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Mr. David Davis: I think that we are getting too tangled up in the wording of subsection (8). I talked it over with the draftsmen in the first instance, and it appears

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that the form of words is not unique to the new clause; but I am not too fussed about that. Let me ask the hon. Gentleman's opinion about something else.

The last group of proposals that we discussed included a permissive clause tabled by the Government--commendably, I think--to allow the Treasury to intervene to provide access where it is not currently available. Does the hon. Gentleman agree that it would be sensible for the Government to table a similar permissive clause--not drafted in the same way, but intended to cover the problems that we are discussing--to give some power to the review to which the Minister has referred? One of the concerns that the Minister creditably mentioned was that there would not be another primary-legislation opportunity in the foreseeable future.

Mr. Davey: That is a good point. If a permissive clause is the only way in which we can secure the changes that we seek on a piecemeal basis through the review, we need such a measure. I hope that the Government will listen to our suggestions, and table such a clause in another place. As I am sure the right hon. Gentleman agrees, however, that is a secondary solution; what we really want is a provision in the Bill that would deal with the issues universally.

The right hon. Gentleman brings me to my next point, which concerns the review that has been referred to--in fairly loose terms so far: we have read press reports, and engaged in conversations outside the Chamber. Perhaps the Minister or the Chief Secretary will be able to tell us a little more, because I think the review is relevant to a number of the groups of new clauses and amendments that we are discussing.

Will the review just involve the right hon. Gentleman and some of his colleagues from the PAC, or will it seek to secure a wider consensus in this place? As the right hon. Gentleman rightly said in his exchange with the Minister, it is important for the review to be led by Parliament. It is about the accountability of public bodies to Parliament, and Parliament should therefore be represented in it, in as many ways as are appropriate. The PAC will obviously have a role in that regard, but I should have thought that representatives from the main parties should at least be consulted, and possibly invited on to any review panel that the Government may consider establishing. Then hon. Members on both sides of the House would have an input into the review.

3 am

As the right hon. Gentleman said, what is the remit of the review? Will it cover the things in the Bill and some of the wider issues that we have read about in today's Financial Times--problems of accountability if there are cross-departmental reviews and budgets in future? Will it cover other matters such as supply and procedure for estimates in this place, which we touched on earlier?

All those matters are germane to the issue of parliamentary accountability on the budget. As we know so little about the review, all I can do at this juncture is to urge the Minister to discuss its remit with all parties to ensure that Parliament has an input at the first stage. The hon. Member for Stoke-on-Trent, South (Mr. Stevenson), a Labour Member, agreed that we needed to reform the

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procedures for supply, so, again, we can get cross-party consensus on a fairly radical approach to improving financial accountability.

In dealing with some of the problems that the Minister raised in Committee concerning the extension of CAG's institutional jurisdiction, the right hon. Gentleman talked about one of the favoured Government solutions to the problem: using administrative means to extend the CAG's access rights where appropriate. However, study of the administrative methods that the Government employ in respect of the auditing of various bodies suggests that the administrative regime goes against the NAO becoming an auditor.

I refer, for example, to the Treasury's central unit on procurement, which issues guidance on model form contracts. Apparently, a standard term in the contract says that the incorporation of a clause on access rights for the NAO is explicitly at the discretion of the parent purchaser. Therefore, the administrative regime on which the Economic Secretary puts such reliance works against a solution to the problem.

Mr. David Davis: I am speaking from memory here. As the hon. Gentleman will remember, I had dozens of examples in Committee, but, if I remember correctly, access to the training and enterprise councils was held up not by the Department, but by Treasury intervention preventing access.

Mr. Davey: The right hon. Gentleman may be right. I do not know the details, but it follows from what I have said that the administrative regime--whether from the Treasury, or the Treasury's central unit on procurement--is not pushing on the issue in the way in which the Government sometimes suggest it is.

I hope that the Government will look to other independent bodies and commentators for their views on that crucial matter and for solutions. In Committee, I had occasion to quote, sometimes extensively, from the latest academic work on the issue, entitled "Audit, Accountability and Government" by Fidelma White and Kathryn Hollingsworth. It is great seller--at least it should be.

Chapter 4, entitled "The jurisdictions of the C&AG", reviews all the various areas that we discussed in Committee. Having looked at how the NAO is able to audit public money that is spent through private contractors and local spending bodies such as voluntary agencies, it concludes that there is a need for statutory legislation to ensure that there are automatic access rights. I quote from page 89 of the book:

The quotation reiterates many of the points made by the right hon. Member for Haltemprice and Howden, and emphasises the fact that it really is time that reform on access was made. We have waited far too long for it.

We have been told that the Government have quite a good record on access. When the Economic and Chief Secretaries appeared before the Public Accounts

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Committee, they said that they were minded to move further in that direction. They probably do not want to hear this repeated, but we want to encourage them to have the strength of their convictions and quickly to follow them through. This matter has waited far too long to be tackled.

The Bill is the first legislation for many decades to deal at all comprehensively with the access issue. The Government should seize this opportunity to ensure that Parliament's auditors, who are accountable to Parliament, have the access rights that they need and should have.

Mr. Fabricant: In the debate on the previous new clause and amendments, we heard that the Comptroller and Auditor General was not allowed to investigate whole swathes of the economy. Now, we hear that there are other spheres in which the CAG is allowed to investigate, but to which he has no access. That is not auditing, it is impotency.

The hon. Member for Kingston and Surbiton (Mr. Davey) said that, in many cases, the CAG is able to gain access only at the discretion of the body that is to be audited. Such an arrangement cannot be right. In extreme circumstances, in cases in which there might be a misappropriation of funds, such discretion would not be exercised in favour of allowing access. Therefore, we are talking not only about impotency, but about responsibility without authority. Such an arrangement also cannot be right.

It is quite extraordinary that officers of the European Court of Auditors are able to go tramping over British farms, whereas the CAG cannot send his officers on to British farms should it be appropriate to do so. Clearly, when it comes to the CAG, there is no independence.

Government amendment No. 21 does not go far enough. New subsection (2) states that new subsection (1) applies only

That considerably restricts the CAG's activities.

We have heard of cases in which the CAG was seeking information--from Camelot, for example--but it took four years to obtain that information. The issue of whether Camelot has been making excessive profits is, rightly or wrongly, contentious. Nevertheless, it would have served the interests of Parliament--and certainly the interests of the people, whom Parliament serves--for the CAG to gain access to the relevant figures. Provision on access must be tightened up. It certainly should not be loosened or slackened, but that is what is happening.

As my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) said, there is a difference between the actions of a commercial auditor--a chartered accountant, certified accountant or any auditor certified by the Department of Trade and Industry--and those of the CAG. The CAG has the additional duty of investigating and determining whether funds are being spent in the spirit intended by Parliament. The Companies Acts do not impose such a duty on commercial auditors, but the CAG must perform that duty. He can do so only if he has access. That access must be quick, because in extremis, where there might be fraud or misappropriation

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of funds, there is a possibility that delay might enable the organisation being audited to conceal information that the CAG needed to see.

Customs and Excise has great powers to investigate certain issues, particularly inputs and outputs for VAT calculations. It is very strange that such powers are not available to the CAG, who is empowered by Parliament on behalf of the people to see whether funds are applied in the way in which Parliament intended.

I welcome Government amendment No. 21 to some extent, but it does not go far enough. New clause 3, tabled by my right hon. Friend the Member for Haltemprice and Howden and the Public Accounts Committee, is comprehensive. It would not damage the organisations that might be subjected to audit.

Unlike my hon. Friend the Member for Eddisbury (Mr. O'Brien), who has only just entered Parliament, I was in business back in the 1980s. My company has been subjected to audit and even dawn raids by Customs and Excise to look at my VAT inputs and outputs. I claimed VAT back because my company was mainly an exporter. Disruptive though such audits can be, if a company keeps its books in a professional manner, it is not a difficult process to undergo. When I started the company in the 1980s, the records were kept manually. These days, almost all companies, from FTSE 100 companies to small sweet shops, keep their accounts on computer. It is not right to say that such audits can be difficult and that the Government are trying to protect companies from them.

I was shocked to hear--perhaps my right hon. Friend the Member for Haltemprice and Howden will correct me if I am wrong--that the BBC is also protected from such audit. That is a problem. The BBC has its own auditors, but whether the corporation is operating in what is called a fair trade environment is a contentious issue. I do not want to go too far off the point, because you would rightly call me to order if I did, Mr. Deputy Speaker, but it is worth explaining. I said that it was in the spirit of Parliament's legislation that the CAG has to investigate.

The BBC gets most of its income from the licence fee, but a relatively small amount comes from the operation of BBC World, which is its commercial arm, selling radio and television programmes overseas, producing publications and entering into joint ventures with commercial operations. It competes with other organisations that are funded not by a licence fee, but by shareholders and trade in a normal environment.

Parliament has rightly said that the BBC should not have a commercial advantage. None of its operations should be funded, directly or indirectly, by money from the licence fee. Nevertheless, we all understand that the BBC has a large structure. After all, it is a £2 billion organisation and it is sometimes difficult to separate the overheads that are paid for by the licence fee from the overheads that should be funded by its commercial arm.

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