controversial in maiden speeches—and he almost managed it—although I think that it is observed more in comment than in practice.
I congratulate the hon. Member for Littleborough and Saddleworth on the graciousness of his comments about his predecessor, for whom there was great affection in the House. His predecessor was one of the personalities and characters of the House. All of us, especially those of us who are a little longer in the parliamentary tooth than others, would say that it is one of the sadnesses of Parliament that there are fewer personalities today than the history books lead us to believe—perhaps—that there were in the past.
I remember when I had to make my maiden speech—it is relevant to the party of the hon. Member for Littleborough and Saddleworth because I was sitting in its corner of the Chamber—on the first motion of censure of the 1964 Wilson Government. I go back that far, so there is hope yet for the hon. Gentleman since I too won a marginal seat.
The Speaker got in touch with me in the morning, with the kindness that Speakers and Deputy Speakers always show to hon. Members who are about to make their maiden speeches, and said, "I just thought that I would let you know, you will be speaking fourth this afternoon." I said, "Oh really. It is a motion of censure. What does that mean?" I was told that Alec Douglas-Home would open, Harold Wilson would speak second, Jo Grimond would be third and I was fourth. I immediately volunteered to make my maiden speech the following week. However the Speaker of the day was rather adamant about such things, and as I had put in to make my maiden speech, I had to make it.
744 In the end I need not have worried. That is not meant in any derogatory way. I sat there listening to the first vicious attack by Alec Douglas-Home on the Wilson Government, followed by Harold Wilson making a rather humorous reply, and became increasingly depressed. But when the Speaker stood up as Harold sat down and called Mr. Jo Grimond, I am sorry to tell the hon. Member for Littleborough and Saddleworth that about 600 Members stood up and walked out.
That happened not because there was not great affection for Jo Grimond—there was—and it was not due to lack of respect for him. He was a good questioner and a delightful colleague, but he was not noted for making the most stirring of speeches. So I congratulate the hon. Member for Littleborough and Saddleworth on commanding an audience approximately four times the size that I was able to command on that particular day.
The hon. Member for Littleborough and Saddleworth made an important point when he referred to the need for us to have regard to finite resources and not to treat energy sources as though they are infinite. History will show that the great tragedy of this century, and the great opportunity of the post-war era, was the period of energy plentifulness in the 1980s, which was sadly squandered. Energy cannot be made infinite, but we could have reinvested the surpluses, the profits, the returns to the Exchequer from the North sea, which could have given the country further earning power through a second industrial revolution. None the less, I congratulate the hon. Gentleman and wish him well. I hope that he has many more years in the House and I look forward to hearing him when he is in a more confrontational mood, when I shall remember not to sit too near.
I want to make only a couple of main points—I am sorry to depress my hon. Friend the Member for Bristol, South (Ms Primarolo). The hon. Member for Littleborough and Saddleworth referred to Select Committees as being toothless tigers. Most of us would recognise a great deal of truth in that. That is not to underestimate what they have achieved. The innovation of the Select Committee system, based on shadowing individual Departments, is probably one of the most important innovations of the past quarter of a century. They have done a great deal of good work, but the problem for Parliament and members of the Committee is shown by today's debate.
Here we are, with a massed audience in the House and an even fuller Gallery—I am talking of course about the Press Gallery [Laughter.] We are trying to discuss 51 reports in one day. Yet in doing that, we are privileged because the other Select Committees have great difficulty in finding any time in which to consider their reports. The Government are only too happy to put the reports on a shelf and leave them there. So the hon. Member for Littleborough and Saddleworth is quite correct in saying that if parliamentary accountability means anything, we have to consider the next stage for Select Committees to ensure that they have more bite and more power.
For the PAC and the House—if I may return to a particular hobby horse: the process of parliamentary accountability—regardless of the rights and wrongs of the development of agencies and trusts, such bodies present a problem in accountability, in that they create increasing numbers of accounting units. There has been a proliferation of accounting units which have to be monitored and audited, on which the NAO may need to 745 report, and on which we as members of the PAC have to deliberate. I know that the following viewpoint commands support from just one member of the Committee at this stage—myself. We shall have to consider whether, at some stage, we go down the route of some of the other Select Committees and break down into a Sub-Committee system because inevitably, the Public Accounts Committee is the bottleneck in the whole system. Any Government can create extra accounting units as they wish. The National Audit Office can expand, given the manpower which, in fairness, it has had and the resources it has had, to accommodate those extra accounting units. What cannot expand under the present format is the capacity of the Public Accounts Committee.
Hon. Members who have served on the Committee and anyone who has been acquainted with the Committee will confirm that it is extremely hard working. One of the difficulties and joys of the Public Accounts Committee is that unlike other Select Committees which consider the same subject week after week, pursuing it in great depth, we have the problem that on a Monday, we consider something to do with the Department of Health and then on Wednesday, we consider major capital projects in the Ministry of Defence. Sitting as a whole, as we do at the moment, we could not accommodate a larger work load from the National Audit Office. I return, therefore, to my suggestion to my right hon. and hon. Friends that at some time, we must consider whether a Sub-Committee system would be appropriate.
I join in congratulating our Chairman, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), on the diplomatic and assiduous way in which he manages to keep the Committee together and to keep the consensus which marks the Committee. That does not mean that we do not have different viewpoints. It does mean that when we produce reports, they are unanimous simply because individuals have made concessions—I am talking about all Committee members—when they disagree with various points and because they regard getting the main report out as the most important objective.
My right hon. Friend the Member for Ashton-under-Lyne has carried out his work in a way that has won admiration from hon. Members on both sides. I also pay tribute to the National Audit Office and to the Clerk—I should say Clerks—of our Committee. I use the plural because we have had several Clerks. The Committee is a good training ground for hon. Members. Indeed, for Opposition Members, it seems to have become almost an essential part of progress towards Front-Bench service. The Public Accounts Committee has become for us what the Whips Office has been, for many years, for the Conservative party. I notice a smirk of pleasure on the face of the hon. Member for Croydon, South (Mr. Ottaway), the Government Whip, in anticipation of the logical consequence of what I have just said about the Conservative Whips Office. The Opposition treat the Public Accounts Committee as somewhere where one can get good experience of how Governments work, how Departments work and how the Committee system works.
One of the most interesting of our reports this year—I shall not deal with it in great depth—is the report on the Trident base. The project was important not only because it was the biggest civil engineering programme, second only to the channel tunnel, in this country, but 746 because it was fascinating as a case study of how not to go about managing a capital project. One could hardly find a more perfect example of many errors bundled together.
There was an £800 million overrun on the Trident base. We must be fair to the Ministry of Defence. I am not saying that an overrun is the same as being wasteful and I am not saying that money was squandered or used improperly. The overrun happened because despite the scale of the project, it was devised as it was being built, day by day. Some 7,200 variations were introduced in the design of a ship lift alone. There were as many as 10 variations a day throughout the life of the project. Anyone who has experience of a major construction will know that that is a contractors' paradise because every variation means a renegotiation. In effect, the Ministry of Defence completely lost financial control of the project, and it is worth mentioning for just that reason.
I understand the strategic reasons and we well understand that the Government said that a policy decision was being taken which had to be implemented as quickly as possible. Nevertheless, although the errors may have been made as a result of a desirable objective from the Government's point of view, as they may concede, it is important that we as a House of Commons do not overlook the lessons that, clearly, should be learnt.
With some regret, I now turn to matters Celtic. I am glad to say that despite a rather bad press at times for some of the Welsh quangos, the reality is that almost all the organisations at which we look in the Public Accounts Committee and which have problems are London based rather than based in Wales or in Scotland. We must be careful not to get one or two instances that relate to Wales, to Scotland or to Northern Ireland out of proportion. However, that does not alter the fact that one cannot condone what happened at the Welsh Development Agency.
It is a matter of sadness to anyone who cares for the future of Wales that an agency on which we depend for inward investment and for the strategic development of our economy fell into the hands of people who did not understand the public ethic and who did not necessarily share the civil service attitude towards probity and standards of conduct. We had a fly-by-night period at the Welsh Development Agency and, I am sad to say, one particular individual who was responsible for appointments, from outside politics, made appointments in his own likeness.
Unfortunately, the cutting of corners, which may or may not have been well intentioned, led to the first report on the WDA. Again, we had the gagging clauses, the free cars for private use as well as for business use, redundancy schemes that had never had Treasury approval and did not conform to Treasury rules and, above all, the case of the operation known as Wizard. A group of senior members of the WDA connived at using public funds, through three consultancies, to try to devise a package for management buy-outs—that is really what it was all about—of the most lucrative parts of the WDA. So that the Treasury and the Welsh Office would not know what was going on, the three consultancy projects were spread into different parts of the budget. It was hoped that no one would realise that an attempt was being made to undermine the standing of the WDA.
747 Again, it is salutary to realize—we have referred to this before—that even the National Audit Office, for which we all have enormous respect, did not discover Wizard, so well was it buried. We came to know about Wizard only because we were contacted by a couple of whistle-blowers within the Welsh Development Agency who were appalled at what they saw and came to meet three members of the Committee in one of the small Committee Rooms next to the Great Hall to tell us what was going on. The Chairman of the Committee could confirm that, for the first time in a PAC report, we praised people for leaking, and we stated in the report that had it not been for those whistle-blowers, we would not have been aware of what was going on.
I say to the hon. Member for Littleborough and Saddleworth that, while I am aware of the courtesies of the House, he may want to make comments to the press and—I mean this nicely—I do not want him to feel that he has to sit through my tedious speech as a courtesy. The hon. Gentleman should by all means feel free to leave the Chamber, because most of what I shall be talking about will not be familiar to him.
I am sad to say that the Welsh Development Agency reappeared on the scene in another matter when its conduct was utterly unacceptable, as the Treasury itself indicated. There was a virtual conspiracy between one senior member of the Welsh Development Agency and other parties in a joint venture set up with local authorities to promote a property deal in the Aberdare area, and to deliberately try to sink an existing project that was being developed by others in which a great deal of money had been invested.
Prior to the joint venture with the Welsh Development Agency, Tesco had been in discussion with another company called Landare relating to a site elsewhere in the valley. Landare had not only achieved planning permission for the development from the local authority, but had reached an agreement on planning gain in which the council would receive a sports hall and transport facilities as part of the project. But the project needed one more thing. The two councils that owned the property had agreed to sell a narrow strip of land which blocked the access from the site to the main road, as this was crucial to the project.
The joint venture between the Welsh Development Agency and the councils was chaired by a director of the WDA, and the WDA board decided that Tesco would not be allowed to bid for the site which the WDA was developing as part of that joint venture. A deadline was set, and tenders were invited. The tenders were received, and the councils and the joint venture team decided to have further discussions on the final details of the proposals with the bidders. Then, out of the blue, Tesco—which, we understood, had been banned from bidding in the contest—came in with a bid after the final date for bids which, to and behold, proved to be the highest.
Understandably, the Committee was deeply concerned, and the Chairman pinpointed the fact that Tesco had two representatives on the board of the Welsh Development Agency—the then chairman of the agency, Dr. Jones, was a director of Tesco, while another member of the board still is a director of the company. After the bids had been opened, and when one would have thought that the last financial offer had been received, in came Tesco whose bid won the day. There were delays to allow Tesco to get its bid in, and meetings were postponed to ensure that the company could make its bid.
748 We received assurances from Mr. Scholar, the permanent secretary—who, in fairness, was not the permanent secretary at the time this happened—that the two directors of Tesco had declared their interests and had taken no part in the making the decision. But the crucial point was made by the Chairman, who said that although the two gentlemen may have taken no part in the decision-making process, who can say what information was passed from them to other people? The Committee felt, and this was a point with which the Treasury agreed, that such conduct was utterly unacceptable and way below the standards we would expect from a public body.
Having received the bid from Tesco, the parties involved then set out calculatedly to sabotage the other side. In questioning Mr. Scholar, I quoted a minute of a meeting of the joint venture in which a letter from Chestertons, the agents and advisers for the sale of the site, to the Welsh Development Agency was read. The letter said that Chestertons was "facing untimely competition" from an alternative site, and went on to say:The scenario outlined above is of great concern as it may prejudice or even possibly prevent the successful disposal of the Gadlys site … The answer to this potential problem is to minimise any opportunity for an operator to swap sides. In this particular case … this is possible, given that the Joint Venture partners control the access to … the alternative site. The parties involved then tried to ensure that the councils—which had offered to sell to Landare land that was crucial for access—withdrew their offer, which would completely blight that site. The site would then cease to be an attraction to the retailer Landare had in mind, or to anyone else. I am sure that Conservative Members who have not been involved in this matter would admit that if they were being treated in such a manner by a governmental body, they would feel that that body was stepping way beyond its powers.
I received at my house one Sunday a copy of a report by Vernon Pugh QC. He said in the report that the Welsh Development Agency was guilty of half truths and untruths, had acted ultra vires and was guilty of serious omissions.
The report by the QC had been delivered to the Welsh Office, but the Welsh Office did not deliver it to the office of my right hon. Friend the Member for Ashton-under-Lyne so that he was aware of it before our hearings. So, with the hearing on Wednesday, there was a ring on the bell at my home in Swansea and, to my surprise, on the doorstep was my predecessor as Member of Parliament for Swansea, West. A Conservative represented the seat until 1964. He was acting for Landare in a professional capacity. He brought me a copy of the QC's document. It was devastating.
What followed was even worse. Not only did the report show that there had been conduct by the WDA which was unacceptable by any standards, but the way in which it was subsequently ignored revealed that there was a wish to pretend that it did not exist. There was a wish to bury it. In fairness, Mr. Hugh Rees, who was a Government Whip from 1959 to 1964 during the Conservative Administration and a former director of the WDA, did not try to embarrass his party. Instead of making a public fuss about the matter, he started writing letters to try to get things dealt with on the basis of sensible discussion.
Mr. Rees wrote to the then permanent secretary at the Welsh Office. The permanent secretary did not write back to him directly, but telephoned and suggested that Mr. 749 Rees might see someone from the WDA rather than himself. This Mr. Rees agreed to do. He also wrote to various Ministers, including the then Minister of State, Welsh Office, the right hon. Member for Conwy (Sir W. Roberts), and the then Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood). He also wrote to the Deputy Prime Minister, who was originally a Swansea man. No one really wanted to know. Indeed, the sort of answer that Mr. Rees received was summed up by the brief letter from the Minister of State, which said:As you know, the new Chairman of the Welsh Development Agency has looked into the Agency's involvement in the Tir Founder Fields case very carefully. His conclusion is that, while he believes matters might have been handled more tactfully, the complaints made against the Agency are in the main unjustified.Anyone who read the Pugh report would find it impossible to say that the complaints were unjustified. No Minister has made the slightest attempt to respond to the points that were made in that report. For that reason, I believe that my ex-opponent and his commercial colleagues have a legitimate grievance to air against the Government. I believe that Ministers should answer to the House for the way in which they, rather than behaved, have failed to behave.
The last report with which I wish to deal is on the occupied royal palaces. It was inevitable that I would refer. to it in view of my special interest in the subject, but I shall be brief. The report is important because it is the first time that Parliament has examined in detail any of the money that is spent on the royal household. I must admit that I could not carry my colleagues on the Committee with me. I wanted to examine the whole £50 million that is spent by the various Departments. I could get agreement to examine only the £25 million that was then being spent on the occupied royal palaces.
Even more worthy of examination would be the £20 million that is spent on royal travel. I have had to do a great deal of the work on that myself, through parliamentary questions. The occasion was interesting because Parliament is incredibly sycophantic about matters royal. I do not understand for the life of me why we should apologise for asking why a family which has two palaces of its own needs five palaces of ours. It seems legitimate for me to ask that question. It is appropriate to seek answers as to why five palaces are needed.
It emerged that the palaces were not needed to house the royal family. I question whether we have a duty to house the wider royal family. The palaces were needed for 280 grace-and-favour apartments. We would not quibble about some of the apartments. They are for people working on the estate—the equivalent of a tied cottage. No one begrudges someone such accommodation. However, it is a different matter when it comes to lavish accommodation in Kensington palace and so on, occupied by people who, as I see it—I recognise that this is not the way the Committee necessarily sees it—are protected by the aura of the Crown and the deference which is shown in the House to anything royal. They have escaped for many years the sort of attention that should be paid to the benefits that they enjoy at the taxpayer's expense. I am referring now to the royal civil service—the royal household.
750 The Committee called as a witness Mr. Peat, formerly of Peat Marwick. He put up a spirited defence of the grace and favour system. Towards the end of the hearing, the impact of that defence was somewhat diminished when my hon. Friend the Member for Warrington, South (Mr. Hall) was discourteous enough to ask him whether he had a grace-and-favour house. He said that he did not, but he hoped to move into one in a few months.
§ Mr. Williams
Indeed, he has now moved in. It strikes me as incredible that we should sanguinely accept that more than £250,000 was spent on furnishing, fixtures, fittings and decoration for that one apartment so that someone who already had a house in Battersea could live in Kensington palace. In order to be near his work in Buckingham palace, he had to be housed in Kensington palace. It is the most nonsensical case I have ever heard.
I must be careful not to go into too much detail because we are producing a second report on the matter. What worries me is the obstruction that one comes up against from the Department and from the palace when one simply tries to obtain information. For example, 46 of the senior members of the royal household—not the royal family, but the royal civil service—enjoy lavish accommodation because, or so we were told, it is necessary to facilitate their work and increase their efficiency in carrying out their work for the palace.
I ask two simple questions. May we know whether those 46 staff work part time or full time—not exactly a dangerous question—and may we have a job description for each of them? I have been told no—that Parliament is not entitled to that information because those people are paid from the civil list.
We cannot ask even general questions about the civil list, as I know that a Clerk of the House would confirm—such as whether, in the most general sense, the civil list has been exceeded—so we cannot ask detailed questions. The royal household continues to refuse to provide the information that I have asked for about the work that those people do and whether it is full time or part time.
Yet there is a flaw in the argument of the royal household, and it should be important to the House. We were told that part of those people's salary is the accommodation. We were told that they cannot be offered the salaries that they might command elsewhere. In evidence we were told that therefore the accommodation makes the job more attractive to them. However, that accommodation is not paid for from the civil list; it is paid for from grant in aid. If it was paid for from grant in aid from the Department of National Heritage, I am entitled—Parliament is entitled—to know what work those people do and whether they work full time or part time, in order to judge whether the public receive good value for money in allowing them to have that accommodation in addition to the salaries, whatever they may be, that they receive from the civil list.
To the best of my knowledge, unless the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Ashton-under-Lyne, has heard anything since I last discussed the subject, as yet we have had no firm decision as to whether that information will be forthcoming.
In the same way, I found out that, during the five years before the £0.25 million was spent on Mr. Peat's accommodation, the six directors of the royal household 751 had £325,000 spent on decorations and furnishing. I am now trying to find out how much they have had since the provision of furnishing and decoration and so on started in 1982. Every obstacle is being placed in the way.
As a member of the Public Accounts Committee, I am horrified at that lack of transparency about matters relating to taxpayers' money. Some of my constituents survive on housing benefit; some must sign away their homes to obtain care in old age. Yet I am not allowed to obtain the information that I need about people who live in the grandest housing benefit scheme that anyone has ever devised. The royal household is not willing to provide us with the information that I want.
I apologise for going on for so long. I apologise especially to the Whip, my hon. Friend the Member for Leeds, East (Mr. Mudie), who I know is deeply concerned that my comments should be as succinct as possible. I hope that, if I voluntarily sit down now, I shall have done my share to facilitate a 10 o'clock Division.
§ 7.2 pm
§ Mr. Michael Connarty (Falkirk, East)
I say to my right hon. Friend the Member for Swansea, West (Mr. Williams) that it was most enlightening for members of the Committee to hear someone with such knowledge, especially of what I would call the housing benefit scam for the elite, which the Government do not appear to be worried about tackling.
Obviously, several Public Accounts Committee reports are of interest to me as a Scottish Member. I look forward to the final report on the Health Care International (Scotland) Ltd. inquiry. We have the minutes of evidence of Wednesday 21 June 1995 with us. If a private investor had subsidised a company to the tune of £27.6 million and a further £9.4 million, and that company had gone into receivership in less than a year, there would have been a scandal and a serious investigation.
We have evidence before us, in paragraph 3 of page 1 of the report, that Health Care International (Scotland) Ltd. built a hospital in Clydebank in the Clydebank enterprise zone, that expenditure of £9.4 million was incurred by the Scottish Office to make the site safe and capable of development, and that further various forms of public assistance totalling £27.6 million were provided to that company.
The subsidies were within the budget until July 1994, but, by February 1995,the receivers announced that a new company, HCI Holdings Ltd, which is wholly owned by the Abu Dhabi Investment Company, had taken over the HCI projectand that the money that we had put in had been lost to the country.
There was serious talk of further subsidies going to the Abu Dhabi Investment Company to entice it to take over the project. That was a private hospital that said that it would gather money by bringing patients from throughout the world to use top world-class surgeons in Scotland, and thereby bring a great deal of money into Scotland's economy. What happened was that more than £36 million of public money went into that project, to be lost for ever.
I shall not speak at length about that, because I hope that we have a chance to debate the final report, and that the Government will be seen to be so obsessed with the 752 private sector in medicine in Scotland and throughout the country that they are willing to throw public money at it without any thought for proper corporate governance.
I wish to discuss the 48th report of the Public Accounts Committee, entitled "Management and Sale of Houses in Borders Region". I am often told by colleagues that, when one discusses Scottish matters in the House, one speaks a foreign language, because there is not a great deal of interest in them, but the following case translates well into the experiences of public housing authorities in England and Wales.
The anxieties expressed in the report are many. On page v of the report, in paragraph 3, the Committee states:We are disturbed that the Department allowed the contract to manage these houses to be awarded without competition.That is the Government who said that we should have open competition, that competition was good for us, and that the market was the way to clean out the bureaucracies. Yet they were found in that case to have awarded the management of the houses in the Borders to a new housing association, the Waverley, without any other competitor being allowed to bid. As will be seen if one continues to read the report, the Waverley did it in such a way that serious questions arose about whether it even offered to do so efficiently.
The houses in what became the Waverley housing trust had been managed directly by Ettrick and Lauderdale council on behalf of Scottish Homes for 13 years, and the management costs were considerably less than those that were in the bid for management by Waverley Housing. In fact, the report states that Waverley Housing, in the management contract, offered to manage the houses for £2.5 million and spend a further £1.1 million after the sale of the houses as a result of improvements—basically improvements in the fabric of the buildings. However, Ettrick and Lauderdale council had been able to manage the houses for considerably less than the sum that Waverley Housing bid.
One would suppose that the Government would have considered the Ettrick and Lauderdale bid, and said, "They are able to manage those houses for much less than Waverley, so let them continue to manage them." That would have made sense to anyone. However, the Government, in the context of the United Kingdom and of Scotland especially, are obsessed with trying to destroy public sector housing in Scotland and trying to force a false third sector into existence.
In spite of the wish of the tenants of those houses to have Ettrick and Lauderdale council as their landlord, they were not allowed the choice of a public authority that had proven itself to be efficient. They had to take what the Government called the only bidder in town—Waverley Housing.
That is in spite of the fact that we see on page vii, paragraph 5 thatan experienced housing association (Eildon Housing Association) had also expressed an interestin those houses. It was not just a matter of debarring the public sector and the local authority, which had managed the houses so efficiently; the Government debarred anyone else who was in the third sector—the housing association sector—from even putting in a bid. That is unacceptable.
753 The Government's stated purpose in allowing competition is given in paragraph 3(iv) of the report:This is not only to secure the best possible value for the taxpayer but to help ensure that the public bodies concerned can demonstrate a clear arm's length relationship with those wishing to bid for the provision of services.That cannot be achieved only by examining public accounts.
The feeling of the people of Scotland is that people in the Scottish Office were under ministerial instruction or persuasion to cosy up to certain senior public officials who had previously worked for local authorities and who had put together the concept of Waverley and ensure that the way was smoothed for Waverley to get the contract to manage the houses in 1989. The Scottish Special Housing Association, which was the predecessor of Scottish Homes, gave the management contract to Waverley in February 1989.
The Scottish Special Housing Associations's costs for managing 1,800 houses had been £1.2 million yet the Government accepted a bid, without competition, from Waverley to manage 1,300 houses—not 1,800, but 1,300—for £2.4 million. How can the transfer of those houses at twice the cost be justified? It cannot be justified. People are therefore deeply suspicious of the management relationship that was set up by the Scottish Office.
The Government went further in March 1992, when they sold 1,191 houses to the Waverley housing association, once again without any other competitor being allowed to hid. The local authorities and Eildon housing association were debarred from bidding and so Waverley had a free run. Not only did it obtain a lucrative—and expensive—management contract, but it was then allowed to buy the houses without competition.
The Public Accounts Committee asked many questions and found many faults. In particular, its report states:It is unclear to us how, in the absence of competition for the contract, the Department have reachedthe conclusion that £2.5 million for the management was a reasonable cost. No test was made against any other valuation, and there was no evaluation of any outside bid.
The problem is that the Government were—and continue to be—obsessed with the destruction of the public housing sector in Scotland. In my constituency, there are some 1,200 Scottish Homes houses. The Government have said that they must be put up for a bidder to take them out of Scottish Homes' hands. The choice before tenants is, again, Hobson's choice. They can either stay with Scottish Homes, or they can go to the new housing association.
A survey has been carried out in Grangemouth and Bo'ness. The tenants showed by a vote of over 90 per cent. that they wished to have a local authority landlord as an alternative to Scottish Homes, but they cannot have that. That is why, back in 1989 and 1992, the Government twisted, bent or broke the rules of good government and sensible finance by selling the houses to Waverley without competition.
Scottish Homes, we are told, is to become only a builder of houses and mainly for people with special needs, not the bulk of the population. As local authorities in Scotland do not have the funding, or permission to spend from the Government, no one is building houses 754 for mainstream public need. There is a distortion in Scotland in respect of the sort of housing being built by the public purse. That all started back in 1989 with this sorry, dubious affair, in which the Government allowed a single bidder to manage, and then purchase, a substantial number of houses in the Borders. That has been the theme ever since.
The criticisms in the report of the Public Accounts Committee are stark, but it would appear that Scottish Office Ministers are not listening, because the only choice before the people of my constituency and the rest of Scotland is still Hobson's choice. It is take it or leave it. Usually, one housing association is cultivated by the Government and civil servants to tee itself up to take over the housing. It is strange that, in the cases that I have dealt with recently, the people involved were ex-employees and managers of Scottish Homes in the areas where the houses are being put up for sale or transfer.
People say that they do not want Scottish Homes or a housing association; they want to have a public authority landlord. Just as with Waverley in 1989 and 1992, that option is not being allowed. I hope that the Public Accounts Committee report will be read by people in the rest of United Kingdom, because what happened in Scotland and the Borders can happen anywhere when the Government put ideology before good management and good government.
I may disagree with the Government about whether there should be a third sector or a large public sector or private housing, but I hope that all hon. Members would agree that the Government do not have the right to give a management contract that costs twice what the previous management cost just because they favour the new managers for personal or political reasons. They cannot be allowed to give away those houses to that same management without allowing open competition. We must be able to see whether the people who are going to pay, through their economic rents, the debts incurred by Waverley have been robbed of better value that could have been achieved had another bidder been involved.
If a Government do not stand comparison, they must stand condemned. In the report, the Government stand starkly condemned by the people of the Borders, by the former tenants of Scottish Homes, and I hope that they will stand condemned by people who read the account of tonight's debate.
It is not right that a Government should do deals in such dubious circumstances. The report says that there were six meetings between senior Government officials and the people who were to become Waverley housing association at which no minutes were taken. It was clearly a little behind-the-door arrangement—and a lucrative one for the people who set up Waverley. If the Government are willing to bribe their ideology into reality, then, as far as I and the people of Scotland are concerned, they are not to be trusted with the running of any Department and not only the Scottish Office.
That is why the Government's popularity stands so low in Scotland, with the massive bribes to private sector health involved in the Health Care International affair and the dubious arrangements that they set up to allow Waverley to take over the houses in the Borders. There is also their continued determination to force people not to have the landlord they want—the local authority—but another one, usually a housing association whose 755 managers were previously managers at Scottish Homes. It seems to me that the Government and their policies are sick. That is proven starkly by the report.
§ Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)
I add my congratulations to the hon. Member for Littleborough and Saddleworth (Mr. Davies), who made a fine maiden speech this evening. The generosity of his tribute to his predecessor was noteworthy, as was the—perhaps controversial—forcefulness with which he put his case. I am sure that it will be the first of many sizeable contributions from him.
I was struck by the clarity and authority with which the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), presented his case. I know that there is a wealth of information to consider, but the way that he dealt with it was excellent and clear to all concerned.
Many subjects have been touched upon in the debate, and, I fear, many subjects will not be raised.
I should like to deal specifically with what the right hon. Member for Swansea, West (Mr. Williams) euphemistically referred to as the "Celtic problem". I shall confine myself to the 29th report, which deals with the Welsh Development Agency.
Despite the fact that the Welsh Development Agency alleges that the Grant Thornton report was independent, it was neither independent nor impartial. Its terms of reference were tightly drawn, and it was instructed and funded by the Welsh Development Agency, so I do not accept for a moment that an arm's-length investigation has been made into the matter.
I shall not repeat the facts of the case, which were more than adequately placed before the House earlier this afternoon by the hon. Member for Swansea, West. The Grant Thornton report has been described by one eminent Queen's counsel, Mr. Vernon Pugh QC, as "selective" in what it decided to investigate. That is a damning condemnation of the report and its terms of reference.
That things were not right during that period in the Cynon valley goes without need for emphasis. At that time, the Welsh Development Agency had two directors, who were also directors of Tesco and who profited royally from the whole deal. That cannot be right. Even if it was not illegal, it calls into question the veracity of the matter.
To deny, as has been denied by the agency and the council, that a formal partnership existed between Cynon Valley borough council, the Welsh Development Agency and the county council is plain folly. It is misleading, and an outright untruth. The association, which I would call a syndicate—a partnership for one specific purpose—which is to deal with the land in question, was formed in April 1991, so any denials are unfounded.
The Public Accounts Committee's report into the matter has been heavily critical, and rightly so. In paragraph 74, it says:We note that the Grant Thornton Report found no evidence of improper pecuniary gain or collusion but … that the Agency had been over-zealous and had left itself open to allegations of undue influence. We note that disciplinary action has been taken … and … trust that the … revised procedures will preventsuch actionsin the future.756 Given that two members of the WDA board were also members of Tesco plc, the words "over-zealous" and "undue influence" are not strong enough.
The Department agreed that the agency's handling of the matter was unacceptable. It drew attention to the code of practice, which sets out the principles to be applied in such circumstances, including integrity, objectivity, accountability and openness.
What happened in Cynon valley was justifiably open to criticism. The leading counsel, Vernon Pugh QC, said that the activities constituted a joint venture or syndicate, and that the moneys expended by the local authorities were ultra vires, and could now validly be claimed back, because no sanction had been obtained under the relevant legislation from the Welsh Office. I therefore suggest that other matters need to be examined, perhaps in another forum, in the coming months.
The Welsh Office was firmly of the view that the disposal of the land was badly handled. I should have thought, therefore, that some form of in-depth and arm's-length inquiry would have been set up by the Welsh Office. Although the Welsh Office has accepted in several parts of the report that things were wrong, it evidently intends to do nothing about it. In the interests of open and fair government, via the quango system or whatever, this matter deserves a full, independent, arm's-length tribunal of some form, with a broad remit to investigate the whole matter from beginning to end, and to make positive and real recommendations in due course.
I echo what previous hon. Members have said: that the Welsh Development Agency has not been the flavour of the month with the PAC, and rightly so. Matters have improved of late, and we are now looking back some two or three years to this set of incidents. Despite a considerable improvement in the running of the WDA, this incident is serious and calls for a full, powerful, arm's-length inquiry into the matter.
§ Ms Dawn Primarolo (Bristol, South)
As always, this afternoon's debate has been informative and interesting. The work of the Public Accounts Committee is extremely detailed and I commend to all hon. Members a careful reading of its reports, for they teach us much about the actions of Government.
I thank my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) for his explanation at the beginning of the debate. He described clearly and precisely many important points in the key reports. I pay tribute to the work of the Public Accounts Committee. It is a hard-working Committee, which has paid a great deal of attention to its work. I also commend the excellent work of the National Audit Office, which has a great deal to do in trying to pursue public money wherever it finds itself and to ensure that it is accountable and transparent in its use.
For the record, I congratulate the hon. Member for Littleborough and Saddleworth (Mr. Davies), who made his maiden speech today. He was generous in his tributes to his predecessor, Geoffrey Dickens, who was a hard-working constituency Member. He was much respected on both sides of the House and will be greatly missed. His courageous fight against his illness was an example to us all in the dignity of life and the confrontation of such a dreadful and debilitating illness.
757 The speech of the hon. Member for Littleborough and Saddleworth was controversial, but none the worse for that. He talked about the importance of the countryside, its fragility and the pressure on it. In particular, he referred to sites of special scientific interest. He spoke out clearly and strongly about the need for long-term planning, not only for this country but for the planet, if we are to discharge our responsibilities to younger generations. He criticised the House's procedures, and I look forward to him participating effectively in the process of legislation in the House and to his contribution to challenging the Executive. He said that he was the 68th Liberal Democrat to be elected this century. Perhaps there is a message in that for him, which I shall not dwell on tonight. He also spoke about the important issues of alternative energy sources and energy conservation. I am sure that we all look forward to his rigorous participation in debates on those issues.
The 51 reports of the PAC consider the principles of economy, efficiency and effectiveness; compare input and output and consider the work of Government. Having looked at those reports, I was relieved and consoled that I did not have to pay such close attention to the 500 reports that have been produced by the Committee since 1983.
As has been said, those reports are passed unanimously by the Committee. Their purpose is to examine the implementation of policy; they do not necessarily question it, and they are none the worse for that. Today's debate has referred again to the relationship between the workings of the National Audit Office and those of the Audit Commission. It echoes last year's debate, when we considered the Committee's important eighth report on the proper conduct of public business. That report stated:In recent years we have seen and reported on a number of serious failures in administrative and financial systems and controls within Departments and other public bodies which have led to money being wasted or otherwise improperly spent. Those failings represent a departure from the standards of public conduct which have mainly been established during the past 140 years.I note that my right hon. Friend the Member for Ashton-under-Lyne said that although fraud still represents a small proportion of the Committee's investigations, it is a growing problem. Today's debate has focused again on how the fragmentation of so much of the Government's structure has led to a lack of accountability in the expenditure of public money. We need to reconsider how to ensure that that money is not wasted and is accounted for.
In last year's debate, the hon. Member for Orpington (Mr. Horam), now the Parliamentary Secretary, Office of Public Service, and no longer a member of the PAC, referred to a number of major Government initiatives. He said that the Government had mademajor improvements in the way in which public spending is controlled and managed."—1Official Report, 26 October 1994; Vol. 248, c. 926.]He said that he was thinking in particular of market testing and competitive tendering. It is a shame that he is not present to discuss those improvements because two of the reports deal specifically with the conflict between market testing and value for money in the privatisation process. I refer in particular to the 39th report on the sale of Forward 758 Catering Services and the problems created for the Treasury in trying to deal with market testing and privatisation, and the loss of revenue as a result.
My right hon. Friend the Member for Ashton-under-Lyne spoke about the need to consider expanding the role and work of the NAO. He referred specifically to the regulatory structure governing the public utilities. Much has been said about the role of those utilities, the huge profits that have been made and whether value for money for the taxpayer has been exacted. I do not intend to continue to debate that now as I am sure that you would rule me out of order, Madam Deputy Speaker, but I reinforce my right hon. Friend's argument about the urgent need to look again at that structure.
My right hon. Friend also identified, correctly, weaknesses in certain areas as a result of ever-increasing fraud. He raised the important issue of accounting officers and their role. I wonder whether the Financial Secretary can give us an assurance that notes of dissent are now available to the PAC. My right hon. Friend referred in particular to the Pergau dam and the role of Mr. Lankester. He also said that Mr. Lankester may be moved—
§ The Financial Secretary to the Treasury (Mr. Michael Jack)
He has been moved.
§ Ms Primarolo
In that case, can the Minister assure the House that that move had nothing to do with notes of dissent and will not act as a disincentive to civil servants writing such notes in the future?
My right hon. Friend the Member for Ashton-under-Lyne referred to the Eurofighter project and the enormous overspend on its development. He was right to ask whether collaborative programmes, which by their nature tend to be more expensive, will be subject to better controls in the future, because it is inevitable that such programmes will continue to develop as our partnership in Europe strengthens. I hope that the Financial Secretary will he able to provide the answer.
My right hon. Friend referred to the Sports Council and the problems still emerging throughout the public sector because of conflicts of interest in the administration of public finance and the fact that regulations governing that public finance are not properly met.
My right hon. Friend also referred to council tax valuations. He was right to point out that although it may have cost 19p for the average valuation, if 2 million properties are incorrectly valued—75,000 of my constituents believe that they are—the appeals cost for correcting those valuations will be extremely high.
My right hon. Friend also spoke of the irregularities at the embassy in Sana' a in the Yemen. Questions surrounding that amazing episode have still not been properly answered—it is worthy of an episode of "Yes, Minister". The financial irregularities included trading money on the black market; a lease that was too expensive and included a bribe; staff recruitment to cover up errors; no checks on proper financial transactions and problems with the issue of visas. The Foreign and Commonwealth Office explained away all the difficulties at that embassy with the words, "There were also personality problems and the Yemen was not an easy country to live in."
When those financial irregularities came to light, the FCO assessed the management skills of the then ambassador and described them as "totally inadequate".
759 In its judgment, however, those skills had not reached the level of being unacceptable. I would like the FCO to give us its definition of unacceptable because it is obviously different from that understood by the rest of us. After that assessment, the FCO encouraged the ambassador to make several changes. Some time later—several expensive visits later—it was decided that he was not the appropriate man after all. He was given early retirement and more money was paid out of public funds. The problems at the embassy were not, however, sorted out and when the new ambassador was appointed, the problems continued.
That raises a series of questions about the role of Government Departments and their stewardship of public money. The Financial Secretary must understand that we are seeking undertakings that there will be changes in the difficult environment that apparently exists only in the Yemen to ensure that public funds are not fraudulently removed.
There is an important report on the green form scheme—legal aid—and the problems that result from incomplete statements of means. The hon. Member for Uxbridge (Sir M. Shersby) referred at length to those important issues. The green form scheme is a vital method of ensuring that those whose financial position may prevent them from receiving the legal advice that they require can receive that advice, following assessment. The report makes it clear, however, that something is going extremely wrong. We must give further consideration to improving the necessary controls, but not with a view to reducing access to the scheme to those who need it. Instead, we must ensure that funds are properly spent.
The hon. Member for Uxbridge referred also to the report on fundholding. Having listened to his comments, I thought that I had read a different report. My hon. Friend the Member for Warrington, South (Mr. Hall) took up the issues. The report is inadequate when it comes to making judgments on the fundholding scheme. The reason for that is made clear by the report; there are no quantified objectives. There has not been a full assessment of the impact of the scheme. The NHS executive has its views but there has been no independent assessment. There is still a case to be answered. I am sure that the PAC will return to it.
Important arguments have been advanced about value for money in grant-maintained schools. There is unacceptable double funding and a need to ensure that all schools in the state sector are funded equally. My hon. Friend the Member for Warrington, South talked about head teachers being provided with health care insurance and questioned whether that was acceptable.
The 40th report deals with the suspension of Dr. Bridget O'Connell. She was a paediatrician, a profession in which there is a national shortage. Indeed, there is difficulty in treating children in certain areas. The outline report is a catalogue of the ineptitude of the internal market and of a lack of direction. I fear that these shortcomings have not yet been resolved. I understand that a consultant within the North Durham trust has been suspended for three years. I hope that another seven or eight years do not pass before the case is resolved.
It remains the fact that Dr. O'Connell was suspended for voicing her concerns about standards of care. She then struggled through byzantine procedures involving disciplinary action in a health service that is breaking ranks with national agreements and procedures. Although guidelines have now been issued by the Department of 760 Health to trusts on the disciplinary procedures that they should follow, the guidelines cannot be, and are not being, enforced. As trusts develop their own contracts with their consultants and as local pay bargaining moves apace, the problems illustrated in the Dr. O'Connell episode will continue to arise and cause problems.
The British Medical Association made it clear that the NHS executive has been moving in a direction opposite to that which has been taken by trusts. Hospitals are persuaded to break or abandon national agreements, including disciplinary procedures, at the very time that we are told that the Department is trying to persuade them to return to a national agreement.
The report on NHS hospital catering in England is truly fascinating. The Department of Health issued a press release on 4 September in which it stated:Food is at the heart of everybody's life and its quality is even more important when ill in hospital. Meal times bring interest to a boring hospital stay and nourishing food aids healing and recovery.I wonder whether the Department read the 49th report of the PAC when it issued its press release. The release adds that nutritional guidelines for hospital catering are to be issued because food, and nutritious food, is vital to the recovery of patients.
The 49th report makes it clear that some of the catering departments surveyed expected patients to order their meals more than a week in advance. That contradicts the trend within the NHS—unless a patient is seriously ill, his or her chances of staying in hospital for a week are pretty slim. If someone is that ill, he or she is probably receiving sustenance through a drip, not through the hospital's catering department.
The report questions the costs of meals, which range from £2 to £15 a day. I am sure that all hon. Members know that hospital catering is often complained about by our constituents. Indeed, they complain at length about its quality. The report states that over 25 per cent. of patients surveyed aged younger than 35 years said that the quality of the food was either poor or very poor. Many of those patients would be women in maternity wards, who would be in need of a proper diet.
It would seem that the promise does not meet the practice. After agreement with the National Audit Office, some Departments are not able to deliver or implement policy. There is sometimes a conflict between what is said in the House and what is delivered outside.
My right hon. Friend the Member for Swansea, West (Mr. Williams) made some challenging points about the functional structure of the PAC and how it might deal with an increasing work load. He referred also to the Trident base, lack of financial controls and the Welsh Development Agency and the Aberdare sites. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) referred to the same problems in Wales.
In his contribution, my hon. Friend the Member for Falkirk, East (Mr. Connarty) highlighted the problems in the 48th report of privatisation clashing with value for money, and the lack of proper tendering arrangements in the dealings with the Borders region sale of homes. He rightly pointed out that in this case the deal was very poor.
I was intrigued by the fourth report of the 1994–95 Session, entitled "Inland Revenue: Getting Tax Right First Time and Dealing with More Complex Postal Queries". I thought that it may be addressed to the Chancellor and his failure last year to get the whisky taxes right, so that we ended up collecting less tax than we had anticipated.
761 The debate has been about the importance of public money, of value for money, of ensuring that that money is accountable, that its use is transparent and that waste is eradicated. Although the reports from the Public Accounts Committee are excellent, as they always are, the challenge to the House is that we ensure that the recommendations are implemented. How do we ensure that they are delivered and that the waste and, unfortunately, the fraud, is eradicated? How do we ensure that all public money, and the complex structure of Government now, with their quangos and unaccountable bodies, is still accountable?
The new Labour member of the Treasury team, my hon. Friend the Member for Warwickshire, North (Mr. O'Brien), is to join us in the task of pursuing the Government on waste and on the undemocratic nature of much public spending, and we look forward in the coming months to discussing, through the Budget and the Finance Bill, and into next year's election campaign, the waste of the Tory Government and the probity of a Labour Government.
§ The Financial Secretary to the Treasury (Mr. Michael Jack)
This has been a very interesting and wide-ranging debate, and it has certainly covered a vast number of topics. For one brief moment I thought that I had come to the wrong debate when I saw a number of my former colleagues who used to attend debates on the subject of fishing coming into the Chamber. I thought that a time warp had occurred, until I realised that the debate on the work of the Public Accounts Committee was running a little longer than some had expected.
I, too, add my thanks to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and his colleagues for the dedicated work that they have undertaken in their onerous task. He reminded us in his own remarks of the considerable volume of work, and that fact was supported by other hon. Members.
All who have spoken represent the bipartisan nature of the work of the PAC. That is a very proper approach and I shall in no way seek to challenge it. The starting point for the Committee's examinations and deliberations is the work of the Comptroller and Auditor General and his staff, through the good offices of the National Audit Office. We should also not forget a further dimension to this: the work of the Northern Ireland Audit Office. A few days ago, it struck me that I really should visit the NAO, as it was some time since I had been there. As a new Member of Parliament I had been there and was inculcated as to the ways in which it is Parliament's office, being there to protect the interests of Parliament in monitoring the expenditure of public moneys. I went to meet the team again and to refresh myself as to the work that it was undertaking.
One interesting point that has come out in all that we have said is that, by and large, many of the problems that we have talked about today result from basic human frailties. We sometimes look at each report as though it were a new discovery when in reality it reflects on that frailty. Although in so many cases we look to systems to try to solve those frailties, it is the role of human beings, in what they do in following rules, procedures and codes of practice, which can make the difference between a 762 proper system operating, giving value for money, being run in terms of probity and correctness, and that same system becoming the subject of a report by the PAC.
It is quite right that the NAO and the Committee criticise Departments when they deserve it. I very much hope that the Committee and the NAO see part of their role as drawing attention to examples of good practice, which can be used as a guide by other Departments and, indeed, working with Departments to ensure that the highest standards of financial management are achieved and maintained. I was struck in my discussions with some of the audit team by the fact that that is precisely what they are now doing. I very much welcome that development.
I see that as a natural remark from a Minister in Government, a Government who have made improvements in efficiency in the public sector such a central part of their policies. The hon. Member for Bristol, South (Ms Primarolo) derided, perhaps, some of our attempts through privatisation and its associated works within government, but we have taken some £500 million in costs out of the running of government and reduced the size of the civil service, against many people who said that government should be reducing their costs if the private sector is being asked to do the same.
For too long, the debate has overlooked another aspect of this audit. I put on record my appreciation of the work of the Audit Commission, which is responsible for the audit of many billions of pounds of public money, including expenditure by health authorities and NHS trusts. The latter was touched on by some Opposition Members in their comments. One of the interesting features of audit is the fact that the National Audit Office and the Audit Commission are increasing their contacts together, to bring in a cross-Government view of auditing procedure.
The right hon. Member for Ashton-under-Lyne went through a number of key reports, which he drew to our attention. Before turning to those, I hope that he and the House will understand if I say a word about a maiden speech which formed part of our proceedings today—that of the hon. Member for Littleborough and Saddleworth (Mr. Davies). Like other hon. Members, the hon. Gentleman properly and with great humanity mentioned the work of our dear friend Geoffrey Dickens. The hon. Gentleman and the hon. Member for Bristol, South remarked on Geoffrey Dickens' bravery in his fight against cancer. He was a politician who brought humour as well as a campaigning spirit to the work of the House. I know that all hon. Members will miss his unique contributions.
The hon. Member for Littleborough and Saddleworth spoke with passion and vigour, as I would expect anybody new to the House to do, just about staying in order in terms of controversy. Although I wish him well during his time as a Member of Parliament, and in serving his constituents' interests, I fear that many Members on the Conservative Benches may wish that stay to be limited. He mentioned the sites of special scientific interest, and the Government welcomed that report. If he wishes to see more on that subject, a reading of the rural White Paper may be to his advantage.
In his opening remarks, the right hon. Member for Ashton-under-Lyne discussed the very important subject of the Ministry of Defence, and major projects. He rightly drew our attention to some of the complexities and 763 difficulties in dealing with matters connected with complex major projects. I reviewed that particular matter with the National Audit Office during my time there. Listeners to Radio 4 may have heard the diaries of Samuel Pepys and will have been attracted by what he had to say about the costs and complexities of running a naval department, when his mind was not on other things, whether his diaries or his personal affairs.
Three things came out of my discussions at the National Audit Office which were central to addressing some of the concerns that the right hon. Gentleman mentioned. First, there is the need to get the specification right for the intended purpose at the outset: that is a central issue in the complex matters to which the right hon. Gentleman referred. Secondly, there is the need to stick to logical stages in the project and not to rush into later stages before preceding stages can be adequately implemented.
Thirdly—this emphasises an important, to me crucial, part of the human dimension—there is the question of continuity of personnel in senior management in such major projects. There may often be a desire to put a new person in to move something along, but the combination of new vigour with wisdom and experience can mean much when such complicated issues are being dealt with.
The right hon. Gentleman cited a number of specific projects. There is no doubt that the Ministry of Defence has taken account of the Committee's advice about, for instance, the mid-life update programmes that he mentioned, but the report also noted progress. The Government welcome its acknowledgement that the MOD is seeking to adopt procedures for better estimation of programme costs and in-service dates. The right hon. Gentleman also mentioned timing, which is crucial to the achievement of those objectives.
The right hon. Gentleman referred to a project dear to my heart—the Eurofighter. He may not know that the prototypes are currently being assembled in my constituency. I have been acutely aware of many of the concerns expressed from time to time about cost overruns, but I must tell the right hon. Gentleman that this is a collaborative venture, for the very reason that it is doubtful whether any one nation could pursue it and achieve the same value for money. I believe that the MOD would argue strongly that in overall terms this arrangement ultimately constitutes a better buy for the British taxpayer. It will, however, have noted the important points made by the right hon. Gentleman.
The right hon. Gentleman mentioned fraud, which was dealt with in the report about the Sana'a embassy. When I discussed fraud with Sir John Bourn, he told me that he had recently been reading a hook about accountancy which had tried to collate a list of fraudulent happenings in an attempt to show where risks of fraud were occurring. Those happenings, apparently, conform to 40 basic models. Sadly, fraud has been around for an awfully long time, but the accountancy profession has now narrowed it down to that short list.
Organisations can find themselves at risk of fraud when there has been too little change for too long, when there has been too much change too quickly and when there is an over-concentration of responsibilities in the hands of one person. Perhaps that covers some of the concerns expressed in the report on the Sana'a embassy.
I draw comfort from the fact that it is possible to apply disciplines learnt from other areas such as health and safety, in which there is a continued process of challenge 764 to accepted procedures. I believe that part of the audit trail, and part of the excellent professional audit work carried out by the National Audit Office, relates to a desire to challenge accepted systems and never to accept that work is being done correctly.
The right hon. Gentleman rightly referred to the Sports Council and the need for a separation of powers and responsibilities. The council recognises that need; a financial memorandum has been agreed between it and its trust company for the purpose, and the company's structure is to be simplified as part of the remedial work involved. The report makes an important point about the need to separate responsibilities in organisations which may operate at arm's length from central Government.
Hon. Members have raised the question of notices received by accounting officers in respect of the PAC. The right hon. Gentleman rightly said that accounting officers now need to inform both the Treasury and the Comptroller and Auditor General if they have been given an accounting officer direction in relation to a course which gives poor value for money. That is a useful way of securing proper accountability and indicating the respective roles of Ministers and accounting officers, and an important further discipline in dealing with how to respond to the work of the PAC.
Both the right hon. Gentleman and the hon. Member for Bristol, South mentioned council tax valuations. I listened carefully to what they had to say, but I think that anyone viewing the arguments the other way round, as it were, would see that the report could have been interpreted as describing the success constituted by the accuracy of 94 per cent. of the valuations, as opposed to making an important observation about the relationship between achieving a particular value for money and the quality of the work undertaken. There was clearly a lesson to be learnt from the costs of remedial action if the original work was not done as it should have been done, but it should sometimes be pointed out that work can be done effectively, which the report attempted to do.
The right hon. Gentleman rightly drew our attention to some of the difficulties associated with severance payments in publicly funded education. That underlined the importance of good information. In fact, both the Department for Education and Employment and the Higher Education Funding Council have responded positively to the PAC report and will be working together to encourage good practice and to ensure that public expenditure is seen to be both open and accountable.
The HEFC and other funding councils share the PAC's views about the undesirability of gagging clauses, which were mentioned by the right hon. Gentleman and others. It will be discussing with its institutions the best way to restrict their application to commercially sensitive information. It has already acted to require the disclosure of severance payments in institutions' annual accounts, and to monitor and encourage compliance with the Committee of University Chairmen's guidance on governors.
The HEFC has acted with commendable swiftness to get the original severance package for the vice-chancellor of Huddersfield university set aside, and has also instigated an investigation of the departure of the vice-chancellor of Portsmouth university. I hope that that shows that robust action has followed. It deals with one point made by the Opposition about the PAC, which was described as a toothless watchdog. The fact that robust action is being taken as a result of the PAC's reports is a clear indication of the importance attributed to them.
765 One issue that emerged from the reports was the question of the National Audit Office's access to areas to which it currently has no access. While I acknowledge the concern expressed by the right hon. Gentleman and his colleagues, it should be pointed out that the Comptroller and Auditor General already carries out certification on audits of more than 550 accounts, covering total income and expenditure of £500 billion per annum. While it does not necessarily have direct access to certain bodies, it does have a right of inspection. The activities of the Comptroller and Auditor General, therefore, are perhaps wider than some are led to believe. As the right hon. Gentleman knows, however, that sector is the subject of further consideration by Government and more will be said in due course.
The right hon. Gentleman rightly mentioned the Sana'a embassy saga, as did a number of other right hon. and hon. Members. They pointed out that disciplinary action had been taken against those who were directly involved in that matter. I wish to reflect on some of the wider issues that came out of that sorry saga.
The Foreign and Commonwealth Office has acted. It has created a financial compliance unit, a rapid reaction team, able to deploy quickly to investigate reports of financial weaknesses and to get to the root of any problems that may ensue. It has instituted an early warning system to highlight posts at risk through internal management problems or local conditions. The permanent under-secretary wrote personally to all heads of post reminding them of their duties and responsibilities as sub-accounting officers. Finally, the FCO has published a booklet with advice on how to prevent and detect fraud.
It is right that people should be critical and point fingers, but it is equally right that we should learn lessons from that. Just as the hon. Member for Bristol, South pointed and prodded her finger in my direction, one could equally say that perhaps there are local authorities run by members of her party in which some of the lessons learnt from all these exercises may be properly applicable.
The final matter that the right hon. Gentleman mentioned, and which my hon. Friend the Member for Uxbridge (Sir M. Shersby) also touched on, involved the whole question of green forms. There is no doubt that there is a serious problem there, which is why something that has been in operation in its current form for some 50 years is the subject of investigation by the Lord Chancellor. The right hon. Gentleman will know that steps have been taken through the franchising operation to try to control much more carefully the operation of the solicitors' end of the green form activity, but the whole subject is to be considered by my right hon. Friend the Lord Chancellor, who has announced a fundamental review of the whole basis of the matter. I shall take pleasure in drawing his attention to the many sage comments made by my hon. Friend the Member for Uxbridge.
My hon. Friend went on to talk on the subject of Hillingdon. One could sense from the passion with which he dealt with that subject that he was talking very much in his capacity as Hillingdon's excellent Member of Parliament. To that extent, I hope that he will not mind if I draw his remarks to the attention of my right hon. and learned Friend the Home Secretary, which were relevant and should be attended to in some detail. 766 On the other comments, I should like briefly to deal with some of the points made by the hon. Member for Warrington, South (Mr. Hall). He, too, mentioned the Sana'a embassy and I have given our response on that. He touched on the subject of grant-maintained schools. The Funding Agency for Schools shares his concerns and, as part of the review and updating of guidance on financial management to such schools, the agency will place a mandatory requirement on them to maintain a register of pecuniary interests of governors and of staff with significant financial responsibilities. The hon. Gentleman will find that that matter has been taken seriously, as have some of his comments on events on Merseyside.
The right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) touched in their own ways on matters connected with the Welsh Development Agency. That matter has been thoroughly commented on in public. They picked out their own particular matters of concern. The right hon. Member for Swansea, West touched on matters connected with a land deal at Gadlys road. The Government agree that aspects of the agency's handling of the case were unacceptable and, as he knows, appropriate action has been taken. The Welsh Office has issued new guidelines to the agency which have revised its procedures, and a code of practice has been issued to all staff. Lessons have been learnt not only from that but, as I have said, from all the reports by the Public Accounts Committee. Those matters have been taken extremely seriously and I am sure that further note will be taken of what hon. Members have mentioned.
The hon. Member for Meirionnydd Nant Conwy touched on the Grant Thornton report. The agency has commissioned that report at the instigation of the Secretary of State for Wales. The report examined all the issues relevant to the development at Aberdare, including the Tirfounder fields, which the hon. Gentleman mentioned. The agency has accepted all the recommendations of the report. Both those examples show the way in which the role and work of the Public Accounts Committee lead to robust action to deal with particular matters.
The final speech was made by the hon. Member for Falkirk, East (Mr. Connarty) and included points on housing. The Government maintain that the objectives of the sale were met, particularly in terms of tenants' interests. I understand that the tenants had already shown a preference for the Waverley housing association that he mentioned. I have noted his particular comments.
As we come to the conclusion of a wide-ranging debate which has touched on value for money, fraud, matters of control and complex projects, it is right to put on record the fact that Conservative Members have sought to improve the efficiency of Government by effectively removing Government from many areas where we should not be operating. The result of that has been a dramatic improvement in efficiency, a reduction in the number of civil servants, a substantial reduction in levels of public expenditure, and due note being paid to the question of value for money, which brings us full circle to where the debate started and to where the right hon. Member for Ashton-under-Lyne drew the House's attention to the continuing importance of the PAC's work in the vital matter of value for money. I thank him for the way in which he introduced the debate and all those who have 767 spoken in it. Without doubt, it shows that the PAC is as robust as ever in probing properly the inner workings of Government and the positive way in which the Government have responded by taking action in so many of the ways that the reports have recommended.
I commend the motion to the House.
§ Question put and agreed to.
That this House takes note of the 40th and 42nd to 51st Reports of the Committee of Public Accounts of Session 1993–94, of the 1st to 40th Reports of Session 1994–95, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 2732, 2739, 2754, 2757, 2786, 2825, 2832, 2906, 2921, 2988, 2990, 3013), with particular reference to the following Reports of Session 1994–95:
First, Ministry of Defence: The Major Projects Report (1993);
Second, The Sports Council: Initiatives to Improve Financial Management and Control and Value for Money;
Fifth, Council Tax Valuations in England and Wales;
Twenty-eighth, Severance Payments to Senior Staff in the Publicly Funded Education Sector;
Thirty-third, Foreign and Commonwealth Office: Overseas Representation: Irregularities at the Sana'a Embassy;
Thirty-fourth, Lord Chancellor's Department: Qualification of Audit Opinion and Alleged Frauds on the Green Form Scheme.