National Audit Office: Access to Papers (Hansard, 15 February 1996)

§ Lord Mackay of Ardbrecknish
My Lords, no. There is a long-standing convention agreed with the National Audit Office that the NAO does not have access to certain categories of departmental papers. These categories are papers dealing with the responses to NAO inquiries and proposals for NAO investigations and draft NAO reports; briefing papers for an accounting officer's appearance before the PAC; papers dealing with the contents of Treasury minutes 721 responding to PAC reports; and papers, including interdepartmental correspondence, about relations with the NAO.

§ Lord Harris of Greenwich
My Lords, is the noble Lord aware that the Answer he has just given will puzzle a number of us because the papers which appeared on the front page of the Independent earlier this week did not fall into any of those categories? What is the point of having a National Audit Office as the guardian of public expenditure if officials can try to deprive it of critical information? Is he aware that the case to which I refer concerns a report by Price Waterhouse? Is he further aware that it seems to many of us astonishing that this procedure has been accepted by the Government?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord should guard against founding on leaked documents an attempt to build a case in public. At the time the official wrote the document the Department of Transport was considering a draft report by the NAO into British Rail Maintenance Limited sales. His note was in the context of considering a response to the NAO. That falls very firmly within the first category I mentioned in my original Answer.

§ Viscount Chandos
My Lords, if the Minister does not feel that the parallels between this shabby saga and the subject of this afternoon's Statement are enlightening, can he instead say what the Government's attitude would be to a public company making a similarly poor sale of assets and concealing that from its auditors, from the Stock Exchange and consequently from its shareholders? Should the public sector not adhere to best practice, not only in achieving value for taxpayers but also in disclosure of its dealings, particularly in respect of management buy-outs of privatised industries?

§ Lord Mackay of Ardbrecknish
My Lords, I am sorry that the noble Viscount continued with his prepared question without altering it in the light of my Answer, which I think shows clearly that the rules and procedures of the Government and the National Audit Office, agreed by the National Audit Office, were fully followed. As to the case itself, the position is that the National Audit Office investigates every privatisation. In this particular example the Department of Transport is quite clear that the British Rail Board did not distinguish cash from other components of the assets, like debts and creditors. In its study for the Department of Transport Ernst & Young is confident that all the necessary information, including details of the Eastleigh depot's cash balances and its future trading prospects, was available to all bidders. The noble Viscount should not let his obsession against privatisation colour his judgment.

§ Lord Clinton-Davis
My Lords, will the Minister indicate why this pertinent question was asked by Price Waterhouse in relation to this privatisation measure? I quote: 722 Why was the business sold at such a discount to net assets, in particular a profitable and cash generative one? Will he also indicate—

§ Lord Hailsham of Saint Marylebone
Reading!

§ Lord Clinton-Davis
Of course I am reading. I am going to quote. Will he also indicate why a memorandum was sent by a senior civil servant in the Department of Transport criticising the BR vendor unit which managed the sale for, operating without satisfactory guidelines"? He also asked whether there were, any similar skeletons in any other completed sale". Perhaps the Minister will address himself to those two questions.

§ Lord Mackay of Ardbrecknish
My Lords, I shall repeat the point I made to the noble Lord, Lord Harris of Greenwich. I am astonished that the noble Lord is also prepared to found his case on leaked documents. But never mind about that. As far as the sale is concerned, clearly if the cash had been removed from this company—the Eastleigh BRML—the price obtained for it would have been that much less because it was part and parcel of the assets and liabilities of the company for which the private sector and indeed the management buy-out, which was successful in this case, were bidding. The answer to the noble Lord is that if the cash had been removed the price obtained would have been a good deal less.

§ Lord Harris of Greenwich
My Lords, as the Government constantly proclaim their enthusiasm for open government, why was this procedure used in the first place? Why are the Government so secretive when it comes to issues involving taxpayers' money?

§ Lord Mackay of Ardbrecknish
My Lords, that takes us back to the original Question. I have to tell the noble Lord that there is nothing secretive about the rules I read out. They were contained in a number of letters. The most recent I have is one from the Treasury to the accounting officers of the departments dated 1988. What I have just explained was the subject of a parliamentary Answer in 1985 to Mr. Bryan Gould, who was then a leading member of the party opposite. In fact, the rules I expounded have been in operation with the NAO since its beginning. They were in operation in the preceding body, the Exchequer and Audit Department, for a very long time before that, including times during which the noble Lord himself was a Minister in the last Labour Government.

§ Lord Ezra
My Lords, it is difficult for some of us to follow what information is being provided to the NAO and what is not. Can the Minister unequivocally state that the Government regard the operations of the NAO as serious; that they will provide it with all the information needed to conduct its inquiries; and that they will treat the resultant reports with the gravity they deserve?

§ Lord Mackay of Ardbrecknish
My Lords, we consider that the NAO has a vital part to play in looking 723 after public funds. We take its reports very seriously indeed. As I explained, the convention is of very long standing. It is clear and open. Parliamentary Questions have been asked about it and answered in full, as I have done today. Departments regard the convention as something they must apply correctly. Their internal audit units are responsible for checking that the convention is being properly operated and they report to the accounting officer straightaway on any abuses which are found. The NAO also monitors the use of the convention as part of its normal audit work. I hope that that reassures the noble Lord.