Select Committee on Procedure Third Report



24. The Parliamentary Under-Secretary, Ms Eagle, reviewing her experience of piloting through the first report under Section 82, concluded that the procedure had been "open and transparent", and that it "got ... me involved as a Minister, the members of the select committee involved, in far more detailed discussions and sessions on what was going on and what was being done with this money and when, than any other procedure that I have been involved in".[38]

25. The Chairman of the Social Security Committee, Mr Kirkwood, made a number of criticisms of the DSS arising from his Committee's involvement in the scrutiny process. He felt that the department had given his committee insufficient time to consider the draft report (the DSS had written to the committee on 3 December 1999 asking for scrutiny to be completed by Christmas). He considered that the report itself should have been drafted with more care: "it did not last for two minutes when we started cross-examining [officials]". He expressed regret that because the report was subsequently considered in Delegated Legislation Committee, there was no opportunity to inform the House of the Social Security Committee's two reports through a 'tag' on the Order Paper. Finally, he argued that it was unfortunate that no members of the Social Security Committee were appointed to the Delegated Legislation Committee which considered the report.[39]

26. Notwithstanding these criticisms, Mr Kirkwood considered that the result of the scrutiny process was a sensible compromise between the DSS and his Committee, which resulted in the report as finally laid being a significant improvement upon the initial draft. He said that the DSS had regarded some of his Committee's proposals as "a bit unrealistic", and acknowledged that "maybe they were". The Chairman of PAC, Mr Davis, also concluded that the overall effect of the scrutiny process was beneficial: "the Social Security Committee's scrutiny of the draft expenditure report significantly improved its quality, and was an effective means of ensuring that the report contained sufficient relevant information to inform the House of the need for, and the extent of, preparatory expenditure, and to ensure that taxpayers' interests were properly protected".[40]

27. We agree that the scrutiny of the first draft Section 82 report by the Social Security Committee led to significant improvements, and we commend the Committee for its diligence. The fact that this process of scrutiny led to a considerable reduction in the amount of expenditure for which authority was sought is testimony to the Committee's effectiveness (as well as supplying evidence that the DSS was insufficiently rigorous in drawing up its initial projections).

28. Ms Eagle made clear to us that further Section 82 applications by the DSS are likely, though she could not at this stage give details. She said that:

    "we may well come back to Parliament at some time in the future with our extensive modernisation programme but it would be attached to some kind of change in primary legislation well signalled in advance. I certainly do not have a list of times when we are planning to use it in my pocket that I can produce for you. Given the state of our IT, given the huge agenda of welfare modernisation that we are developing in the department, I think it would be wrong of me to suggest that we are not going to seek its use again."[41]

29. We have considered ways in which the parliamentary scrutiny of further draft reports and reports under Section 82 might be improved. At the heart of this question is the quality of information supplied by the DSS to the House. We wrote to the DSS asking if they saw any reason why the following information should not be included in future Section 82 reports:

    (a)  a detailed breakdown of the proposed expenditure together with the expected timing of this expenditure and the reasons why it is desirable to incur the expenditure;

    (b)  the amount, nature and timing of any financial liabilities to be accrued;

    (c)  details of any contractual relationships into which the Government proposes to enter in relation to the proposed spending; and

    (d)  an estimate of the unavoidable expenditure that would arise in the event of the subsequent bill not being enacted or being substantively amended.

30. In response to this request the Government has given a broad undertaking that "we are happy to share all the information that we have about the expenditure that is the subject of a Section 82 report, subject only to considerations of 'commercial confidentiality'".[42] We welcome this assurance. We accept that the need to preserve the confidentiality of sensitive negotiations may impose some constraints on the information that can be divulged, but subject to this one restriction we believe that information in all the categories set out above should be made available to the House and its Committees as early in the scrutiny process as possible. We also support the recommendation of the Chairman of PAC that "expenditure reports should include a thorough analysis of the risks, as well as the value-for-money benefits, of incurring preparatory expenditure", and that Section 82 proposals "should be supported by a well-reasoned case, which should set out the consequences, in terms of value for money likely to be foregone, of alternative courses of action (such as a paving bill; awaiting Royal Assent; delaying implementation)".[43]

31. We note Mr Kirkwood's points about some of the difficulties his committee encountered. With regard to timing, it is important that the committee should be given a realistic period of time in which to consider a draft report under Section 82. For this reason we recommend that the Government should normally make allowance for a period of at least six sitting weeks between the submission of a draft report to the Social Security Committee and receipt of the committee's comments.

32. We have no strong views as to whether the subsequent consideration of the report as actually laid should take place on the Floor of the House or in a Delegated Legislation Committee. The Government told us that they have "an open mind" on this. It very much depends on the content of each report and the seriousness of the issues raised. We recommend, however, that the Government should accede to any request either by the Social Security Committee or the official Opposition that a report be taken on the Floor. If so taken, any relevant select committee reports should be 'tagged' on the Order Paper.

33. If the report is to be taken in a Delegated Legislation Committee, it would make sense for some of the members of the Social Security Committee, who have invested time and effort in mastering the issues involved, to be appointed to that DL Committee. We regret that this was not done in the case of the first report under Section 82, and recommend that it should be done in future cases, in the interests of coherent scrutiny.

34. In oral evidence, Ms Eagle offered on behalf of the Government to make available an outturn report on the money actually spent under the powers granted. This was subsequently done by means of the Written Answer referred to in paragraph 14 above.[44] In the same Written Answer the Government gave a wider undertaking "to provide the House with an outturn report setting out the actual expenditure incurred under the terms of Section 82 for each use of the power, either at the end of the specific period to which the power relates or following the termination of its application by the receipt of Royal Assent to the related Bill, whichever is earlier".[45] We welcome this undertaking by the Government.

35. We support the recommendation by the Chairman of PAC that HM Treasury should develop guidance on the use, format and content of future Section 82 expenditure reports, such guidance to be drawn up in liaison with the National Audit Office.[46]


36. The Government have not ruled out the possibility of seeking powers similar to those conferred by Section 82 in respect of other departments. The DSS state that "there is no reason in principle why other departments should not consider seeking a power similar to Section 82 if circumstances suggest that such a move is sensible".[47] Ms Eagle said that:

    "Any potential future case ought to be looked at on its merits, but it is not for me to speak for other government departments about what they may or may not be planning to do, or may argue in the future. But, yes, it is possible for any department to argue that Section 82-type powers ought to be available to it."[48]

37. The DSS told us that "Her Majesty's Treasury would expect any such proposals to be cleared by them and would not agree unless there was a compelling justification".[49] We sought clarification from the Treasury as to how they would assess any such proposals. The Chief Secretary to the Treasury, the Rt Hon Andrew Smith MP, replied. He commented that the case put forward by DSS for its Section 82 powers had been a strong one, and noted that other departments have not sought similar powers. He stated that:

    "If other departments were to seek similar powers, having explored all available alternative options, the Treasury would have to satisfy itself that without those powers implementation would be seriously delayed, at greater risk than without such powers and would incur greater expense than would otherwise be the case—and so the power would secure improved value for money. Such problems would also need to be of a continuing nature, since a one-off problem could of course be solved by the department bringing forward a paving bill for that project, and the Treasury would want to ensure that any such proposals included similar safeguards to those in paragraphs 2 and 3 of Section 82 of the Welfare Reform and Pensions Act."[50]

38. Mr Smith added that "of course, if such proposals were to be brought forward for other departments the House of Commons would have the opportunity to debate those, both in principle and in detail, in the course of the relevant legislation".[51]

39. The two chairmen of select committees from whom we took evidence both expressed deep unease about the prospect of Section 82-type powers being sought by other departments. The Chairman of the PAC, Mr Davis, said that he did not think Section 82 was "a very good precedent for any legislation". He was worried that the precedent having been set, it would be extended to other departments which had a less strong case: "I would worry if you started to apply that argument to the Health Service, to the DTI, to whoever, because it seems to me they picked the nice soft target here and once they have the soft target in hand they can extend it beyond that".[52] The Chairman of the Social Security Committee, Mr Kirkwood, said that "if you really stretched the Section 82 procedure to its limits, any department could use it every year, in my opinion, and that is my real base fear".[53] He said that "if other departments latch on, very quickly I believe that expenditure will spiral out of the control of the legislature"; and he argued that there was a case for limiting the extension of Section 82 powers to computer development and procurement.[54]

40. As we state in paragraph 22 above, we are not persuaded that it was necessary to seek the Section 82 powers even in relation to DSS. It follows that we are even more sceptical about any future extension of them to other government departments. It would be deplorable if any Government were to seek further Section 82 powers as a device for circumventing normal parliamentary scrutiny of expenditure.

41. Nevertheless, we do not wish to state dogmatically that no other government department should ever seek comparable powers. It may be that exceptional circumstances might justify Parliament granting such powers. If so, we believe that safeguards should apply as set out in the following paragraphs.

42. The Treasury in the first instance, and subsequently Parliament, should be satisfied that the circumstances are genuinely exceptional. For the reasons given in Mr Smith's letter, 'one-off' projects would not be suitable for a grant of expenditure under Section 82-type powers. In the case of such projects, and where possible in relation to other projects, a paving bill is a more appropriate way of proceeding.

43. We recommend that in considering any future proposals, the Treasury should adopt more stringent criteria than appears to have been the case in relation to Section 82. The deficiencies identified by the Social Security Committee, and the contrast between the large sums of money originally sought and the small sums actually spent, suggest that this was a proposal which should not have been cleared by the Treasury. Full account should be taken of the risks as well as the prospective benefits of authorising preparatory expenditure.

44. We agree with Mr Kirkwood's view that, as a general rule, Section 82-type powers are only likely to be appropriate in relation to IT development and procurement.

45. The Treasury's assurance that the House of Commons will have the opportunity to debate future Section 82-type proposals "in the course of the relevant legislation" rings somewhat hollow, considering that no such debate was possible in the case of Section 82 itself in consequence of the operation of guillotines. We recommend that any Programme Motion governing a bill which contains clauses conferring Section 82-type powers should make specific provision for those clauses to receive guaranteed and separate debating time.

46. Finally, we recommend that all the undertakings given by the Government in relation to the exercise of powers under Section 82 should be extended, mutatis mutandis, to any future comparable legislative provisions.

38   QQ 8, 12. Back

39   Q 69. Back

40   Ev p 16. Back

41   Q 24. Back

42   Ev p 15; see also more detailed comments at Ev pp 3-4. Back

43   Ev p 16. Back

44   Official Report, 30 November 2000, col. 850W. Back

45   Ibid. Back

46   Ev p 16. Back

47   Ev p 2. Back

48   Q 18. Back

49   Ev p 2. Back

50   Ev p 25. Back

51   Ibid. Back

52   Q 74. Back

53   Q 74. Back

54   QQ 69, 76. Back

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