§ [Relevant document: The Government's Response to the Committee's Report, published in the First Special Report from the Procedure Committee, HC 576.]5.18 pm
§ The Chief Secretary to the Treasury (Mr. Paul Boateng)
I beg to move,
That this House approves the First Report from the Procedure Committee of the current Session, on Estimates and Appropriation Procedure, House of Commons 393.
§ Madam Deputy Speaker (Sylvia Heal)
With this it will be convenient to discuss motion 8 on Questions on Voting Estimates, &c.
§ Mr. Boateng
This report follows the extremely constructive correspondence that I have had with a number of Committee Chairs about the changes to the Supply estimates and appropriation process and I am grateful for the care and attention that Members and Chairs on both sides of the House have paid to this matter. The aim is to improve the reporting of public expenditure information to Parliament and the Procedure Committee and other committees have responded quickly and positively to the Government's proposals.
The changes include a move from one to two Appropriation Bills each Session, one in March and one in July. The reason for that is primarily to allow departmental resource accounts to be presented to the House earlier than is currently possible. At present, Departments that have winter or spring supplementary estimates do not get full legislative authority for that until the Appropriation Act is authorised in the July after the financial year-end. They cannot therefore present their accounts to the House until after Royal Assent, which is usually in mid-July. A March Appropriation Bill, which will replace the Consolidated Fund Bill currently presented at that time, will ensure that full legislative authority is provided in the same financial year.
A further change would allow departmental Supply estimates to better reflect reductions in voted limits. Departments are currently allowed to seek increases in resources but not reductions. The current process can therefore lead to an unhelpful presentation of departmental spending plans and the change would allow estimates to better reflect reductions, for example, when responsibility and therefore resources for a particular function have been transferred to another Department as part of a machinery of government reorganisation, or when a Department was using savings from one request for resource within its estimates to finance additional spending in another.
The second motion amends Standing Order No. 55. This proposed change, which has been recommended by the Procedure Committee, extends the minimum time available to Committees to scrutinise the estimates before formal authorisation from eight to 14 days. It also provides for estimates to better reflect the move to resource-based supply, by including limits on appropriations in aid—the amount of income that departments may retain. Other proposed changes set out in the Procedure Committee's report provide for the 433 provision of additional information to the House. The main change is that Departments will be required to provide an estimates memorandum to their Select Committee, explaining how the changes sought in the estimates relate to spending controls and published targets.
§ Mr. Alan Williams (Swansea, West) (Lab)
May I reiterate to my right hon. Friend on behalf of the Liaison Committee—we have had correspondence—how important it is that the memorandums are as clear and understandable as possible? The Treasury has been dragging its feet at official level. What we want to ensure is that we get maximum time, as he said, but also maximum clarity. To help to focus the attention of the Treasury, may I tell him—with my other hat on as Chairman of the Public Accounts Commission—that I have invited the Comptroller and Auditor General at the end of the first 12 months to produce a review for the House of Commons of the clarity, adequacy and timeliness of the memorandums when the new system is introduced?
§ Mr. Boateng
I am grateful to my right hon. Friend for the care and attention that he and his Committee have applied to this issue. Before the Chairman of the Public Accounts Committee took his place in the Chamber, I thanked all Committee Chairmen for their contribution to the consideration of these matters, which has led to these motions being tabled. I take my right hon. Friend's point about the need for clarity in relation to the memorandums and will ensure that we do everything that we can to live up to the properly high standards that he, his Committee and his fellow Committee Chairmen demand and expect of us.
§ Mr. Edward Leigh (Gainsborough) (Con)
I am grateful to the Chief Secretary for what he has said. He will be aware of the correspondence that we have had, which is detailed in the report. As well as the Treasury being aware of what the Liaison Committee wants, I take it as read that he will issue full guidance to Departments on the contents of these new memorandums so that they are clear and useful to the House.
§ Mr. Boateng
Certainly, we will take steps, whether through the issue of formal guidance or otherwise, to make sure that all Departments are aware of their responsibilities in relation to this matter and the changes proposed. I will write to the hon. Gentleman and my right hon. Friend to explain the means by which we have sought to ensure that their properly directed strictures have been met.
An explanatory memorandum explaining the purpose of the motions in more detail has been made available in the Vote Office. With that, I commend the motions to the House.
§ Mr. Howard Flight (Arundel and South Downs) (Con)
I wish to second support for the two motions and to congratulate the Procedure Committee on its work, which, as I understand it, implements the will of Parliament. Having read through the report, it struck me that any citizen doing so would not have a clue as to 434 what it is about. If I may comment on such procedural matters, it would be helpful if there were at least some gloss to describe such effects in a way that citizens could understand.
Before I conducted my researches, my gut reaction was to ask, "Is there a rat to smell here? Is our stealthy Chancellor involved in some arrangement to slip something past us whose effects might be other than its apparent effects?" Having checked with the National Audit Office and others, I established that my suspicion had been entirely erroneous—or perhaps I have been too bogged down with the Finance Bill, and have missed something.
This is, I think, an occasion on which the House of Commons has got what it wants. As the Chief Secretary explained, there will now be two Appropriation Acts each year rather than one. The reporting and availability of Government financial information will be improved and the sensible inclusion of negative estimates will make arrangements for the transfer of funds within and between Departments much more transparent. The measures constitute a sensible modernisation of appropriation procedures that have become somewhat outdated in the context of the requirements of ordinary life.
There will be three key improvements. First, the changes will facilitate speedier completion of departmental accounts —hopefully by the summer recess. They will remove legal constraints that have hitherto prevented Departments from completing their accounts on time. We will take due note of whether they do have that effect. In the past, there have been unnecessary delays in the completion of audited Government accounts. I understand that until now parliamentary approval has been required for supplementary estimates and the fact that it has not been available in time has made Departments legally unable to produce their accounts on time. The second March Bill will make possible approval and thus completion of resource accounts in due time, with no legal restraints.
Secondly, the new arrangements will improve the way in which estimates are used to facilitate changes in the machinery of government. For example, if the transfer of functions from one Department to another—or, potentially, the consolidation of Departments—occurred after the production of the main estimates, there used to be a very complex and opaque arrangement which allowed accounts to be produced, but legally that was fairly difficult to accomplish. The changes will bring about transparency and remove the legal complexity involved in sorting out the figures.
Thirdly, the arrangements will deal with instances in which savings in one departmental area are matched by additional spending in another. The new system of negative estimates will permit transfers of resources "plus or minus" within Departments. At present that can only be done by means of what is again a very complex and opaque procedure.
The changes will increase transparency. The increase in the notice period for Select Committee approval from eight to 14 days is also welcome, but is essentially a formalisation of current practice.
435 As the Chief Secretary has already commented, it is clearly necessary that there should be clear and explicit guidance for all Departments. We welcome his confirmation of that. I am pleased that, as I understand it, the Government have confirmed that they will accept two specific recommendations made by the Procedure Committee. First, changes in departmental expenditure limits will continue to be announced via written statements, as well as included in estimate memorandums—the National Audit Office feels, rightly, that that is required and proper. Secondly, the Government agree that there should be a 14-day interval between presentation of the summer supplementary estimates and their approval, as well as a 14-day interval between the spring and winter estimates and their approval.
We note that Departments will need to make better progress in the presentation of their accounts if the benefits of those technical changes are to be realised. We will look with confident expectation at that being achieved next year.
§ Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I thank the Chief Secretary for setting a precedent by making a timely response to the Committee's recommendations and I hope that other Departments that respond to the Procedure Committee will follow it. That the response was in the required time was much appreciated.
§ Mr. Desmond Swayne (New Forest, West) (Con)
A rather better precedent is the fact that the Chief Secretary has agreed to all the recommendations of the report. Would not that be a precedent to follow?
§ Sir Robert Smith
Given that the report followed a request from the Chief Secretary, the circle was being completed —it would have been rather unusual if he had changed his mind. The report is a welcome step in the right direction. Much of it has already been dealt with by hon. Members, for example, the reasons for the process being brought forward and for the recommendations.
In their response, the Government took the recommendations on board, although they made some minor caveats about which I want to question them. Recommendation 2 was about publishing annual lists to show the dates on which each resource account is laid before Parliament and published—it is a chance for the Government to demonstrate what they are doing. Their response states:The Government accepts the recommendation to publish annual lists showing the dates on which individual resource accounts are laid before Parliament and published. The Government has no plans at present to amend the statutory deadlines but will keep them under review.It would be helpful if the Government showed a willingness to try to improve the speed at which they publish the annual lists, so that scrutiny is timely and effective. If the naming and shaming through publishing the lists does not achieve that, perhaps statutory deadlines may be required.
436 The Committee recommended that the 14-day period should take account where possible of recesses and the times when the House is not sitting to do the leg work. The Government have said that they intend to take that into account, although they included the caveat:However, despite best efforts the timing of recess periods such as the half-term break. particularly if announced fairly late or subject to a change of date, may not always make it possible to ensure that a full two weeks of sitting days is included".I hope that that is a minor caveat. With modernisation, we were meant to have a regular timetable, so the Government should not be caught out. They have made the commitment that we should know all these things in advance. There was a time at Easter when they would have been caught out, and people would have had to understand, but I hope that people will not rely on that caveat and get too slack in meeting the deadlines.
The Government say of the 14-day deadline:It is envisaged that this might not be met only in circumstances where departments require authority for spending on new services at a late stage in the process.I wonder whether the Government can give some idea how often they think that will happen and assure me that that is meant to be a minimalist caveat. If the process is to work, 14 days is still not a great length of time.
I welcome the commitment to clear memorandums because that will offer a greater chance that scrutiny will be more effective and more focused. I welcome the Government's approach and hope that they can give some reassurances on the caveats that they have put in their response.
§ Mr. Desmond Swayne (New Forest, West) (Con)
May I apologise for the absence of my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton), the Chairman of the Procedure Committee, who is unavoidably elsewhere? The motions arise out of the first report of the Procedure Committee, although the proposals have also been considered by other Select Committees.
I am in the fortunate position of rising when everything has already been said, even if not by everyone, so I can be brief. The proposals are directed at improving scrutiny of the Government's expenditure proposals that appear in the estimates. I do not think that we can be expected to nod through 12-figure sums without proper scrutiny, and these are useful changes.
Having two Appropriation Acts per year instead of one, as previously, will enable the resource accounts—the successors of the appropriation accounts—to be produced earlier. The winter and spring supplementary estimates will be laid at least a fortnight before their approval, which gives a much more realistic time scale to the opportunity for scrutiny, especially if the proofs are made available to the Select Committees in advance of that.
Resource accounts and estimates do not naturally lend themselves to the scrutiny of ordinary Members of Parliament without some expertise, and in that regard, the new scrutiny unit will assist by explaining matters to Members, and perhaps even pointing them towards useful avenues of inquiry. Each Department will produce an estimates memorandum to its Select 437 Committee, which will accompany the estimate. We hope that supplementary estimates will be in a standard format, analysing the changes proposed. The reasons will be set out in the accompanying memorandum.
I understand that the contents of the memorandums will be a matter for negotiation between Departments and their Select Committees, and Committees will clearly differ over what they expect and require in their own estimate and memorandum. However, I hope that the Chief Secretary will be open to representations for the material that will form the core of those memorandums, and that guidance will be issued to the Departments, as he has already given us to believe. I am sure that the Liaison Committee will pursue that with him.
Before we get too excited, I quote from the conclusion of the Procedure Committee's report, which says that the change is a "useful" butminor … improvement in the House's procedures".
§ The Deputy Leader of the House of Commons (Mr. Phil Woolas)
This debate has been short, positive, useful and more lively than anticipated. I start by thanking the Chairman of the Procedure Committee, the hon. Member for Macclesfield (Sir Nicholas Winterton), who has explained to the House that unfortunately, he cannot be here. I should like to put on record our thanks to him, on behalf of the Government and the whole House, and to the hon. Member for New Forest, West (Mr. Swayne), who is a member of the Committee, for explaining that to us.
I reiterate the thanks expressed by my right hon. Friend the Chief Secretary to the four Committees involved in the debate for their swift and positive response to the Treasury's original proposals for change. We owe particular thanks to the Procedure Committee for its helpful report. We could call it sensible accounting, and on the anniversary of the tragic death of our former leader John Smith, sensible accounting is something that we should all support and bear in mind.
§ David Taylor (North-West Leicestershire) (Lab/Coop)
The Minister refers to sensible accounting, and I declare an interest as an accountant.
In relation to the point made by the hon. Member for New Forest, West (Mr. Swayne) on Committees nodding through 12-figure sums without the background information needed to know whether that is justifiable, how does the Minister respond to the International Monetary Fund's observation that the private finance initiative commitments that our Government have racked up during the past seven years, which are 12-figure sums in aggregate, should appear on the national balance sheet, rather than being invisible as at present?
§ Mr. Woolas
The House spent three and a half hours yesterday debating £5 million, and looks set to spend about 40 minutes today debating how we account for the expenditure of hundreds of billions of pounds. It would not be wise for me to go into that issue in detail, but my right hon. Friend the Chief Secretary has noted the point that was made.
438 For those Members who have never been fully confident about the differences between a Consolidated Fund Bill and an Appropriation Bill, or between Votes on Account and Excess Votes, the Committee's clear exposition of our Supply procedure is very useful. Reference has been made to the memorandum by the Clerk Assistant, which is printed on page 52 of the report. It is particularly helpful and I commend it to Members.
I shall try to respond briefly to some of the points that were made. The hon. Member for Arundel and South Downs (Mr. Flight) welcomed the report and I thank him for that. He implied that the use of plain English would be helpful, but I am not sure that the accountancy profession would always support that idea. Like the legal profession, it tries to keep some semblance of its own language for its own benefit. As he acknowledged, a very helpful explanatory memorandum is available and can be referred to. I was rather worried when he said that his instinct told him that he smelled a rat, only to discover that he could not smell one. It is good advice for Governments always to work on the principle that if the Opposition Treasury spokesman cannot smell a rat, there probably is one and he simply cannot smell it. That said, I think we are all in agreement, and I am grateful for that.
The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) asked three questions, the first of which concerned recommendation 2, speed of publishing and the statutory deadline. We do of course intend to meet the deadline, but in the spirit of sensible accounting my right hon. Friend the Chief Secretary is keeping the matter under review. The hon. Gentleman also asked about the 14-day period, and I can confirm that the Government and the Committees intend that the period in question be 14 working days. As he pointed out, in the past two years the Government and the Leader of the House have helpfully published a calendar of parliamentary sitting times, but of course, there is the inevitable caveat of flexibility. The intention is that common sense be applied, but half-term might cause problems, as the hon. Gentleman suggested.[Interruption.] I am helpfully informed by my right hon. Friend the Chief Secretary that the period is indeed 14 days.
The hon. Member for West Aberdeenshire and Kincardine also asked whether there would be exceptions. I am informed that there is the usual Treasury contingency, in that one has to plan for all eventualities. That is the sensible approach.
§ Mr. Oliver Heald (North-East Hertfordshire) (Con)
As the hon. Gentleman knows, I did not choose to wind up the debate for the Opposition, given its narrow nature. Will the guidance given to Departments be made available to Members, so that we can judge whether we think it right?
§ Mr. Woolas
I am grateful for that helpful intervention from the shadow Leader of the House, and I appreciate what he says about not winding up the debate. On the guidance—about which the hon. Member for New Forest, West also asked—the Chief Secretary is very sympathetic to the point that is being made. He intends to write to the Chairmen of the Select Committees to clarify the guidance in each 439 departmental area. That will be done forthwith. I hope that that deals with the questions asked at this stage of the debate.
§ Mr. Leigh
The Minister mentioned the excellent memorandum and referred to the table on page 51. I see from the section on the historical background on page 52 thatthe systematic use of legislative appropriate dates from the Glorious Revolution.If we are to have historical references, could they avoid value judgments?
§ Mr. Woolas
Some in the House would argue that all historical references are value judgments. What is important is that supply measures are the property of the House and not the other place. I am sure that every hon. Member would agree with that and long may it be so.
In conclusion, once again the Government have listened to the advice of Select Committees. We are grateful to them; that is what they are there for. Once again the Government have provided time on the Floor of the House to debate these important issues, and I hope that that will be noted. What we are proposing is a modest and sensible change to our supply procedure. Several Committees have endorsed both motions on the Order Paper and I commend them to the House.
Question put and agreed to.