HC Deb 30 July 1998 vol 317 cc564-72

Brought up, and read the First time.

Mr. David Davis (Haltemprice and Howden)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss the following: Amendment No. 7, in clause 52, page 25, leave out lines 10 and 11 and insert—

  1. '(1) There shall continue to be a Comptroller and Auditor-General for Northern Ireland.
    1. (1A) The Comptroller and Auditor-General for Northern Ireland shall be an independent person appointed by Her Majesty on the nomination of the Assembly; but for the purposes of this section 565 the Comptroller and Auditor-General for Northern Ireland in office immediately before this section comes into force shall be treated as having been so appointed.
    2. (1B) A recommendation shall not be made to Her Majesty for the removal from office of the Comptroller and Auditor-General for Northern Ireland unless the Assembly so resolves and, if the resolution is passed on a division, the number of members voting in favour is not less than two-thirds of the total number of seats in the Assembly.
    3. (1C) A person is independent for the purposes of subsection (1A) if he is not subject to the direction or control of any member of the Executive Committee or of the Assembly in the exercise of his functions.'.
Amendment No. 8, in page 25, line 14, at end insert '; and the accounts so audited shall be presented by the Comptroller and Auditor-General for Northern Ireland to the Assembly and to the Secretary of State, and the Secretary of State shall thereupon lay them before the House of Commons.'. Amendment No. 9, in page 25, line 16, at end insert
  • 'enacted before section 5 of this Act comes into force or to any Act of the Assembly; but no Act of the Assembly shall have effect which—
    1. (a) prejudices the independence of the Comptroller and Auditor-General for Northern Ireland conferred by Article 3 of the Audit (Northern Ireland) Order 1987, or
    2. (b) reduces the powers of the Comptroller and Auditor-General for Northern Ireland conferred by Part III of that Order or by subsection (2),
  • unless the provision in question or a draft of it has been laid before the House of Commons by the Secretary of State and approved by a resolution of that House.
  • (4) The expenses of the Comptroller and Auditor-General for Northern Ireland (including those of the Northern Ireland Audit Office or such other Office as he may from time to time be empowered to maintain) shall be defrayed out of moneys provided by the Assembly.
  • (5) For each financial year of the Assembly after this section comes into force other than the first, the Comptroller and Auditor-General for Northern Ireland shall prepare, and submit to the Assembly (or, if a committee of the Assembly has been designated by the Assembly for the purpose, that committee), an estimate of the income and expenses of his office.
  • (6) If the estimate is submitted to a committee of the Assembly, the committee shall examine the estimate and lay it before the Assembly with such modifications as it thinks fit; but if the committee proposes to lay it with modifications, it shall first consult the Comptroller and Auditor-General for Northern Ireland and the Secretary of State and have regard to any advice which they may give.
  • (7) The Comptroller and Auditor-General for Northern Ireland may assist the Comptroller and Auditor General in reporting any matter to the House of Commons or in providing information or papers requested by the Committee of Public Accounts of the House of Commons.
  • (8) Paragraphs (1) and (2) of Article 6 of the Audit (Northern Ireland) Order 1987 are hereby repealed.'.
Government amendment No. 43.

Mr. Davis

On Second Reading, I commented on the unfortunate but, as I accepted at the time, necessary speed at which the Bill was going through the House. Hazards are associated with speedy Bills. In 1920, the Government of Northern Ireland Act created problems that lasted 50 years and ended in misery and the end of Stormont in the 1970s. I fear that, if we are not careful with some aspects of the Bill, we will create not necessarily the same problems—

Rev. Ian Paisley (North Antrim)

The legislation that the right hon. Gentleman mentions is the Government of Ireland Act 1920. I ask him please not to give all the blame to Ulster. He should remember that the southern part gave a great deal of trouble.

Mr. Davis

I am happy to be corrected, but I was not blaming Ulster: in part, I was placing the blame on the United Kingdom Government of the time and speaking about the problems that can be caused by speedy legislation on serious and complex constitutional issues.

Three matters need further thought. The first relates to guaranteeing the independence of the Comptroller and Auditor-General for Northern Ireland. The second is the problem of long-term corruption in some aspects of Northern Ireland business and the Assembly's ability to deal with it. The third is the rights of the United Kingdom taxpayer as they are reflected—or, more accurately, not reflected—in the Bill.

Amendments Nos. 7 to 9 aim to guarantee the independent appointment, tenure, funding and action of the Comptroller and Auditor-General for Northern Ireland. They underpin that independence by setting it in UK law, rather than in law that is susceptible to change by the Northern Ireland Assembly.

The Minister has been kind enough to write to me on the issue, and he indicated some sympathy with my argument. I elaborated on that on Second Reading, so I will not press it further. I say merely that that is the purpose of those amendments—all today's amendments are probing amendments.

5.30 pm

I move to a more worrying question: long-term corruption in Northern Ireland. We start from a bad base. As the Minister will no doubt be aware, my 1990 study of paramilitary racketeering showed that the Provisional IRA made about £5 million a year from a dozen different scams and rackets that it ran to fund its activities. These days, I suspect that the amount is a little lower because of Government action. Nevertheless, the joint actions of a number of paramilitary organisations probably raise several million pounds, and perhaps more. Many of those rackets focus on the public sector.

A large proportion of the money that is acquired illegally arises from corruption in one form or another in the public sector, be it public works, housing projects, welfare or other matters. That will be familiar to the Minister and, I should think, to almost every hon. Member in the Chamber.

The problem of corruption is compounded by the understandable wish of Ministers and civil servants in Northern Ireland not to let any social project that is aimed at dealing with sectarian problems fail because of lack of money. That means that there is a tendency to throw money at problems, which leads to waste and slackness, which we have seen too many times and which have been reported by the Northern Ireland Audit Office and by the Public Accounts Committee in the past few years.

Systematic waste, fraud and corruption have become a serious and permanent threat in Northern Ireland public expenditure. I am concerned that the Assembly will have difficulty in dealing with those problems because many have their origin, as I have said, in sectarian and paramilitary organisations. Some of those will be represented in the Northern Ireland Assembly by their political arms, which may have power and executive responsibility for areas that are susceptible to fraud—housing, for example.

Corruption is a threat to any free and democratic system of government. It is a particularly virulent problem when the same party or same coalition stays in power for a long time; we have seen that in local government in our own country. It is also a problem in small communities, so we have a difficulty that is likely to be made worse, not better, by the solution that the Government have, understandably, come up with for Northern Ireland. The form of government that is proposed for Northern Ireland is not very good at dealing with corruption.

Rev. Martin Smyth (Belfast, South)

I appreciate the point that the right hon. Gentleman makes. Corruption in the former Northern Ireland Parliament was minimal compared with what went on even in local government in England, but may I remind him that, when questions were asked in this House about social security payments to Mr. Gerry Adams, we were told that he was not getting such payments, even though the strange claim was made that he was an unemployed barman in Belfast? However, when he had a job to go to, we ultimately discovered, although it was denied in the House, that he was getting social security payments, so the problem affects the Administration here, who do not act on reports of auditors and accountants.

Mr. Davis

The hon. Gentleman helps to make my point. The difficulty is partly the activities of the paramilitaries, but it is also—I reiterate this point—the Assembly's structures, which make it difficult for the Assembly to deal with the problem. The old Northern Ireland Parliament—Stormont lid not have that structure. There are reasons for the new structure—I understand that—but it will have difficulties in dealing with this problem because political parties are still linked to paramilitaries, the structural legislature is poorly designed and there is already some corruption in place.

It would be easy to imagine that this is simply a financial problem, but it is not. Corruption in circumstances such as this has a corrosive impact on the communities that are supposed to be served by the Assembly, and on the political environment.

If hon. Members want an example of that, they can look back simply to post-prohibition American racketeering days and what happened to city and state government as a result of that racketeering. I worry much more about the impact on the politics and the communities of Northern Ireland than about the money itself. That is one reason why I think that this is vital.

Mr. Roy Beggs (East Antrim)

It has been suggested that at least £5 million has been misappropriated in Northern Ireland by the activities of paramilitaries. Without close scrutiny by the CAG, who is answerable to this House, that sum may be quadrupled, especially if we end up with a head of a Department and a Minister who represent paramilitary groups?

Mr. Davis

The hon. Gentleman restates in starker language the point that I was making. That is why subsection (7) in my amendment No. 9 would allow the Northern Ireland CAG to assist the United Kingdom CAG in reporting matters to the Public Accounts Committee.

This is not full House of Commons scrutiny—we should not misunderstand this—but it would act as a reserve parachute for Northern Ireland scrutiny if fraud were to become a more serious problem. The Minister is setting up a constitutional arrangement that is supposed to last for generations, one presumes, and we must at least do what we can to ensure that that awful circumstance does not arise.

The last issue that I want to take up is that of the accountability of the House of Commons for the £3 billion or so of UK taxes that subsidise Northern Ireland expenditure. This is the primary reason for new clause 1 and amendment No. 6. I do not expect to persuade the Minister today of this issue, but it is of fundamental constitutional importance, so I am obliged to raise it.

Mr. Peter Temple-Morris (Leominster)

The right hon. Gentleman is quoting many figures and raising serious matters that need consideration by the House. I am not asking this in any way other than constructively, but will he give us some idea of where his evidence is for the fraud that he speaks about in Northern Ireland? On what is he basing it?

Mr. Davis

There are two sets of data. I referred at the beginning of my speech—if the hon. Gentleman had listened carefully he would have heard me say this, although I am surprised, given his previous work on the Northern Ireland Committee, that he was not aware of it—to a survey that I conducted in 1990 on paramilitary racketeering. At the time, the Northern Ireland Office handed it out to the press as a guide to what went on. The Public Accounts Committee published a number of reports about waste in Northern Ireland—I could cite half a dozen; I will write to him if he wishes to know the exact number—that showed weaknesses in Northern Ireland, some of which will create opportunities for fraud, which is what we are trying to eradicate.

Mr. John D. Taylor (Strangford)

Is the right hon. Member aware that there have been questions on this matter in the House and that three times more disability living allowance is awarded in some constituencies than in others, which suggests that something strange is going on?

Mr. Davis

The right hon. Gentleman is correct. He may be aware that I took the Public Accounts Committee to Northern Ireland and that we met at Stormont to consider that very issue. Disability living allowance claims in Northern Ireland are higher than one could reasonably expect in the rest of the United Kingdom, and I am aware of the problem that he raises.

I now turn to a constitutional issue. The accountability for money spent rests finally with the Parliament that raises the taxes to finance that expenditure. It underpins the most basic of Parliament's functions. It is not a new argument. The provision of supply has been behind Parliament's functions for a long time. Indeed, that argument lay behind the "no taxation without representation" issue that led to the war with the American colonies, so it has some hundreds of years' provenance.

Nearly 40 per cent.—the exact figure is 39 per cent.—of Northern Ireland expenditure is met by the rest of the United Kingdom and not from local taxation. It is obvious that it demands severe United Kingdom scrutiny. At this point we run into what I shall call the Scottish dimension. I do not blame the Minister, as I understand entirely where it comes from.

The same argument was applied less dramatically in the Scotland Bill and the Government found themselves in a difficult political position. If they had allowed United Kingdom scrutiny of Scottish expenditure, they would have been outflanked by the Scottish National party for giving in to the English, or some such other slogan, so the Government had to invent a constitutional fiction. They raised a constitutional non sequitur to the level of an argument when they proposed that a Parliament or Assembly that was responsible for primary legislation should scrutinise its own expenditure and that no one else should do so. That is nonsense. Those who raise taxes are accountable for the expenditure. We can delegate power, but we cannot delegate accountability. We are held accountable by the people who elect us, from whom we raise taxes.

The ludicrous nature of the Government's position is shown by amendment No. 43, which states: The Treasury may require the Northern Ireland Ministers and departments to provide, within such period as the Treasury may specify, such information, in such form and prepared in such manner, as the Treasury may specify. In other words, the Executive, through the Treasury, want access to information that the House is being denied. They will not agree funding for Northern Ireland without the right to that information, but the House will be required to approve the funding without access to the information, which demonstrates the paradox of the Government's argument. Yet again, a large sum of taxpayers' money—£3 billion—is being spent outside the control and scrutiny of the House, which is completely against the traditions of the House.

Mr. William Ross (East Londonderry)

I have considerable sympathy with the new clause because I believe that the right hon. Member for Haltemprice and Howden (Mr. Davis) has put before the House serious issues that should concern us all. As he pointed out, the House is ultimately responsible not only for raising revenue, but for its expenditure and for protecting public finances and the public purse.

In my experience, the Northern Ireland audit is highly efficient. Every time I have approached the Comptroller and Auditor-General for Northern Ireland, he has been extremely helpful. If the Treasury can second-guess his figures, that information should also be available to the House. There are times when right hon. and hon. Members wish to raise matters of concern to our constituents and to Northern Ireland generally. I would not wish to be inhibited in raising those matters in future by a lack of information.

We all know it is often years before allegations of fraud are investigated and conclusions are reached. However, that is no excuse for giving up our control of the finances of any part of the United Kingdom and I am certainly happy to support what the right hon. Member for Haltemprice and Howden said.

Amendment No. 43, which the right hon. Gentleman read out, refers to the Treasury. I would have been much happier with it had it referred to the Comptroller and Auditor-General as that would have brought it within the ambit of this place. It is not acceptable to me or to my right hon. and hon. Friends that we should be excluded from access to such information.

I believe that the new clause sets the direction in which the Bill should go. I hope that the amendments tabled by the right hon. Member for Haltemprice and Howden will be given favourable consideration by the Government because of the right hon. Gentleman's long experience in these matters. It is not a light matter or even a party political matter; it is a House of Commons, Government matter and we are concerned about the expenditure of UK taxpayers' money for which we are ultimately responsible.

5.45 pm
Mr. Paul Murphy

Obviously, we raised this issue on Second Reading and the right hon. Member for Haltemprice and Howden (Mr. Davis) is right to raise it again. It is extremely important, not just to taxpayers but to democrats throughout the United Kingdom, that if we are to have a devolved system of Administration in Scotland, Wales and Northern Ireland, there should be proper scrutiny of public funds and public expenditure. No one disagrees with that principle.

We should all be aware that the Comptroller and Auditor-General for Northern Ireland has done, is doing, and I am sure will do an excellent job. I agree with the right hon. Gentleman that the independence of that office should be enshrined in statute and we should be able to reach an accommodation between us as to the wording necessary to achieve that. It would be very useful if the right hon. Gentleman and I were to get together with the appropriate officials during August or September to look at this so that the House of Lords can consider any amendments.

The right hon. Gentleman was kind enough to say that he would not press his amendments and I am grateful for that. I am also grateful to him for drawing to my and the House's attention the provisions of the Scotland Bill that place particular emphasis on the independent status of the auditor in Scotland, although we must remember that the Comptroller and Auditor-General for Northern Ireland has been in place for some time now.

I am not so convinced about systemic corruption in the Northern Ireland Administration—if that is the phrase the right hon. Gentleman used, I am not sure whether it is accurate. There have been examples of corruption in public bodies in England, Wales and Scotland. Of course all hon. Members would condemn that, but I do not think that there is a particular difference in respect of Northern Ireland and I hope that there will not be one in future.

Mr. David Davis

I thank the Minister for his constructive approach and I shall certainly not press the amendments. First, I am happy to take up the Minister's offer and talk to him in detail about guaranteeing the independence of the Comptroller and Auditor-General for Northern Ireland. Secondly, he should not take what I said about systemic corruption as a criticism of the vast majority of civil servants or politicians who work in Northern Ireland. However, the assault by paramilitary organisations in particular, as has happened in the past, will tend to corrupt. The Minister will be aware that such organisations have raised large sums of money. I would not like what I said to be taken as a criticism of civil servants and politicians, but rather as a concern about the conditions under which they will have to work in future.

Mr. Murphy

I understand the difference between the right hon. Gentleman's two points. He also raised the question of an Opposition/Government. In this place, the Chairman of the PAC is always a member of the Opposition; there is a great deal of sense in that. In Northern Ireland, the situation is not quite the same. Is there an Opposition? Is there a Government? Parties are entitled to membership of the Executive and to hold ministerial posts based on the strength of their election success and the number of seats that, consequently, they hold.

There is not as obvious a distinction as there is in our system in Westminster. Indeed, it could be said that parties around the table in the Executive would be politically very much opposed to each other. In some ways, that could be reflected in a Public Accounts Committee in the Assembly. We shall certainly be tabling an amendment in the other place that will lay on the Assembly a statutory requirement for a PAC, with all the necessary controls that such a Committee could exercise.

The problem that the Government have with new clause 1 and amendment No. 8 boils down to the question of devolution and accountability. An Assembly in Belfast is of course elected by the people, so the Government of Northern Ireland and their expenditure should be scrutinised by the legislature of Northern Ireland through its own PAC. That is the best way, and it will certainly occur in Scotland. When we meet to discuss these issues, we may find that, on some occasions—I can think of one—we will be able to lay the accounts of the Northern Ireland Assembly before the House of Commons. The accounts would, after all, be a public document. We would have to do so in such a way that Scotland, Northern Ireland and Wales were treated equally; so that in no way would devolution in Northern Ireland be weaker, different or less significant than it is in Scotland or in Wales.

Mr. William Ross

The hon. Gentleman is surely forgetting something. He drew attention to the laudable practice in the House of the Chairman of the PAC always being a member of the Opposition. In the concept proposed for Northern Ireland, there will not be an Opposition. The Minister must face that problem. He should pay careful attention to what the right hon. Member for Haltemprice and Howden is saying, because we are talking about where the ultimate responsibility lies; and he should know what is going on.

Mr. Murphy

I agree with the hon. Gentleman; what will happen in Northern Ireland will be fundamentally different from what will occur in Edinburgh where there will be a Government and an Opposition in the sense that he and I know. In the next few weeks and months, we must reflect on how best a PAC can operate in Belfast, who will chair it and what its rules and procedures will be.

Mr. Davis

The Minister drew comparisons with the bodies in Scotland and Wales, yet their treatment is very different. I for one do not see the peculiar circumstances of Northern Ireland as a precedent for either of them, just as Wales is not a precedent for Scotland or vice versa. It is much more important that we get the system in Northern Ireland right than to worry about an inappropriate consistency. If Northern Ireland is consistent with one of the examples that he picked, it would be inconsistent with the other.

Mr. Murphy

There is a big difference between Wales and Scotland because the Scottish Parliament is a legislative body—as will be the body in Belfast. The similarities between the situations in Northern Ireland and Scotland are greater than those between Northern Ireland and Wales. It is clearly important to have some comparability. I agree with the right hon. Gentleman that it does not have to be exact; it has to fit the circumstances—but in such a way that it in no sense demeans the Belfast Assembly. The Assembly must have its own controls and methods of scrutiny that are not in any way derived from the House of Commons. Our job is, obviously, to deal with the United Kingdom Government.

I take the point about subvention. If the people of England, Scotland and Wales have to give extra money to Northern Ireland, that is clearly a matter of interest to the House of Commons, just as it is when they have to give money to Scotland or Wales. The new clause and the amendments would not achieve what I think the right hon. Member for Haltemprice and Howden wants to achieve. Nor would they ensure that, on one hand, proper scrutiny, and on the other, the proper accountability of the Assembly and the Executive which is in everyone's interest.

To sum up, first, we can look very favourably on the idea of putting into legislation some sensible independence of the Comptroller and Auditor-General. Secondly, the right hon. Member for Haltemprice and Howden and I ought to meet in order to deal with some of the matters to which he referred. Thirdly, when the Bill goes to the other place, amendments will certainly be tabled, including one to establish a PAC for Northern Ireland. I hope that the right hon. Gentleman feels able to withdraw his new clause.

Mr. Davis

In view of the Minister's very constructive reply, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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