NATIONAL ENTERPRISE BOARD: ACCOUNTS (Hansard, 14 November 1978)

§ Lord ORR-EWING
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)
My Lords, Her Majesty's Government are still considering this recommendation and will report their conclusions to both Houses at an early date.

§ Lord ORR-EWING
My Lords, is the noble Baroness aware that private sector companies have by law to produce detailed and audited accounts in respect of individual companies and subsidiary companies? Surely it is desirable that the NEB should act no less circumspectly when dealing with taxpayers' money in order to carry out what is provided by the Companies Act—I think it is Section 6(7)—which lays down that the facts must be produced within seven months. Is it not essential that all-Party recommendations from the Public Accounts Committee should be taken most seriously, and that the Comptroller and Auditor General should therefore be given access to the books of the NEB?

§ Baroness BIRK
My Lords, with regard to the noble Lord's first point, it would be quite wrong if he was giving the im- 644 pression that the NEB does not produce audited accounts. It does in fact produce audited accounts, as I think the noble Lord is aware, and it can be called—as indeed it was—by the PAC with any papers and the chairman may be required to answer questions. The matter with which both the noble Lord and the Government are concerned is that of the appropriate form of accountability for a public sector trading company. The practice in relation to nationalised industries, and the vast majority of other public sector trading bodies, shows that the tradition of the past 30 years has been against any Comptroller and Auditor General involvement in the affairs of bodies of this kind. The problem is to find the right balance between public accountability and commercial freedom, because here we are dealing with a rather different kind of animal.

§ Lord BOYD-CARPENTER
My Lords, while disclosing an interest as a former chairman of the Public Accounts Committee, may I ask the noble Baroness this: Where an organisation is using very substantial sums of money, is not a very substantial objection required for arguing that the Comptroller and Auditor General should not see the books?

§ Baroness BIRK
My Lords, I was saying—and I repeat—that the PAC made the recommendation. The Government are considering it, and will be reporting their conclusions shortly. The noble Lord, as an ex-chairman of the PAC, will be very well aware—more aware than I am—that this is an extremely complicated subject. I return to the point of trying to get the right balance in relation to public accountability, without making it difficult for the Board to carry on its day-to-day affairs or without it being inhibited by having shackles on its commercial freedom when trying to conduct business. I do not think that we can have it both ways. I am sure that the noble Lord, whom I should have thought to be a great exponent of free enterprise, must see this point.

§ Lord BOYD-CARPENTER
My Lords, why does the noble Baroness think that submitting the books to the Comptroller and Auditor General would interfere in any way whatever with the commercial effectiveness of the NEB?

§ Baroness BIRK
My Lords, it is not a case of submitting the books; the actual wording is having "access to the National Enterprise Board's books". I understand that to mean that the Comptroller and Auditor General would at any time be able to call and look at the books, even during the course of a transaction. I do not pretend to be an expert on this matter but I am trying to put both sides of it to the House. There is the problem, which was readily recognised when the nationalised industries were set up, of avoiding interference in their day-to-day affairs while auditing their books. As the noble Lord is aware, the auditors are chosen with the agreement of the Government. There is a difficult problem here, and the Government are aware of it. It is not a case of presenting a blank wall against what is suggested. I return to my original Answer and point out that the Government are still considering the recommendation.

§ Lord ORR-EWING
My Lords, will the noble Baroness bear in mind that the last report of the NEB shows the turnover of the NEB and its subsidiaries to be £3,500 million, and that it involves a very large, and increasing, number of companies? In the circumstances, would there not be a better balance if the Comptroller and Auditor General was allowed access to the books, so that we can see that the taxpayers' interests are being properly looked after? Will the noble Baroness bear in mind that, if the Public Accounts Committee's all-Party recommendations—without a minority viewpoint—are not carried out, Parliament will be deterred from keeping control of the ever increasing sums of public money spent on its behalf?

§ Baroness BIRK
My Lords, I am quite aware of the number of people and of the amounts of money involved. However, I should point out that my right honourable friend has made clear that the NEB profits before tax in the first half of this year were £2.4 million, and so it is not really an entire loser, as I think has been implied.

§ Lord LEATHERLAND
My Lords, is not one of the difficulties here due to the fact that the NEB has to come to the rescue of private enterprises that have failed?

§ Baroness BIRK
This is true, my Lords, and I think that over the weekend one of the spokesmen of the Party opposite in another place referred to keeping the NEB on as "a casualty clearing station."

§ Lord HAILSHAM of SAINT MARY-LEBONE
My Lords, does the noble Baroness seriously pretend that those enterprises which have failed ought not to show their books to the public when they receive public money?

§ Baroness BIRK
My Lords, I am not pretending anything at all. As I repeated—and I am sure the noble and learned Lord heard me—an audit is conducted, it is open, and the people concerned are called by the PAC. The subject and the point of the noble Lord's Question, and what we are discussing, is access to the books by the Comptroller and Auditor General. It is that which is under consideration by the Government, which quite naturally take any recommendation of the Public Accounts Committee very seriously.