Public Accounts

HC Deb 29 June 2004 vol 423 cc210-57

4 pm

Mr. Edward Leigh (Gainsborough) (Con)

I beg to move,

That this House takes note of the 1st to the 16th, and the 18th and 19th Reports of the Committee of Public Accounts of Session 2003–04, and of the Treasury Minutes and the Northern Ireland Department of Finance and Personnel Memorandum on these Reports, Cm 6130, 6136, 6155, 6175, 6191 and 6244.

It is a great pleasure to move a motion that stands in my name and those of the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Sheffield, Hallam (Mr. Allan), who is present. I welcome Members to what could be described as part two of the Public Accounts Committee debate. We thought that February's debate was successful, and decided there should be a sequel. We hoped that splitting the debate between two afternoons would make it more topical.

I think that PAC members will agree that the year continues to be successful for the Committee. Obviously, public sector efficiency is high on the political agenda. We have had reviews on accommodation from Sir Michael Lyons, and will shortly have one from Sir Peter Gershon on efficiency. Their efficiency agenda chimes with ours, and is always on our radar. On behalf of Parliament, we attempt to hold the Executive to account. We make recommendations for savings and improvements in public services, and we are ideally placed to report on whether the savings sought by Government have been realised.

I want to take this opportunity not just to go through all our reports, but to explore a couple of themes. Others may wish to draw on that. The main theme is delivery of efficient and effective public services, and making them relevant to the citizen. We believe that our work over the past three years has saved upwards of £1.5 billion. Every year, 90 per cent. of the Committee's recommendations are accepted by the Government, because we eschew any party political recommendations. We think that we do hold the Government to account, but we try to do so from a positive perspective. We try to congratulate the Government when they make a success of things, and when mistakes are made we hope that our warnings will help them to ensure that those mistakes are not repeated. We hope that the good practice we identify will be heralded and shared as widely as possible in Whitehall.

It has been a busy year for the Committee. So far we have published 26 reports, and we shall probably have published nearly 50 by the time the Session ends—far more than any other Select Committee. Our work covers almost every part of Government, from the major Whitehall Departments such as the Department of Health and the Ministry of Defence to much smaller agencies that do not normally appear on the political radar, such as the Forensic Science Service and the Veterans Agency. We could not do any of that work without the help of our able Committee staff, headed by Nick Wright, and the 800 staff of the National Audit Office, headed by the Comptroller and Auditor General, Sir John Bourn. We pay tribute to Sir John: we could not do our work at all without his help.

We also try to be topical. Earlier this year, we took evidence from those operating in Iraq. I shall not deal with Iraq in detail; we can return to it in our next debate when the Government have replied. Just over a week ago we had a hearing on visa entry into the United Kingdom, and tomorrow we shall consider the Home Office's work on processing asylum applications.

There have been some changes. Sadly, we have had to lose my hon. Friend the Member for Tatton (Mr. Osborne), who has become a Front-Bench spokesman. On this Committee at least, we have preserved the principle that spokesmen from the main Opposition parties should not sit on a Select Committee. I consider that an important principle. I know that it is often difficult for the Conservative party to provide people to serve on Select Committees, but I think it is important for the Public Accounts Committee—which is nonpolitical, and is the main vehicle for scrutiny of the Government in terms of economy and efficiency—not to include Opposition spokesmen. I hope that that principle will continue to be followed. Because we hold to that principle, however, we have acquired a couple of good new members from the Conservative party: my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) and my right hon. Friend the Member for Skipton and Ripon (Mr. Curry). I should say that we welcome back my right hon. Friend, because he served on the Committee before the start of his distinguished ministerial career.

At the heart of our work and hearings is our interrogation of senior Government officials. The PAC is a testing Committee, but we were rather amused to hear that one of our witnesses had paid up to £1,500 an hour to be coached on how to appear in front of it. I am pleased to say that the hon. Member for City of Durham (Mr. Steinberg), who is in his place today, immediately offered to provide on his retirement—something that we regret, because he is a very worthwhile member of our Committee—a far cheaper service to the witnesses who appear in front of us in future.

The Committee is testing, but I make no apology for that. It is extremely important that permanent secretaries, who often live in a rarefied atmosphere, should be held to account. It is also important that key contractors to the Government should be held to account for how they have used or misused public money. At the same time, we try to be fair, to give praise where it is due and to help the Government to highlight good practice.

We have also continued to visit the front line. For example, we had a successful visit to a drug treatment and testing order centre in Ealing in May. I hope that we can continue those visits.

It is easy to be complacent in these debates, but I hope that we are never complacent about our Committee. I was interested to read recently in Anthony Sampson's "Who runs this place: the anatomy of Britain in the 21st century," which is an update on his earlier work:

Debates in the Chamber have always been a distraction from the more continuous duty of MPs: to supervise the executive over which they theoretically have sovereignty, and to call it to account—as Gladstone had told them in 1869",

which was shortly after he founded this Committee. Mr. Sampson says:

The central instrument of parliament for enforcing accountability is the Public Accounts Committee

and I am pleased to say that he described it as

much the most prestigious of parliamentary committees".

However, that is where his praise for the system ends. So that we do not become complacent, I must say that Mr. Sampson says later:

The effectiveness of the auditor-general depends on the Public Accounts Committee, which suffers from the same weaknesses as other select committees, with their party-political agendas and their short horizons; in any case, the PAC is no match for the complexities and obfuscations of Whitehall.

I say that because I do not want this debate to be just a pat on the back, and I want to reply to that charge straight away. It is important not to get into the groove of party politics; we should avoid that. A book, by David Lipsey, "The Secret Treasury" makes the mild criticism of the PAC that we deal with events after they take place. However, I think that we have to do that, otherwise we would be involved in the party political process. Mr. Lipsey says that we should devote more resources to publicising our reports. We already get more press publicity than any other Select Committee, but we can and must do better. He also says that we can still look at modernising our procedures. We try to be modern and up to date, but it is important that we recognise what commentators are saying, that we are open-minded and that we constantly try to improve the way in which we do our business.

Select Committees need to respond to what emerged from Hutton. They need to be more vigorous. They need to be prepared to test the Government more, and to call for papers that have hitherto not been in the public domain. We will do all that with the help of the National Audit Office, and it is my hope—and the hope of the right hon. Member for Swansea, West—that other Select Committees will in time gradually increase the resources available to them so that they are similar to those that we have in the Public Accounts Committee. There are things that we could do better, but we take very seriously, and are very proud of, our record in holding the Executive to account.

Let me deal with my two themes, the first of which is service delivery and its relationship to efficiency. Everyone—from top officials to those at the coalface—needs to make the recent increases in Government spending count. Regardless of which side of the political divide members of the Committee come from, we do not take issue with the Government on whether or not these increases are right. That is not our business; rather, we are concerned with ensuring that these massive increases in public spending, particularly on health and education, actually count. They must be translated into a clear improvement in front-line services.

During this debate, we can look at many of the reports that address this issue, so let us consider one or two. We followed up a previous National Audit Office inquiry into the medical assessment of incapacity and disability benefits. We found that, as result of our recommendations being implemented, the average time taken to process medical examinations had fallen by seven weeks, so that is an example of a delivery gain actually being achieved. Recipients of incapacity and disability benefits now get a decision more quickly on the benefits that they need and to which they are properly entitled. I should add, however, that such improvement in service is entirely compatible with making efficiency gains. By reducing significantly the backlog of delays in making decisions about benefits, the Department has saved the taxpayer £29 million. The improvements, if sustained, will lead to future savings of some £21 million each year, so that, too, is a gain.

Improvements in public services are not just about what the customer gets at the end of the process, be it a benefit payment or a new passport; the actual experience of dealing with government is also important. Our 26th report, on difficult forms—it was published this morning—makes a number of recommendations that will hopefully help to reduce the burden of bureaucracy on the citizen. Forms need to be shorter and easier to complete, and people should not have to provide the same information to several Government Departments, let alone several times to the same Department. Forms might sound a boring subject and perhaps it is; but it would add enormously to the happiness of many people if forms were short, and easy to fill in and to understand.

So I emphasise again that better services and efficiency improvements can be two sides of the same coin. At the same time as improving the experience of the customer, Departments can reduce their own administrative costs and therefore do more for the public. For example, the Inland Revenue's introduction of the short tax return for some customers should result in more efficient processing. It is a shame, however, that the Revenue does not yet know the relative costs of processing the short form and the standard one. Perhaps bureaucracies have a rule whereby all forms, however long or short, take the same time to process—I do not know.

I am afraid to say that the claim by some public bodies to place the consumer at the heart of their work is somewhat exaggerated. As our report "Helping consumers benefit from competition in telecommunications" shows, customers are still not getting as good a deal as they could on their telephone bills. Twenty years after the telephone market was liberalised, British Telecom still has a staggering 70 per cent. of the market. Customers could save money by switching supplier or changing their tariff.

When we published the report, some apologists for BT had a go at the Committee, but I make no apology for standing up for the customer and the consumer in this instance—or, indeed, in all instances. The truth is that people find the telecommunications market confusing. We found that Oftel was remote from consumers. It did not do enough to help them to make properly informed choices, and it spent only a tiny fraction of its budget on publicity. Its successor, Ofcom, must now disseminate guidance on how to identify the best supplier, and do more to draw public attention to the savings available by switching supplier.

Two of our more recent reports looked specifically at agencies' efforts to improve their service delivery. Our fourth report was about the Forensic Science Service. The service's direct customers are the police, the Crown Prosecution Service and Customs and its work is increasingly important. Any delay in forensic analysis can mean suspects being bailed, charges being dropped and court cases being jeopardised, but the timeliness of the agency's performance is very disappointing. It has missed targets every year since the Committee last looked into the subject. DNA samples, for example, were waiting on the shelf for two weeks before being analysed, even though the analysis takes less than a day and a half. The agency must turn around its performance and maximise the use and efficiency of its laboratories.

Our 20th report looked at the Veterans Agency and was published shortly before the nation commemorated D-day. We found that, by and large, veterans were receiving the service to which they were entitled, but in some areas the agency can and should do a lot better. For example, we found that the targets placed on the agency were undemanding and we were particularly concerned that new claims for war disablement pensions took a staggering 131 days to complete—more than four months and well in excess of the agency's own target. Surely veterans who have suffered injury on behalf of their country deserve a better service than that.

I was particularly concerned about the treatment of Gurkhas. I received a letter from the Minister this week, emphasising that Gurkhas would be eligible to receive pensions under the war pensions scheme, so I believe that we have made some progress.

No Public Accounts Committee debate is complete without someone talking about information technology disasters. In the last debate, I noted that Libra, the national IT project for magistrates courts, was the latest in a long list of public IT disasters. Sadly, in our 14th report on the Inland Revenue's new tax credit system, we had yet another sorry tale to tell. The introduction of the new system was nothing short of disastrous for public service. Hundreds of thousands of claimants were not paid on time, which led to hardship among some of the most vulnerable people in society. Inconvenience was created for employers and employees, and other aspects of the Revenue's business were disrupted. The accounting officer, Sir Nicholas Montague, admitted that public confidence in the Revenue had been severely dented.

I believe that IT systems need to work effectively to serve the public properly, but we also need to ensure that we avoid wasted public spending. In fact, considerable sums could be saved. Under the old tax credit system, the Revenue was making overpayments that could total as much as a staggering £700 million a year. In that case, roll-out happened, even though people knew that the pilot studies were inadequate.

David Taylor (North-West Leicestershire) (Lab/Coop)

I congratulate the hon. Gentleman and various members of the Committee over the years on their IT reports, in which I have taken considerable interest. Is the hon. Gentleman surprised that, in the face of all the evidence of failing large-scale public sector IT projects, large Government Departments such as Environment, Food and Rural Affairs are still wedded to the idea that outsourcing is necessarily the best way to obtain IT facilities? Does he believe that Departments should draw more heavily on the recommendations of his reports and those of previous Committee Chairmen?

Mr. Leigh

I very much hope that they do draw heavily on our recommendations, of which there are many. Clearly, IT is one of the most difficult areas for the Government. To be fair to them, the systems that they have to deal with are far more complex and much larger than those in the private sector. We have to accept that. However, lessons are sometimes not learned, and the Government often try to bite off more than they can chew. Often, new Ministers arrive on the scene and load new policies and new burdens on to IT systems that simply cannot cope with them. Frankly, those lessons have to be learned and the Government have to be more conservative and more cautious in dealing with IT in the future.

Mr. Gerry Steinberg (City o Durham) (Lab)

Although it does not relate to the reports in the list, one big failure from many months ago that has still not been put right—it is about time that it was—concerns the Child Support Agency IT system. There are two separate systems operating—one for people who came into the system at an earlier stage and another for more recent entrants. Frankly, the lack of progress made there is quite outrageous. Different rates of maintenance apply to people in basically similar conditions and no progress at all seems to have been made. It is another failure of IT, and perhaps one day we could get round to doing something about it.

Mr. Leigh

I hope that we do. As the hon. Gentleman says, that is not the subject of any of the reports being discussed this afternoon, but the CSA's IT system is of enormous importance. It has been one of the greatest disasters in the public delivery of services over the past 15 years, and I hope that the National Audit Office will look into it again so that we can make further recommendations.

I shall digress for a moment to discuss the subject of fraud, a topic with which we are always concerned. In our third report, we examine the payment of EU support to sheep farmers in Northern Ireland. I should say that we are now the PAC for Northern Ireland as well, as Stormont, of course, is suspended. We found a catalogue of errors and control failures in the payment of some £24 million a year in subsidy that pointed to a particularly slack regime. I can also tell the House that that hearing was notably strong.

Key requirements of the scheme had been repeatedly ignored. The Department involved had consistently neglected the interests of taxpayers over a long period, and that had contributed to unacceptably high levels of fraud. For example, we found evidence of payments for sheep that were either figments of the fraudsters' imagination, or which had died some time earlier. There was evidence that some departmental staff were complicit in allowing farmers to claim more money than they were properly due.

The accounting officer has assured us that his department now operates a policy of "zero tolerance"—his words—in respect of fraud, and that attempts to cheat the system are being tackled much more vigorously. We look to progress.

Mr. Ian Davidson (Glasgow, Pollok) (Lab/Co-op)

Will the hon. Gentleman confirm that the fact that some of the sheep were dead when they were counted did not necessarily prevent them from voting in the recent European elections?

Mr. Leigh

Perhaps we should not delve too deeply into the intricacies of electoral politics in Northern Ireland. However, we are all finding our experience of being the PAC for Northern Ireland very illuminating.

I have spoken about service delivery, and I want to devote the second part of my remarks to a brief discussion of better project management and procurement, which is a key part of our work. To avoid the problems encountered with the introduction of the new tax credit, the Government must get their act together on project management. Improvements in that and in procurement—where we are starting to see some notable successes—could save the taxpayer millions of pounds, and would free resources for public services.

I believe that the Committee has a valuable role to play in encouraging improved project management across Government, and that we boast first-class credentials. In recent years, we have published more than 30 reports on private finance initiative deals alone. That is a controversial subject, about which people have strong views. I hope that our reports have got down to the nitty-gritty of PFI, and have shown whether its use in individual cases stands up.

David Taylor

I am grateful to the hon. Gentleman for giving way again. Earlier, he said that the PAC commented not on the ends of policies but on the means by which they were delivered, and the efficiency of that delivery. Does the hon. Gentleman consider the PFI to be a means to Government ends, or to be the end of Government? I am of the latter opinion, as the medium and long-term impact of PFI cannot be justified, either in terms of finance or in respect of the services with which it is associated.

Mr. Leigh

Recently, we held an interesting seminar with senior Treasury officials. The members of the Committee sought assurances from Government that every case of procurement would be looked at on its merits. There should not be an assumption that we must go down the PFI route for ideological or political reasons. Sometimes, traditional or conventional means of procurement can be better, and provide better value for money, than the PFI route. Equally, however, the Committee is not prepared to say that PFI is wrong for political or ideological reasons. We recognise that, in some cases, it has delivered schools and hospitals on budget and to time.

In general, we are prepared to look at every PFI project on its merits. I do not think that we can do anything else, but I know that the hon. Member for North-West Leicestershire (David Taylor) takes an interest in these matters and I assure him that we will continue to keep a beady eye on the subject. We shall not allow any Government to proceed down the PFI route merely because they feel that they must. For instance, we looked at the new GCHQ building, which was a PFI project. The new building was built under a PFI deal, while GCHQ retained responsibility for moving its technology into it, largely for security reasons of course. However, over two years GCHQ's cost estimates for that element rocketed from £41 million to £450 million.

A number of lessons can be learned from that report that are pertinent to other Departments. GCHQ failed to spot that the development of IT networking during the 1990s would hugely complicate the moving of its technology. It also continued for far too long to perceive the matter as a building project rather than a major change programme. The taxpayer lost £400 million as a result.

Mr. Brian Jenkins (Tamworth) (Lab)

I am sure that the hon. Gentleman will recall that in the case of GCHQ it was not the PFI project—the building itself—that was over cost and over time, but the moving of the equipment. Serious doubts remain in my mind about whether GCHQ took the opportunity to update the equipment on the back of the move.

Mr. Leigh

Well, GCHQ had to update its equipment. It is not giving away national secrets to say that it is obvious that there have been massive advances in information technology that have had a huge impact on the work of GCHQ. The sheer cost of installing the new computer systems in that superb new building was, unfortunately, underestimated. I hope that lessons have now been learned. Incidentally, our hearing on an acutely sensitive matter of national security was an object lesson in how Members of Parliament can concentrate on the lessons to be learned without compromising that security. I hope that we can make further progress on such matters in other areas, because the public spotlight should fall on GCHQ as much as on any other part of Government.

The new Home Office building in Marsham street should be an object lesson in the need for Departments to think carefully about their real requirements. Our 18th report found that the new Home Office building was planned on the basis that numbers of Home Office staff in London would fall. In fact, the numbers have increased and by the time the report was signed, the Home Office and Prison Service staff numbers were 1,500 in excess of the capacity of the new building. The Home Office is considering accommodation options. I hope that it will take seriously our recommendation that it should consider moving more staff out of London. It may be an inevitable rule of bureaucracy that a new building for a Department will never be large enough. In any case, the planning should have been better.

I pat the Government on the back for a positive example of procurement that they mostly got right. Our 10th report examined the success of the Office of Government Commerce negotiation of the memorandum of understanding with software companies. It sounds an obscure subject, but the Government saved £600 million of public money. The new arrangements have already saved the taxpayer £50 million, and it is important that the OGC keeps up that momentum. I pay tribute to Sir Peter Gershon, who has now left Government service, for his work and the considerable savings that he achieved of £1.6 billion in Government procurement. It just shows what can be done.

The Committee has produced many other reports that hon. Members can discuss. For instance, we had hearings on Warm Front, and we found that the targets were so weak that they could be met simply by installing a couple of light bulbs.

Mr. Jenkins

The Chairman will be aware that the report on the memorandum by the OGC said that 10 per cent. of Departments are still without an up-to-date IT list and were unaware of the memorandum. I know that that means that 90 per cent. were aware of it, but we are interested in the 10 per cent. and improving that figure.

Mr. Leigh

I am sure that Sir Peter Gershon's successor, John Oughton, will continue to make enormous savings. There is no point in excellent recommendations being made if they are not followed through, and perhaps the Minister will address that point when she winds up. Some Government Departments appear to be able to evade their responsibilities, but we look to progress.

I was briefly running through a list of other subjects where targets are weak. I mentioned Warm Front. The saga of the Wembley stadium is well known so I shall not go into details. Our report on hip replacements found that there was a dangerous tendency for too few operations to be performed by consultants. We also looked at the performance of secondary schools.

I mention those subjects to show the enormous breadth of our work. It is a great privilege for all members of the Committee to deal with it and to try to make sense of it and, with the help of the National Audit Office, to make sensible conclusions and recommendations.

I conclude on the same theme with which I closed my speech during our last debate—making increased investment in public services count. I make no apology for returning to that, as it is a central issue for the Government. In April, we held a hearing on the capacity of Departments to spend the £61 billion increase in resources. Not surprisingly, we focused on health, education and transport and discussed five key risks that need careful attention. Unnecessary complexity in bureaucracy must be removed from the delivery chain; delivery organisations must have enough capacity; resources must be targeted where they are really needed; risks to delivery must be identified and managed; and performance must be properly monitored and evaluated.

Unsurprisingly, the permanent secretaries—distinguished gentlemen in charge of health, education and transport—agreed with the Committee. Perhaps that is blindingly obvious. But again and again we came across instances where one or more of those key factors had been left out. That is when the public can suffer, so we must continue to make our voice heard.

We shall continue to scrutinise the efficiency with which Departments and other bodies spend our money, and the improvements, or failings, in the services that they provide us and our constituents. It is clear to members of the Committee that many lessons can be learned and we hope and believe that our reports will be high on the reading list of officials. In the Committee, we shall work together in a spirit of bipartisan consensus, not going for the lowest common denominator but producing hard-hitting reports that hold the Government to account in delivering better public services for all our citizens.

4.32 pm

Mr. Gerry Steinberg (City of Durham) (Lab)

As the Chairman of the PAC said, this is our second debate this Session and I reiterate everything I said in my last speech on the subject a few months ago, especially relating to the National Audit Office, the PAC staff and the Chairman himself. I thanked everybody and congratulated them on their performance. Members will have listened so carefully to my speech that they will of course be able to remember what I said and it will be clear in their minds, so there is no reason to repeat it. I shall not go into great detail, but repeat my thanks to everyone for their work since our last debate.

It shows how much I enjoy the work of the Committee that, this afternoon, I could have been at the centre court at Wimbledon—watching, not playing. However, I declined the invitation as I felt that it was important to participate in the debate.

The Chairman has gone through almost all the reports and has explained the role of the PAC, so I shall not repeat that. We consider about 50 reports a year and he gave an excellent picture of our work. I want to concentrate on two reports.

Each report that we consider has a bearing on our constituents' lives—some have more of a bearing than others. Very often, our constituency postbags include letters from constituents who, frankly, have been given a very bad deal by Departments. In particular, we often receive very harrowing letters about decisions that have been taken with regard to social security benefits and the consequent appeals, as the Chairman of the PAC mentioned in his excellent speech. Very often, that is linked to stories about how people have been treated in the medical assessment procedures according to which their incapacity and disability benefits are determined. So we recently investigated those issues and produced two reports called, "Getting it right, putting it right: Improved decision-making in appeals in social security benefits" and "Progress in improving the medical assessment of incapacity and disability benefits." Those reports were vital to many of my constituents and demonstrate that. frankly, if such things are not done fairly and correctly, a huge amount of misery can be caused to people's lives.

Millions of those benefit decisions are taken each year, and many are very complex. Most people accept the decisions that are made, but others appeal, as they have every right to do. In 1999, the appeals system changed owing to the concerns that were expressed in Parliament. In fact, since then, the number of appeals has reduced by 15 to 20 per cent. and waiting times for appeals has also reduced; but, unfortunately, we found no proof that the standard of decision making has improved. At least 20 per cent. of those decisions still contain serious errors, and 45 per cent of the decisions that relate to attendance allowance and disability living allowance are incorrect. That is not a very good story, particularly for the people about whom wrong decisions are made. Incidentally, 38 per cent. of income support decisions were incorrect in 2002—the last year that those cases were looked at. Decisions that relate to medically assessed benefits have the highest rate of overturn on appeal.

The 1999 reforms abolished the role of the chief adjudication officer and transferred responsibility for decision standards to the Department's agency chief executives. At the time, that was a very controversial decision. Under the new rules, the Secretary of State is now required to report to Parliament on performance in benefit decision making, yet the first two reports in 2001 and 2002 were both published about 15 months late and the exercise cost the taxpayer £62 million. So there is still room for much improvement.

Disability living allowance is a self-assessed benefit, but the decision maker can seek medical evidence from other sources, which may include a medical examination. The claim form is 47 pages long and is undoubtedly onerous to complete. Obviously, we found that it needs simplifying. Some 90,000 cases—one in 12—go to appeal, which is not surprising given the methods involved, and 50 per cent. of them are found in favour of the appellant. Since the 1999 reforms, the number of appeals has risen—obviously, more mistakes are being made.

The Department's officials do not see the client face to face when they make their initial decision and the decision letters sent out are often confusing and unhelpful. Again, that needs rectifying. There are very large variations—about an eight times difference between the best and the worst—in the time taken by Jobcentre Plus districts to prepare appeal submissions. Appellants may attend the hearings and meetings, and the evidence shows that people are more likely to receive a favourable outcome if they are present face to face. The figures show that 61 per cent. of people who turn up win their cases, while only 34 per cent. of those who do not turn up win. However, people are not told that it is better for them to attend the appeal meeting, so that problem should be put right.

Mrs. Angela Browning (Tiverton and Honiton) (Con)

The hon. Gentleman is right. Does he agree that we lack an advocacy service for people who attend appeals? Individuals often need people to attend such meetings with them and although the citizens advice bureau and other voluntary organisations can offer a degree of advocacy to assist with such cases, we simply do not have sufficient advocacy services throughout the country.

Mr. Steinberg

I agree with the hon. Lady. People have the right to take a third party to such meetings, but many people who make appeals are not told that. As she says, it is sometimes difficult for people to find individuals to accompany them. I have often been asked to represent people at appeals, but that is difficult if one does not know the case personally and must get time off to attend.

It is unacceptable for people to have to wait 90 days for a hearing given that they have probably waited about 10 weeks to reach that stage in the first place. As I said, people are not told that their appeal is more likely to be successful if they attend the hearing.

We found several examples of people not pursuing an appeal because the process was too distressing and demanding. I am greatly worried that often only people who are sufficiently articulate make successful cases, which means that the process has little to do with the validity of cases and more to do with an appellant's ability to construct and present an argument. I know of two cases in my constituency, and I am sure that many hon. Members are aware of similar examples, which showed me that people who were persistent and able to construct an articulate case were more likely to be awarded a benefit than those who are less articulate. On the face of it, such people might be more worthy of winning their cases, despite the fact that they are less orally gifted.

For example, I knew of a highly intelligent individual with an undoubted ability to present an argument who was successfully awarded incapacity benefit following an appeal. I am not suggesting that that decision was not right, but saying that the appeal was successful and that he was articulate. On the other hand, I met a cleaner in a community centre who was unable to move or lift tables and chairs after she had had a colostomy reversal, but whose appeal was turned down. Again, I am not making accusations, but it seemed peculiar that the person who was articulate made a successful appeal while the cleaner who was in tremendous difficulty did not.

I turn to the second part of the report regarding progress made on improving the medical assessment for incapacity and disability benefits. Those benefits cost the taxpayer about £18 billion a year, so we must get things right. Apart from that, however, people should get the benefits to which they are entitled. Part of the test for eligibility is a medical assessment, and although claimants' doctors provide some evidence, more than 1 million medical reports are produced each year by Schlumberger medical services, which holds the contract for medical appeals. The situation worries me greatly because it is clear that the quality of the service provided to claimants by the company's doctors varies greatly.

David Taylor

Like me, my hon. Friend might well have had contact with Schlumberger Sema regarding miners' compensation and its performance can be patchy. Will he comment on its recent performance when dealing with people with mental health problems? Such people find it especially difficult to get a fair deal and to obtain the right decisions at medical appeal tribunals. Is he happy that the company's doctors are appropriately trained to deal with such cases?

Mr. Steinberg

No. One of the complaints by citizens advice bureaux concerns the standard of doctors' assessment of people with mental illness, and it gave us some shocking examples in which such people were failed. Our report makes some recommendations, so I suggest that my hon. Friend read it.

Citizens advice bureaux, which are involved with the claims process, report that across the country personal capacity assessments are throwing up a large number of benefit withdrawals, despite fact, as detailed in the PAC's previous report, that the Department for Work and Pensions is establishing more rigorous targets for the quality of Schlumberger's medical reports. Although the proportion of reports rated substandard has halved from 6 per cent. to 3 per cent., that is still a huge number of mistakes affecting 30,000 cases. Schlumberger doctors underestimate miserably the severity of claimants' disability. Citizens advice bureaux have dealt with scores of such cases, most of which arise because examining medical practitioners employed by Schlumberger fail to provide a correct PCA score to decision makers in the Department for Work and Pensions. For example, a man in the east midlands with cervical spondylosis and heart disease who had received incapacity benefit for 10 years was exempted from the PCA on the ground of severe illness in 2000, but not in 2004, even though his condition had deteriorated. The examining medical practitioner awarded him only six points—15 is the threshold—even though the client disagreed with five of the zero scores, and his GP and consultant said that he must not work.

In the west midlands, a man with severe heart disease was told by his GP that he should not work, but the examining medical practitioner thought otherwise and decided that he had failed the PCA. He did not start work again, but he had a heart attack five months later and needed a coronary artery bypass, suggesting that his GP was right and the Schlumberger doctor wrong. A man in the north-west with severe arthritis in all his joints who had received incapacity benefit for 10 years was not awarded any points at his medical examination, which lasted 10 minutes.

Such cases must be looked at so that tests are done properly in future. One questions whether the EMPs are merely going through the motions in an assessment or are genuinely concerned about the people whom they assess. It is a great concern that the withdrawal of incapacity benefit, which may have been someone's only income for many years, may result from a short, sloppy examination by a Schlumberger doctor. We were told that 22 doctors have been sacked and 40 have been told to improve, which is a poor record. The report shows that it is not just Schlumberger doctors who need to improve—many GPs are reluctant to complete medical reports for their patients because it may harm the patient-doctor relationship. I find that a weak excuse. Perhaps they do not like filling in forms or having their normal procedures disturbed. I have regularly found that to be the case with some GPs.

When an individual fails the personal capability assessment, incapacity benefit stops immediately and there are knock-on effects: income support stops because the person is expected to claim jobseeker's allowance, having been declared fit to work. Housing benefit and other benefits may stop. The individual can do one of two things—appeal and claim jobseeker's allowance, or claim 80 per cent. of income support until the appeal is resolved and reapply for housing benefit and the other benefits. That can all be traumatic. People's income could drop to as little as £44 a week. For those under 25, it could drop to less than £35 a week. That causes stress and could endanger health, so benefits should be stopped only on sound evidence, not on the basis of sloppy findings by a doctor who may just want to get the case out of the way.

We found that there were administration problems with the Schlumberger doctors. When that happens, the stress and the inconvenience caused to disabled people can be worse than one imagines. In many cases the effect is made more serious by benefits being stopped as a result of an unjustified decision. I shall give examples. The client of a London citizens advice bureau informed Schlumberger that he would be unable to attend a PCA examination and his invalidity benefit was stopped. The problem was compounded because although the Department for Work and Pensions agreed that the invalidity benefit should be reinstated, the computer system went wrong and he never received it. Such administrative errors are not at all helpful.

A citizens advice bureau in East Anglia reported that a young man with severe learning difficulties and behavioural problems missed two appointments for his assessment, the first time because he was ill, and the second time because his mother was too ill to take him and he needed to be accompanied. Each time his mother had informed the medical centre of the reason and was told that it was okay. What happened? His invalidity benefit and income support were stopped and he had to apply for a crisis loan for food. That is not good enough. The administration must be better than that.

Most medical examinations relating to disability living allowance and attendance allowance are carried out at clients' homes by doctors who are not employees of Schlumberger, but have jobs elsewhere as GPs. They often try to fit their medicals outside their working hours, which can result in phone calls to clients inappropriately late at night or early in the morning, and requests that can appear to be demands to carry out medicals at weekends or in the evenings. For example, an 80-year-old asthmatic man received a phone call at 7 pm on a Saturday to say that the doctor would call at 8 am the following day—Sunday—to examine him in his own home. He found it difficult to be up and dressed by 8 am, he was distressed when he was asked to go up and down the stairs several times, but he was afraid to tell the doctor that the time proposed was inconvenient. That is no way to do business, is it?

Also in the south-east, a mentally ill woman was telephoned at 7.20 am by a Schlumberger doctor who wanted to conduct a medical the same evening. The client was naturally confused and distressed by the call. That cannot be fair on the patient, who made an appeal. As far as I am concerned, such GPs are moonlighting. The conduct is not appropriate and needs rectifying.

Notwithstanding all the problems, improvements have been made, but the Government still have a long way to go. I am confident that the two reports that we produced on these matters will lead to further improvements and will consequently give a better deal to people who, unfortunately, have to apply for benefits.

4.54 pm

Mr. Richard Allan (Sheffield, Hallam) (LD)

Unlike the hon. Member for City of Durham (Mr. Steinberg), I have not refused Wimbledon tickets, but I like to think that I, like him, would choose Westminster over Wimbledon this afternoon.

This is the second occasion on which I have participated in the debate on Public Accounts Committee reports. I became a member of the Committee last autumn and am still enjoying the experience, although it can be challenging. I found it particularly tough to get my head around resource accounting, my momentary understanding of which disappears as soon as I leave Committee Room 15 or 16, where the Committee meets. I pay tribute to staff from the Committee, the National Audit Office and the Treasury, who try hard to help us understand concepts such as private finance initiatives and resource accounting.

I joined the Committee because I am interested in information technology. Sadly, I have not been disappointed, because IT failures are a recurrent theme in our deliberations. Rather than discussing IT failures, however, I want to remark on two forward-looking technology reports and the Government's responses to them. The 10th report "Purchasing and managing software licences" and the 11th report "Helping consumers benefit from competition in telecommunications" examine how we can improve things rather than what went wrong in the past. The 10th report is important for the Government, and the 11th report is important for consumers.

The 10th report seeks to secure better value from Government investment, which, as our Chairman rightly mentioned, is a key theme in Committee. In the software arena, better value could be obtained in three ways. First, prices from existing suppliers could be driven down through mechanisms such as the memorandum referred to in the report. Secondly, new ways to license software—specifically those offered by open-source software—could be explored. The third option, which is not a feature of the report but is important, is software asset management, which involves knowing what software one has and whether it is being used correctly.

Those three options interrelate to a significant degree. I have no doubt that the pricing of commodity software, which is covered by the memorandum, has been affected by the growing success of open-source software, which offers a genuine route to competition. Until recently, no significant competitor offered desktop software, but competition is increasing and is affecting prices directly. Multi-million pound savings have already been credited to the memorandum, and the credit for that should go to thousands of friendly hackers, who have produced open-source software alternatives that provide real competition for some of the established players.

Credit is especially due to Richard Stallman, who is the philosopher of the free software movement and the author of the general public licence, which is also known as the copyleft licence rather than the copyright licence, and which has been critical in developing competition. The participation of thousands of people around the globe in such work has resulted in significant savings to the public purse.

The alternative licensing model for free software is described as "free as in speech, rather than free as in beer", which is American shorthand to describe a completely different approach to software production. The Government response refers to their open-source software strategy, which will be updated in the autumn, and I hope that the public sector takes an increased interest in that software development model as a result of that review.

Mr. Jenkins

When I asked a question about that matter in 2002, the Minister said that a level playing field for open-source software had been achieved, but the pilot survey has still not been completed.

Mr. Allan

The hon. Gentleman is entirely correct. I am lobbied weekly by people who are keen to promote greater use of that form of software in the public sector but find that there are still barriers to it. There are also questions about the nature of the pilots, which tend to involve large companies instead of the smaller companies engaged in this field. We need to keep our eye on this very technical area.

The changes have borne fruit in the shape of £50 million in savings. If we trace that back to where it came from, we can see that it results from competition starting to emerge in a market that was previously locked down and uncompetitive. We should do everything we can to encourage that trend. Relevant to that are some important technical decisions concerning intellectual property legislation in relation to patent law and copyright law at the European Union level. Many in the sector fear that established players will use legal methods to shut out competitors and to stifle competition before it arrives by making it dependent on expensive licensing legislation. I hope that the Government will follow through the report by saying, "We are making these savings, and we could make more if we took an enlightened approach to intellectual property legislation that encouraged, rather than discouraged, a competitive market." There is plenty of action on that front, especially at EU level.

All these methods of getting more software more cheaply are useful, but I hope that they will be complemented by effective software asset management systems to ensure that we are not buying too much software. There is a fear that the mechanism could be counterproductive. If it is cheap for an organisation with 5,000 employees to buy a mass of 5,000 licences, it may be encouraged to do so, but if only 3,500 of those employees have a use for that software, the remaining 1,500 licences, although bought more cheaply, represent money down the drain. The most simple waste of all, which occurs on a weekly basis in the public sector as it does elsewhere, is to pay good money to upgrade a software product that has not even been deployed for use. I hope that we will be able to balance our pleasure at being able to buy more software more cheaply against maintaining a rigorous approach towards ensuring that we buy only what we need in the public sector.

The other report that I want to consider is the 11th report on telecommunications. My hon. Friend the Member for Newbury (Mr. Rendel), who served on the Public Accounts Committee in relation to that report, made a suggestion that I promised to pass on. He believes that fixed line telephone providers could help consumers to work through the mass of call bundles that are on offer—that was one of the themes that came out of the report—by ensuring that once their call patterns have been established they are offered the most appropriate call plan. Instead of the consumer having to figure out which call plan is right, often getting it wrong and being frustrated to be told that they could have got it cheaper if only they had ticked box A instead of box B, we should encourage the telecoms companies to take some of that responsibility. That is what happened in the highly competitive mobile sphere when mobile operators responded to competition by giving commitments always to go for the lowest-priced bundle for any particular user. I hope that that idea will be considered.

So far, the verdict of Ofcom, the critical player, is that companies are doing a reasonable job, but much of the report is directed towards trying to give it a steer as to how the Committee think that the competitive market can be developed. The art is to try to maintain a balance in the debate, which is taking place against a background of commercial companies fighting desperately for business. As the largest incumbent provider, BT—naturally for a business—is trying to fight off new entrants into the market. Given that most of our constituents are still BT customers, the quickest benefit for most of them usually comes from improvements to its packages for consumers. When BT announces changes to the "Together" packages or line rental, it frequently does so with a fanfare about how good they are to consumers. It is true that in the short term—today, tomorrow and next month—BT improvements are often the best way to get cheaper telecoms out to the largest number of people. However, that may make life difficult for competitors such as carrier pre-select operators, so the long-term effect is to act against competition. We need to try to strike a balance. We should not be too churlish about the goodies that are offered today, but at the same time we should not allow them to discourage us from seeking a longer-term competitive market. Ofcom has to try to hold the ring in all this.

We will know where Ofcom is going when we see the outcome of the telecoms review later in the year. We have encouraged people to go out and sell alternative telecoms packages more forcefully, but I agree with BT when it says that rogue operators often take that too far and sign up people without their consent. Events in the gas and electricity markets are already being echoed in the telecoms market. I am sure that constituents have approached hon. Members who are present to say that their suppliers have been switched but that they did not believe that they had consented to that. We must be firm and emphasise that we do not want to encourage inappropriate sale techniques and that we expect Ofcom to tackle that.

However, I am also in sympathy with alternative operators who say that it is extremely hard to describe the market as a level playing field when one operator can change at a stroke the rules of the game for everybody and introduce, for example, line rental charge changes. That alters the business model for carrier pre-select operators in a way that requires more long-term consultation and consideration. Such changes should not be thrown into the market, thus allowing people simply to sink or swim.

As always with Public Accounts Committee debates, there is plenty more to say. I shall confine myself to a final point about the tax credit system, which, again, could be the subject of a huge debate. However, I want to highlight one aspect. The technical problem with the implementation of the tax credit system is that the testing time scale was shortened so that all the tests that should have been undertaken were not carried out. When we questioned witnesses, we were told that there was an information tree. The supplier, Electronic Data Systems, told officials in the Inland Revenue that it would have to shorten the time scale for testing. It said that it thought that that would all right but that some inherent risk was entailed. It claimed that there would be no difficulty at any stage in warning people all the way up to the top—ministerial level—that problems might occur. That is an unsatisfactory method of decision making.

The solution—if one exists—to avoiding the tax credit problem would have been to take a serious political decision to delay the implementation of the system on the basis of insufficient testing. That may have been a better alternative to the method that was chosen: to go ahead without the testing. I was not satisfied that sufficient political courage existed to make such decisions.

The Child Support Agency system has already been mentioned. Again, all sorts of delays and problems have occurred with it and it is perceived that politicians declare that they will set up a system on a specific date and, when technical problems arise, there is insufficient willingness to admit that, although they want to deliver it, they cannot because of those problems. We therefore go ahead and end up with a cocked-up, discredited system. We all have constituents whose attitude to tax credits, and consequently the operation of the Inland Revenue, is negative.

I raised a tax credit query on behalf of a constituent last week. The fax from the office that deals with such queries from Members of Parliament had a space for printing a header. It stated "War room", which is perhaps not entirely suitable to be passed on to a constituent, but sums up the feeling of Inland Revenue staff that they are engaged in some sort of conflict, fending off hordes of angry Members of Parliament, who are dealing with distraught constituents. Unresolved issues about the decision-making process remain and I am sure that that applies to other matters.

The reports are useful. My time on the Public Accounts Committee has been most well spent and I commend the reports to the House.

5.8 pm

Mr. Alan Williams (Swansea, West) (Lab)

I apologise to you, Madam Deputy Speaker, and to the Chairman of the Public Accounts Committee for being slightly late. As the Chairman knows, I had a meeting with the Comptroller and Auditor General preparatory to next week's Public Accounts Commission meeting to consider the corporate plan.

It is not generally realised that the National Audit Office is monitored as it monitors others. When we consider the list of reports on the Order Paper, I am not sure how many people realise that, on average, those value-for-money reports cost £180,000 each. The collective year's output probably costs approximately £9 million. That accounts for only a small part of the NAO's public work in auditing all the Departments. It has been argued for many years that it saves the taxpayer money because it makes eightfold savings on every public pound that it spends.

That argument had become rather axiomatic, however, and we had not challenged it. A year ago, therefore, the Commission decided to ask for an audit of the National Audit Office. Haines Watts carried it out for us, and the report arrived on my desk the other day. It confirmed what the NAO has always claimed—this was after consultation with Departments that had been studied by the NAO—which was that it did indeed save eight times its annual cost. I can think of no other organisation that can make such a claim. In fact, its efficiency is improving. Up to 1998, it saved only seven times its annual cost, so it has now improved on what was even then a remarkably good performance. The Commission now intends to ensure that we monitor annually the rate of return from the work of the NAO.

Hon. Members can see the number of reports that we have produced already this year. In the past, we have produced only 50 reports a year, so, with £650 million worth of public expenditure and income, we can only ever look at a minuscule proportion of the total. It seemed to me that, with such a good rate of return from the NAO, it would be a good investment to have more reports. For this year, therefore, my Commission has authorised an extra 10 reports. This has an advantage for the Committee, in that we do not always want to monitor those who have gone wrong; sometimes we want to monitor those who have done well and pat heads when they deserve to be patted. The extra reports will allow the Committee to have some choice over which 50 reports it will hold hearings on in the current year.

I do not pretend that we have any concept of what the optimum output of the NAO would be. With the rates of return that I have mentioned, we must ask whether even further investment might be practicable. That, however, places a further problem before the Public Accounts Committee. The more we expand the output of reports from the NAO, the more difficult it would become for us to monitor all of them and, some time in the next year or two, we might have to consider the way in which the Committee works. We have already had brief discussions about that.

Like all members of the Committee, I sometimes get very annoyed when I meet obstruction from the Departments that are being examined, and I have been particularly annoyed this year, as have other members of the Committee, about one issue. We were promised a report on the royal finances from the NAO, and a draft was put to the Committee. Its members were not satisfied that it was comprehensive, so we submitted extra questions. I myself submitted two pages, containing 20 to 30 supplementary questions. That was months ago, yet we still have not had answers to those questions from the Palace.

As some hon. Members will know, I have shown a modest interest in Palace finances over the past 12 to 15 years, so foot-dragging is not exactly unknown to me. I am amazed, however, that the Palace is treating the Public Accounts Committee with such contempt, and I hope that it will quickly make the information available to the NAO, to enable it to prepare its report. There are areas that we never look at; we are not allowed to, although we should be. The royal collection, for example, which is probably the largest single collection in the country in terms of value, is so organised—no doubt by coincidence—that the National Audit Office cannot examine it. It is organised as a charitable trust, and the NAO cannot examine charities, and its commercial wing is the Royal Collection Trust, and we have had trouble, up until Sharman, getting powers for the NAO to examine companies. It is an enormous collection, of which there is no catalogue—we were promised one 10 years ago by Sir Michael Peat, and it still does not exist. Only yesterday, I received an answer from the Financial Secretary confirming that at least she is satisfied that there is an inventory of the collection. If there is an inventory, it is a short step to producing a catalogue and making that available to the public as so many museums do. In the next couple of months, I hope that we will have the information that we require from the palace.

It is no secret that I am probably devolution's most consistent enemy in the House of Commons. I must confess, however, that I have found one merit in it. The breaking down of the auditing function between the constituent countries has increased the access of auditors to the working of Departments. Therefore, as my colleagues know, I hope that the next stage for us will be to start working co-operatively as auditing and monitoring bodies, and to produce comparative reports where appropriate. Health is an obvious example. I asked Sir John, and I think that there will be a report in the next month or two, to carry out a comparative study of hospital waiting lists in relation to hip and cataract operations. If different systems are in operation, we might as well ensure that we not only look for what is wrong but for what is best, and that we analyse the different systems, the way in which they work, and the products that they provide to the consumer. Where one part of the country has a good idea, that can be used by other parts, and where one part of the country is dragging its feet, as Wales is currently doing on health, that can be exposed.

I have nothing more to say other than to thank my colleagues. I am a PAC addict—I have been on it so long that I cannot leave it. It is so good to see new members coming on to the Committee, despite its work being difficult, numerate and time-consuming. Each report is about 70 pages, as we all know, and there is all the supplementary briefing, so when doing two of those a week, Members are probably putting in more work than on any other Committee. I congratulate my younger, newer colleagues—everyone is younger nowadays—on the enthusiasm and thoroughness with which they carried out this year's work.

5.19 pm

Mr. Richard Bacon (South Norfolk) (Con)

It is a great pleasure to follow the right hon. Member for Swansea, West (Mr. Williams)—a doughty member of the Committee from whom I have learned a great deal in my three years on it. He mentioned the royal family, and the evidence shows that the Committee's scrutiny of the royal family has been very useful. I remember the report on royal travel by air and rail, which had the wonderful performance indicator, "cost per royal mile". Costs fell from £17 million to £5 million, and the amount of travel stayed the same by rail and doubled, I seem to remember, by air.

As ever, I pay tribute to the National Audit Office and to the team led by Sir John Bourn, and also to our Committee staff, led by Nick Wright and the Committee assistants Leslie Young, Ronnie Jefferson and Chris Randall, for all their hard work in keeping the Committee running so smoothly.

I want to concentrate on an issue that of enduring interest to the Committee—the planning, procurement and management of Government information technology projects. I was interested to hear what the hon. Member for Sheffield, Hallam (Mr. Allan) said earlier. I shall not duplicate any of his remarks, but he made some valuable points about IT, although I think we approach the topic from different angles.

It is a commonplace that mankind learns from its mistakes. We can think of many areas of human activity, from the building of bridges to the manufacture of aircraft, in which the consequences of failure led to improvements. The philosopher Karl Popper once said that all human knowledge was, in one way or another, the result of human beings' learning from their mistakes, and that is broadly true. The great and obvious exception to that principle is the planning, procurement and management of Government information technology projects. The Government appear to be condemned, or perhaps have condemned themselves, to repeat the mistakes of the past in an endless cycle.

I was looking forward to a reply from the Economic Secretary to the Treasury—not because I am not pleased to see the Financial Secretary, for it is always a great pleasure to see her but because during our February debate I suggested that the Economic Secretary that should start to publish the gateways reviews of the Office of Government Commerce. He said he would reflect on that suggestion, and I was looking forward to hearing the results of his reflection this afternoon, but I feel confident that the Economic Secretary has briefed the Financial Secretary on the result of his reflections on the benefits of publishing gateway reviews. I shall be interested to hear her conclusions—or his conclusions, on the basis of that briefing.

Just in case the Financial Secretary has not devoted as much time to the subject as I might have hoped, let me offer her one or two hints.

There are still far too many projects and programmes reviewed by Gateway teams where, frankly, project planning is little better than something on the back of a cigarette packet.

Those are not my words; I found them on the OGC website. They are, in fact, the words of Sir Peter Gershon, the former OGC chief executive, uttered when he spoke at the project and programme management, or PPM, awards ceremony on 23 October last year.

I firmly believe that if we are to improve things we need more scrutiny, more openness and more accountability in the system. Last week's issue of Computer Weekly—always a good read for those who want to know what IT disasters are in the pipeline—set out what was described as the life cycle of a public sector IT failure. It goes something like this.

First, there is the project design. The design accords with the best-practice project principles, but there is an expansion of the objectives and the costs as interested parties give their views on what the new systems could do. In the second stage, an invitation to tender is issued. Civil servants faithfully reproduce the often unreasonable and, in some cases, simply ignorant demands of Ministers that the project be delivered at superhuman speed, when to anyone who knows anything about the subject the timetable looks completely unrealistic. However, the commitment to the time scales and to the project design is too great for heed to be paid to warnings from prospective end users, from trade unions, or indeed from any of the reputable prospective suppliers who are considering bidding for the project that the timetable is too tight or the scope unrealistically ambitious.

The third stage is when contracts are awarded. After that, fuller consultation with potential end users begins, but it is usually inadequate or self-selective. In the fourth stage, the supplier begins to realise that it has overestimated its ability to understand the customer's business, and to convert that into IT systems, and the customer realises that it has overestimated the capability of the supplier. More often than not, the supplier also realises that it has not asked enough questions before signing the contract, and that the customer has not understood its own business sufficiently well to explain its work practices, the complexities of the project, the risks of failure and the real costs to the supplier.

Now we reach the fifth stage, and the timetable begins to lengthen. The projected costs start to increase, but commitment to the project is now far too great for any indecision or U-turn to be allowed, so the Department ploughs on.

The project starts to founder in the sixth stage, which is characterised by the beginnings of the cover up. In this stage, failure is depicted as success, and Members of Parliament do not get well-rounded answers to questions. In the seventh stage, the failure becomes apparent anyway. It is impossible to hide it because the public or the departmental end users are affected by the fact that the contract is being abandoned, changed, rewritten or even reawarded to another supplier. In the eighth stage, often years later, there are sometimes reports from the National Audit Office and the Public Accounts Committee. In the penultimate stage of the cycle, the Department says that it has learned the mistakes from the past, and those who give the assurances that lessons have been learned move on to other jobs, often in different Departments. Finally, those people are replaced by new personnel who embark on other projects that repeat the mistakes of the past, and the cycle begins anew.

That summary is all too realistic. Over the years, the PAC has examined scores of projects that exhibit those characteristics. The Inland Revenue tax credit system, which has already been referred to, was a classic example of a supplier being pushed into adopting a wholly unrealistic timetable and of a system being launched even though the contractors knew that it did not work properly. It became impossible to hide that failure when hundreds of thousands of citizens started to complain to their Members of Parliament that they were suddenly not receiving payments that hitherto, under the old working families tax credit, they had been receiving quite smoothly. Another classic example was the passport office fiasco, where after the expenditure of many millions of pounds on a new computer system, people suddenly could not get their passports on time—something that one tends to notice if one is just about to go on holiday, no matter what smooth reassurances one gets from a Minister or computer contractor.

Sometimes the failure is not quite so obvious to the pubic at large, but it usually comes out in the end. In Operation Telic, the UK's military operation in Iraq, when containers arrived with equipment for our armed forces in Kuwait and platoons of soldiers started to break into the containers to see what was in them and to obtain the kit that they needed—breaking in was the only way to find out what was in them—it became clear that the Ministry of Defence did not have proper asset-tracking or consignment-tracking software. It could not track its equipment as it was delivered around the world and into theatres of operation for our armed forces. Notoriously, that meant that there was not enough body armour available for our soldiers in the right places in the recent Iraq war. Let no one say that that was a cost issue: the body armour cost £169.70 per set and the MOD spent a mere £2.9 million on body armour for the recent conflict. The issue was one not of cost but of basic logistics.

In our hearing on Operation Telic, the MOD mentioned, almost en passant, that it had spent £120 million on a bespoke tracking system before it was scrapped four years ago—incidentally, 41 times more than it spent on the body armour for the recent deployment. There was the usual story about how the money had not been wasted because it was being rolled into the next project, but the fact is that 13 years after the lack of decent consignment-tracking software was first identified in 1991, after the first Gulf war, that problem has still not been fixed, even though there are all kinds of commercially available off-the-shelf systems that tell users all that they need to know about exactly where their supplies are. For example, the American firm Caterpillar can deliver a spare part for one of its customers anywhere on the planet in 48 hours. We are familiar with firms such as Federal Express and DHL, which can routinely tell customers exactly where in the system their deliveries are at any one moment in time.

With Government IT projects, it is endemic that there are problems that do not get solved and mistakes from which lessons are not learned—it is the same story wherever one looks. There is a fundamental inability to learn from mistakes. Apart from the cases that I have already mentioned, we had the infamous Wessex regional authority case, and the London ambulance system case in which the suppliers warned about potential problems and were ignored. We had the mess over Inland Revenue self-assessment and the mess over the Central Veterinary Laboratory database for tracking BSE. In the case of the national insurance recording system, the contract extension was double the price of the original contract, and with the caseworking system for the immigration and nationality directorate the supplier was paid for not writing software.

In the Libra project for magistrates courts in England and Wales, which has already been briefly mentioned, costs quadrupled. The old Lord Chancellor's Department, before it was scrapped, paid some £232 million merely for 11,000 PCs, the printers and the "associated support"—whatever that means. I know that it does not include software, because that was clearly set out in the NAO report. That works out at about £20,000 per PC, or £10,000 even if we include the replacements, when it would have been perfectly possible to go down to PC World and buy the required kit for a few hundred pounds per desk.

There was the implementation of the national probation service's information systems strategy, which had seven project managers in seven years, five of whom knew nothing about project management. The result was a system so poor that no one wanted to use it. There was the recent Criminal Records Bureau fiasco, whereby the prices quoted by potential suppliers to do the same job varied so wildly—from £250 million to £380 million—that the CRB got in another consultant to assess the relative merits of the bids, and to see where the discrepancy had arisen from. It still managed to end up paying significantly more than the highest bid.

We have already heard about the moving of the GCHQ computer, the cost of which, according to the management's own assessment, was £40 million. However, they told the board that the cost would be £20 million—do not ask me why because I do not know—and, of course, the actual cost was £400 million. Despite the fact that the National Air Traffic Services system at Swanwick cost £337 million and supposedly offers a superior service and an immediate 40 per cent. increase in capacity, it plainly is not up to the job, as became painfully clear when all the nation's aircraft ground to a halt the other day because of problems with the West Drayton system—a system that the new Swanwick system was supposed to replace.

Very topically, Sir Michael Bichard says in paragraph 35 of his recent inquiry that

although national Information Technology (IT) systems for recording intelligence were part of the original National Strategy for Police Information Systems (NSPIS) as long ago as 1994, no such system exists even now. It was, in fact, formally abandoned in 2000 at the same time as the launch of the National Police Intelligence Model (NIM), which sought to place intelligence at the heart of policing. There are still no firm plans for a national IT system in England and Wales, although, in contrast, such a system will be fully operational in Scotland by the end of this year.

Mr. Allan

Does the hon. Gentleman share my fear that, in looking at all the IT failures, we might develop a very risk-averse culture whereby public authorities that do need new IT systems—the police are the classic example—do not invest in them because they are scared of what will happen down the line? That, too, would be very retrograde.

Mr. Bacon

I agree that that would be retrograde. I do not think for one moment that anyone can say that the public sector is risk-averse when it comes to IT projects. The public sector takes huge risks in respect of such projects, and in the main it does not know the size of the risks that it is running.

I want to mention two more examples. The first is the joint probation service and Prison Service offender assessment system—OAS—which is still in the pipeline. The report on that system, on which we were supposed to have taken evidence, was due in July but was postponed until 15 September. We learned as of yesterday that it has been postponed still further. Secondly, there is the national programme for IT in the health service. Key aspects of what are multi-billion pound contracts—the initial assessment was £2.3 billion, but the latest Financial Times report suggests a figure closer to £6 billion—had to be reviewed within mere months of their being signed.

The project has seen Professor Peter Hutton, the chief clinical adviser, resign as chairman of the clinical advisory board, and until extremely recently the views of GPs had been largely ignored. Indeed, in respect of many of the other projects that we have considered, the advice of the National Audit Office concerning the need to consult early was also totally ignored. The NHS has contracted to buy far more systems in phase 1 than there is demand from hospital trusts, and in phase 2 the contractors will almost certainly be unable to meet the likely demand. Finally, GP magazine described the programme as

more likely to be a fiasco than the Dome".

Mr. Jenkins

I listen with interest, as always, to the hon. Gentleman. Ho provides a list—too long a list—of near-disasters, but such contracts have been taken out with some of the best private sector companies in this country. Can he suggest a solution? Where are we to look if not to the best private sector companies in the country?

Mr. Bacon

I thank the hon. Gentleman for his extremely timely intervention, because at the top of my next page it says, "What can be done?" He is right: we are talking about some of the finest and biggest computer contractors in the world. The Financial Secretary must therefore consider the possibility that something systemic is going on. It simply is not the case that everyone wants to get things wrong or to have as many disasters as possible. Something deeper is going on, and two areas deserve immediate attention, including from the Financial Secretary. To do so would not cost any money—she should be interested in that—and there would be an immediate benefit and a significant chance of improving the situation.

The first, which I briefly mentioned in our last debate on the subject, is the publication of gateway reviews. With a record as appalling as the one that I have just cited—the hon. Member for Tamworth (Mr. Jenkins) is right that the list of mistakes is far too long—the burden is not on me to show why the Government should publish gateway reviews, but on the Government and the Financial Secretary to say why they should not publish them. What possible justification could there be for not publishing them?

Departments often bleat about commercial confidentiality as a reason for not publishing reviews. They say that they have an agreement with a supplier and that the commercial interests of that supplier would be threatened by greater openness, but that is not necessarily what suppliers themselves say when given the chance. It was interesting to see that in the public evidence given to the Work and Pensions Committee in its ongoing inquiry into IT systems, the supplier stated that it did not have any problems with the publication of gateway reviews. On the contrary, the supplier said that it would welcome them. At the moment, it is not necessarily the case that suppliers are even aware that a gateway review is being undertaken. Amazingly, it is not a given that they know that a gateway review is happening.

Mr. Allan

On that point, does the hon. Gentleman agree that it would be helpful to see the early gateway reviews—those on feasibility and all the technical issues that do not necessarily involve suppliers—when we are debating legislation? For example, when we debate the draft identity cards Bill in this place, it would be helpful to have the early gateway reviews before us, to help us think about the feasibility of implementation.

Mr. Bacon

I entirely agree with the hon. Gentleman. While we are on the subject of ID cards, I read in Computer Weekly just recently that senior figures in the industry—including, I am delighted to say, the Government's new chief information officer—have poured scorn on the feasibility of the ID card scheme. Before the Financial Secretary goes off with her Treasury colleagues and spends thousands of millions of pounds on an ID card system, she should listen to the people in the industry who are saying that the Government's business case for ID cards is vapid. A great deal of money could be saved and spent on something that people want their taxpayers' money to be spent on. I utterly agree that the answer is to have more transparency at as early a stage as possible.

It would be worth comparing the position that I have described with some of the well managed projects. It was noticeable that some common themes for successful projects emerged at the recent corporate IT forum—Tif—awards presentation for excellence in IT projects. I quote:

The successful short-listed projects all had exceptionally close links between the business leader and the project team. The 'business customer/IT supplier' approach was all but absent, and the judges saw development of integrated teams, based around common goals, with each individual or group contributing something of value to the project. There was genuine collaboration, with the programmes adding something significant to the business.

Yet far too often with Government projects, far from having such close collaboration on the project that the business customer/IT supplier approach was all but absent, the suppliers do not even know that a gateway review is under way.

It is not the case that suppliers are wary of such openness. It is Departments and their officials who are so wary. They are far more protective of the so-called need for commercial confidentiality, because it helps protect them from future criticism.

Mr. Jenkins

I want to be clear about this in my own mind. The hon. Gentleman is intimating that the difficulty lies not with the suppliers, but with the customers, and that the customers do not want the transaction to be transparent because it may be difficult to specify the exact requirements of the project from the outset. That may result from a lack of technical ability or understanding of how the system will work. Is the hon. Gentleman saying that we do not have the necessary expertise to undertake the projects in the light of the rigour of transparency to follow?

Mr. Bacon

I think that the hon. Gentleman makes a good point. The lack of procurement skill in government is quite widespread. However, I would not want to pretend for one minute that some suppliers do not also get things horribly wrong. In the case of the Libra project, for example, it was not only the Department that was responsible for the scandal, it was also the supplier—ICL/Fujitsu. To return to my earlier point, in successful projects there is close collaboration between the supplier and the Government, such that it works like a seamless collaborative integrated team.

The hon. Member for Tamworth brings me to my next point. The Chairman mentioned Mr. John Oughton, the new chief executive of the Office of Government Commerce. Ten years ago, he was in charge of the Cabinet Office efficiency unit. He led a scrutiny study that led to the publication in August 1994 of a report called "The Government's Use of External Consultants". The frontispiece of the report carried a quotation directly relevant to what the hon. Gentleman said. It stated:

It is difficult to do good consultancy for a bad client, and it is difficult to do bad consultancy for a good client.

That is true, but suppliers and Government need to be in an informed loop where they can learn from each other. Too often, suppliers are not trusted in the adult way that makes close collaboration and success more likely. Part of the answer is to publish gateway reviews, so that everyone can see where they stand—or, in some cases, simply what is going on.

My second suggestion is more wide ranging, and it draws on experience in the US. When that country was faced with similar problems, Congress passed the Clinger-Cohen Act 1996, which provides a statutory framework of accountability. The US Government recognised that the lack of accountability, particularly in IT projects, and a culture of secrecy and cover-up had contributed to major failures in IT projects. The Clinger-Cohen Act, in essence, requires Departments to report contemporaneously to Congress on the progress, or otherwise, of projects, and to disclose any deviations from standing orders.

If we had a similar system here, following a gateway review that revealed a red light on a project, it would— as a matter of course and at an early stage—become public knowledge that the Department concerned was facing a red light. In particular, it would automatically become public knowledge if a Department went through a red light.

Last week, the Committee published a report on Customs and Excise and its use of electronic delivery to transform its services to customers. The report refers to the fact that Customs faces an OGC gateway review, as many Departments do. It also notes that Customs should have had a sensitivity analysis, but that it plainly did not. It says that there should be proper management of consultants, and that there should be an overall, senior responsible owner.

It is extraordinary that, even now, we must tell Departments that they should have proper management of consultants and that they should have overall senior responsible owners for their projects. However, we still do not know for certain whether a red light was flagged up by the gateway review process that Customs and Excise then went through. That is how it appears, but we do not know for certain, because the OGC's gateway reviews are not routinely published. I think that they should be.

Legislation that provides a clear framework for accountability would be an important step in forcing the searchlight into some of the darker corners of IT projects, where the natural tendency is to cover up mistakes. There is an important contrast with what happens in the private sector. People often say that mistakes are made in the private sector too, and they are right: there are many such mistakes, but there is an important difference.

I spoke at a conference for IT suppliers a few months ago. The Committee's Chairman gets many invitations and is very kind in refusing them and palming them off to other members of the Committee. It is a matter of duty, I suppose. Before the conference, I was talking to a supplier who worked in both the public and private sectors. I asked her what was the main difference between the two sectors, and she said there were two differences—speed and commitment.

In the private sector, greater speed applies to decisions, and to the rapidity with which the plug is pulled if it becomes clear that circumstances have changed, that the market has moved or that the project has been rendered irrelevant by other changes. The supplier said that commitment is what top management in the private sector devotes to a project. That commitment is far too often lacking in Government projects.

I repeat my two proposals for the Financial Secretary's consideration—that gateway reviews should be published as a matter of course, and that a statutory framework for openness and accountability should be introduced, building on the lessons of the Clinger-Cohen Act.

The Financial Secretary may say no to my proposals, and she may assert that they are not necessary. However, given the public sector's catastrophic record in procuring IT projects under Governments of all political complexions, the Treasury has to do more. It must say whose side it is on. Is it on the side of taxpayers and citizens, who expect good value and service for the taxes that they pay, or not?

Unless the Treasury is prepared to change, the IT disasters will continue to happen—not because anyone wants them to, but largely because there are no real obstacles in the path of failure.

5.44 pm

Jon Cruddas (Dagenham) (Lab)

It is a pleasure to follow the hon. Member for South Norfolk (Mr. Bacon) and I shall cover some of the points that he raised later in my remarks. I have a few general comments about the work of the Committee before making some specific remarks about public expenditure. Like other members of the Committee, I wish to place on record my appreciation of the work of the people who service it. Nick Wright and his staff do a tremendous job, especially for newer members of the Committee. I joined just before the hon. Member for Sheffield, Hallam (Mr. Allan), who joined in late autumn last year. In those early months, the staff walked me through the methodology of the Committee and an impenetrable series of reports, and I bear witness to the work that they do on behalf of all of us.

I also wish to praise the work of the National Audit Office. It is commonly understood that every £1 spent by the NAO saves the taxpayer some £8, as my right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out. The NAO also provides a key check on Government activity by its own existence. That is demonstrated by the seriousness with which accounting officers take preparing to appear before the Committee as witnesses. That itself is a check on the activities of Government.

The volume of work carried out by the Committee was mentioned earlier. It covers a staggering amount of territory across all Departments. It covers the general and the specific, the macro and the micro elements of public expenditure. As such, it proves the uniqueness of its contributions. No other Committee can provide the rigour of analysis that the PAC does in terms of the conclusions it draws about Government activity.

The civil service comes out well from the deliberations of the PAC. Time and again, I am impressed by the commitment to public service that we witness in our deliberations. I also respect the tradition whereby civil servants take responsibility for the actions of those who preceded them and who, more often than not, took the decisions that we are investigating. To me, that remains an honourable tradition, and it is displayed week in and week out. I have one slight caveat, however, and that is the recent incident when reports on the public-private partnership on the tube were issued very late for our hearing last Wednesday. That was regrettable, because the impression was given that someone was holding off signing off the report to put more pressure on the NAO as it came up against the Committee's deadlines. It would be a concern if such pressure were to blur the edges of any NAO conclusions, although I have no specific evidence that that has been done.

Overall, I find being a member of the Committee and its work deeply rewarding, although it is difficult at times to assimilate the data and research projects that await us in our folders every week before the Committee meets. I find the politics of the Committee fascinating. It operates in a non-partisan way, which is especially impressive when we consider that it covers the key political battleground between the two main political parties—the efficiency of the Government in using our constituents' tax revenues. No votes are taken in the Committee: its conclusions remain unanimous. Indeed, if an outsider considered the workings of the Committee, it would be difficult for them to ascertain the political loyalties of a specific questioner in any given debate. That reflects well on the Committee and strengthens the conclusions it reaches.

None of that is to say that Committee members cannot draw their own conclusions for use outside the Committee. For example, given the speech today by the hon. Member for South Norfolk, I eagerly await his next article in The Daily Telegraph to reinforce his argument in an earlier article that

if we stopped the haemorrhage of cash from our public sector we would have to worry less about extra taxes and borrowing".

In terms of waste, the hon. Gentleman is correct to list examples that the Committee has considered and that are contained in the reports before us. For example, there is the £7 billion to £10 billion in unpaid VAT lost to Customs and Excise. Several hon. Members have mentioned the £400 million spent on the new GCHQ building, when the management were informed that it would cost some £20 million. The sorry tale of equipment at the Child Support Agency has been touched on. Last week, we heard about the extraordinary amount of money spent on establishing the public-private partnership for the London underground and we shall look at that again. A general leakage of public money to consultants, financiers and middlemen is evident in the PFI projects we consider. There is the sorry tale of the refinancing of British Energy and the costs of specific items of kit in the Ministry of Defence—the list could go on and on.

The issue is not waste alone, however; it is waste alongside reform. At times, there is a danger that we may look at the work of the Committee in a slightly unbalanced fashion, considering only the failings in Government strategy, expenditure and management of resources. That is only one side of the equation. Analysis of waste must be considered alongside the evidence we receive of changes in the expenditure strategies deployed by the state. That is all the more important when we have a Government who believe in the role of the state and who are investing a further £61 billion of taxpayers' money in public services.

The NAO report, "Managing Resources to Deliver Better Public Services" provides balance when considering the reports put before the Committee. The NAO suggests a greater focus on delivery and an attempt to grapple with short-termism, through annual cash accounting with money handed back at the end of the year. It suggests a new emphasis on performance outcomes and that, among other things, we should consider whether the move to accruals-based accounting would better inform state expenditure. It considers the relative effectiveness of three-year comprehensive spending review periods, the flexibility to carry forward budgets and so forth. It will be interesting to see how those changes improve the relative efficiency of the state in managing and spending our resources. As the NAO stated:

new flexibilities and changes in the way resources can be managed, if used effectively, should make an important contribution to improving public services".

Against a changing background, where the Government are trying systematically to rebuild the public services of our country, the work of the Committee is centre stage and is even more important in terms of the general political debates that arise from its deliberations.

The Committee considers the most important domestic political issues and the key political battleground for western market economies—how public resources are utilised and the efficiency of the public sector.

Mr. Howard Flight (Arundel and South Downs) (Con)

I wholly agree with what the hon. Gentleman is saying. Is it not sad that more Members did not turn up for this debate which is at the centre of the issues of our times?

Jon Cruddas

I take the hon. Gentleman's point, but before I became a member of the Committee I did not realise how penetrating its proceedings were and the fact that they form the cornerstone of all political discourse in terms of the core issues of tax expenditure, perceptions about the role of the state—which divide political parties—the role of intervention versus markets, devolution, centralisation, central planning versus more devolved decision-making and the like. All those issues will be centre stage over the next 12 months, if there is an election, and they all have a route back to the core terrain over which the PAC presides every week. That makes our work more rewarding, but also more complex, given the amount of information on which we have to deliberate.

The conclusions of the Government efficiency review—part of the overall spending review about which we shall hear soon—will be of interest in the process of debating waste and reform. We know that the general shape of that work is to release more money down to the front line. We hear a lot of talk about that, as we do about reducing bureaucracy. In general, we know which changes are being considered: a focus on procurement, given Sir Peter Gershon's work at the OGC; a look at emptying back-office functions, given technological change; better use of IT in the delivery of services; examination of the devolved agencies—for example, their regulation regimes; and a look at bureaucracy in the public services.

I presume that those factors will inform a lot of the Committee's work in future. Indeed, they will inform a lot of the political battleground right up to the next election, which we touched on earlier. It will be interesting to see how the Committee's work can remain separate from heightened political debate and controversy about investment and reform in the public services and the role of the state itself, as we move into a heightened election gearing.

I want to make a simple final point about how the Committee's work and general political debate about the respective economic efficiency of state activity interrelates with what may be described as spatial economic development. One aspect that has tended to be underplayed in the debate about investment and reform in the public sector and the Government's strategy is whether it is cross-referenced with the dynamic spatial economic change in our country. At times, our sittings imply a static model of resource allocation on the basis of a certain population distribution.

I shall give an example that has been the subject of questioning during some recent sittings. It is estimated that London will grow by some 700,000 people in the next 10 to 15 years. For example, my borough's population is 155,000—the smallest in London—but it will grow by an estimated 50,000 in the next 10 to 15 years. It sits at the geographical centre of the so-called Thames gateway—a key growth area in the Government's sustainable communities agenda. I simply flag that up to make a number of simple points.

The Committee considers the complex issues of resource allocation and expenditure. We find that those issues become even more complex when analysed alongside current and projected population movements. For example, the Department of Health accepts, as did Sir Nigel Crisp during one of our recent sittings, that the budget allocations for the primary care trusts in my borough are underfunded by about £24 million. That figure was calculated before taking account of the major changes in population that are anticipated for the next 10 years. The comprehensive spending review will presumably consider both that structural underfunding and future budgeting, given the growth in that illustrative borough.

Let us take another example. The Government are setting up new delivery vehicles for economic regeneration. Last week, we processed the order to establish an east London urban development corporation to work alongside the London Development Agency and a host of other regional and sub-regional economic partnerships to spend public money. At times, it looks as though a jungle of structures and responsibilities operates within a positive sum game of financial investment by the state. How all that works through to public service delivery on the ground will be the real test of Government strategy in my constituency during the next 10 years.

We as a Committee are starting to study some of those interrelationships, but they will provide a rich seam of work in the next few years. I do not underestimate the difficulties for the state in its various manifestations, given the relative efficiency of its activities. Everything else being equal, cutting waste and boosting efficiency is a tough job, but when the population is radically changing, an even more complex task is at hand. To cut short my comments, I very much enjoy the work of the Committee. It provides a unique service to this country's taxpayers, but I do not underestimate the difficulties that lie ahead in monitoring the activities of the state in its various manifestations.

5.58 pm

Mr. Brian Jenkins (Tamworth) (Lab)

It is always a pleasure to follow my hon. Friend the Member for Dagenham (Jon Cruddas). I always find PAC debates fascinating; they are some of the best that take place in the Chamber. In fact, I congratulate every hon. Member who has spoken in the debate, particularly the Chairman of our Committee. Although from the Opposition, he has always been a very good Chairman in his manner, attitude and diligence, and I know that he will maintain that stance. He has brought credit to our Committee. I also thank the staff of our Committee, without whom we would not be able to work, and, of course, I thank the NAO.

As I am speaking towards the end of the debate, I do not want to repeat arguments made by other hon. Members—four pages of my speech on computers and software have gone for a start. I decided to take a new tack, so as I sat redrafting my words, it struck me that we are not opposed to innovation. We support and welcome innovation and risk taking in Departments, because if things do not work, at least they tried. We must overcome risk avoidance and complacency in Departments. Are Departments complacent and do they still know best? Ninety per cent. of the work done by Departments goes well, but they have no discipline in the marketplace. We, the members of the Public Accounts Committee, must search to achieve improved efficiency for the taxpayer and to help each Minister to achieve departmental delivery. National Audit Office reports are often enlightening, even for departmental heads, as we found when producing our reports.

What of complacency? Is Sir Humphrey alive and well in Whitehall? I have picked two reports at random, so we can determine whether our recommendations were accepted. First, I shall address the report "PFI: the new headquarters for the Home Office". I am glad that the Financial Secretary is in the Chamber because I know that she will make notes on what I say and take them back to the relevant people. The Committee's first conclusion said:

Under-forecasting of staff numbers leads to bad decisions on accommodation … departments have assumed much lower staff numbers than they have subsequently employed. The buildings have … not been large enough to hold everyone. Yet such projects are often justified … by the advantages of bringing everyone under one roof. The Home Office assumed that staff numbers would reduce … Instead, numbers increased dramatically between 1998 and 2003 … Similar stories arose at … the Ministry of Defence, and the former Department of Social Security.

Was that recommendation accepted? The Home Office said:

The Home Office notes the Committee's conclusion. While good forecasting of staff numbers is important … there are bound to be uncertainties in any forecasts for long timescales.

I think that the period between 1998 and 2003 fits in with a five-year plan well. If the Home Office cannot administer the numbers over five years, we are in trouble.

The next part of the Home Office's response is very illuminating because it says:

The current plan is to use 2 Marsham Street to accommodate those staff … expected to remain in central London".

However, it says that it intends to relocate

the National Offender Management Service away from London … That will be achievable if funds are available to meet the cost of relocating … and a move offers value for money.

I say, "Thank you, but no thank you."

The Committee's second recommendation said that if Home Office numbers fall, it

should identify other Government departments whose staff can fill up the new building.

However, the Home Office response was:

The Home Office currently anticipates that all the accommodation in 2 Marsham Street will be required at the time it takes possession of the building in early 2005.

So, No. 2 Marsham street will be full of Home Office staff.

Mr. Bacon

While the hon. Gentleman is on the subject of the Home Office and PFI, does he find it odd that it had to pay £2.75 million to insert the refinancing clause in the contract, as the report identified, but that the Treasury managed to insert a similar clause for free when negotiating its contract? Does that suggest to him, as it does to me, that the Treasury is not keeping a sufficiently close eye on other Departments or promulgating best practice well enough?

Mr. Jenkins

The hon. Gentleman is jumping ahead of me; I will come to that point in a moment.

We expect numbers of staff in the Department to fall and to take full advantage of the opportunity provided by Sir Michael Lyons's review on relocation. The Home Office said that the number of its staff

accommodated in central London is expected to reduce significantly".

It said that because

2 Marsham Street comprises three … blocks it would be possible to share occupation with other Government Departments",

but surely all Departments will have reduced numbers of staff in the next three years. We also recommend that agencies and non-departmental bodies that are required to remain in London move to No. 2, Marsham street to fill the space. The private finance initiative, however, may cause problems, because lease and operational arrangements are difficult to change. The Home Office, however, says that the lease does not differ from any other lease and that, as the landlord, it will negotiate alterations.

There is no reason why Prison Service headquarters should remain in London. Subject to funds being found, and a satisfactory business case being made, relocation could be achieved by 2008. It is proposed that by 2005 Home Office staff will move into the new building, which is large enough to accommodate Prison Service headquarters. By 2008, however, if funds are found, those staff may have moved out of London. I am not sure whether the Home Office knows exactly what it is going to do with the building or the estate, but as the hon. Member for South Norfolk (Mr. Bacon) said, its decision to pay £2.75 million for refinancing is strange.

The PAC has looked at refinancing deals in which the PFI arranger refinances the deal and takes a windfall profit. The Home Office would take a share of such profit, but its reasons for paying £2.75 million for the deal are unclear. I doubt whether it would take the same action again, even though it has broken new ground.

The last part of the report deals with the future of Horseferry house. As there is a falling property market in London, we thought that the Home Office—like all Departments, it is pressed for cash—might want to get rid of it, and the report says:

The Home Office expects to declare Horseferry House surplus to requirements in the very near future.

When the Home Office does so, the building can be put on the market.

Our recommendations on PFI for Home Office headquarters are not being taken seriously enough. The Home Office has managed to skirt around them and, in true Sir Humphrey style, has decided that it knows best. It is complacent, because it knows that the Treasury will top up the money every year without looking for efficiency.

The Department for Education and Skills accepted some recommendations in the 19th report, our first conclusion of which was that inspection reports on secondary schools should be made available to parents, as not all parents are aware of the full range of information sources on school performance. They may not have access to the internet, may not go to the local library, and may not have a total commitment to securing the future of their children. The Department accepted that recommendation, but went on to say that

70–80 per cent. of homes with school-aged children have internet access.

The Department's website had about 400,000 hits last year, and it said:

Hard copies of performance table are available in local libraries … —some 10,000 telephone calls requesting one or more copies were received last year … The Ofsted web-site attracts in excess of 120 million hits a year … The Department recognises the need to improve communicantions to parents … The Department is currently consulting on the development of a new annual School Profile.

Having listened to our recommendations, the Department leapt into action. It told us exactly what it was doing—it was remiss of us not to know—and it will consult on a new school profile. It has, however, accepted our recommendations in words but not in spirit.

Our second conclusion was that information on schools should include "important external factors", as a school can move from the bottom 20 per cent. to the top 20 per cent. if those factors are taken into consideration. In deprived areas where children do not have the advantage of their parents' support, they do not come to school with a peer group that wants and respects education, so they are at a tremendous disadvantage. The Department agrees with the Committee that external factors other than the pupils' prior attainment can significantly affect the performance of a school.

The Department's response goes on to tell me in almost every other paragraph why such factors cannot be taken into account. We are told:

Value added (VA) measures were introduced into the secondary school performance tables (PT) in 2002.

That is fair enough. The Department and Ofsted go on to say:

The PT methodology was developed through extensive consultation with schools and local education authorities… At the time this methodology was developed, VA was not a concept generally understood outside the statistical community, and certainly not by the public at large"—

in other words, parents. So what is the point of publishing added value tables for people who would not understand them? But our recommendation was accepted, of course.

The document continues:

The priority was to find a simple and transparent approach … there were also fears that including factors other than prior attainment might risk suggesting an acceptance of poor educational outcomes for particular groups of pupils.

What does that mean? It means that if we accept that a school attended by disadvantaged children turns out lower grades on the performance table, which are rather raw material, the school might lower its expectations. Unfortunately, that misses the point. The point is that if a school is given a value added criterion instead of a raw table showing the qualifications produced, the school will recognise that it is doing good work, its morale will be reinforced and that will drive standards up. That is the reverse of the first comment.

I may be misreading the document and I may be disingenuous to those who wrote it, but when they come up with Sir Humphrey-speak time and again, they can expect it to be misinterpreted. Our Committee should start examining the Government reactions to our comments and recommendations.

The Department is to investigate and develop a more sophisticated value added methodology and it accepts the recommendation that social and economic deprivation should be taken into account in assessing the performance of schools. As we all know, increased income support and working families tax credit may take pupils out of the category eligible for free school meals, so a different method of evaluation is needed, rather than clinging to the free school meals criterion, as the Department does.

I shall skip a couple of recommendations because of the time. We recommended adjusted performance measures because we concluded that beacon schools, faith schools and single-sex schools do better than average. We stated:

The strengths of these schools, such as a strong set of values and ethos, should be identified by the Department and promoted across the school sector.

In paragraph 21 the Department accepts the recommendation. In paragraphs 22 to 25 we are told what the Department is doing in that regard—not what it will do, but the state of play prior to our receiving the response. The Department says that such schools

tend to have strong values and a unique ethos. Many draw from communities that particularly value education … Parents who seek out faith schools"—

remember, the interested parents, the ones who care, who are concerned about their children's education and who value education—

may provide their children with a high level of support. Social background may also be a consideration. On average faith schools have fewer pupils with free school means than other schools.

Surprise, surprise. Paragraphs 27 to 30 go on to tell us what is being done at present.

Ofsted accepts our recommendations. The Department accepts our recommendations. We asked for funding to be open, transparent and accountable. The Department agreed, but then said that that might cause friction. Why? Because if funding were open, transparent and accountable, people who feel that their schools are under-funded might be able to further their case. Staffordshire and Tamworth contain schools in deprived areas, and the social make-up of such schools is the same in any city in this country. Because the county is wealthy, however, those schools are denied funds. The Department spoke to head teachers, parents and LEAs, but it did not speak to Members of Parliament, although hopefully it will change its mind.

I enjoy being a member of the PAC, which does a worthwhile job. I shall continue to attend as best I can, but I wish that more hon. Members would take an interest and read our reports, and I also hope that Front Benchers stop using snippets from our reports out of context.

6.15 pm

Mr. Ian Davidson (Glasgow, Pollok) (Lab/Co-op)

I shall start with a tribute to the Chairman, of whom I heard from one of my hon. Friends the high words of praise, "He is not nearly as bad as was expected." In my view, he is a judicious and tolerant Chair, and my only criticism is that my 10 minutes are never as long as those allowed to other hon. Members. It is worth mentioning that, to his eternal credit, the Chairman turned out for the parliamentary rugby team—we did not pass to him, but we were just getting our own back.

I also pay tribute to Sir John Bourn and the senior officers of the NAO who attend our Committee, as well as to the NAO staff who do not attend, but who undoubtedly perform valuable work in the background, and I also thank the Committee staff. Before I thank my parents, my schoolteachers and everyone whom I have ever met, burst into [...]ears and accept my award, I shall mention the other members of the Committee.

It is valuable that many members of the Committee act as if they were self-employed by raising their interests in Committee, rather than being spoon-fed prepared questions, which happens in several other Select Committees. For example, the contributions made by my hon. Friend the Member for City of Durham (Mr. Steinberg) are invariably drawn from his constituency, which is invaluable because they illustrate how policies that we discuss in theory impact on real people in real situations.

The hon. Member for Sheffield, Hallam (Mr. Allan) and for South Norfolk (Mr. Bacon) spoke at length about IT projects, during which time I found myself losing the will to live—it is important that some members of the Committee take an interest in such things. I perked up when the hon. Member for Sheffield, Hallam mentioned beer, but I understand that he used the word in a technical sense. In my view, hell will be a never-ending discussion about the gateway process for IT projects. I am pleased that the Committee includes anoraks; I am just glad that I am not one of them.

Before we get too pleased with ourselves, some points must be made about some of the senior officials who appear in front of us. It is true that many of them are extremely bright and able—I do not object to being patronised by my intellectual superiors, otherwise I would go through life in a state of perpetual irritation. Given the return of "Come Dancing", however, we should consider giving scores to some of the witnesses. When I refurbished my house, I used a leaflet from Pilkington Glass that lists various types of frosted glass according to an obscuration index. Some of the officials who come before us knowing that we have a limited amount of time deliberately attempt to lead us in the wrong direction and to obscure the points that we are trying to elucidate. On some occasions our mild-mannered Chairman should rebuke them more severely than he does. We also need a bullshit detector for some of the responses that we get from officials, not all of whom are as frank as they should be.

The final category should be the smugness score. Some officials are so pleased with themselves that if they were made of chocolate they would eat themselves, as we would say in Glasgow. I am tempted to name and shame them, but they are so conceited that I suspect that they would take it as a compliment.

It is not entirely a question of the culture in the civil service. Yesterday, we discussed complex and serious issues with officials from the Department for International Development. Their open and honest approach—they were frank, helpful and constructive— was in stark contrast to the way in which some other officials deal with such matters. Officials should be encouraged to prepare for our meetings in a way that allows them to be more helpful and constructive.

Most of the report that we produce are fully acted upon. However, in the case of the report on the Northern Ireland Department of Finance and Personnel in relation to the sheep regime, the points that we made were not adequately accepted. That was a revelation in terms not only of the incompetence and dishonesty that was practised in that area of the budget, but of the stunning complacency of the Department's response. The report was a pretty damning indictment, yet in its responses it appeared to be unwilling to accept some of the criticism.

Conclusion 1 of the Committee's report states:

It is of major concern that the level of discrepancies noted by the Department's inspectors, when accompanied on farm visits by the Audit Office, was many times higher than when they were not accompanied. It appears to us that, by turning a blind eye to irregularities during on-farm visits, some inspectors were complicit with farmers in claiming more money than they were properly due.

In its response, the Department said that it

takes very seriously the view expressed by the Committee in relation to possible collusion … There is no evidence that collusion has taken place or that inspectors failed to follow agreed procedures … However it does recognise that inspectors had been provided with a considerable degree of discretion, in relation to the type of irregularities that can be reported during the inspection process.

That is a particularly mealy-mouthed way of admitting that errors were made.

The Department gives every indication of being in denial about the scale of the difficulties that we outlined. Our report rather modestly states:

We were surprised to find that payments were being made for sheep that had apparently died".

The Department's response is inadequate. It says:

From January 2004,"—

that is, some considerable time after not only the Committee's hearing, but the NAO's investigation—

with the banning of on-farm burial, sight of fresh carcasses or appropriate documentation is now obligatory

and that

penalties will be rigorously applied

for future errors. We must continue to monitor that policy to ensure that it is applied in the appropriate circumstances.

Our conclusion states:

We find the circumstances surrounding the Department's 1998 decision to allow payments for sheep at unnotified locations extraordinary.

It was not only

contrary to EU rules, but the Department has no record of its decision, despite a senior official apparently travelling to Brussels to discuss the matter.

The Department's response was:

The Department regrets that there is no record of the specific meeting in Brussels where the acceptability of the Department's interpretation of the EU requirements was confirmed.

The response continues the same vein. I can cite several more examples of similar evasive responses from the Department in Northern Ireland. That is entirely unsatisfactory.

Another part of the report states:

The Department's failure to properly address the weaknesses in control, highlighted by the European Court of Auditors in 1994, was a serious error in judgement.

The Department responds by saying:

The Department accepts that it should have been more diligent".

Well, that is good of it. I wonder whether anybody in the Northern Ireland civil service has been disciplined, sacked, transferred or rebuked. What does it show when a devastating report is produced but the relevant Department refuses to accept responsibility for its mistakes and is apparently in denial? That is unacceptable.

I could read out many similar examples, but I shall draw attention to only one more. Our conclusion 25 states:

Our overall impression is that the Department has in the past been soft on fraud and this has contributed to unacceptably high levels of fraud within Northern Ireland agriculture.

The Department had the cheek to respond:

The Department notes the views of the Committee and deeply regrets the impression created that it has in the past been soft on fraud. It would assure the Committee that this is not the case.

That is utterly incorrect. It is clear that the Department regrets being found out and that is unacceptable. It continues in its defence:

In addition, the Department is working with its stakeholders, including farmer representative bodies, to promote high levels of probity".

If the police in Pollok met the national union of burglars to discuss the disappearance of articles from houses in the area, one would not necessarily expect a consensus. I am not convinced that farmers' representative bodies are entirely clean in the matters that we are discussing. It is difficult to believe, when the report identifies that in one specific area 58 per cent. of claims for foot and mouth were fraudulent or partly fraudulent, that some collusion with the overall farming body did not occur. In those circumstances, much more needs to be done.

I have tried not to stray from the list of items that is being discussed. However, I want to mention the National Audit Office's work on the report on health and safety in construction, which we shall debate later. Aileen Murphy and her staff were helpful and constructive in moving that forward.

My right hon. Friend the Member for Swansea, West (Mr. Williams) made a point about comparing and contrasting. I welcome the fact that devolution allows us to make comparisons between Scotland, England, Wales and Northern Ireland and so on. I hope that we will do much more of that. There is scope for comparing and contrasting in a way that can serve only to drive up standards of public provision. However, we should make more international comparisons. Although we have had contacts with the French and the Germans and we shall make contacts with the Spanish, we should also compare and contrast some of our work, not least on European Union agriculture subsidies. I am sure that if there is rank fraud and corruption in EU agriculture subsidies in this country, we can learn lessons from efforts to combat such practices in other partner states.

I am glad to have been able to participate in the work of the Committee over the past few years. It has been one of the most useful and worthwhile things that I have done as a Member of Parliament, and I want to pay tribute not only to my colleagues on the Committee but to the Chairman for his inspiration and leadership of the Committee.

6.30 pm

Mr. Howard Flight (Arundel and South Downs) (Con)

May I add my thanks and congratulations to the Chairman of the Committee, my hon. Friend the Member for Gainsborough (Mr. Leigh), the Public Accounts Committee, the National Audit Office and Sir John Bourn for their excellent work? As ever, we have had an excellent debate, and I should like to comment particularly on the contributions of the hon. Member for Dagenham (Jon Cruddas), which went to the heart of why this work is so important, my hon. Friend the Member for South Norfolk (Mr. Bacon), who focused on the area that we are most failing to address and which wastes the most in the public sector, and the hon. Member for Glasgow, Pollok (Mr. Davidson), who made a most witty and incisive thrust into some of the key areas that are so unsatisfactory.

I congratulate the Chairman on his excellent opening speech and wholly agree with his two messages: that greater efficiency is all about achieving better delivery of public services, and that there is a need for far better project management in the public sector, especially in information technology services. For nearly a year, I have been working with some 60 professionals who have been seconded and volunteered to work with David James in 15 teams to examine, on a bottom-up basis, how to achieve greater efficiency in the public sector. To date, at least, that work has been carried out in a great deal more depth than the Gershon report.

I find it depressing that, notwithstanding the response that people are "taking note", so much more could be achieved if the recommendations of the PAC reports were put into practice. Hon. Members mentioned the fact that the NAO makes savings eight times greater than its costs, but they could be massively greater if its findings were listened to and put into effect. The Chairman was right to say that that issue is at the centre of our political life today, given the massive increase in spending by an unreformed public sector that appears unable to deploy the money to adequate effect or to deliver.

The investigations of the PAC are conducted on an issue-by-issue basis. In the United States, according to statute, bodies must regularly audit the operational efficiency of the public sector entities, and perhaps what is missing in this country is an ongoing review of the efficiency and operational structures of much of the public sector.

The reports that we have debated today deal with some £60 billion of public expenditure, which, along with those that we discussed in our debate in February, give a total of £310 billion of expenditure. I shall not repeat the comments made by many who have spoken today, but many issues struck me as I read through the reports. One thing that I particularly value about participating in these debates is the discipline that it imposes on me to find out what is being said in the busy life of this place.

The first report said that the Inland Revenue had got out of date in dealing with tax compliance strategy. It is interesting that, just as the Government are tightening up on avoidance, the report should find that the Inland Revenue has gone soft on evasion.

That is not a particularly good message to send to the public at large, because evasion is a far greater and more difficult problem than avoidance.

The much quoted—understandably so—report on the sheep premiums scheme in Northern Ireland is a classic example of what is wrong with such schemes, what will inevitably happen and what is happening in many different areas all over the EU. The poor delivery by the Forensic Science Service agency, which has missed targets for five years, struck me as a classic case for privatisation, in which a public body has apparently been quite unable to achieve efficiency, whether through an efficiently priced private finance initiative or something greater. Most of the funding for the Warm Front scheme does not help those in most need: only a third of the grants help the fuel poor, and a third of fuel-poor households are not eligible for grants. That is a classic example of an ill-thought-out political gesture, and of tinkering that does not achieve its objectives and wastes taxpayers' money.

The report on expenditure on regional assistance and enterprise grants in England shows that, 14 years on, and £1.4 billion of expenditure later, the economic gap remains just as wide. That suggests not that the principle is wrong, but that the measures deployed have manifestly not succeeded in narrowing the economic gap. On Wembley, to which reference has been made, let us imagine handing over £120 million to another party without any guarantee or contribution from that party—in this case, the Football Association. Although taxpayers ended up paying for a fifth of the funding, they will not receive any benefit if the stadium is financially successful—what a completely uncommercial way of running Wembley and of looking after the interests of taxpayers.

The ninth report focused on the community grant to the National Coalition Of Anti-Deportation Campaigns, which found that the NCADA had used the funding for dubious campaigning that opposed any form of immigration controls whatever. I thought that I was reading a report on the EU budget, because this is another classic example of how public money must not be spent on indulging interest groups.

The 10th report is easily the most important, on which both my hon. Friend the Member for South Norfolk and the hon. Member for Sheffield, Hallam (Mr. Allan) made extremely valuable contributions. Ultimately, the issue is not learning from experience—as I commented last year, there is much to learn from how Italy, of all countries, has achieved far greater efficiency in the implementation of public sector IT investment and, as my hon. Friend the Member for South Norfolk pointed out, from some of the disciplines that have been used in the US.

The 12th report displays no evidence of benefit eligibility decision making having improved at the Department for Work and Pensions, which the Chancellor contradicted at last week's Question Time. Overall, 24 per cent. of decisions contained errors, and 45 per cent. of disability living allowance claims contained errors. Essentially, it is a problem of a benefit system whose complexity is causing problems both for citizens and its administration.

The PFI for the Home Office was quoted. The one issue that was not quoted, which tells us so much, was that the Home Office might reconsider its implausibly high assumption that 1,300 officials and support staff need regular ministerial access. In relation to moving the civil service out of London, the same principle obtains right across the board.

The 17th report looks at hip replacements and the use of hip prostheses, in respect of which there is inadequate evidence. It also contains the important statistic that hip replacement costs vary from £2,266 in one hospital to £7,456 in another. That is unacceptable if we are to have a much more efficient national health service. One of those hospitals is extremely efficient, while the other is, by implication, extremely inefficient. Much can be learned from such figures about possible ways of improving NHS efficiency.

Mr. Jenkins

The problem is the number of operations performed. A hospital that performs five operations a year is not in the same economic league as one that performs 50 or 60. It is a question of getting the specialism in the right place.

Mr. Flight

It is indeed a question of making the NHS more efficient by helping hospitals to specialise, and to become better at those specialisms.

The reports overall spoke to me of a public sector in need of major structural reform. They tell a sad tale of inadequate management, and many major areas of waste and inefficiency. It is clear that the public sector should be able to deliver better, and to produce better value for the taxpayer. Merely spending more money is not enough; structure and management are in urgent need of reform.

6.41 pm

The Financial Secretary to the Treasury (Ruth Kelly)

We have had an excellent debate, which has shown the special contribution that the PAC makes to our system of parliamentary scrutiny of the Executive. It has reminded us of the key role played by the Committee in highlighting ways in which better value can be obtained from public spending. I pay tribute to its work and in particular to its Chairman, the hon. Member for Gainsborough (Mr. Leigh), who has ensured that its work is done in a manner that makes clear the reasons for the success or failure of projects or schemes. That approach ensures that lessons are learnt for the future, and that good practice is promoted.

Before I comment on the relationship between the PAC and the Treasury and respond as fully as I can in the time available to some of the points that have been raised, I too must pay tribute to the assistance that the Committee has received from the Comptroller and Auditor General, Sir John Bourn, and his staff at the National Audit Office. Their role as independent scrutineers of central Government spending is central to the process of ensuring the accountability of the Executive. The NAO's financial audit work and value-for-money studies continue to make an important contribution to efforts to improve the standards of financial stewardship in Departments, and the effectiveness of public spending.

Many Members have singled out the role played by the NAO, particularly my right hon. Friend the Member for Swansea, West (Mr. Williams), who sadly cannot be present—although he gave me notice of that. I commend him on his long service to the Committee. He made sensible points about the workings of the Committee, and brought his experience to bear. I know that he retains a keen interest in the Committee's access to the civil list. I remind him, and other Committee members, that it has long been the policy of successive Governments that Ministers stand between the royal family and Parliament. That approach has been agreed on both sides of the House.

Other Members also made important points about the workings of the Committee, and I am sure that they will continue to bring their expertise to bear. My hon. Friend the Member for Dagenham (Jon Cruddas) pointed out that the Committee was central to political discourse, and I entirely agree. He challenged not just the Committee but the Government to define the way in which the need for spatial economic analysis was taken into account. That is something that we should reflect on further as we prepare our approach to public spending in future years and as the Committee carries out its scrutiny in years to come.

I note the touch of scepticism brought to the debate by my hon. Friends the Members for Glasgow, Pollok (Mr. Davidson) and for Tamworth (Mr. Jenkins) over how the Government have responded to some of the points made by the Committee, but I assure the House that we take the recommendations extremely seriously. The Committee and the Government have a shared responsibility to ensure that taxpayers' money is used economically, efficiently and effectively, and we want to see the delivery of public services to a high standard, drawing on the skills of the private sector, working together and applying best practice in financial and project management. We have to ensure that the extra investment flowing into public services leads to the significant improvements that the public expect and deserve.

This is probably not the best place to enter into a partisan debate about the role of public spending, as the Committee traditionally has a commendable, non-partisan approach. However, I should like to respond to some of the points of detail raised. The hon. Member for Gainsborough reminded us in his opening remarks of the considerable ground that the Committee has covered since February, and I commend all Members who have contributed to that important work. The Committee has rightly continued to take an interest in the efficiency of the social security system. One report that it considered was entitled "Progress in improving the medical assessment of incapacity and disability benefits". I pay tribute to the work of my hon. Friend the Member for City of Durham (Mr. Steinberg), whose contribution to these debates I always enjoy. He brings to them great insight and passion for his subject, but also good humour. I am sure that Members on both sides welcome that.

It is fair to say that we share my hon. Friend's and the Committee's concern about the complexity of benefit systems, which raises difficult issues about targeting benefits at those who need them. However, the Department for Work and Pensions is committed to trying to make the system easier to understand and improving the accuracy of decisions. Of course, the Committee has made valuable recommendations that the Department has taken into account, and it is only right to point out that the Committee has concluded that since 2001, performance has improved in many aspects of medical assessment. The DWP has taken action on all the Committee's earlier recommendations. New performance targets have been set out, which either have been met or are on track to being met. The Committee has also recognised the action taken to enhance the training of doctors and to improve the quality of medical reports.

As the hon. Member for Gainsborough pointed out in his opening speech, better services and efficiency savings are two sides of the same coin, and he pointed to the concrete savings that the DWP has achieved, partly as a result of the Committee's recommendations. The backlog of incapacity benefit examinations was fully cleared by March 2004, and the result was a one-off saving to the taxpayer of £10.9 million. The time taken to complete personal capability assessments since 2001 has been reduced, resulting in an updated estimate of annual savings of £21 million. The overall saving to the taxpayer is therefore nearly £32 million. It is only right that we always focus on ways of improving efficiency and at the same time delivering better public services.

A great deal of interest in IT procurement and software has been expressed by members of the Committee on both sides. That is an emotive issue, and I certainly recognise the difficulties with IT procurement, but I merely point out to the Committee that they are not unique to the United Kingdom. Other leading international economies, particularly the United States, have encountered similar issues and difficulties. I believe that in the United States, 23 per cent. of all projects are cancelled before they are completed, and only 28 per cent. are finished on time and budget with the expected functionality. We clearly have common challenges that we need to address.

However, we are committed to learning from the past, to adopting best practice where it exists, and to attempting constantly to improve procurement techniques. For example, we have concluded that private finance initiatives are not suitable vehicles for IT projects. That is a significant example of how we have learned from the past. We do of course still believe it is important to work in partnership with the private sector, partly because of the skills and expertise that it offers to the public sector.

The Office of Government Commerce has played an extremely valuable role in helping Departments to procure IT more sensibly. The OGC introduced new procedures to improve the delivery of all projects and programmes that depend on the implementation of new IT systems. Three features of these new procedures are worth highlighting, the first of which is the establishing of a project-programme management centre of excellence in each Department. These centres report to departmental management boards on progress in key programmes and projects to support effective decision making, to share information and lessons learned elsewhere in government, and to provide internal support to aid delivery.

Secondly, each accounting officer is required to confirm that major IT-enabled projects do not suffer from the common causes of failure identified through OGC and National Audit Office experience. The NAO's contribution in this regard was particularly welcome. The third feature is the introduction of a requirement that no Government initiative that is dependent on new IT be announced before an analysis of the risks and the implementation options has been undertaken.

These measures will go a long way towards raising procurement performance across government. I acknowledge the contribution and comments of the Chairman of the Public Accounts Committee, who said that it was only reasonable to give the Government a pat on the back for the work of the OGC. The OGC constitutes a very significant development in IT procurement and elsewhere, and it is only right that we should recognise its role, while not being complacent about the issues that will affect us in future.

Mr. Allan

It is very welcome that assessments of the IT implications will be made before policies are announced, but will the Financial Secretary deal with the point that was made by the hon. Member for South Norfolk (Mr. Bacon), among others, about the publication of such information? In considering policy initiatives in the House, it would be extremely helpful to have that information before us, instead of guessing it or picking it up from the computer press.

Ruth Kelly

I was about to turn to the publication of the OGC gateway reviews, about which I know the hon. Member for South Norfolk (Mr. Bacon) feels extremely strongly. My hon. Friend the Economic Secretary considered this issue in a previous debate, and although I acknowledge that there are differing views on each side of the argument, I shall make the same point that he doubtless made then. I have been involved in gateway reviews on a number of occasions, and I can say that the OGC reviews are conducted on a confidential basis. The process involving the OGC and the Department is extremely open. The OGC, which has the ability to disseminate best practice across government, helps and advises the Department when it has a project to deliver, and it is right that, once the Department owns that project, such information be kept confidential. If we took confidentiality away from the discussions we would not have such open and honest negotiations. Lessons would not be learned to the same extent, and the value added by the process could be significantly diminished.

Mr. Bacon

Does the Financial Secretary agree that the evidence is overwhelming that lessons are not being learned, as the history of the past 20 years has shown? I have made the point clearly that parties of both political complexions have suffered from this problem. The Financial Secretary says that the discussions between the Department and the OGC are very open. That is okay, but what about the suppliers? How can the situation be acceptable if suppliers do not even know that a gateway review is taking place? What is the Treasury afraid of?

Ruth Kelly

This is a question of learning from experience, and I can assure the hon. Gentleman that such lessons are being taken on board. He has given examples of projects going back 15 years or more, and we do of course share the concern that he and other Members have expressed this afternoon about performance in relation to IT procurement. We are determined to improve and the OGC process is a vital contribution to the debate. On the particular issue of a new statutory framework, I can tell the hon. Member for South Norfolk that I am committed to taking away this interesting proposal and looking into it further. He will understand that I cannot give an instant answer to that proposition, but I commit myself to writing to him about his interesting suggestion.

I hope that that illustrates the fact that we are committed to learning from experience. We are open to new ideas about how to take this forward. I believe that the OGC process has been and is valuable, and that some of its fruits may not be felt for many years to come, but will be significant in the future.

Many other issues have been raised in the debate and hon. Members will understand that I do not have time to respond to them all. Some concern individual Departments. My hon. Friend the Member for Glasgow, Pollok asked about the sheep regime and it is important to pass his question on to the appropriate Department, and the same applies to the points made about the Home Office building. The Home Office response highlighted the positive contribution that the new building will make to its operation in the future. It is something that is quite hard to quantify and to take into account—and the same applies to other points.

We have had a valuable and useful debate. It has been stimulating and enjoyable, demonstrating the value of the Public Accounts Committee's work in adding to the process of parliamentary scrutiny. I look forward to the Committee continuing its extremely valuable work throughout the coming year.

6.56 pm

Mr. Leigh

I would like to add my thanks to all members of the Committee for what they have said in today's debate and, indeed, for serving on it. I shall run through them quickly.

First, the hon. Member for City of Durham (Mr. Steinberg) is, with his humour and his knowledge, an extraordinarily valuable member of the Committee. In a particularly brutal hearing on tax credits, he reminded the chairman of the Inland Revenue, Sir Nick Montague, that he had received more letters on the subject than any other, apart from fox hunting. Quick as a flash, Sir Nicholas replied:

I have to be thankful for small mercies, Mr. Steinberg. Fox hunting is not a subject about which you write to me.

We are very grateful to the hon. Gentleman for his contribution to our Committee.

We are also grateful for the wise counsel of the soon-to-be Father of the House, the right hon. Member for Swansea, West (Mr. Williams), who keeps us on the straight and narrow and reminds us when we are in danger of veering away from the ancient precedents of our venerable Committee. He is another extraordinarily valuable member. What he said today about benchmarking was important and we should take it away with us. The point was reiterated by the hon. Member for Glasgow, Pollok (Mr. Davidson). We should have more international comparisons; we are too insular in our work.

I would also like to thank my two hon. Friends—if I may put it that way—the Members for Sheffield, Hallam (Mr. Allan) and for South Norfolk (Mr. Bacon) for their extraordinarily skilful speeches on IT. I did not lose the will to live during their speeches. They are not anoraks, but are contributing a great deal to saving many tens of millions of pounds. We will have to return to the issue of gateway reviews. We may be able to debate it further in our Committee. We have also spoken today about how best to publicise findings and how to avoid the eternal reiteration of mistakes, about which Karl Popper spoke, as mentioned in the debate.

The hon. Member for Dagenham (Jon Cruddas) spoke well about the central paradox that the Committee has to deal with—the efficiency of the public sector. Somehow in our Committee, if nowhere else in the House of Commons, we manage to avoid it becoming a party political issue. It is something on which we can all agree, whatever our views—that we have to make the public sector far more efficient than it has been under this Government, under the previous Government and, indeed, under any Government.

I would also like to thank my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who did a feisty canter across the ground and injected a little bit of party politics into the debate—and what is wrong with that?

I also thank the Minister for being a member of our Committee, even though she cannot turn up for sittings. We are very grateful for all her work.

Finally, I am grateful for the very kind personal appreciation that the hon. Member for Tamworth (Mr. Jenkins) gave me. He is the hardest working member of our Committee and we are all very grateful to him.

This has been a good debate and we will carry on our work.

Question put and agreed to.

Resolved,

That this House takes note of the 1st to the 16th, and the 18th and 19th Reports of the Committee of Public Accounts of Session 2003–04, and of the Treasury Minutes and the Northern Ireland Department of Finance and Personnel Memorandum on these Reports, Cm 6130, 6136, 6155, 6175, 6191 and 6244.