Public Accounts Committee

HC Deb 16 October 1996 vol 282 cc862-903 5.58 pm

Mr. Robert Sheldon (Ashton-under-Lyne)

I beg to move, That this House takes note of the 41st to 47th reports of the Committee of Public Accounts of Session 1994–95, of the 1st to 41st Reports of Session 1995–96; and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm. 3166, 3167, 3172, 3189, 3222, 3243, 3279, 3298, 3327, 3373, 3379 and 3384) with particular reference to the following Reports of Session 1995–96:

• First, Child Support Agency (House of Commons Paper No. 31);
• Sixth, A Review of the Financial Controls over Indirectly Funded Operations of the Metropolitan Police Service (House of Commons Paper No. 109);
• Tenth, The Annual Report of the European Court of Auditors and the Statement of Assurance (House of Commons Paper No. 250);
• Thirtieth, Ministry of Defence: Management of Works of Art (House of Commons Paper No. 337);
• Thirty-eighth, Lord Chancellor's Department and the Court Service: Handling Small Claims in the County Courts (House of Commons Paper No. 410); and
• Forty-first, Evaluating the Applications to run the National Lottery and the Director General's Travel and Hospitality Arrangements (House of Commons Paper No. 96).

We are looking today at the hard work of the Committee during the past year, in which 48 reports have been produced—seven in the 1994–95 Session and 41 in the 1995–96 Session. I welcome the presence in the Chamber of the Financial Secretary to the Treasury, whose predecessor was very helpful in wholeheartedly accepting our eighth report of 1994. That was a most important report, and his acceptance of it was of great value to us in our subsequent work.

I pay tribute to the outstanding Comptroller and Auditor General, Sir John Bourn, and his highly qualified and dedicated staff, who have been most valuable to the Committee and to the House. Sir John is, of course, now an Officer of the House, as is John Dowdall, the Comptroller and Auditor-General for Northern Ireland.

The current staff are different from what they were. It used to be that people came in at the age of 18 to learn bookkeeping, and they learned not much more than that. Now, we have auditors and professionally qualified accountants, who are in great demand in the City of London and accounting firms. They now have a level of professionalism that we never saw before—certainly not up until the early 1980s.

I welcome the help given by the Clerk of the Committee, Mr. Ken Brown, who has been most valuable in producing all our papers. These seem to grow in complexity all the time, but his explanations are welcome. I also thank the members of the Committee, who are outstanding. I am grateful to my colleagues, who do enormous amounts of work—far more than when I was first appointed to the Committee in 1965.

At that time, there was a very small amount of work in comparison with what we have now, with just one report a year covering all the various elements. Now we have a multitude of reports, and the work imposed on my colleagues is very great. They bring a great deal of enthusiasm, perseverance and dedication to it. I am also grateful to the Treasury's officer of accounts and to the accounting officers for their work.

During the past 13 years, the Committee has introduced a custom of inviting some accounting officers who are reaching retirement age to give their thoughts on the work of the Committee and the direction that it might take. Those comments have been welcomed. As this will be the last Public Accounts Committee debate of this Parliament, the present Committee should set out some matters that a future Committee may wish to consider.

First, success must hinge on the belief that nothing—certainly not party considerations—should come before the interests of the taxpayer. In the past 13 years, the Committee has produced more than 500 reports—all of which have been unanimous. That unanimity is not a result of fudged conclusions or recommendations, but because the people we are defending are at the forefront of our minds.

We know that we have the obvious advantage of not examining policy, as the Committee is as divided on such matters as any other in the House. But we take policy as given—even when we as individuals may thoroughly disagree with it. The report in which we examined the consequences of privatisation was an example of extreme disagreement on policy, but we examined whether the Government's goals were being realised, whether the assets had been sold for the best price, whether the timing was suitable for the sale, and whether, if there was a case for a clawback provision, it should be inserted. We studied whether the advisers and consultants were wisely and competitively chosen, and whether their rewards were commensurate with the work that they undertook.

We need a unanimous report, so that the Government are faced with conclusions that they cannot ignore by selecting those recommendations supported by one part of the Committee or another. As a result of our unanimity, the Government typically accept the overwhelming majority of our recommendations. When they do accept a recommendation, we do not leave it at that, but monitor the situation closely to ensure that it is implemented. If it is not implemented, we can return to it, as we have done several times. The advantage of meeting twice weekly is that we can come back again and again to matters.

We draw the attention of the House to the failure to implement the Government's own decisions. Such examples include the failure to institute adequate fire precautions covering Government property. Had the Government heeded our warnings, we would not have had the second fire at Donnington, where the Ministry of Defence lost £170 million of Government supplies, nor would we have had the fire at Windsor castle. The Committee has returned to each of these matters to underline the failure to implement previous recommendations.

In those cases where some of our conclusions are not acceptable to the Government, we still keep a close watch on the progress of the issue, and we frequently return to the matter and take further evidence. The evasion of vehicle excise duty in our 36th report this year is one example of this. Following our criticisms, I note that the Driver and Vehicle Licensing Agency is undertaking a programme of increasingly demanding targets. I shall be surprised if a future Public Accounts Committee does not return to that matter before very long.

There is a concentration on big issues such as defence procurement, which costs us £8 billion a year, and these must be a prominent part of our activities. In addition, we must examine a number of relatively small amounts of expenditure where the principles of good housekeeping, efficiency and—above all—probity need to be examined. I shall be dealing with these matters later. Taking account of those considerations, I must express my gratitude for the work undertaken by Committee members. The original work done by members is most important these days. Members have discovered matters that I, the Government and even the National Audit Office did not know about.

We need a close relationship between the Committee and the Comptroller and Auditor General. I know that we take that for granted, but we should not, because we have seen a number of examples in other countries where such a relationship does not exist. It must be based on mutual respect, trust and confidence. We are not in each other's pockets, but we understand the work that the National Audit Office does and the way in which these matters are dealt with. We should acknowledge the advantages we have, and make use of them accordingly.

I now come to the priorities for our work. First, I wish to mention our famous eighth report of 1994 on the proper standard of public conduct. This was a seminal report, which ranks alongside the most important reports ever published by the Committee. The evidence set out the kind of standards we need and how to uphold them, and it was brought to the attention of the House and the Nolan committee. It is crucial that we retain the standards of public conduct that we have had the good fortune to inherit.

Gladstone set up the Public Accounts Committee with the immense authority of an outstanding Chancellor of the Exchequer; that, along with his later premiership, set the standard for the way in which the public services have developed. It was he who decided that the Committee Chairman should come from the Opposition, and it would be hard to find any subsequent period when such a decision might have been made. Yet that decision ensured that Gladstonian standards became those of our public life.

In our own time, we have—through the National Audit Office Act 1983—the greater powers of the NAO and the Public Accounts Committee, as well as the selection of the Comptroller and Auditor General by the Chairman with the agreement of the Prime Minister. It is a great tribute to the work of the NAO and the Committee that, when the Comptroller and Auditor General, Sir John Bourn, was invited to become principal of the London School of Economics, he was able to say that the work of the Comptroller and Auditor General was even more important. That was an enormous tribute to our work.

Of the 185 or so countries in the United Nations, even with the decline that we note in our report, few come up to the standards of public life that we take for granted. We have received a valuable inheritance, and the Public Accounts Committee must pass it on. The eighth report left its mark on all the subsequent work of the Committee, and its impact has been far-reaching.

In the month following the publication of the report, the Treasury wrote to all Departments to draw their attention to it. They and other bodies for which they were responsible were required to review their procedures in the light of the report. A new memorandum for accounting officers reflected the issues of propriety and accountability. Detailed guidance for non-departmental bodies was issued, dealing with accountability and the declaration of financial interest. I am grateful to the Treasury for doing so, and for ensuring that the lessons we pointed out in our eighth report were spread as widely as possible.

The Civil Service College provided a course for newly appointed chief executives of agencies and non-departmental bodies as well as their boards. That course deals with aspects of public business and the maintenance of high ethical standards. I have here a summary of 10 Departments that have taken action based on the eighth report and the work of the Comptroller and Auditor General, who was invited to become the head of the London School of Economics, with one of the highest salaries in academic life. The fact that he is still there and undertaking that work on behalf of standards in public life is enormously important to us.

The sixth report illustrated the need to establish proper controls to prevent fraud. The report is entitled, "A Review of the Financial Controls over Indirectly Funded Operations of the Metropolitan Police Service". As the House will know, we have selected six reports to show some of the elements that we regard as important in the work of the Committee. Two others also deal with fraud.

The sixth report deals with a Mr. Williams, who lived the life of a lord in Scotland. He bought houses and hotels saying that he had acquired large sums of money from relatives in Norway. His fraud came to light only through an assessment of his work.

The Metropolitan police service is responsible for policing Greater London, and employs 28,000 police officers and 15,000 civilians, with a gross budget of £1.9 billion. The service has developed a number of confidential and indirectly funded operations to deal with serious crime—organised crime, drug importation, trafficking, terrorism and armed offences. Obviously, those are sensitive areas, which require a considerable element of secrecy.

In July 1994, a theft of more than £5 million allocated to one indirectly funded operation was investigated. Anthony Williams, a senior civilian member of the service, was arrested and charged with 19 counts of theft, found guilty and sentenced to seven and a half years' imprisonment. A further 535 offences were taken into consideration.

We felt it astonishing that a senior civil servant could have been living such a life in Scotland-buying hotels and becoming an important figure in his local town—"but coming to London to ensure that the sums of money were available. After his arrest, it was discovered that he had had unsupervised control over a bank account, and was the sole channel of communication between the operational and finance branches.

The operation was financed without detailed supporting evidence from Williams as to the funds needed. There was no independent reconciliation of the records with the claims made. Williams submitted no accounts, and there was no separate account code for his operation. He was responsible for accepting money, deciding how much he wanted, paying a certain amount for the purposes for which it was drawn, and making use of a large part of the balance for his own purposes.

I understand that one needs to be careful in some matters. If secrecy is necessary, one does not want a large number of people to know what is going on. Obviously, the operation involved was of that kind. Nevertheless, if secrecy is necessary, one must be even more careful to ensure that the proper safeguards are introduced. There was a greater responsibility on Mr. Williams' superiors to undertake the proper supervision. If someone has those powers—there may be occasions when they are astonishingly wide—the person's superiors have a greater responsibility for ensuring that other systems are in place.

Mr. Williams got away with that astonishing life. There was no investigation, and I find it strange that no one was aware of his life style. As in all these frauds, the trouble is that the person concerned usually gets too greedy. One starts with a small fraud, but it grows, and one gets over-enthusiastic. Before one knows where one is, one is taking such large sums of money that the fraud comes to light. As to recovery of the money involved, only about £1 million of the £5 million has been recovered.

Our 46th report of 1994–95, "Ministry of Defence: Fraud in Defence Procurement" found that there were 191 cases of procurement fraud, amounting to about £22 million. The Gordon Foxley case was by far the most serious. He dealt in the procurement of ammunition, and was able to secure at least £1.3 million—probably much more—in corrupt payments from overseas contractors. He got money from them rather than awarding contracts to the Royal Ordnance factory, which resulted in the loss of a large number of jobs in this country.

The corrupt payments were aimed at influencing the allocation of contracts for fuses and ammunition. That case was one of the worst that the Committee examined. Again, there was a failure to oversee the work of that procurement officer that I would not have expected, and I hope to see the loophole fully closed.

The third case of fraud I must mention is described in the 23rd report of the present Session, "National Heritage Memorial Fund Account 1994–95: Replacement of the Accounting Officer". A case involving such an officer is rare. The fund gives assistance towards costs incurred with certain items of national heritage.

In June 1995, the Department of National Heritage concluded that the accounting officer of the fund, Miss Nayler, had breached her basic responsibilities. The report states that she had allowed a clear conflict of interest to arise by permitting her partner's firm … to tender for a contract to be let by the Fund and was allowed to do so despite the knowledge of the Chairman of the Trustees of the conflict. We note that, despite the issue of a letter from the Department indicating that such conflicts of interest should be avoided, she subsequently permitted the Fund to award her partner's firm further contracts, without competitive tender, which resulted in payments of some £35,000. Clearly, that was fraud at the highest level. Although Miss Nayler was an accounting officer, an accounting officer of the Department was her superior, which is how the fraud came to light.

The interesting aspect of those three cases of fraud is that they arose before our eighth report of 1994 was produced. The Committee hopes, of course, that such fraud resulted from the sort of situations that could arise before that report and the action taken by the Treasury and Departments to deal with the serious decline detailed in it.

The Committee's first report of 1995–96 deals with the Child Support Agency, an executive agency which introduced a new system of child maintenance. The year 1993–94 was its first year of operations, and 40 per cent. of assessments on absent parents contained errors—a high rate. One can understand trivial errors, but these were mostly serious ones. I understand the difficulty of getting information from up to four partners—two from the current marriage and two from the previous one. That is a complication.

The Committee seriously criticised the agency and the Department, and said: We are gravely disturbed that at least 40 per cent of the child maintenance assessments made on absent parents in 1993–94 contained errors. We severely criticise the Department and the Agency for allowing this state of affairs to arise. While we recognise the difficulty the Agency face in getting accurate information from up to four parties, not all of whom may wish to be cooperative, achieving accuracy in maintenance assessment is essential if the Agency are to provide a fair and efficient service in the interests of children. We therefore urge the Agency to continue their efforts to explain to parents why the law requires the information concerned and to pursue non-compliance tactfully but firmly. The agency has been set a new target of 75 per cent., rather than 60 per cent., accuracy. We were told by the Department that the planning assumed that the average assessment would take about two and a half hours. In fact, it took twice as long, so it fell hopelessly into arrears. As Sir Michael Partridge, the permanent secretary to the Department, said: it is quite unprecedented in anything I have come across in public service. That is a serious indictment from a distinguished public servant, who understood the Department's work so well.

Finally, the Committee states: We consider that the Department should have established at a much earlier stage the financial and management information required by the Agency. We note that the Department are to produce a report of things that went wrong and lessons to be learned. We look to the Department to do so without delay and to ensure that the lessons are applied". We have had the Treasury minute, but the situation is still not satisfactory. The Department was over-ambitious. In Australia and elsewhere, the past was ignored, and it was decided that the arrangements would apply only to future cases. Not following that example made things more difficult. It was the attempt to achieve fairness—and, I suspect, to get some money into the Treasury—that produced some of the problems.

The 10th report concerns the annual report of the European Court of Auditors and the statement of assurance. We have insisted that the Court of Auditors should be able to assure us that the money is spent properly. Partly as a result of our Committee's efforts—we have been very strong on this—in November 1995 we got the first statement of assurance from the Court of Auditors. It produces an assurance on the legality and regularity of transactions. It gives us information of which we can make some use. We immediately latched on to that. We were the first country in the European Union to say that the matter was important.

The hon. Member for Uxbridge (Sir M. Shersby) and I went to Brussels, and later we took the whole Committee to Luxembourg. Interestingly, we had by far the biggest representation at Brussels, and we had an impressive delegation to Luxembourg. I remember a Dutch Member of the European Parliament saying that he would speak in English, because English was the language of anti-fraud measures. That was a great boost to us, and an acknowledgment of our reputation for looking after the interests of the taxpayer.

There is now an internal audit every eight years; every three years is being talked about. The situation is not adequate or sufficiently stringent; we want it to be done better. Fraud should be a criminal offence, and the sanctions must be greater than repayment. At present, if fraud is found out, only repayment has to be made. The role of the court is too passive.

We notice that Mr. Tomlinson, a Member of the European Parliament, is doing useful work on the committee considering transit arrangements. The important thing is that fraud is going to be tackled. It hurts people to see their money going to the Community but not receiving the close scrutiny that we give.

We visited the Court of Auditors in Luxembourg in April. It had taken a sample of 563 payments among the then 12 member states and found that in 59 there were substantial errors. It had no opinion on 14 per cent. of cases, but of the rest, 4 per cent. had serious errors. It was unable even to assess 14 per cent. of cases. It is unable to provide an overall assessment. We regard that as serious. The financial systems of the Commission and of the member states are too often unreliable and inadequate.

From examining the money that we pay to Europe, we feel that fraud is indivisible. Some people say that it is only European money, so we can be more relaxed about ensuring that it is correct to the last penny. However, once such treatment begins, it can move across to the treatment of our funds in Britain. All public money must be treated in the same way. We tried to show the European Court of Auditors that lesson. There is a lack of effective sanctions. The court is an institution of the Communities rather than of the Union. The audits could be farmed out and national bodies made subject to supervision. Those suggestions should be followed.

On the auditors' powers, I should mention something about their rights of access. Astonishingly, the National Audit Office has fewer rights of access in Britain than have the European Union auditors. They do not much use their powers, but they have more of them. The National Audit Office has powers to deal with, and rights of access to, Departments, and does the audits of Departments and executive non-departmental bodies because they are laid before Parliament. However, it does not audit other non-departmental public bodies.

The present position here is unsatisfactory. The Executive, rather than Parliament, appoint their own auditors. Where public money is involved, it must be Parliament, not the Executive, that appoints the auditors. Something is fundamentally wrong there.

We need a practical way to provide inspection rights for all public bodies. The Treasury could issue guidance to Departments and other public funding bodies requiring access for the Comptroller and Auditor General as a condition of the grants that they make. The CAG should be offered the right to exercise rights of access reasonably and after consultation with the sponsoring Department, as he does now in respect of education.

In the past few years, Departments, agencies and executive non-departmental bodies have set up more than 200 publicly owned companies to help them deliver public services. Examples include the Student Loans Company and regional development organisations. Some executive non-departmental public bodies have been set up as companies.

Some of the statutes of those companies require Companies Act auditors, even though the non-departmental public bodies are not companies. Given the Comptroller and Auditor General's role as the auditor of public funds, it should be possible for him to be the auditor of companies wholly or mainly owned by the Government.

The Government have increasingly contracted out departmental functions to private sector firms under the "Competing for Quality" initiative. The private finance initiative has extended private sector involvement to the provision of services. The value of contracts awarded to them or pending amounts to more than £5 billion. The Comptroller and Auditor General has guaranteed rights of access only to papers under the control of auditor departments, not to relevant records in the hands of private firms which carry out contracted-out functions.

The Government's guide to market testing made it clear that the Comptroller and Auditor General should have access to contractors. There is a need to give the CAG access in every case, subject to the constraints that it would apply only to those activities carried out on behalf of the Government and funded by Parliament. It is clearly unsatisfactory that, in its direct responsibility to Parliament, the National Audit Office has fewer rights of access than other bodies or the European Union auditors. I hope that we may be able to see some movement on that, and I should welcome the comments of the Financial Secretary.

The 30th report is entitled "Ministry of Defence: Management of Works of Art". This dealt with a surprising situation. When the Ministry of Defence started to computerise the record of the Government art collection, it discovered that there were 900 works of art, but when it came to examine them, it found that 205 were missing. It did not know where they had got to. Such works of art were often donated by distinguished members of a regiment and displayed in mess halls and elsewhere. It was found that 205, or almost one fifth, were lost, and that many had been lost for more than five years. There has been little progress in recovering them.

The Treasury minute on the report said: The Department continues its effort to recover missing works of art but, so far, with limited success. The problem is that there was no adequate inventory system. The Ministry should know where the works of art are, what they are, and rough valuations. We said: We consider the Department clearly negligent to have lost so many works … and we are concerned that so many items have been missing for more than five years. We are disappointed that the Department have made so little progress in tracking down the missing items, given that the problem has been recognised for some time. We look to the Department to continue the search for missing items, and to pursue with greater vigour incidents of theft. We find it deplorable that so many thefts have apparently been committed by the Department's own staff. We recognise that the management of works of art may seem unimportant compared to the billions of pounds that the Ministry of Defence spend each year. But we are concerned about the loss of valuable and historic components of our national artistic heritage. and about the failure of stewardship: the failure to apply principles that people would regard as common sense in their private lives to their responsibilities as public servants. We believe that nobody would be as careless with their own pictures as the Ministry of Defence have been with these publicly owned works of art. The 38th report is entitled "Lord Chancellor's Department and the Court Service: Handling Small Claims in the County Courts". The small claims procedure in the county courts is one of the great successes of our time, yet it is not trumpeted. I fail to understand why that is so. We found that the small claims procedure was introduced in 1973 to reduce the cost, delay and complexity of pursuing low-value civil cases through the county courts. The limit now stands at £3,000-it has been increased. Individuals use the procedure mainly to recover debts or seek compensation. Businesses use the procedure mainly to recover debts.

The report says: We are pleased to see from the National Audit Office survey that most people who had pursued a small claim found the procedure cheap and easy to use. However, we note the evidence that public awareness of the procedure is low. That is most surprising. Here we have a way for people to obtain their rights readily, easily, and at small cost, yet so few people know about it. We say in the report: We consider that more needs to be done to ensure that people considering action know about the small claims procedure. We urge the Department to address these issues as part of their review". The total cost of the county court system was more than £200 million in 1995–96. The Committee was astonished-we do not use such words often—that the Department did not know the cost of the small claims service. Here we have a success, but we do not know how much it is costing us.

The report goes on to say that the Department must undertake to determine the costs of the small claims courts so that it can set them in context and that it should determine the level at which fees need to be set in order to recover those costs. We said: We welcome the Court Service's recent moves to treat small claims as a separate area of county court business and to collect more detailed management information on the cost of the procedure. … We are concerned about the limited information available to claimants on the effectiveness of the various enforcement services. We note that many claimants assume they should use the bailiff service when other enforcement methods might be more helpful. We urged the Department to provide information, as well as comparative information, on the effectiveness of other methods

The 41st report was entitled "Evaluating the Applications to run the National Lottery and the Director General's Travel and Hospitality Arrangements". There were eight applications. The director general announced that the successful applicant was Camelot plc. The contract is effective for seven years. The Committee examined two issues: first, the evaluation of applications, and secondly, travel in aircraft and hospitality from GTECH, which is a shareholder in Camelot.

When we examined Mr. Peter Davis, we found that an important part of the evaluation was to establish that applicant companies and all individuals who would be involved in running the lottery were fit and proper for that role. We were concerned at information which raised doubts about the fitness of GTECH, a shareholder in the Camelot group. This included suggestions of undesirable business practices by GTECH in obtaining lottery contracts in the United States, and alleged corrupt payments in California, Kentucky and New Jersey to various persons, including the state senator.

We heard the director general's evidence that he had had access to all the information, that he had carried out intensive investigations into it, and that his decision to allow GTECH's participation in Camelot took account of a variety of factors, including the fact that neither GTECH as a company nor any of its officers had been charged with an offence, that adverse reports about GTECH were confined to its activities in the United States, and that a former employee of GTECH involved in corruption allegations had no connection with the United Kingdom lottery, the high reputation of the members of the Camelot consortium and GTECH's proposed role in the consortium.

We noted the director general's concern that, if he had required the withdrawal of GTECH, he would have ruled out the applicant offering the best return to the distribution funds. We said: We nevertheless stress that it is of overriding importance that the United Kingdom National Lottery should be subject to the highest standards of propriety and integrity and that the regulator should take a strong and active role throughout the period of the Section 5 licence to ensure that propriety is observed. In relation to scratchcards, we noted that section 6 licences to promote individual games could be issued only in pursuance of an agreement with the section 5 licence holder—Camelot. We further noted that all Section 6 licences … have been issued to Camelot but that another Section 5 applicant, Rainbow UK Ltd, have alleged that Camelot were not prepared to consider their Section 6 proposals. We also noted: We were reminded by the Director General that he has no duty to promote competition or a level playing field. We nevertheless believe that Parliament would expect the regulator to ensure that all potential licensees are treated fairly. We therefore stressed the importance of the director general using the powers available to him to take a more active approach to those matters. We look to him to do so in the future.

We went on to note: at the time of publication of the Invitation to Apply for a Section 5 licence, the Director General gave a formal undertaking that he would not divulge information from applications without the applicant's consent because he believed this assurance was necessary to encourage high quality applications. We believe, however, that those applying for public sector contracts and licences must recognise that Parliament has a right to information to provide assurance that contracts and licences are properly let without impropriety and that they represent best value for money. We cannot do our job without that kind of assurance.

As for the travel and hospitality arrangements, we noted that the Director General went to the United States in October 1994 to visit selected US Lotteries and that a similar visit was made by two members of his staff early in 1995. Throughout both visits all internal flights were made in G Tech corporate aircraft at G Tech's expense. We note the Director General's view that his decision to make use of G Tech facilities in this way was based on the fact that to have undertaken the journeys by scheduled airlines would have taken much longer and would have cost the taxpayer more money. The Committee did not feel that that was sufficient reason to take that kind of hospitality. We agreed with the Secretary of State, who said that she did not think that the director general's acceptance of the flights was wise in the context of his role as regulator of the lottery.

We recognized that the friendship between the wife of the director general and the wife of Mr. Menges has been a long-standing one, but we considered the director general's decision to make use of Mr. Menges's hospitality unwise, as was his decision to use GTECH aircraft for his private visit to the Menges's home. The Committee regards it as of vital importance that the director general should be seen to be impartial at all levels.

When the director general accepts any free flights from GTECH or any other person who has a role as an operator or a shareholder, or has any involvement, he has the continuing responsibility to regulate the Lottery and issue further Section 6 licences". That had not been undertaken at that stage. In our view, the director general's decision to use GTECH corporate aircraft represented serious errors of judgment on his part.

Mr. Alan Williams (Swansea, West)

Does my right hon. Friend agree that what is particularly preposterous is that the regulator had previously been told by the Secretary of State and by the Department that he had to be careful about accepting hospitality? He ignored that advice, and went further, by encouraging members of his staff to ignore it. Secondly, it is strange to note that it emerged from the closed session of our Committee that he ignored that advice in the full knowledge of the reputation of GTECH. No one is suggesting that the company had been charged with anything criminal, but the director general was aware that there was dubiety about the reputation of the firm whose hospitality he took.

Does my right hon. Friend agree that the director general's decision first to ignore the advice of the Secretary of State, and, secondly, to neglect to recognise the dangers of accepting such hospitality from someone whose reputation was somewhat clouded showed an enormous lack of judgment?

Mr. Sheldon

I was extremely surprised that anyone in public service might even consider for a moment acting in that way. What happened may not have been greatly influenced by that action, but certain procedures must be maintained if we are to be able to show taxpayers that we are looking after their finances as we have always done. It is our job to ensure that those standards are maintained. I hope that our report will help to ensure that.

I look forward to hearing the Financial Secretary's response to some of the matters that I have raised. He has been helpful in the past, and I am sure he will try his best to be helpful on this occasion.

6.44 pm

Sir Michael Shersby (Uxbridge)

I should like to join the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), in paying tribute to the work of the Comptroller and Auditor General and the staff of the National Audit Office and the Comptroller and Auditor-General for Northern Ireland and his staff.

It is an extremely pleasant experience to be able to stand up in the House and point to a substantial record of success achieved by the National Audit Office. I commend to hon. Members' attention the report of the NAO and some of the highlights from its work during the past year. Because of its work in the past three years, £775 million has been saved, which is £7 for every £1 spent on running the NAO. Some £500 billion of Government expenditure and revenue was audited by the NAO in 1995–6, and 50 value-for-money studies were completed. It presented the first report made to Parliament on European Community accounts, to which the Chairman has already referred. It also won a contract from the European Commission to audit its £2.5 billion of expenditure per annum on agriculture in the United Kingdom. The NAO also holds the chair of the central Government auditing standards advisory panel, and it published the panel's practice note on central Government audit.

That list is a fine tribute to the work of our NAO. Members of the PAC present in the Chamber know how its high standards make it possible for us to do our job and play our part in saving taxpayers money and ensuring that they get value for money.

I was interested in the Chairman's remarks about the small claims court. I commend to my hon. Friend the Financial Secretary what he said about the lack of knowledge of the work of that court and the limits that apply. It would be useful if a note were sent to all hon. Members to remind them of its existence. I hope that steps are also taken to ensure that every citizens advice bureau and other similar organisations are informed about the advantages to citizens that flow from that court, which is able to solve so many comparatively minor but nevertheless important problems that beset our citizens.

As the Chairman told the House, over the past year, we have dealt with a number of major items of public expenditure, such as the substantial problems because of the cost overruns on the Trident programme and our recent work on a report about the huge cost of building the British library. No doubt that work will come before the House in a year or so, when we have produced our final report on that most interesting but rather extraordinary building.

One of the most important reports by the PAC this year is the 10th report on the annual report of the European Court of Auditors. The Chairman has already referred to it. It is extremely important, because for the first time it came with a statement of assurance and a related special report concerning the reliability of the accounts of the Community budget for 1994 and the legality and regularity of the underlying transactions. We have never received such an assurance or report before, and it is extremely useful to our country. As a contributor to the budget and a recipient of funds from it, the United Kingdom has a vital interest in ensuring that the budget is spent with due regard for regularity and value for money and that the majority of the UK's transactions are properly accounted for.

On the court's overall findings, we as a Committee expressed our concern about the fact that there remains considerable potential for improving the way in which the Community's finances are managed in the areas of revenue and expenditure examined by the Court of Auditors in both member states and European institutions. The Committee is pleased that the Commissioners have started a management improvement programme, and I hope that the Government will support the continuing implementation of reforms under that initiative.

The Committee has also welcomed the emphasis placed on combating fraud by the European Council at Essen in 1994. We have acknowledged the steps taken subsequently by the Commission in its anti-fraud programme. We welcome the Government's strong line on fraud, and the fact that they are seeking even closer co-operation between member states, the Commission and the Court of Auditors.

The Chairman of the Committee mentioned a conference that I was fortunate enough to attend with him. It was organised by the European Parliament in Brussels on 23 and 24 April, and its purpose was to discuss action to combat fraud in the Community budget. We discussed the formation of the Commission's anti-fraud unit, known by the acronym UCLAF, which stands for Unité de Coordination de la Lutte Anti-Fraude. UCLAF describes itself as the flying squad of the Commission. It has 125 staff, of whom—we are told—a substantial proportion are experienced investigators; but, strangely enough, it has no legal personality or status. It is simply a co-ordination service.

Some member states would like UCLAF to do more, but it cannot now, because it is restricted by the institutional status of the Commission as a whole, and it has no power to conduct investigations in the territory of the member states. That is because of the understandable national susceptibilities relating to sovereignty. The question whether the United Kingdom and other countries would be willing to allow such a flying squad to cross their national frontiers and follow up investigations there is the crux of the issue of our membership of the European Union.

Other member states have reservations, as we have, about a Community-level body operating in an investigative role within their jurisdiction. They do, however, have a strong interest in the effective fight against fraud. My own view is that Britain would be most unlikely to grant cross-border investigative powers to UCLAF. I share the Committee Chairman's view that our own National Audit Office is the right body to investigate fraud, together with the PAC, and I hope that there will be no change in the present arrangements; but I strongly endorse the right hon. Gentleman's observation that the National Audit Office should have at least the same access as the European Court of Auditors in investigating all matters concerning Community finance.

As one of those who visited the European Court of Auditors in Luxembourg in June, I found it helpful to understand the work that the court is doing for the Community. It does not investigate fraud, because that is a matter for UCLAF. What it does is audit the Community accounts, and ensure that financial and management controls are adequate. I pay tribute to the work of the British member of the court, Mr. John Wiggins, and his staff for all that they do on our behalf.

Mr. Tim Smith (Beaconsfield)

Will my hon. Friend tell us a bit more about what the European Parliament is doing to tackle all this? Does he think that it, and its budgetary control committee, takes these important issues of financial regularity and value for money as seriously as the PAC? Could not the European Parliament get hold of the Court of Auditors' reports, and summon the Commissioners responsible for different areas of spending? Could it not increase the accountability of the Commission? It seems to me that there is so much work to be done that it is for the European Parliament, rather than the House of Commons, to tackle that work.

Sir Michael Shersby

I am grateful for that intervention. The European Parliament has a very important role. It is vital for it to ensure that a European Community institution such as the Court of Auditors is doing its job properly—that it is providing the European Parliament with information, and that that Parliament in turn is providing member states with information about the success or otherwise of its work. I hope that that will happen.

As I said, that was the first occasion on which I had the opportunity to visit the European Court of Auditors. Like other members of the PAC, I had been somewhat in the dark about what the court actually did, and I felt that the two days there were very well spent. I believe that it was the first visit that the PAC had made to the court for some 13 years. We have a problem; as time rolls on and Parliaments come and go, it will be unfortunate if we do not understand what the court is doing. I hope that contact with it will be more frequent in future.

Mr. Richard Tracey (Surbiton)

I, too, was privileged to participate in the Committee's visit to the Court of Auditors. I share my hon. Friend's feeling about the importance of its work. May I jog his memory in regard to the point raised by our hon. Friend the Member for Beaconsfield (Mr. Smith)? As I recollect, the court told us that only a small handful of Members of the European Parliament took an interest in the court's work. I was struck by that: it is a shocking fact, and the House should send a message to Members of the European Parliament that that is one of the most important pieces of work that they should be turning their hands to.

Sir Michael Shersby

I agree. In passing, let me make my annual observation that it would have been very nice if the House had been a little fuller this evening to hear a debate about the work of the Public Accounts Committee, which also has a vital role in ensuring that we are given value for money and economy, effectiveness and efficiency in the services provided by Departments of our own Government. But perhaps Members of all Parliaments find it easier to devote their energies to other things when matters such as this arise. At least some of us, who are present, care very much about such issues, and they may make up for that.

Let me now refer to a matter that interests me greatly, although it is not included in one of the reports to which we have drawn particular attention in the motion. I refer to the 25th report of the Session 1995–96, which deals with civil legal aid means testing. I want to discuss it because of the substantial increase in expenditure on legal aid, and the way in which that expenditure is being monitored and approved. We should remind ourselves that the civil legal aid scheme is there to enable people of small or moderate means to pursue or defend a civil case, and that to qualify for legal aid, an applicant must pass a means test that examines his or her financial circumstances and the merits of the case, to ascertain whether there are reasonable grounds for taking or defending court action.

Unlike many funds that Members of Parliament must examine from time to time, the legal aid fund is not cash-limited; it is demand led. I raise the matter because the cost of the civil legal aid scheme increased from £255 million in 1990–91 to £601 million in 1994–95. The Lord Chancellor's Department told the Committee that it considered the increase to be due to the demand-led nature of the scheme, and to the fact that the legal cases for which assistance was given were now more complex, with more disputes relating to personal injuries.

As a Committee, we were worried about the verification of means, which is vital in determining whether a person is entitled to legal aid. We took the view that The Assessment Office should continue with its programme of seeking full verification of applicants' means in representative samples of cases, and that a stronger line will need to be taken with those applicants who do not co-operate". We noted during our discussion of the matter that the Department is receiving an increasing number of allegations from third parties to the effect that applicants for legal aid have mis-stated their circumstances. We therefore take the view that The Assessment Office will need to ensure that its investigation teams have sufficient resources to ensure that such allegations from third parties are thoroughly examined". I am sure that most hon. Members whose constituents visit them at their constituency advice bureau will have heard the observation that someone who has been in receipt of legal aid should not be receiving it. Verifying means is therefore very important.

We found: Under the current system, the Assessment Office do not verify every item of income, outgoings or capital declared on the … application form … Outgoings, such as mortgage payments, council tax or loan repayments are not routinely verified. Verification of capital is usually sought only if the applicant declares more than £2,500, the relevant threshold being £3,000. Our conclusions, as a Committee, are: We endorse the measures … being taken by the Lord Chancellor's Department and the Assessment Office to improve the arrangements for verifying the means of applicants for civil legal aid and to confirm, where appropriate, the income support status of applicants. We also take the view that The Assessment Office should continue with its programme of seeking full verification of applicants' means in representative samples of cases". It is important that that should happen, because the number of high-risk cases is increasing. We were told by the Department that a small but growing number of applicants … pose a high risk to the whole legal aid fund. Typically, their legal and financial affairs are complex, they may possess what was described to us as 'an aura of wealth' not normally associated with applicants for legal aid, and the litigation has tended to have a business flavour of some sort or another, such as disputes about business assets and contracts, sometimes with an overseas element, sometimes not. The Lord Chancellor's Department became aware of that problem in 1994, when, as the House will recall, some well-publicised cases emerged, in which people received legal aid who, as it appeared. were not the sort of people for whom the legal aid scheme was intended. Shortly afterwards, the Lord Chancellor announced that he would take every step necessary to ensure that legal aid was provided only to those for whom it was intended.

I am sure that hon. Members will agree that £601 million is a lot of money. If that money is being spent on legal aid for people who do not qualify for it or who have taken steps to disguise their assets, every possible support should be given to the Lord Chancellor's Department and to the special investigations unit in ensuring that no one receives legal aid who is not entitled to it.

Sometimes, when I hear my right hon. and learned Friend the Chancellor of the Exchequer talking about the need to reduce public expenditure, my mind turns instinctively to reports that we have considered in the Public Accounts Committee, and one of the things to which it turns most often is expenditure on legal aid. I hope that my hon. Friend the Financial Secretary will say something about that when he replies.

Our 45th report is on the sale of County hall, a subject that arouses passions among political parties. I shall not get involved in the merits or otherwise of selling County hall, and I hope that other hon. Members will not do so. I simply want to draw attention to our report, with which we took considerable care.

The total proceeds of the sale of County Hall were about £92.3 million, compared with a valuation for the London Residuary Body, assuming planning permission and vacant possession, of between £90 million and £120 million in June 1987. The residuary body told the Committee that the advice from its property consultant and marketing agents was that the Shirayama bid of £60 million was a very high offer, and that the £30 million valuation obtained in 1987 would possibly have been high in 1990. The eventual sale of the Riverside building, with which we are all familiar, to Shirayama for a cash payment of £50 million, plus a deferred payment of £10 million payable over a period up to 2012, was estimated to be worth between £52.5 million and £57.5 million in net present-day terms. One of the interesting things that happened during the saga of the sale of County hall was that the London School of Economics expressed an interest in purchasing it in March 1991. It was even given access to the buildings. The residuary body said that it did not pursue that bid because it was comparatively low, but the LSE's efforts to negotiate for the building continued through the national press.

More than a year later, on 29 June 1992, following an Adjournment debate in the House, the residuary body invited the LSE to submit a bid within 10 days. The residuary body acknowledged that in retrospect, asking the LSE to produce a bid in 10 days was possibly too early; but the LSE had been expressing an interest in the building for a very long time. In the Residuary Body's view, the LSE were negotiating through the press, and it needed to get them to put a financial offer on the table … The Residuary Body considered that the publicity surrounding the LSE interest in County Hall was damaging the prospects of the sale to Shirayama. It is important for the House to recognise that no offer was forthcoming from the LSE at the end of the 10 days, and it was very unlikely that it would ever have been able to make an offer to enable it to buy County hall.

The eventual proceeds of £92.3 million come partly from the sale to Shirayama and partly from the initial sale to County Hall Development Group, which fell through in October 1990. That group forfeited its £20 million deposit and £4.8 million in accrued interest, which formed part of the proceeds of sale of the building.

The subject is difficult and contentious. Whatever one's views, it is fair and reasonable to pay tribute to the work of Sir Godfrey Taylor and that of the London Residuary Body in obtaining a very good price in all the circumstances.

I pay a warm tribute to the Clerk of the Committee, Mr. Ken Brown, and his staff in the Committee Office. They provide us with a magnificent service. Their courtesy, helpfulness and enthusiasm make our job all the more interesting and worth while, and we are very fortunate to receive such excellent service.

7.8 pm

Mr. Mike Hall (Warrington, South)

I congratulate my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and the hon. Member for Uxbridge (Sir M. Shersby) on their excellent contributions to this annual debate on the Public Accounts Committee. It is the fourth or fifth time that I have participated in the debate, and this is probably the worst-attended debate that we have had in the four and a half years that I have been in Parliament. I echo the sentiments of the hon. Member for Uxbridge; this very important debate deserves a wider audience.

The PAC has a very important history. It was set up under Standing Order No. 122 in 1862, following the Northcote-Trevelyan report, which condemned nepotism, incompetence and other defects in the civil service. Today, the PAC has three primary functions that stem from that report—to combat fraud and corruption, to ensure that public money is spent on the purposes voted by Parliament and to ensure that we get value for taxpayers' money. Those are all very important aims and the PAC is charged with upholding them on behalf of both the Government and the taxpayer. I have been delighted to be involved in the PAC over the past four and a half years and in the work that its Chairman, my right hon. Friend the Member for Ashton-under-Lyne described.

The benchmark for the work currently done by the PAC stems from the important eighth report of the 1993 Session. We did not take evidence for that report—it was an accumulation of the reports considered by the PAC during recent years—"The Proper Conduct of Public Business". It is an important report that underlines all the work of the PAC.

I want to concentrate on four reports which deal with combating fraud and corruption. However, it is worth recalling what we said in that eighth report: 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. Over the past 140 years, we have built up a civil service that, by and large, is impartial, trustworthy and competent. It is the primary concern of the PAC to ensure that those standards are maintained.

There are 48 outstanding reports before the House—seven from the 1994–95 Session and 41 from the current Session. That demonstrates the work load of the PAC. I actually enjoy the work. I am not suggesting that we take on any more; the balance is about right. We get a proper response from the Government to the reports that we publish. The work of the Committee receives good coverage in the press. All that contributes to the ability of the Committee to ensure that our civil service is impartial, trustworthy and competent.

The first report on which I shall concentrate is the 13th report on the operation of the Student Loans Company. It is the PAC's second report on the role and work of the SLC. The company is wholly owned by Government, with the Secretary of State for Education and Employment and the Secretary of State for Scotland each owning 50 per cent. of the shares. That second report shows that the chief executive of the SLC had been summarily dismissed. When preparing the first report, the Committee took evidence on the setting up of the SLC. At that time, we were concerned because members of the Committee had received an anonymous letter making certain allegations about Mr. Harrison, the chief executive of the SLC. A separate letter was sent to the then Department for Education making further allegations about that individual's conduct. I will not list all the allegations as a number of them were proved to be unfounded, but it is safe to say that there was a question about that individual's relationship with the company that supplied the SLC with information technology—Electronic Data Systems. There was concern about the appointment to the SLC of Mr. Harrison's son, about expense claims, foreign travel and company cars and about membership of the Royal Scottish Automobile Club, to name just a few.

The SLC investigated the allegations, as did the internal auditors of the Department for Education and senior civil servants. The PAC was told by Sir Geoffrey Holland, the then permanent secretary at the DFE: No evidence whatsoever has been uncovered to suggest a corrupt relationship between the Chief Executive or any other company staff and ED-SCION. The chairman of the SLC reached the conclusion that we were dealing with a grudge letter which has no foundation in the truth. He said that Mr. Harrison … continues to cam the full confidence and support of the board. It is a bit like the football manager who had the same support at Main road from Manchester City.

In December 1993, a decision was taken to extend the termination date of Mr. Harrison's contract from 1995 to 1998. The value of that three-year extension was £250,000. However, when we took evidence on the operation of the SLC on 13 December 1995, we discovered that Mr. Harrison had been dismissed in March that year. It was a summary dismissal without compensation. The report discloses that a forensic investigation by Coopers and Lybrand confirmed some of the earlier allegations against Mr. Harrison and discovered some new wrongdoings as well. It is that aspect of the report that is very worrying and begs the question why it took an independent investigation by Coopers and Lybrand to provide the necessary evidence on which to sack Mr. Harrison.

In the meantime, students were not getting a good deal from the SLC. Our report records that 1.1 million students telephoned the SLC seeking advice, but only 41,000 calls were answered. The Committee concluded that that represented almost a complete breakdown of the management of the telephone system. That failure to deal with student telephone calls was deplorable. In addition, some 35,000 students suffered delays in the receipt of loan payments averaging six weeks—in consequence, some of them could have been in very great financial difficulties. The PAC was right to draw attention to that aspect of the SLC. However, more importantly, we need to ask why the initial allegations into impropriety at the SLC did not result in a more judicious outcome to the inquiry into why the chief executive had his contract extended.

The next report that I want to deal with is the 46th report of the 1995–96 Session—"Ministry of Defence: Fraud in Defence Procurement". That report identifies 191 cases of alleged fraud between 1985 and 1994. The most significant recent case is that of Gordon Foxley. He was able to secure at least £1.3 million, and probably more, in corrupt payments from overseas contractors aiming to influence the allocation of contracts for fuses and ammunition. He also received substantial bribes. The exact amount is not clear, but the National Audit Office report shows that his English bank account received credits to the tune of £3.5 million between 1982 and 1990. The report rightly concludes that it is one of the worst cases of corruption that has come before the PAC. Some 12 contracts worth £33 million were cited in the criminal charges against Foxley, involving companies in Germany, Italy and Norway. It is interesting to note that there have been no charges, trials or convictions relating to that corruption in any of those countries.

At the time of the hearing in April 1995, I was trying to ascertain how much money had been recovered from the bribes or secret commissions that had been paid to Foxley. I wanted to know how much money had been recovered from the properties that he had purchased with the money that he gained from his illegal activities. At that time, the Government were still trying to gain access to Foxley's Swiss bank account. I hope that that has now been achieved and that some of that taxpayers' money is being returned to the Treasury so that it can be put to better use.

Another worrying aspect of the case is that Foxley's son, Major Andrew Foxley—a serving Army officer—was found in possession of documents that he was passing on to his father. They contained information on commercial matters that would have been beneficial to Gordon Foxley's corrupt activities. Major Andrew Foxley was not dismissed from the service. Again, important questions need to be asked about the investigation into that case.

The third report is entitled "A Review of the Financial Controls over Indirectly Funded Operations of the Metropolitan Police Service", which was the sixth report in the 1995–96 Session, and it is an extraordinary but sad tale. Anthony Williams—a civilian worker in the Metropolitan police—managed to steal £5 million. On 19 May 1995, he was found guilty of 19 charges of theft and sent down for seven and a half years.

When we took evidence during the hearing, I asked Sir Paul Condon, Commissioner of Police of the Metropolis, how many other offences had been taken into consideration when this case was prosecuted. The record shows that I was told that the number was between 40 and 100, which is not a very precise figure. In a written note to the Committee, we had the correct figure of 535 cases taken into consideration. We also learnt that, in a previous instance, £10,000 had been stolen from the police benefit fund.

The thefts were made possible and kept secret because there had been a fundamental breach of Government accounting procedures. Had Government accounting procedures been kept in place at the Metropolitan police, that £5 million fraud would not have happened. Williams was allowed to design the financial regime for funding the on-going indirectly funded operations. He became responsible for accounting for the fund, and he had unsupervised control of the use of that fund. Quite clearly, the temptation was too great.

We know full well that, in accounting procedures, we must separate the people who spend from the people who audit and account for money if we are to ensure that frauds such as that in the Williams case do not occur again. In that case, there was a single bank account, in Williams's name, and he was the only person who received a statement of the account. It was far too easy for him to defraud the Metropolitan police. Because of that massive fraud, committed over a substantial period, Williams was able to develop a double life.

The Williams case provides the Government with a lesson for the nursery voucher scheme. The company that has been charged with determining who is entitled to receive nursery vouchers is the same company that will distribute the vouchers. The operation of the nursery voucher scheme is a clear case in which there must be clear separation of responsibilities to ensure that a similar fraud does not occur. We do not want anyone to be able to do again what Williams did.

Williams bought a hotel, a public house and a restaurant in Scotland. He bought a villa in Spain, and he rented luxury apartments in London. He even bought baronial titles so that he had a suitable status to go with his illegally acquired wealth.

The surprising aspect of the Williams case is that he had a salary of £42,790. It was obvious from his life style that he was living well beyond his means. I should have thought that alarm bells would have rung at the Metropolitan police a little earlier. If they did not ring then—when he arrived at work driving his XJS or his Land Rover Discovery—they should have sounded when someone rang police headquarters in London and asked for Lord Williams. They told the caller that there was no Lord Williams on the payroll, but someone should have started to ask questions.

Another intriguing aspect of the case is that, in 1993–94—I can be no more precise about the date than that—Williams applied to Moray enterprise board for a business loan of £180,000. Moray enterprise board had the nous to ask for references and, when Williams did not provide them, his application was not proceeded with.

To mitigate the loss, the Metropolitan police have tried to sell Williams's assets. Sadly, they have been sold off at less than Williams paid for them, and the net loss to the taxpayer and to the Metropolitan police is approximately £1.2 million.

The next issue about which I am concerned is that contained in the report entitled "Ministry of Defence: Management of Works of Art", which has already been referred to by the Chairman. The use of the words "management of art" in that title is interesting, as we were told that 205 works of art have been stolen, and that 161 are still missing.

Among the works of art that are still missing is a painting entitled "Coastal Scene with Fishing Boat". It was stolen from the MOD's main building in London. When I cross-examined the permanent secretary to the Ministry of Defence about that theft, he told me that the building was one of the most secure in the country—as one would expect—that it is occupied seven days a week, 365 days a year and that he had nothing else to say. I asked whether he thought that it had been an inside job, and he said that he did not think that it had been an outside job.

Another painting that disappeared, entitled "Admiralty House", was painted in 1970 by Alan Dyson. It disappeared from the flat allocated to the Secretary of State for Defence. I shall not point my finger at any of the Defence Secretaries because the permanent secretary to the Ministry of Defence said that, between 1982 and 1991, there had been four Defence Secretaries, and that one of them had not occupied the flat in Admiralty arch. It is, however, a sorry tale.

A further problem in the report on the Ministry's management of works of art is that members of the Public Accounts Select Committee were told that the works of art were of "low value". We asked how the paintings could be valued after they had been stolen. We were told that they had been valued on the basis of the painter and the title of the work. I do not know whether we were being given a low valuation to demonstrate that the losses or thefts were not a serious matter. It is a serious matter, and I hope that there will be an attempt to ensure that the missing 161 paintings and other Government works of art are recovered.

The next report is on the Prison Service and the excess vote expenditure, which is the 17th report of the Committee. This is an extraordinary report. I am sure that the Minister's response to it, in his reply, will be one of severe condemnation of the Prison Service.

In February 1995, the Committee was told that there was a projected underspend in the Prison Service of £36 million. Even by 27 March 1995, the projected underspend was £20 million. When the book was closed, at the end of March 1995, the Prison Service had overspent by £1.6 million. I do not think that anyone would disagree that such a feat takes a great deal of effort and some ingenuity.

We have outlined in the 17th report the fact that there have been very sloppy accounting procedures in the Prison Service and a breach of Treasury guidance. The Treasury was kept in the dark over the situation; revenue was spent on capital; and there were dubious advance payments and unapproved virement. It was a shambolic state of affairs.

I am not sure what happened in the weeks when the Prison Service managed to spend that money, and I am not sure whether there was any central direction of it. Perhaps it is a coincidence that that was the same period immediately before the Prison Service attained agency status. I am convinced that it is not coincidental, and that a message was sent from somewhere to spend, spend and spend. The 17th report—it is very thin, but it contains a huge amount of detail—sets out a shambolic state of affairs that can only be condemned.

The Chairman has mentioned the Committee's report evaluating the application to run the national lottery. When the Public Accounts Committee takes evidence, I often think that senior accounting officers of Departments or next steps agencies are not there to collect the award for the best civil service department or the award for the best well-managed project.

In this case, the report from the National Audit Office on the setting up of the national lottery was very complimentary. The project had been brought in on time and on budget, sales had exceeded expectations, and the money that had been generated for good causes was better than had been anticipated. It was a model report, and the Director General of Oflot could have expected a reasonably comfortable ride from the Committee.

Things went wrong for the director general when he was asked by my right hon. Friend the Member for Swansea, West (Mr. Williams) about his trip to America. My right hon. Friend asked Mr. Davis: Did you go to Florida to talk to one of their rivals? Mr. Davis said that he had. He was asked whether he had found it rewarding, and Mr. Davis said that he had found it interesting.

My right hon. Friend asked: How did you travel there? Mr. Davis replied: By aeroplane. My right hon. Friend said: Yes, of course by aeroplane. I did not think you swam. Did you travel at your expense, at anyone else's expense? Mr. Davis replied: I travelled across the Atlantic. My right hon. Friend said: That is the usual way to go. Mr. Davis went on to say that he had travelled across the Atlantic on scheduled airline and that came out of the budget of my department. Some of the internal journeys that I made within the United States were made in the private aircraft of G Tech. GTECH owns 22.5 per cent. of Camelot and is therefore the organisation that the Director General of Oflot is charged with regulating. It is a matter of great concern that the director general chose to accept that kind of hospitality from one of the owners of Camelot, the company that runs the national lottery.

Mr. Davis then refused to answer any more questions along similar lines unless we went into private session. We did so—the proceedings of the private session are published in the minutes for all to see in the Public Accounts Committee's report—and were concerned about the relationship between GTECH and organised gambling in the United States. There were a number of prominent court cases involving members associated with GTECH.

Mr. Davis said: You may be interested to know that the day after I announced the award to Camelot I asked the chairman of Camelot to come to see me. I said to Sir Ron Dearing, who was then the chairman. that I wanted him to be aware that I knew of some serious concerns which had been expressed to me from the United States and that I required him to be aware that I knew and to make absolutely sure that he ran a regime within Camelot which monitored the situation and ensured that nothing untoward happened. I am astonished that, having awarded the contract to run the national lottery to Camelot, the Director General of Oflot had to take the chairman of Camelot to one side to make that point to him. It was no surprise, however, that the PAC stated: In our view the Director General's decisions to use GTech's corporate aircraft represented serious errors of judgment on his part". Had a member of a local authority done that, I suspect that he would have been surcharged and disqualified from office. I am also sure that had the Director General of Oflot been a time-served civil servant, he would have known that that type of such hospitality should not have been accepted and he would not have made that mistake. My view is that the position of the Director General of Oflot is untenable in light of the PAC's report.

The first of my two final points relates to my constituency and RAF Burtonwood. RAF Burtonwood is a Ministry of Defence property which is now surplus to requirements and being used as a private storage and distribution depot. It is the largest above-ground single-storey depot in Europe, providing 1.6 million sq ft of warehousing. When the PAC took evidence about fire risk, I was interested to note that the things that characterised the problems that we have had at Donington and elsewhere raised questions about automatic fire detection, fire suppression systems, weak buildings and the high value of stores. RAF Burtonwood has all those problems.

RAF Burtonwood is now surrounded by high-quality residential developments. Every time I mention this. I make the point that I live in one of the houses around it. I am not sure whether that counts as a pecuniary interest, but I want it put on record.

I was concerned about the fire precautions at RAF Burtonwood and remain concerned to this day. I fear that a fire there would be a huge environmental disaster and could have serious consequences for my constituents in that area. I still look to the Government to bring to an end the storage and distribution activities at RAF Burtonwood, which have made the lives of some of my constituents a nightmare, and to change the use of the facility to something more acceptable in an area that now has a residential development.

Secondly, I must mention a PAC report from some time ago on the sale of National Bus. Before the sale of National Bus, a £168 million surplus in its pension fund was paid into the Treasury. Mr. Wheeler, a constituent of mine, has pursued this aspect of the privatisation of National Bus with some enthusiasm. He finally got the pensions ombudsman, Dr Julian Farrand, to investigate the problem, and the ombudsman found in favour of Mr. Wheeler.

The ombudsman said that he has directed the new trustee to take without delay all practical steps to obtain the return of the money, with interest at an equitable rate, paid from the scheme's fund in breach of trust and received by the Department of Transport on behalf of the company. When the Minister replies, I hope that he will be able to give me up-to-date information on the Government's position on this case and their response to the report. It is clear that £168 million was wrongly removed the National Bus pension scheme, and the scheme's pensioners are entitled to get their money back from the Government.

7.34 pm

Mr. Peter Thurnham (Bolton, North-East)

A tribute has already been paid to the work of the Comptroller and Auditor General, Sir John Bourn, for his excellent reports and for the excellent value for money provided by the National Audit Office. If I understand it correctly, the number of reports has increased, the number of staff has decreased and the NAO has kept within its operational budget. I should like to thank Ken Brown and other members of the Public Accounts Committee's staff for their excellent work in servicing hon. Members. I also thank members of the Committee, especially the Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). We are all aware of the amount of work faced by Committee members, but it can be only a fraction of that of the Chairman himself—he cannot have very much spare time during the week, in view of the number of reports produced and the fact that he works closely with the Comptroller and Auditor General.

Last year there were 48 reports, and we are considering 27 tonight. I shall not detain the House by going through them all, but I shall comment briefly on four: the 34th report on sickness, the 36th on vehicle excise duty—they appear in Cm 3384—the first report on the Child Support Agency this Session and the 19th report on fraud in Cm 3379.

I was sorry not to be able to visit the European Court of Auditors with the PAC. I know that the Committee made a worthwhile visit. I had hoped to be able to go, but other Committee work detained me in the House. The Committee was perfectly right to draw attention to the need to work closely with the European Court of Auditors in supervising the huge amounts of money spent from European funds.

I shall deal first with the report on sickness and draw attention to two points that arise from it. I was concerned to find that the Confederation of British Industry's evidence showed that the average number of working days lost in Britain is eight per worker, but in the private sector the CBI estimated it to be seven days a year and 10 days in the public sector. If the Financial Secretary to the Treasury is looking for ways to save money, he might consider why there are three more days' sickness per worker per year in the public sector than in the private sector. I do not know whether he can calculate the cost to the taxpayer, but it must run into hundreds of millions of pounds annually, and it must be worth investigating.

As the Financial Secretary represents a constituency in the north-west, he might be interested in evidence given to the Committee which showed that sickness rates for civil service staff are highest in the north-west. Sickness rates in the north-west are consistently the highest in the country, which I find unacceptable. I have drawn this matter to the attention of the Secretary of State for Health. I received a reply from the Under-Secretary of State for Health, the hon. Member for Orpington (Mr. Horam), in which he confirmed that the north-west does indeed have the highest sickness rates and links it to the area's high morbidity rates and mortality rates in general. He offered no hope that we might solve the problem. I find it wholly unsatisfactory that, year after year, the north-west should have such high sickness rates. It would be more acceptable if it happened only in some years and not others. In attempting to explain why this might be, he makes what I regard as a typical comment from the south-east—that it is a reflection of the more general lifestyle and health characteristics of the population in the north-west. In other words, because we eat tripe and onions we are not going to be so healthy. I hope that more effort can be put into ascertaining properly why sickness rates in the north-west should be higher. Clearly, the health of people in the area is just as important as that of people elsewhere in the country.

I am concerned about the number of drivers evading excise duty—some 1.3 million vehicles annually. The Driver and Vehicle Licensing Agency estimates that there are some 60,000 unlicensed vehicles in the Greater Manchester area, which accounts for about £8 million of lost revenue. I estimate that there must be about 5,000 unlicensed vehicles on the road in Bolton itself, which emphasises the need to tackle the issue. There is also the question of false addresses being given to the DVLA. It is important that there should be a crackdown on the way in which licences are administered so that not only does everyone have a licence, but everyone gives correct addresses. People who are not interested in giving correct addresses should be made to do so.

I was concerned about other issues in the report. There is the question of whether wheel clamping should be used to impose sanctions against licence evasion. I am in favour of far greater sanctions in this area, but I hope that the Government will consider wheel clamping, because there is no doubt that it has been a racket for taking money off people who are entirely innocent and who have not intended to become the victims of wheel-clamping sanctions after parking accidentally on private land.

I will now move on to the report on the Child Support Agency. The Chairman of our Committee has already drawn attention to the difficulties of getting information from all the different parties; four partners could be involved. The problem of getting information is at the root of the CSA's subsequent difficulties in administering much of its work.

I am not happy with a lot of the work of the Child Support Agency. Just a fortnight ago, I visited the Data Protection Registrar, Elizabeth France, in her office in Wilmslow to discuss with her ways in which the CSA could operate more efficiently. That visit was in connection particularly with a constituent, Mr. Collier, who had been wrongly accused of fathering a child. The father was another Mr. Collier. My constituent was upset because his employers had been approached by the CSA to divulge his private address so that it could approach him at home. That disturbed his employers and it seems wrong that the relationship between an employee and an employer should be disturbed by the CSA coming in with its great big boots on and making requests for information which stemmed from its desire to find a father who was not owning up to a child. That can prejudice the relationship between the employee and the employer, and it is wrong.

I spoke to the registrar and she said how dissatisfied she was by the way in which the CSA requested information from all sorts of people in areas where it had no right to do so. In the case I was raising, the agency had the right to request information; I was concerned about the way in which it went about doing so. The registrar said that in some cases the agency had been requesting information when it had no right to do so, particularly from partners of absent parents from whom it does not have the right to ask for such information.

There is an important need to look at the way in which the whole operation works. The relationship with the Inland Revenue is the important one. To find out the earnings of self-employed people and others, it is essential that the Government use the information that is available to them so that the CSA and other operations can work efficiently. That brings us on to fraud.

There is no doubt that tax records are one of the most valuable ways in which to seek methods by which fraud can be reduced. If the Government's left hand has information that their right hand needs, subject to the proper safeguards, the two hands should work together to reduce the inefficiencies. I hope that, in that way, it will be possible for the CSA to obtain information about the private addresses of individuals without prejudicing the employer-employee relationship. The Inland Revenue might be able to give a private address from its records, with national insurance numbers and so on, straight away. All that the CSA has to go on is that there is somebody called Mr. Collier living in a certain area who may or not be the father of a child. I feel that the Inland Revenue could help just as easily with that matter as could the employer, without the consequent upsetting of an employee who may be perfectly innocent.

I shall not discuss further matters to do with the CSA, which I find an extremely inefficient operation. The inefficiency raises questions about the need to continue with such an organisation. I shall now move on to fraud and refer to the 19th report and Cm 3379, in which many issues have been raised.

I asked for regional performance figures, and I see that the appendix to the 19th report consists of information supplied by the permanent secretary at the Department of Social Security. It quotes a lot of offices under headings that I do not understand. Under the heading "Scotland and Northern Territory", performance figures are given for offices AD 1 to AD6. I do not have the faintest idea where the north-west fits into that. The three areas of the country are "Scotland and Northern Territory", "Wales and Central Territory" and "Southern Territory". I assume that the north-west is somewhere in "Scotland and Northern Territory". If the Financial Secretary is able to establish where the north-west and, for that matter, Bolton and Greater Manchester fit into the six offices AD1 to AD6, I shall be interested to hear that information because it would give some idea of the efficiency of fraud detection in those areas. We know from information that has been released that in Bolton, £4.3 million was saved last year by the anti-fraud team. I hope that work will continue on that front to reduce the amount of fraud in total.

On the operations of the Benefits Agency in Bolton, I draw attention to the concern about the out-of-hours service being reduced. I hope that funding will be sufficient to maintain the service, at least until proper consideration has been given to any options that could be provided if it is to be reduced.

A number of issues are touched on in the Government's response to the 19th report. In paragraph 15, the Department of Social Security says: we have commissioned a major survey of disability". I do not know whether the Financial Secretary can comment on when that major survey might become available and exactly what its terms of reference are. I am not aware of any more information about that other than what is given in the report.

The report comments on the high levels of error and on the appalling performance when the severe disability premium was introduced in 1988. I can confirm from my constituency cases how badly the introduction was handled. One constituent—a disabled person with no other means—was owed £10,000 in arrears of benefit. He became almost suicidal while waiting for the money. By the time I got on to the case, the arrears were substantial. It should not have been possible for them to have reached that level. Paragraph 23 of the Government's response shows that the average level of arrears per head was close on £4,000. I find it incredible that disabled people above all should be left with enormous arrears. Coupled with the general errors, that is totally unacceptable.

The report draws attention to visits to houses as the best way in which to establish the veracity of new claims. I would be pleased if the Financial Secretary could confirm that the number of home visits will be maintained at the levels envisaged and, if anything, increased to improve the efficiency of the detection of fraud. The Financial Secretary may care to tell us whether he thinks that the detection of fraud is better done with centrally administered benefits rather then with those administered at local authority level, such as housing benefit which is mentioned in the report.

I draw the Financial Secretary's attention to a recent report—I do not know whether he has been made aware of it—from Liverpool business school, which was carried out by the unit for the study of white collar crime. The author, a lady called Eve Coles, is a research associate. She has given a lot of information in the report, and I will touch on just one item.

I was pleased to see that Eve Coles had estimated the percentage of total housing benefit saved in councils, categorised under different political control. She established that Conservative councils were better than Labour councils at detecting fraud. The former had a detection rate of 2.2 per cent. of total housing benefit paid whereas Labour-controlled authorities had a detection rate of only 1.44 per cent. However, she was able to point out that Liberal Democrat councils performed the best, with a saving rate of 2.3 per cent.

7.49 pm

Mr. Alan Williams (Swansea, West)

You will agree, Madam Deputy Speaker, that in general it is an error for an hon. Member to attend a debate in which he has no intention of taking part. You will also confirm that my name was not on your list when you entered the Chamber this evening. However, a few thoughts have come to mind as a result of what I have heard this evening, particularly the points raised by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) about the erosion of accountability through Government restructuring.

The ultimate democratic responsibility is illustrated by the apocryphal story of President Truman, who had a plaque on his desk saying, "The buck stops here". In the past two months we have seen a variation on that. We are now assured that the Home Secretary has a doormat which says, "The buck stops here", but the mat is outside his door.

There has been a redefining of ministerial accountability. As my colleagues on the Committee will recall from our hearings, the accounting officer should be outside the Minister's door. If the Minister is not accountable, the accounting officer is. When we heard evidence from Mr. Alan Langland, who is an excellent witness and is always very honest and straight, he made a point that was distinctly disturbing. As the accounting officer for the national health service executive, he is responsible for an enormous empire. He made a legitimate but salutary point when he said that he had started to create within his empire the concept of accountable officers. I wonder whether my right hon. Friend the Member for Ashton-under-Lyne remembers that phrase. Under the new system, Ministers shrug off any responsibility other than policy, accounting officers say, "The buck does not stop at my door either," and there are accountable officers further down the line.

I see in the Box to which we are not allowed to refer our friends from the Treasury who always attend our hearings. I asked the Treasury representative whether he could give us some idea of the number of accountable units. If I remember correctly—I do not have the minutes with me—he told me that it was something in excess of 600. I found that astonishing, as did most of the Committee. We all thought that we had a nice, simple system with Ministers responsible to Parliament and accounting officers directly responsible to Ministers.

The Treasury representatives have now told us that there are approximately—they did not know the precise number—600 such accountable units. It is no wonder that we have the shambles that my right hon. Friend rather gracefully and flatteringly described. He was very kind to the system but would not reveal its worrying aspects.

There was another evolution when Sir Peter Gregson gave evidence to the Committee. During his final appearance before us, which was a matter of considerable relief to him—it was not a matter of sadness that we would no longer be in his work programme—he said that everyone appreciates and values the work of the Public Accounts Committee, but it should not be confrontational.

I remember my first meeting with Sir Peter when the Committee was dealing with the privatisation of the electricity distributors. I almost had to use thumbscrews to extract from him the value of the assets that had been sold off for £6 million. Eventually he told us that they were worth £16 million.

It is nonsensical to pretend that we can have a Public Accounts Committee without any risk of confrontation. Most of the reports that we consider involve questions that are thought to need answers. If we had not been confrontational, we would never have found out about Operation Wizard—the attempt at a covert privatisation bid within the Welsh Development Agency. The National Audit Office was unable to discover it because the costs had been farmed out in different accounts. I promise the Minister that all that is duly recorded as it was before his time.

If we had not been confrontational, we would not have discovered some of the misdemeanours of the Development Board for Rural Wales or wrapped around the neck of Wessex its monumental failure.

My right hon. Friend the Member for Ashton-under-Lyne was kind enough to read the relevant section of the report, but there was nothing confrontational in what I said to the regulator of the lottery. Had we not challenged him, we would never have found out about his trips with GTECH. That was not in the National Audit Office report.

Sir Peter also said that we should not be concerned about blame, but there cannot be true monitoring and accountability if, when someone has committed an offence, or one has occurred accidentally, no attempt is made to find out who is responsible or to blame.

In 12 months, we have had a massive rewrite of the concept of parliamentary accountability. Ministers have said, "It's not me, mate, it's him." Accounting officers have said, "It's not me either, it's them," and "they" are spread out so widely in 600 units that most of them know that we could never get around to seeing them all.

Nearly everyone has referred to the lottery. I shall not dwell on the GTECH issue because I made my point in an intervention, but it is salutary to think that during the period when the regulator was swanning around the United States in presidential style in GTECH aircraft, his staff were not doing the work. They had employed outside consultants to advise them on the establishment of criteria against which they could judge whether the terms of the section 5 licence were being complied with.

According to another report from the National Audit Office, 21 such tests were devised, but a year after the lottery had started, of the 21 tests to ensure that the criteria were being observed, only one was operational and it was sloppy, 10 were partially devised but not in operation and another 10 were notional ideas and no work had started on them. That was in October 1995, just over a year after the lottery had started operating.

Each day, Camelot is allowed to draw down the money that it has paid out in prizes. It is astonishing that, for the first 12 months, in which he paid out £700 million, the regulator was simply checking that the amount that was paid out to Camelot was the one that had been requested. He paid out £700 million on the basis that the figures balanced. As the National Audit Office report shows, there was no verification to show that Camelot was entitled to the sum being requested. No one was suggesting that Camelot would deliberately claim money to which it was not entitled, but surely the regulator's job is to ensure that the wrong sums could not be paid out accidentally. Yet a year—14 months to be precise—after the lottery began, he was still operating on the primitive system of assessing whether there was rectitude in the finances. I am sure that we shall have a chance to look at that during a future sitting of the Committee.

7.59 pm

Mr. George Mudie (Leeds, East)

I am delighted to follow my right hon. Friend the Member for Swansea, West (Mr. Williams), although I know that I show up badly in comparison. I served on the Public Accounts Committee with him and others before I finally escaped to the Whips Office. Although it may seem wrong for me to speak in this debate a year after leaving the Committee, I could not do so at a better time.

I should like to place on record my appreciation of the chairmanship, courtesy, integrity and kindness of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). It was wonderful to see him get angry when faced with some of the individuals who attempted to avoid the very pointed questions that open up meetings. It was also an education and a pleasure to work with my hon. Friend the Member for Warrington, South (Mr. Hall) and the hon. Member for Uxbridge (Sir M. Shersby), and see the different approaches taken in the Public Accounts Committee.

The PAC dates back to Gladstone; it has a wonderful history. Coming from local government, I find it incredible that the Committee seems to represent the one area of parliamentary scrutiny of expenditure. When one tables written questions asking for the £24 million-worth of spending in a given area to be broken down and receives the reply that it would take too much time and expense to do so, one wonders what scrutiny there is. The PAC has an impossible task of covering all the Departments' public expenditure, and they well know that, if they escape scrutiny one year, another year or perhaps several years will pass before the roulette wheel comes back round to their turn.

One of the themes of the speech of my right hon. Friend the Member for Swansea, West was how badly the PAC is treated by the Treasury and, above, all, by Departments. Public scrutiny of public money is essential, and should be applauded. Gladstone should be applauded, as should my right hon. Friend the Member for Ashton-under-Lyne, who does a very important job. Almost every report that lands on the table from the National Audit Office demonstrates the need for such work and for more scrutiny.

I should like to refer to the Committee's 19th report, which relates to income support fraud and security in the Department of Social Security. It is not one of the reports highlighted in the bundle, but it deserves examination not only for the amount of money it relates to, but because it shows the Department's history. I am delighted to see the Secretary of State for Social Security about to take his place on the Front Bench. He is very hard when scrutinising benefit. I wish that he would scrutinise it more carefully and exert more pressure on the Benefits Agency, which seems to get away with murder in sheer incompetence. I shall back that up with figures.

The 19th report on the 1994–95 financial year demonstrated errors amounting to £848 million, including £546 million cash overpayments and, even more sadly, £183 million underpayments. As the report says, the errors are in an area of work where they can cause real hardship to benefit claimants". They do not concern people the Secretary of State would chase or say were scroungers or did not require benefit. Of the total errors, £183 million should have gone to such claimants and did not. A written answer from the Benefits Agency demonstrated that, despite the fact that the Public Accounts Committee and the National Audit Office draw such figures to the attention of the Department, it does nothing to follow up the underpayments in an attempt to ensure that the money goes to the individuals concerned.

The Secretary of State is on a crusade at the moment against benefit fraud. Benefit fraud in the income support vote amounts to £1.4 billion—£600 million more than the amount caused by self-inflicted errors by the DSS and the Benefits Agency. Such figures should be enough to cause the matter to be raised on the Floor of the House. Not only the level but the doubtful consistency of the Department in respect of those errors is of concern.

Income support began in 1988. Each and every year, the NAO has qualified accounts in that area because of errors. In 1993, the 33rd report on the Department of Social Security for the financial year 1991–92 stated: We regard the reported levels of error in income support as unacceptable. The overpayments are a waste of resources and the underpayments are causing hardship to the most vulnerable members of society. In that report, the NAO found that just under 17 per cent. of income support cases concerned monetary errors, and suggested that overpayments—this will gladden the Secretary of State's heart, but should raise questions about what has gone one since—amounted to £86.8 million and underpayments to £87 million. That totals almost £170 million.

In the Committee's 10th report two years later, for the financial year 1993–94, the PAC put total errors in income support since 1988 at more than £2 billion. Together with figures in the latest report, the DSS and the Benefits Agency between them have cost the British taxpayer almost £3 billion in that one area of benefit since 1988.

The Committee estimated two years ago that total arrears were £617 million, including £540 million overpayments and £77 million underpayments. There is a steadily worsening trail of error from 1991, through 1993 and up to 1996. The accounts were qualified each time by the NAO, hauled before the PAC and questioned thoroughly, and reports were prepared and sent to the Treasury: yet what was done about it?

I turn to the report in 1993 of the 1991–92 financial year. When my right hon. Friend the Member for Swansea, West hauls staff over the coals over such matters, he does not do it out of blood lust. We are talking about public money. Anyone can make a mistake, but to continue to do so increasingly over the years at such a level makes one wonder whether it would be a waste of time to bring the Department of Social Security and the Benefits Agency before the PAC again. Clearly the Department does not listen or learn, and pays no attention to the PAC.

In 1993, the Department said, "Aha, yes. It is a very complicated job." Apparently it had already spent several hundred million pounds on computerisation and this could rise to £2 billion by the end of the decade. Now we have the 1994–95 accounts in front of us, and in that year £858 million of taxpayers' money was lost. In 1993, the response to the Public Accounts Committee was to boast that £2 billion was being spent on getting the computer systems right, which would deal with the problem. Presumably the £2 billion was spent, but the mistakes are increasing. Two years ago the loss was about £600 million; now it is £858 million.

I think that the fellow who drafted the report must have a sense of humour, because he wrote: The computerised system had also reduced the number of errors in the calculation of awards but other types of errors had gone up and more than outweighed that improvement. Several hundred million pounds were spent on a computer that dealt with some mistakes, but which then produced more mistakes, costing more than the mistakes that it had stopped.

Of course, Hacker was at it. The response was, "We shall have a review." The review originally started in 1991—I would like the Minister to note that date. It was intended to deal with the "false statistics" that local DSS offices were apparently sending out. The Department did not really know the level of error, and intended to do something about that. The hon. Member for Uxbridge must remember it well.

Income support accuracy was to be made the Department's "number one priority" in 1993. It was going to have training, new advice and a handbook. So my right hon. Friend the Member for Ashton-under-Lyne, ever kind, courteous, patient, tolerant and understanding, said, "Go on your way. You will have learnt by your mistakes, you are taking all those steps and we shall not see you again." Ha, ha.

In 1995, the agency was back. By then, it had lost the computer somewhere. When asked about the appalling figures, it had apparently lost the computer, the handbook, the false statistics and—and I have lost my notes, but the point being made was that the work had become more complicated, so there was a need for training.

The ever obliging Treasury had stumped up £9 million for training, with the offer of another £15 million. Has anyone ever heard of such a case of throwing good money after bad? The ever gullible Treasury was offering £24 million to the Benefits Agency, because training was the answer. And in 1995 the agency again pledged that accuracy was its number one priority. Again, the ever understanding Chairman sent its representatives on their way. They may have had a tongue-lashing from the direction of Swansea, Warrington and Uxbridge, but they had escaped for another two years.

The latest report is now before us—or at least, it is not before me now, but I have it somewhere. Whatever we think of him, Hacker has been resurrected. The agency has now forgotten about training, and about the computer, the advice and the handbook. Now the line is, "We shall have a fundamental review." The fellow who wrote "Yes, Minister" could not have written that fiction—but this time it is fact. The review is the excuse that the Benefits Agency and the DSS gave to the serious hard-working members of the Public Accounts Committee—adding that, of course, accuracy would continue to be a high priority.

This time, the response was all about tailored training … improving the detail and reliability of management information", but it was followed by the rider However, substantial and sustained improvements in IS accuracy will be achieved only with improvements in the processes and systems". I thought that we had already spent £2 billion to do all that.

In 1996, we have an even higher level of loss—£858 million. What could the Secretary of State do with £858 million? If those errors had not been made, much of that money would have been available, without any cuts being necessary, to do things that the whole House would want to do.

When I served on the PAC, there were rumours that a training session was being held for those who were to appear before that Committee. People were told, "You realise that you will be there for only three hours. There are about 15 members, and they will all take 10 minutes each. Some are worse than others, and some are more courteous and polite—but just get through that three hours."

That, at least, is training that the DSS and the Benefits Agency seem to have taken to heart. It is certainly working, because they get away with things. Some may think I am joking, but I hope that the Secretary of State will simply pull all the reports together and get a decent member of staff to find out what on earth is happening to his money.

The Department and the agency are thumbing their noses at the Public Accounts Committee and at the public. The loss is £858 million, yet the Treasury offers only four paragraphs in response to the PAC. The first paragraph says—surprise, surprise— the level of errors is unacceptable". It takes the Treasury a paragraph to agree with that.

Then the civil servant who wrote the response obviously realised that he was going dangerously far, because he added: As the Committee is aware, Income Support … is a complex safety-net benefit … inherently complex and thus creates a risk of errors at various points in the process". There we are. They are off again, asking, "How do you expect us to get it right? Although the errors are unacceptable, the benefit is too complex to get right."

I ask the Financial Secretary to read the next paragraph. I could read it out now, but if I did it would confirm in the public mind the idea that people in the Treasury and the rest of the civil service do not write in English understandable to ordinary people. The Treasury says: Improving accuracy … will continue to be a high priority. For how many years will it be a high priority? What about tailored training, and all those other improvements? There are four paragraphs, and now the Treasury has offered the agency more money.

On Sunday night, I saw a nice programme featuring the Secretary of State and one of the permanent secretaries, who has now moved on to another Department, but who was then rehearsing to appear before the Public Accounts Committee. Representatives of his 166 accountants—obviously the cream, the best he can get—were briefing him for his appearance in front of my right hon. Friend the Member for Ashton-under-Lyne.

With such a record, does the Department deserve to continue to employ those 166 accountants? When do we say enough is enough? The permanent secretary appears before the Committee and says that the loss is less than 1 per cent. of expenditure. Yet it amounts to £858 million. We cannot afford to throw away money in that way.

Where is that man now? In local government, we were supposed to be the hicks, the backwoods people-low—level, not parliamentary. But if we had a chief officer who delivered that standard of service year in and year out, he would be an ex-chief officer. That fellow is now a permanent secretary in another Department.

As a former member of the PAC, I must speak on behalf of its members, who work hard. They are dedicated Members from all parties. They deserve better treatment by the Government. To achieve improvements in the agency's finances, heads should roll. We should not be content with flowery phrases and allowing people to escape after a brief three hours before the Committee. Heads should roll, because the situation revealed in the report is not good enough.

That may be only one report, but, as the members of the PAC could tell us, it is the tip of the iceberg.

8.18 pm

Ms Dawn Primarolo (Bristol, South)

This evening's debate has been informative and interesting. The work of the Public Accounts Committee is extremely detailed, and I recommend that all hon. Members read the reports carefully. I congratulate my hon. Friend the Member for Leeds, East (Mr. Mudie) on his speech, and on the detailed way in which he studied the reports on the Benefits Agency. He gave an eloquent explanation, and picked up on a theme that the House constantly echoes but does not honour—that the role of the PAC is extremely important. However, there is apparently a lack of respect for that work in government, including the Treasury.

My hon. Friend the Member for Leeds, East described the Treasury as "gullible", but that is not quite the word that I would use, as I am sure that getting money out of the Treasury is very difficult. I presume that the Benefits Agency is used to operating good stings, and the reports have demonstrated that clearly.

I must comment on the work of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), and thank him for clearly describing many of the important points in the key reports. I pay tribute to him and to the members of the Committee. It is clearly a hard-working Committee that does a great deal and pays great attention to its work. I also commend the National Audit Office and the Comptroller and Auditor General, who deal with the problems of trying to pursue public money to ensure that it is accounted for.

The many reports from the PAC—the figure given by my right hon. Friend the Member for Ashton-under-Lyne was 500—consider the principles of economy, efficiency and effectiveness. However, perhaps a report on how efficient and effective Departments are in paying attention to the work of the PAC needs to be added. The reports compare input with output, and consider the work of the Government.

The reports are passed unanimously by the Committee. The reason is that the Committee wants to examine the implementation of policy, not to question it. Today's debate has referred to the special relationship between the work of the NAO and the Committee. In his opening remarks, my right hon. Friend the Member for Ashton- under-Lyne talked about the importance of mutual trust, respect and confidence, and stated that they need to be present in the work of the Committee and the NAO.

My right hon. Friend and other members of the Committee referred to the eighth report, on the proper conduct of public business in 1994. While we reflect on the Committee's work in this Session and throughout this Parliament, it is timely to remind ourselves of what 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 last 140 years. I am not seeking to make a party political point, as it is accepted by the House that that report made an enormous contribution, and that particular paragraph is important in considering the work of the Government. We should all be constantly vigilant in studying that work.

Today's debate focused 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 must reconsider how we ensure that money is not wasted and is accounted for. My right hon. Friend the Member for Ashton-under-Lyne laid out at the beginning of his speech the paramount importance of the interests of the taxpayer. My right hon. Friend the Member for Swansea, West (Mr. Williams) raised the matter of the erosion of accountability, a theme to which I shall return in my brief remarks.

The hon. Member for Uxbridge (Sir M. Shersby) complimented the NAO on its cost-effectiveness and stated that for every pound spent in running the NAO, there was a return of £7. That underlines the importance of having proper scrutiny of the Treasury, other Departments and all levels of government, local and national, to ensure that we receive value for money. Clearly, that is the case with the NAO.

The hon. Member for Uxbridge returned to a subject that he raised in last year's debate—the legal aid scheme, and the increase in moneys being drawn from the legal aid fund. He questioned whether those amounts were appropriate, and referred to the importance of verifying the means of applicants, which the whole House will endorse. In addition, we must remember that the purpose of the legal aid scheme is to ensure that people are not prevented from gaining access to justice simply because they do not have resources. I am sure that the hon. Gentleman was in no way implying that he wanted to see a reduction in the legal aid scheme, or that it should be cash-limited. He made some interesting comments on the sale of County hall. and I agree with him that we should note the income generated and make no comment on the merits or otherwise of the sale.

My hon. Friend the Member for Warrington, South (Mr. Hall) drew attention to the Student Loans Company, and asked pertinently why it took an independent inquiry to reveal impropriety and, in particular, to recommend that the chief executive be removed. He also pointed out that students were not being provided with the services that they needed from the Student Loans Company, and referred to a number of other reports.

The hon. Member for Bolton, North-East (Mr. Thurnham) made some interesting observations on a number of reports, particularly the 34th report on working days lost. He asked why more days were lost in the public sector through sickness than the Confederation of British Industry said were lost in the private sector. We should look at the terms and conditions of employment and at pay and stress levels, and they may account for that fact.

The hon. Gentleman also commented on vehicle excise duty, the Child Support Agency and access to information. When Government Departments, such as the Inland Revenue, hold privileged information for specific reasons, we need to be careful about the basis on which it is made available, to whom it is made available and whether there should be wider availability. The freedom of information Act and the Data Protection Acts are relevant.

The understated tone of the Public Accounts Committee reports always interests me. The 30th report, "Ministry of Defence; Management of Works of Art", for instance, states that when the Committee asked the Department how thefts could have occurred in their Main building and other secure buildings … Their assumption was someone who had legitimate access to the Ministry of Defence buildings had been responsible. The Department was then pressed as to why the Ministry of Defence police had recovered none of the 23 items stolen from the central collection and had made only five recoveries following … 30 instances of theft from local collections. The reply was that they were satisfied that the police were doing all they could In the second report on "Health Care International (Scotland) Ltd." and the loss of millions of pounds of public money, commenting on the rather ambitious proposals for the hospital, the Committee said: We suggested that it would have been better to have started HCI on a small scale and not gone for a 168 bed hospital, a four star hotel, a 175-seat auditorium and an international faculty", all at the same time.

The Committee went on to ask the Department why Health Care International, which had no experience in the private health care market, had been able to undertake such a high-risk venture. The reply was that its Chief Executive had been running a very prestigious hospital in Boston, USA", but acknowledged that there were some "novel features" in the hospital, such as the 'paperless' drug-prescribing system unique in the United Kingdom which the Greater Glasgow Health Board required to be validated. The Department recognised that this was a new concept, the success of which would depend on the quality of the doctors and the links which HCI managed to develop with key people overseas. When asked why the money had been given, when only three out of 12 advisory board members voted in favour of the project, the Department told the Committee that the Board, which meets once a month, is composed largely of businessmen. When they cannot attend meetings, they let the Department know if there is anything they are unhappy about. None of the six who did not attend said that there was anything wrong with the proposals. The two members who had objected had not done so on areas that were considered relevant. So, absence counted as support for the project.

Finally, the report states that the Committee asked the Department whether the location of the hospital was a problem for marketing. They told us that the problem was marketing a hospital in an area where people expect to find one". The mind boggles about where the hospital was located.

The reports on Ministry of Defence procurement and the Metropolitan police service highlight an absolute failure properly to vet and scrutinise work.

Two reports have not been mentioned. The 33rd report on "HM Customs and Excise Checking Claims for Repayment of VAT" and the 35th report deal with serious questions, which are at the heart of government—whether the taxpayer is being represented effectively and whether services are run on the basis of value for money. That returns us to fragmentation, the changing nature of government and the difficulty in pursuing public money. In a previous debate on the Welsh Development Agency—a report that we considered last year—Mr. Scholar, the permanent secretary at the Welsh Office, said that the Department was too small to carry out effective management of the quangos and that fragmentation and agencies, coinciding with other structural changes, had made it extremely difficult, if not impossible, for the staff properly to keep account of public money.

My right hon. Friend the Member for Swansea, West pointed out that with the proliferation of accounting units—there are now 600 or more—the job is becoming more and more difficult. The House needs to consider the gains, losses and economic benefits. The service has been fragmented, which has damaged career prospects for civil servants. Some people may consider that that was necessary because of the difficulties caused by lack of contact with people outside government. None the less, it has undermined civil servants' confidence.

In addition to that restructuring, the Government decided to parachute business men and women into Government Departments. Many did not have a background in the public sector and perhaps did not clearly understand the public sector ethos, conflicts of interest and the need to be transparent. The report on the lottery is an example. Such people were parachuted in over civil servants, further adding to their insecurities about their career prospects.

I am not advocating that we should not draw people from the business world to act in partnership. I question whether that process has gone too far, however, so that we are undermining the heart of government—the planning and the longer-term views that we need to keep public moneys accountable. Another issue was the growth of one-year contracts. That combination has brought short-termism to the heart of government and made it more and more difficult to have a longer-term objective. My hon. Friend the Member for Leeds, East made that clear.

As we finalise the reports for this Session, it is important for us to consider carefully the gains, losses and economic benefits, and the changes that have worked and those that have not, as my right hon. Friend the Member for Ashton-under-Lyne said at the beginning of the debate. We should restore the paramount importance of taxpayers' money being used accountably and efficiently and, far more important, ensure that it is transparent who is using it and why.

8.39 pm

The Financial Secretary to the Treasury (Mr. Michael Jack)

This wide-ranging and interesting debate has touched on many subjects that relate to the 48 reports that the Committee has so assiduously produced over the past year. It was beneficial that the remarks of the hon. Member for Leeds, East (Mr. Mudie) coincided with the arrival of my right hon. Friend the Secretary of State for Social Security. Instead of my having to say that I would draw his attention to the detailed points raised by right hon. and hon. Members, I can say, at least for one Department, that that task has been done without my having to do anything other than turn to the Secretary of State; he heard what the hon. Gentleman said.

The hon. Member for Leeds, East brought a lighter tone to the debate when he drew an analogy between the various reports and "Yes, Minister". I want to paint another picture showing how Government Departments and accounting officers regard the Public Accounts Committee. I have attended it as a Minister, listening to what has been said. Officers take seriously the grilling that they are likely to get, even if it requires them to have some rehearsal. To go before the Committee is a difficult experience. When I was first appointed to this job, I sat in to get a flavour of it. The detailed, forensic way in which information is extracted gives an idea of why people are concerned about their performance and of the seriousness with which they take what happens.

Value for money, efficiency and propriety are serious issues. There was a little adverse comment on how the Treasury operates. However, I noticed some difference of opinion. The hon. Member for Warrington, South (Mr. Hall) said that he was grateful for our comments and that Government Departments had responded properly to the Committee's requests for information. I was grateful for his remarks. So important to us is the remit of trying to improve the service that we give the Public Accounts Committee that we asked its Chairman, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), whether he would grace us with his presence in the Treasury. He kindly spoke to civil servants involved in the work to give us the benefit of his views so that our response could be more tailored to the Committee's needs.

The right hon. Member for Ashton-under-Lyne put on record some sage advice. He said that the Committee's first concern was to stamp out fraud and corruption, of which he noted that there were mercifully few cases. He also said that the Committee's remit was not to hand out awards but to identify what had gone wrong and to make recommendations. He confessed that he occasionally pronounced himself satisfied—and, on very rare occasions, very satisfied—with the outcome of inquiries. Everyone who attended found his words useful. I hope that he will grace us with his presence again. That gives me the opportunity to put on record my appreciation, and that of the Treasury and many others, for the dedication and hard work that he puts in as Chairman of the Committee.

I also thank my hon. Friend the Member for Uxbridge (Sir M. Shersby) and the right hon. Member for Swansea, West (Mr. Williams) who, respectively, as vice-chairman of the Committee and one of its longest-serving members, represent all that is best about the Public Accounts Committee and the diligent way in which it undertakes its work.

I shall draw the detailed points that hon. Members have made to the attention of the relevant Secretaries of State. I would be doing them a disservice if I simply read out an annotated piece of paper in answer to some difficult, detailed and very correct probing that perhaps goes beyond some of the responses that have been given in the Treasury minutes and in respect of which more up-to-date information may be available.

One theme comes out of the debate. In any system run by human beings, we must ask how we can improve what we are doing and learn from our mistakes. Wherever human beings are involved, there will be human frailty and error. It is only by continual scrutiny that we can try to improve our systems. It is always easy to point, as we have in each of the commentaries on the reports, to what went wrong and consider how we could have stopped it. It is at that point that the value of debates such as this and of the reports comes through. They show us that—even where people thought at the beginning of a process that a system was in place and capable of dealing with matters such as value for money, accuracy, propriety, correctness or any other description of performance—when the system fails, something has gone wrong.

We are then drawn to the conclusion that it was either the system that was wrong or that the people who were operating it made mistakes or even that there was wrongdoing. However, it is only with hindsight that the problem can be identified and, more important, that we can try to put in place yet better systems and checking mechanisms to ensure that such problems do not recur. But that is a circular argument: because the system is operated by human beings, it is inevitable that human frailty will again play its part.

I acknowledge the excellence of the work of the Public Accounts Committee. Every year we have this debate and review about 50 reports, all of which point to areas where Departments, non-departmental public bodies, agencies and other bodies could do better. It is proper that we have that analysis, but we should recognise the human dimension. I was delighted that my hon. Friend the Member for Uxbridge drew the attention of the House, as others did, to the value-for-money aspects of the National Audit Office's work. Without it and its reports, the Public Accounts Committee would not be able to exercise its detailed role of scrutiny.

Since I have been Financial Secretary, I have come to have great respect for the National Audit Office and have twice visited it to discuss its work in detail. I look forward to further discussions with it on the private finance initiative. The interchange of views, expressions and information between the Committee and Ministers is an important part of developing the role of scrutiny which it undertakes. I am also delighted that it is involved in spreading good practice. One of the best ways to stop problems occurring is for those who have responsibility for the things that I mentioned to know what works elsewhere. I look forward to the introduction of the magazine Focus, which will address that issue.

If there is one word that runs like a seamless web through much of what we have been considering, it is "awareness"—awareness of risks, frauds and irregularities and of the need to follow best practice and put effective systems in place. That was touched on in the report on the Ministry of Defence art collection, which the hon. Member for Warrington, South mentioned. Anyone examining that report might well wonder how, if the MOD cannot look after the paintings, it will look after the tanks, missiles and other things for which it has responsibility. The report highlighted a slipshod attitude towards the good stewardship of public property.

The report highlighted the situation and a response was given. Again, that shows the sloppiness of a human system being drawn up short by the Committee in its report. There is awareness that the taxpayer has a right to good-quality public services and of the responsibility to improve value for money. That point was brought out by my hon. Friend the Member for Uxbridge in his commentary on the small claims court. He will be pleased to know that work is in hand to pick up, publicise and exemplify many of the good points about the small claims court and address his central point. An important general point came out about making people aware of what is going on. The small claims report is interesting because it drew the House's attention to an area where light had not shone. People were not aware of what was happening. The Lord Chancellor's Department is working hard to deal with that.

A serious theme that runs through much of what we have heard this evening is fraud. That draws us up short each and every time we hear about it. The Treasury was anxious to make its contribution to deal with that. I opened a conference across the Government that dealt with managing the risk of fraud. We tried to draw together from right across government those who are responsible for audit and accounting to learn what is best practice.

It is interesting to note that people are rather surprised to learn that few frauds are discovered by auditors, either external or internal. More are discovered as a result of information from third parties. The role of the auditor—to return to my opening comment—is to put in systems of deterrence and prevention to minimise risk.

The hon. Member for Leeds, East mentioned social security. In fairness to my right hon. Friend the Secretary of State for Social Security, who was here earlier, savings made through action to counter benefit fraud in 1994–95 were more than £700 million and in 1995–96 were £1.2 billion. The hon. Gentleman was right to draw the attention of the House to failings in the income support system, but in fairness and in defence of my right hon. Friend, I should point out that he has had successes in combating fraud. That also typifies the approach of the Inland Revenue.

Propriety in public conduct was touched on in the debate and reference was correctly made to the eighth report. I draw the attention of the House to the fact that, in its response to the 23rd report, the Treasury undertook to prepare new guidance on regularity and propriety. By drawing on reports from the Public Accounts Committee, it aims to make the reader alive to Parliament's exact expectations with regard to financial propriety. The handbook will also feature the checklist which the Committee included in the eighth report, together with the Nolan committee's seven principles of public life. That shows, albeit in a thumbnail sketch, how seriously we take the Committee's recommendations.

The hon. Member for Bolton, North-East (Mr. Thurnham) touched on the Child Support Agency. That highlights a further theme of much of the work of the Public Accounts Committee, which has been to draw attention to improving public services. If it had not been for my right hon. Friend the Prime Minister's citizens charter initiative, we would not have given as much attention as we should to that aspect of public life.

My hon. Friend the Member for Uxbridge touched on an important external but also internal theme—the European dimension of the Public Accounts Committee's work. Britain should take credit for the work that we have done to support the European Court of Auditors. The court is independent in the Community, but it reports to the Commission, the European Parliament and the Council of Ministers. It is right and proper to take seriously what the Court of Auditors has to say, as our scrutiny Committees do. I was delighted that my hon. Friend the Member for Uxbridge drew attention to the Prime Minister's work in the Essen European Council to examine ways in which the work of the Court of Auditors could be further extended, such as through the system of fines and spot checks on fraud.

It is important that best practice is exemplified and picked up on the basis of what the PAC's reports say, as the reports on Ministry of Defence works of art and fire risk make clear. That point, which was made by the right hon. Member for Ashton-under-Lyne, illustrates again the perceptiveness of the Committee and the need for each and every Department to take careful note of it.

Above all, good judgment is required. The comments made in connection with the national lottery illustrate that very point. My right hon. Friend the Secretary of State for National Heritage said in response to the Committee's report that an error of judgment had been made. Judgment is much required in all the matters on which we have touched in our debates this evening.

The hon. Member for Warrington, South mentioned a detailed point in connection with the pension of one of his constituents. I shall draw that specific point to the attention of my right hon. Friend the Secretary of State for Transport. The Government take careful note of matters to which the pensions ombudsman draws our attention. The hon. Gentleman was right to make that important point.

The right hon. Member for Swansea, West, a long-serving member of the Public Accounts Committee, drew our attention to the number of accounting officers. To make a serious point, in spite of the number of points at which responsibility may be exercised within government and its agencies, the ultimate point of accountability in the hierarchy remains with Ministers and accounting officers. It may be that more people can now be held accountable, but the buck stops with the Government, in the person of Ministers or accounting officers.

This has been an important debate. I always learn by listening to what right hon. and hon. Members say. The 48 reports are clearly noticed. I undertake to the House tonight to draw the attention of the relevant Secretaries of State to the important and detailed observations of those who have contributed to our proceedings.

Question put and agreed to.

Resolved,

That this House takes note of the 41st to 47th reports of the Committee of Public Accounts of Session 1994–95, of the 1st to 41st Reports of Session 1995–96; and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm. 3166, 3167, 3172, 3189, 3222, 3243, 3279. 3298, 3327, 3373, 3379 and 3384) with particular reference to the following Reports of Session 1995–96: First, Child Support Agency (House of Commons Paper No. 31); Sixth, A Review of the Financial Controls over Indirectly Funded Operations of the Metropolitan Police Service (House of Commons Paper No. 109); Tenth, The Annual Report of the European Court of Auditors and the Statement of Assurance (House of Commons Paper No. 250); Thirtieth, Ministry of Defence: Management of Works of Art (House of Commons Paper No. 337); Thirty-eighth, Lord Chancellor's Department and the Court Service: Handling Small Claims in the County Courts (House of Commons Paper No. 410); and Forty-first, Evaluating the Applications to run the National Lottery and the Director General's Travel and Hospitality Arrangements (House of Commons Paper No. 96).