Public Accounts

HC Deb 14 January 1999 vol 323 cc458-69 1.29 pm

Mr. David Davis (Haltemprice and Howden)

I beg to move, That this House takes note of the 1st to 67th Reports of the Committee of Public Accounts of Session 1997–98, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 3880, 3893, 3894, 3936, 3955, 3973, 4004, 4015, 4021, 4041, 4055, 4060, 4069, 4075) with particular reference to the following Reports:

• Twenty-seventh, Measures to Combat Housing Benefit Fraud (HC 366);
• Thirty-second, Cataract Surgery in Scotland (HC 546);
• Thirty-fourth, Foreign and Commonwealth Office: Irregular Payments at the British Embassy in Amman, Jordan (HC 553);
• Forty-fourth, Northern Ireland Social Security Agency: The Administration of the Disability Allowance (HC 527);
• Forty-sixth, The Contract to Develop and Update the Replacement National Insurance Recording System (HC 472);
• Sixty-first, Getting Value for Money in Privatisations (HC 992);
• Sixty-seventh, HM Treasury: Resource Accounting and Resource-Based Supply (HC 731).

In the past year, the Public Accounts Committee has published 67 reports, more than in any equivalent period in our 137-year history. Those reports ranged from a review of the home energy efficiency scheme, designed to provide warmth to the most vulnerable in our society, to a study of the operation of the Department of Social Security, which spends some £96 billion of taxpayers' money each year.

The number and variety of reports that we have produced is a testament to the quality, dedication to duty, and breadth and experience of the staff of the National Audit Office who support us. However, it is also a testament to the commitment and perspicacity of the members of the Committee, who twice a week grapple with diverse topics that require stamina, forensic intelligence and tenacity in equal measure—qualities that my colleagues on the Committee undoubtedly possess. I take this opportunity to thank all of them for their dedicated hard work.

I also extend my special gratitude to the hon. Members for Corby (Mr. Hope) and for Shipley (Mr. Leslie), both of whom had to resign from the Committee after a year of sterling work, although I am glad to say that the reason for their resignations was the happy one that they both received well-deserved promotions. I also extend my thanks to the Clerk of the Committee, Mr. Ken Brown, and to his dedicated staff, who made a formidable job possible.

Finally, I want to extend my personal gratitude to the senior member of the Committee, the right hon. Member for Swansea, West (Mr. Williams), who made his sage advice freely available to me when I had to deal with a number of rather difficult problems.

We also welcomed two new members of the Committee, the hon. Members for Halton (Mr. Twigg) and for City of Durham (Mr. Steinberg), both of whom have shown already that they will be assets to the team. The newest formal member of the Committee is, of course, the new Financial Secretary to the Treasury, the hon. Member for Hornsey and Wood Green (Mrs. Roche), whom I am pleased to congratulate on her promotion. As well as her undoubted ability, she brings to the Committee a reputation for commitment to open government and transparency—matters that the Committee holds dear.

The Committee is steeped in the history of public service reform, the result of Gladstone's determination to raise the standards of the British civil service to unprecedented heights and to set the standards for services in the rest of the world. We have a long and learned history, but what makes the Public Accounts Committee important and relevant today—despite tumultuous change and a near-revolution in public service delivery—is its ability to grasp the nettle of change and to continue to make an impact.

That impact can be financial. Each year, the work of the NAO and the Public Accounts Committee generates substantial savings—some £365 million in 1997 alone. Those savings come from diverse areas, from controlling the cost of prison food and the redesign of benefit order books to cut fraud, to the proper of use of lottery money. The sums involved range from relatively small savings of, perhaps, £1 million to savings of tens of millions of pounds a year. To paraphrase the American billionaire Nelson Bunker Hunt, "A million here and a million there and pretty soon you're talking real money." Real money indeed: over three years, savings of £1 billion have been achieved, equivalent to £8 saved for every pound spent to run the NAO.

Saving taxpayers' cash is important, but we also have a qualitative impact. Last year alone, about 2,500 significant changes to systems in audited bodies were prompted by the Committee's work. The Committee has maintained its record over the past few years by ensuring that more than 90 per cent. of our recommendations have been accepted by the Government.

Mr. Andrew Rowe (Faversham and Mid-Kent)

I congratulate the Public Accounts Committee on a remarkable year's work. One of the features of the Committee is that, by and large, it examines expenditure incurred several years previously. In the case of the channel tunnel rail link, I am delighted that the Committee will look at expenditure that has yet to be finally incurred. Is that a possible precedent for the Committee's future activities? Will it be able to study likely costs before they are incurred?

Mr. Davis

I am not 100 per cent. sure of the reference that my hon. Friend makes, but the National Audit Office and the Public Accounts Committee have, historically, examined contractual arrangements that extend into the future. I shall refer to one such arrangement later: indeed, the problems of hindsight and of creating lessons for the future will form a major theme of my speech. I will press on as I have much to say and I do not want to take up too much time.

It is no accident that since Gladstone's reforms—indeed, only since those reforms—the British civil service has become a worldwide watchword for honesty and commitment to public service. That is a reputation that we treasure and it is one that our Committee seeks to defend by its actions. The Committee's effectiveness depends and rests on accountability. We have the most impact when we can hold those truly responsible to account for failures and weaknesses in policy implementation. The British tradition of accounting officers, who are responsible to Parliament for the work of their Departments, is a cornerstone of our constitution and it is one that must not crumble.

Recently, I have become concerned that some accounting officers are not taking their responsibilities to Parliament as seriously as they should. Perhaps a few examples will illustrate that. The first may sound trivial, but it is not. At the hearing on the millennium threat, I asked the accounting officer of the Office of Public Service—the man responsible for dealing with the millennium bug—whether he would be available to report back to the Committee in February 2000, which seemed a reasonable request at the time. It was not his fault, but he promptly responded that he would retire a few months before the date at which the bug took effect, just before the turn of the year 2000. Although it was not his fault, it is indicative of an attitude to accountability that the single civil servant who has a time-limited task will not be in place for it.

More sombrely, following the fraudulent loss of £333,000 from the British embassy in Amman, the accounting officer from the Foreign and Commonwealth Office told the Committee in February 1997 that he had made improvements to financial controls his top priority. He gave my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) the assurance that he was, "as sure as anybody" that no additional fraud had taken place. One year on, his successor was in front of the Committee, this time to explain a further £100,000 fraud at the same embassy. To be fair, that accounting officer appears to be taking the Committee's comments extremely seriously, as he should.

Accounting officers must also pay Parliament the courtesy of keeping the Committee informed of key developments on issues in which we have taken an interest. This Session, one of our more important reports was the 46th report on the private finance initiative contract for the new national insurance recording system. We were concerned about the delays in the delivery of the system. However, in a response to our report, which was issued in September, the Department did not inform us about the continuing and worsening problems with the system. Instead, it chose to reveal the true picture in a written answer in November, which explained that it was experiencing further problems affecting benefit claims for as many as 300,000 people, many of whom were pensioners. There was a major crisis in a system that had so recently been the subject of a critical report by the Committee. Clearly, that should have been brought to our attention. The Department's response was unsatisfactory and, no doubt, we will revisit that issue this Session.

Finally on accountability, our most recent report on the Ministry of Defence major projects statement demonstrates the tendency in some parts of Government to fail to act promptly on our recommendations. We sometimes feel that we are making the same points to a small number of Whitehall Departments year after year. In this debate last year, my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who is here today, highlighted that point when dealing with the long-running problems of the British Library. This year, in the report on the Ministry of Defence's major projects, we highlight the repeated findings of the PAC of weaknesses in the procurement of defence equipment. If we wanted to press the point, we could cite one case that predates the last Liberal Government—those with a strong sense of history will know that that was a long time ago indeed.

Mr. William Cash (Stone)

Will my right hon. Friend give way?

Mr. Davis

If the intervention is brief.

Mr. Cash

It is. Has my right hon. Friend noticed the letter in The Times today from Geoffrey Martin, head of the European Commission in the United Kingdom, which suggests that much of the fraud problem in the European Union is the responsibility of national Parliaments? Does he agree that there is a strong case—as I suggested during debates on the European Communities (Finance) Bill in 1995—for closer working relations between our Public Accounts Committee—which expresses a view based on real accountability, unlike other national Parliaments—and the Court of Auditors?

Mr. Davis

I will come to European fraud later. We take an interest in that through the publications of the European Court of Auditors and our reports on them. It will be easier if I deal with my hon. Friend's comments at length when I reach that point.

I have made my concerns about accountability in Whitehall known to the Cabinet Secretary, and it is clear that he understands them. The Committee successfully combines its clear role on accountability, casting a retrospective eye over events, with a forward-looking approach. We might be accused of exercising judgment solely with the benefit of hindsight, but our purpose is not simply to criticise poor performance, but to ensure that lessons are learned. By highlighting examples of good and bad practice, we have provided Departments with practical assistance. We have placed emphasis on assisting the development of new and innovative public management techniques such as performance measurement, resource accounting and the private finance initiative.

Our forward-looking approach is illustrated most strikingly by our 61st report, the thematic report on privatisation, which drew on some 35 reports spanning nearly 20 years and containing a wealth of experience gained from studying privatisation throughout the previous Administration. The lessons that we identified will be relevant to future privatisations. I was pleased to note the Government's positive response to it. I hope that the Treasury will ensure that the lessons that we set out are spread across Government. We expect soon to publish a similar report on the lessons arising from the early PFI projects and are considering the scope for compiling good practice guidance from our work on computer failures and on the higher and further education sectors.

The Committee aims to be constructive and to react positively to developments in government. We will give criticism where it is due, but we will do so to prompt change and ensure that mistakes do not recur. To do that well, the Committee requires comprehensive rights of access for the Comptroller and Auditor General and the National Audit Office. It requires new access rights to match developments in government.

That is the first of four themes that have run through the Committee's work in the past year. There has been considerable progress in that time. The Government wisely conceded the Public Accounts Committee's request for National Audit Office access to the grants in aid for royal transport and the royal palaces. The greater transparency will renew public confidence in the monarchy.

Access to the lottery operator was essential. I congratulate the Secretary of State for Culture, Media and Sport on his willingness to drive through the necessary change in lottery legislation. I am also pleased that the Comptroller and Auditor General has been appointed auditor of all the 17 executive bodies set up by this Government. However, more could be done.

I repeat my call for the CAG to be appointed auditor of all non-departmental bodies. The current arrangements are illogical and confused. Some bodies spend huge sums of public money but escape the rigour of the CAG's audit scrutiny. For example, the Legal Aid Board spends some £1.2 billion of public money each year. The decision to replace it with a legal services commission presented an opportunity to address the point but the current proposals do not. I am writing to the Minister to ask that this be reconsidered and the accountability arrangements for legal aid brought in line with those for other areas of public expenditure.

Mr. Geoffrey Clifton-Brown (Cotswold)

Does my right hon. Friend agree that it is not only illogical and confusing that the National Audit Office does not have access to non-departmental Government bodies but dangerous, because fraud could be taking place? There is a gap between the Audit Commission and the National Audit Office in which there is no rigorous auditing. The NAO should be given access to such bodies.

Mr. Davis

My hon. Friend is right. It is a question not only of fraud, but of waste. All parties have been concerned about the sheer cost of legal aid over the years. Information that would have returned to Parliament from value-for-money studies arising out of the Comptroller and Auditor General's access would have provided a valuable common foundation for the sorts of reforms for which all parties are on side.

Mr. Alan Williams (Swansea, West)

As I do not want to sneeze my way through a speech, I will not be able to make a speech today so may I emphasise to the Minister that the point that has just been raised by the Chairman is not only a personal point or a point made by only one side of the Committee, but a House of Commons point? The Committee feels that very strongly and we hope that the Minister will respond to the point.

Mr. Davis

I thank—I almost said my right hon. Friend, but 1 do not want to do him that much damage—the right hon. Gentleman for that important intervention. I am sorry that he is not able to speak today. His contribution to the Committee has been one of the most valuable and one on which I have rested throughout the year.

The point made by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) is illustrated even better by the example of the Housing Corporation and the housing associations. The Housing Corporation spends some f1.1 billion per annum, but the Comptroller and Auditor General and, therefore, Parliament has no right of access to the records of housing associations. There are 2,600 such bodies in the United Kingdom, and they receive £1.2 billion of public money. Their assets—the houses that they rent out—were largely provided by public finance. However, the Comptroller and Auditor General has to negotiate every time that he wants access to a housing association.

Our predecessor Committee in 1994 noted significant weaknesses in the Housing Corporation's control of housing associations. I regret to say—this relates to the point made by my hon. Friend the Member for Cotswold—that weaknesses of long standing in one association's procedures have come to light involving alleged corruption and fraud. I cannot say any more because the case may come to court. It is clearly time for Parliament to have a right to information from housing associations. The way to ensure that it does is for the Comptroller and Auditor General to have a right of access.

I also have concerns about the adequacy of the scrutiny arrangements in matters that arise from the constitutional changes as a result of devolution. In total, some £20 billion has been paid in grants to Scotland and Northern Ireland from taxes raised by this Parliament for which this Parliament is accountable to taxpayers. We should recognise that devolution will reduce Parliament's ability to call to account those responsible for spending taxpayers' money in Scotland and Northern Ireland. I am pleased that the Government accepted my call for independent audit arrangements in the Northern Irish and Scottish devolution Bills, but a very real accountability gap has been built into the new arrangements.

Three reports from the year illustrate my point. Our work on cataract surgery in Scotland, the privatisation of Belfast international airport and the administration of disability living allowance in Northern Ireland would not have been possible under the new arrangements. Those who disagree will argue rightly that the local PACs—which, incidentally were set up at our request by the Government—will deal with such issues, but in each case a large part of United Kingdom taxpayers' money and subvention will go to Northern Ireland and Scotland.

I reiterate the point made last year by my hon. Friend the Member for Bexhill and Battle and since echoed by my predecessor as Chairman of the PAC, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), that it is unacceptable that the Comptroller and Auditor General's rights of access are less extensive than the powers of the European Court of Auditors in respect of the final recipients of EU grants. Without such access, the Comptroller and Auditor General's ability to report to Parliament for EU spending in the United Kingdom is seriously impaired. On today of all days, we should take that issue seriously. I shall deal with the issue of the European Union later.

The next theme running through our work this year has been the need to combat fraud. Central Government spend more than £300 a week on behalf of every family in the country. It is our duty to those families that we ensure that their money is spent properly in their interests, and that we minimise the risk that taxpayers' hard-earned money is stolen, defrauded or misappropriated within government. Our interest ranges from the systematic defrauding of large social security budgets to the misappropriation of relatively small sums by individuals at overseas embassies that I mentioned earlier. The magnitude might differ, but the principle remains the same.

In our 27th report, the Committee considered the measures introduced by the Department of Social Security to combat housing benefit fraud. We found it totally unacceptable that housing benefit fraud exceeded £900 million a year—about 8 per cent. of the total spending on that benefit. Our report emphasised the need for the benefit system to strike a balance between the addressing of needs fairly, and simple and secure administration. We were concerned about the impact of the interaction between benefits in creating opportunities for fraud. The failure of the Department of Social Security and the benefits agencies to control properly claims for other benefits, such as income support and jobseeker's allowance, creates a gateway to fraud in housing benefit. The Committee stressed the need to design fraud out of the benefit system—that is very important for the Treasury in planning for future years.

I am pleased that the Government appear to be taking fraud seriously and welcome their commitment to examine the funding arrangements that best suit a robust counter-fraud strategy. It is too early for us to judge the effectiveness of that strategy; it clearly did not reduce the level of fraud, as was shown by the accounts published during the past few weeks. However, as the strategy bites, we hope to reconsider that matter.

In our report on the irregular payments at the British embassy in Amman that I mentioned earlier—and in the interests of time, I will shorten my remarks now—the Committee focused mainly on the importance of ensuring that financial control systems work and, most important, that the people who abuse them are punished appropriately. The report emphasised the need to regard sound financial management as an essential feature of any successful organisation, and that it should not be seen as a second order activity—a point made by my hon. Friend the Member for Bexhill and Battle in Committee. We were not satisfied with the disciplinary measures taken against those who should have prevented the fraud—a point made by another hon. Member—and negligence in fiduciary duties should be regarded as a very serious offence.

Finally, I turn to irregularity on a grand scale in the European Union—a matter on which I have already taken two interventions. Our 35th report pointed out the serious institutional difficulties that arise when proper controls are not in place. The Committee expressed serious concern that, for the third successive year at that point, the Court of Auditors could not provide a positive statement of assurance on the legality and regularity of European Community payments because of the large number of errors that had been identified. Those errors cost about £3.5 billion.

All that took place before the current debacle, which is coming, or will have come, to a head today in the vote in the European Parliament. I will not comment on the vote itself, but hon. Members might find it valuable if I give a brief history of the issue, which might help them to put the current arguments in context.

As long ago as 1990, there were allegations of fraud in the European Community's tourism unit. In 1995, there were allegations of irregularities in the Commission's management of assistance to Mediterranean countries. In March 1998, the European Parliament postponed its decision to discharge the Commission from responsibility for the 1996 budget, citing the urgent need to improve accountability in the fight against fraud. In July 1998, the European Court of Auditors published a highly critical report on the effectiveness of the Commission's task force for co-ordination of fraud prevention—the so-called UCLAF. At that time, I called for major improvements in the approach taken to tackling fraud within the Commission, as the extant arrangements clearly were not working.

In autumn 1998, there were allegations of irregularities and fraud in the European Community's humanitarian aid office and the European Parliament called for an independent European anti-fraud office to be established, similar to that which I had suggested in July 1998. Around that time, Jacques Santer accepted the need for such an office—but it also seemed to be accepted that it would take 18 months to two years to put in place. In December 1998, Parliament again postponed its discharge decision about the 1996 Budget, citing that the Commission had failed to satisfy it about improvements in combating fraud and corruption. We now know about the revelations of the European Union official that have caused the current crisis.

Irrespective of the outcome of the parliamentary vote, if the European Union does not come to grips with the fraud within its ranks, the citizens of the Union will lose faith and trust in the EU's ability to spend taxpayers' money. That would be a very damaging outcome. I believe that the simplest way for the European Union to get a grip on the fraud problem that it clearly faces is by instituting the anti-fraud office—which I called for last July—not in two years, but immediately. I know that it cannot be set up tomorrow, but it should be established within a few months—as near to immediately as possible.

The third theme running through our work this year was privatisation. There is not necessarily a consensus of view on the Committee about the policy of privatisation. I believe that it has proved extremely successful and that former public services have thrived under the privatisation policy. I note also that some £12 billion in assets are earmarked for release to the private sector under this Government. However, the Committee is interested not in privatisation policy, but in the effectiveness of its delivery, and that has been our focus this year.

Our 61st report brought together the cumulative lessons learnt from 35 studies of asset sales undertaken by the Committee and its predecessors. Over the past 20 years, more than 150 state-owned businesses have been privatised, raising some £90 billion for the taxpayer at current prices. The general lessons upon which we reported included the need for proper valuations to be conducted before the sale—that would seem to be fairly straightforward—the need for clawback arrangements to be included when a high degree of uncertainty surrounds the sale, and the advisability of selling shares in stages in order to deal with the ferocious difficulty of establishing fair market valuations before the capacity to thrive in the private sector has been demonstrated.

I could cite several such cases from this year, which I am sure that other hon. Members will also wish to highlight. Therefore, in the interests of brevity, I shall leave them to one side. However, as the case is important to Northern Ireland, I shall pick up consideration of the sale of Belfast international airport, which provided a stark example of some of the problems. In our report, we drew attention to the need to follow proper privatisation procedures and to achieve transparency in the conduct of a sale. That is vital if public and market confidence are to be maintained when public assets are being sold. We were concerned that the Department had not investigated more thoroughly why the successful bid from the management buy-out team had dropped by more than £6 million to within £900,000 of the next highest bid. That struck us as being a singularly suspicious outcome.

Our work has raised a major privatisation strategy issue regarding the need for the taxpayer to receive a fair price based not just on the performance of the industry in the public sector, but on the prospective performance of the industry in the private sector. The true value of a business cannot crystallise until it operates in the private sector. That consideration is not confined to the public sector. It has been noted on several occasions that, in the case of management buy-outs, spin-offs from major companies can enjoy phenomenal increases in profitability when management is allowed—and, indeed, motivated—to exercise its initiative in running the company.

Many major companies have underestimated the value that can accrue from privatised parts of their concerns. Therefore, I suppose that it is no surprise that Governments make the same mistake. Nevertheless, it highlights the need for an improved privatisation strategy. Clawback provisions in the case of a private sale and the need to sell shares in stages in order to achieve the best price once the true value of a company is known are simple but effective measures that provide an improved strategy.

In addition to seeking to secure economic and efficient public services, we spent a substantial proportion of our time investigating issues of effectiveness, which has been the fourth theme of the year. Effectiveness is the quality of service that taxpayers receive. Our work in that area has covered the timely and effective delivery of services, the regulation of service providers and management and control processes. Again, our interest is broad, ranging from large public services such as social security to small-scale spending on vital public services such as cataract surgery in Scotland. Where public services fail, we have sought improved delivery.

In considering the starkest example, the Child Support Agency, we picked up on the work of our predecessors, who had significant concerns about the operation of the system, in particular the level of inaccuracy in assessment. We reviewed progress and concluded that unless firm action was taken, the Child Support Agency would continue to bring unnecessary hardship and suffering to thousands. We urge the Department of Social Security and the agency to look long and hard at the complexity that is built into the system and at ways of clearing away the errors and irrecoverable debt of the past. It is unacceptable that the agency's current accuracy target of 85 per cent. means that one in six cases—almost 80,000 cases in 1997–98—are wrong if the agency hits its target.

Our report on cataract surgery in Scotland was different. We examined the performance of the national health service in Scotland in increasing the proportion of cataract operations carried out as day cases and ensuring equality of access to cataract surgery across Scotland. The National Audit Office report considered day care surgery in the round and found that its use increased the number of operations possible and reduced costs.

Although cataract surgery in Scotland requires a relatively small budget of £14 million, it is one of the most effective operations carried out in the national health service. It gives back sight to many elderly people and improves their quality of life. We were therefore dismayed by the slow progress in raising levels of day surgery for cataracts and by the wide variation in the level of day surgery across the trusts. It is shocking that many patients are effectively blind by the time they are referred for cataract surgery. The report is a good example of work that is based on one part of the United Kingdom but which has resonance throughout. I very much hope that the audit arrangements after devolution will explicitly allow for the sharing of good practice because that is a vital consideration.

My final theme, as my colleagues will be glad to hear, arises from changes that are afoot in the way in which Government policy is delivered to the public.

Mr. Charles Wardle (Bexhill and Battle)

One minute, Chairman.

Mr. Davis

The Minister sees the discipline that is exercised in our Committee being applied to the Chairman, for a change.

The Prime Minister announced only recently the development of public service agreements to focus on outcomes, examining the implementation of policy in the round. He rightly pointed out that the public care little about who delivers a service—whether it is delivered by local or national Government—and they do not care at all about interdepartmental wrangles that might occur. They care about the effective delivery of service. The Prime Minister calls that joined-up government. I prefer to call it performance-driven government, because that is what matters.

Performance measurement has the potential to be the great governmental reform of this era. It is not a party political issue. Several Governments around the world, most famously in New Zealand, have undertaken initiatives on performance measurement. It has been a major component of speeches made by the leader of the Liberal Democrats. It was started in this country some years ago by the previous Administration in the "Competing for Quality" White Paper and other initiatives. It will continue under this Government with the introduction of resource accounting, public service agreements and specific initiatives in health and education.

There is wide acceptance of the value of performance measurement, but there are dangers, too. Public performance measurement will be effective only if the information that it delivers is of iron-clad integrity and is seen as such by the public and the public sector managers whose successes and failures are judged by it. The temptation to bias performance measurement for party political interest will be enormous, but must be resisted if the reform is to achieve its potential. The introduction of resource 'accounting illustrates the point.

Resource accounting is the most important development in public accounting for almost a century and a half. It will introduce commercial-style accrual accounting for central Government Departments and, most important, it will include analysis of expenditures by aims and objectives, relating them to outputs where possible. It is due to take effect this year and will impact directly on the measurement of performance. Our 67th report on resource accounting and resource-based supply explored in some detail the implications of this.

In our view, if we are to have good, clear accounts for the public sector, we also need a similar system of good, clear performance information to go with it, but Departments must identify the right measures and targets for their performance—measures that will properly serve the needs of the Departments, the Treasury, Parliament and, of course, fundamentally, the public.

The political will seems to be there. There is scope for greater focus on performance in Government policy with more tangible accountabilities. Information technology has developed to provide a new, powerful tool for collecting and evaluating information which can be used to make these accountabilities real and catalyse significant improvements in performance. However, if we are to believe in this, we must ensure that the information we receive is seen and accepted by all as proper performance information, not political propaganda in any sense. This requires independent validation of performance measures. The proper way forward would be for the Comptroller and Auditor General and his staff at the National Audit Office to do this and to report to Parliament regularly.

The National Audit Office is developing an appropriate validation methodology for setting, compiling and presenting the output and performance analysis. The Public Accounts Committee should be looking forward to regular reports from the Comptroller and Auditor General on the validation of performance measures, but we are disappointed that the Treasury has not yet committed to independent validation. At present, validation will be left with the appropriate Minister, and I am afraid that the public will view that with the same scepticism that they might view a school report written in the child's own handwriting.

Parliament should have an input into the debate on performance measures that will be adopted and should have independent confirmation that the targets set are being achieved. The importance of this cannot be overstated. It will affect the service that constituents get for the money they pay. It will be the way of the future for holding the Government to account, and Parliament's rights and responsibilities should be clear from the outset. Done badly, it will corrode the citizen's faith in government; done well, it will materially improve government, and continue to do so far into the future.

Gladstone, the founder of our Committee, once said that it was the duty of government to make it difficult for people to do wrong, and easy for people to do right. Properly executed, properly audited performance measures will make it difficult for the Government to do wrong and easy for them to do right.

I urge the Minister to consider carefully and to accept that all Government performance measures should be subject to independent audit by the Comptroller and Auditor General of this Parliament. It is a crucial part of Parliament's duty to scrutinise the actions of the Executive and to hold the Executive to account. Accordingly, in measuring the delivery of public services to all our constituents, it should be Parliament, through its instrument—the National Audit Office—which should be the final arbiter of what is a true and fair measure.