Quangos: Expenditure (Hansard, 17 February 1993)

The Minister of State, Department of Transport (The Earl of Caithness)
My Lords, gross expenditure by executive non-departmental public bodies was £6.15 billion in 1978–79 and £13.75 billion in 1991–92. Expressed as a percentage of general government expenditure, these figures are respectively 8.2 per cent. and 5.8 per cent.

§ Lord Dean of Beswick
My Lords, is the Minister aware that although he has given certain figures, those appearing in the Financial Times show that since 1979 the amount spent by non-elected bodies has increased to nearly £42 billion? The amount spent by those bodies in the public sector has increased by 20 per cent. —one-fifth. Is the Minister also aware that there is serious concern—not in political but in financial circles —that the spread of quangos, in responsibility though not in numbers, is so great that it has become almost impossible for the Secretaries of State officially to control them?
Bearing in mind the financial disasters that have just taken place in the Wessex Regional Health Authority and the West Midlands authority, either through lack of attention or something else, it is about time that the position was reviewed. Will the Minister take that message back to the Government in the interests of all taxpayers?

The Earl of Caithness
My Lords, I am happy to tell the noble Lord that the number of executive NDPBs has declined from 492 in 1979 to 369 in 1992. The figures I used come from the Cabinet Office paper Public Bodies 1992, a copy of which is in the Library of the House.

§ Lord Dean of Beswick
My Lords, the Minister should look at the figures quoted in the old government financial returns; they are far in excess of the figures he has given today.

The Earl of Caithness
No, my Lords, the figures quoted in the Financial Times are different. They are the government figures that I quoted.

§ Lord Hailsham of Saint Marylebone
My Lords, is there not a certain danger in the House of Lords equating quangos—and I understand that means "quasi autonomous non-governmental organisations"—with all non-elected bodies? Surely we are not a quango.

The Earl of Caithness
My Lords, my noble and learned friend is quite right to draw attention to the fact that we need to tread carefully in that area.

§ Lord Mellish
My Lords, is the Minister aware that in 1981 the Government set up a quango called the London Docklands Development Corporation? That money was well spent, but for 15 years local authorities had had it and did not build a single toilet. At any rate, in the period during which I was involved over 30,000 houses were built and we had to deal with 10 miles of derelict land. Will the Minister say that that was money well spent?

The Earl of Caithness
My Lords, I certainly compliment those concerned on what has happened in Docklands, which is quite a change from the previous situation, and the effort of the noble Lord was by no means unnoticed.

§ Lord Richard
My Lords, is the Minister aware that the figures given by my noble friend Lord Dean came not from the Financial Times but from Hansard of another place of 25th January? The figure that he gave of £41.7 billion expenditure by quangos at present is correct if we include the National Health Service, as we clearly ought. Does the Minister agree that accountability in public bodies is important, and particularly accountability to the taxpayer of those bodies which spend public money? If he does agree—as the Government should do—we have a situation where no less than 20 per cent. of government expenditure is being spent by unelected, unaccountable boards whose members are answerable only to their ministerial patrons. That is not a situation with which one can be happy.

The Earl of Caithness
My Lords, sadly I have to take issue with the noble Lord, Lord Richard, on that point. NHS bodies such as the regional health authorities are part of central government and are not classified in the same way as quangos. As to accountability, not only is there a Minister responsible, but most executive NDPBs operate under powers laid down in statute, and executive NDPBs' annual reports and accounts enable Parliament, the taxpayer and the customer to judge whether an NDPB is securing value for money. The accounts of all executive NDPBs are subject generally to audit by the National Audit Office.

§ Earl Russell
My Lords, when the Minister says that a quango is an arm of central government, does he perhaps risk impaling himself on the other arm of the fork, and inviting the question: "What degree of independence from the Minister do those bodies enjoy?"?

The Earl of Caithness
No, my Lords. I said that NHS bodies, such as regional health authorities, are part of central government.

§ Lord Shepherd
My Lords, if the noble Earl is correct that a quango—shall we say a health authority—is an arm of government, is it therefore acceptable, as was reported in the Independent newspaper last week, that a member of that quango was also a director of a company that was petitioning in tender form? When the tender was lost, it was referred back to officials for it to be renegotiated. If it is an arm of government, do the Government accept that that is a correct relationship between a health authority and interested parties in what is a sizeable contract?

The Earl of Caithness
My Lords, I was not aware of the specific issue raised by the noble Lord. It is considerably wider than the Question on the Order Paper.

§ Lord Bonham-Carter
My Lords—

§ Lord Stoddart of Swindon
No, my Lords, it is our turn.

§ The Lord Privy Seal (Lord Wakeham)
My Lords, I am sure that the House wants to hear both noble Lords, and there is time to hear both. I think that the noble Lord, Lord Bonham-Carter, rose first, so that is probably the best way to deal with the matter.

§ Lord Bonham-Carter
My Lords, if the noble Earl says that quangos are an arm of central government, does he regard the BBC as an arm of central government, for that is surely the original quango? Further, does he think that those appointed to quangos should be appointed, as they have been under the present administration, on strictly political terms?

The Earl of Caithness
My Lords, members who serve on those bodies and who have done an excellent job are appointed as the best person available for the job.

§ Lord Stoddart of Swindon
My Lords, bearing in mind that the £41.7 billion is more than the health service budget and more than half the social security budget, are those organisations to be subject to the same rigorous expenditure review as are health, education, social security, and so on, under the present review by the Chancellor which is taking place?

The Earl of Caithness
My Lords, where there is ministerial responsibility of course there is very close scrutiny of all the finances; and rightly so, because it is taxpayers' money. I think that the noble Lord was again confusing central government with non-elected executive bodies.

§ Lord Carrington
My Lords, may I inquire about the position of the Commissioners of Customs and Excise, which is certainly a non-elected body? I am not at all sure whether they are answerable to Ministers.

The Earl of Caithness
My Lords, from personal experience I can tell my noble friend that they are.

§ Lord Sefton of Garston
My Lords, is the noble Earl aware that there are people and financial institutions in the City of London today having some concern about the quango that inflicted the unplanned effects of Canary Wharf on the City?

The Earl of Caithness
My Lords, that is a most interesting observation.