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Mr. Richard Bacon (South Norfolk): As the hon. Member for Croydon, Central (Geraint Davies) concluded his speech, I thought I heard the hon. Member for Newbury (Mr. Rendel) say that the debate still had three or four hours to run. I read the speech that the hon. Member for Newbury made in the previous debate, and I note that he began his remarks by saying that he was conscious that no one else was seeking to catch Mr. Speaker's eye. I therefore came prepared with lots of documents, not least because I know that my hon. Friend the Member for Tatton (Mr. Osborne) finds it amusing when I quote from documents in the Committee. Of course, I subscribe to the Fidel Castro view that if a speech is less than four hours, it cannot do any good. However, I suspect that I would try your patience, Madam Deputy Speaker, and that of the House were I to go through all the documents that I have brought with me.
My hon. Friend the Member for Tatton and I are at a disadvantage. As new Committee members, we have not witnessed much of the work that is being debated today, so I have decided to restrict myself to a couple of general themes that are of enduring interest to the work of the Committee and the NAO, which I shall illustrate with quotes from Committee and NAO reports.
I begin, however, by joining other hon. Members in paying tribute to the work of the retiring Committee Clerk, Mr. Ken Brown, who has been enormously helpful. I wish his successor, Nicholas Wright, every success in his new job. He has already been very helpful to Committee members. I also pay tribute to the NAO, in particular to the work of its press office under the able stewardship of Gabrielle Cohen and Keith Davis, both of whom have been enormously helpful.
The Committee's work is of central importance. The act of this House of Commons taking money from taxpayers by compulsion and forcing them to pay into the consolidated fundinto the Exchequeris a cardinal act. It is of central importance that the House has that ability, but it is equally important that having taken money from taxpayers, the way in which it is safeguarded, looked after and spent is transparent, open and accountable.
My second theme is that of good project management, which the Financial Secretary also mentioned. I would add good risk management to that, because they go together. Risk has been mentioned by a number of hon. Members. No one on the Committee is opposed to the public sector taking risks. It is, however, a matter of understanding what the risks are and, having identified them, ensuring that they are carefully managed. We all take a risk when we walk out of the front door, but it is knowing that there are risks and properly managing them that matters.
In that earlier debate, the hon. Member for Edmonton (Mr. Love), who used to serve on the Committee, referred to information technology projects. He could, however, have been referring to any kind of project when he said:
The NAO issued a report on the implementation of the National Probation Service information systems strategy. The project overran its budget by about 70 per cent. and ended up costing £118 million, which was about £50 million more than it should have cost. That project had seven project directors in seven years, which was fundamentally the fault of the project managers, not of the suppliers. As my hon. Friend the Member for Gainsborough (Mr. Leigh) said, project management is central. It is time that that was more widely understood and acted on in Whitehall. Successful project managers need to move to senior leadership and senior management positions in Whitehall to a greater extent.
Some years ago, the Cabinet Office published a report on the use of consultants in the public sector. In a previous incarnation, I used to work for the consulting industry and came to know the report rather well. On page 59, it points out:
In the short time that I have been on the Committee, it has dealt with the loss to the Revenue from fraud on alcohol duty, which amounted to £858 million, the loss of £48 million as a result of the project for the National Probation Service and the collection of the benefit payment card cancellation, which cost more than £1 billion. That is nearly £2 billion, equivalent to nearly 1p on income tax. It is right for us as elected representatives to ask how much hard work had to go in to earn the money to pay the £2 billion of tax to the Exchequer which was then wasted.
My next point concerns where the Committee should begin to focus its attention in future. According to a newspaper report in December, fraud and waste cost the NHS between £7 billion and £10 billion a year. I asked the chief executive of the NHS about that last week when he came before the Committee to talk about the report on inappropriate adjustments to waiting lists. I recently received the transcript of the proceedings from the Committee Clerks, and the stenographer had typed the figures as £7 million and £10 million. I corrected them to billions, and then I thought that I had better attach a note to say that the figures should be in billions because the sums are so huge that people would think that I was not serious.
Seven to ten thousand million pounds is enough to pay for between 30 and 43 hospitals like the recently completed Norfolk and Norwich hospital. In fact, that hospital is still being built, but patients are moving into it. It is a PFI project on the borders of my constituency. I mention in parentheses that no one bothered to build a road to the hospital, so it is difficult to get to even though it is consuming £229 million of public money. My point is that between £7 billion and £10 billion goes south every year in the NHS, and if that estimate is not correct, we need to get to the bottom of it. Those losses have been happening for years, and the matter needs much closer attention than it currently appears to receive.
The Department for Social Security, now the Department for Work and Pensions, is another area that needs the Committee's steady attention. Indeed, we shall soon be looking at fraud in income support. I have before me the DSS appropriation accounts, and I am looking at the page on which the CAG sets out in a certificate his views on the accounts. Just as the auditors of a private company sign off accounts, the CAG signs off the DSS accounts, in this case to the House of Commons. He has qualified his opinion of these accounts, saying:
If one looks at the itemisation of that irregular expenditure, one finds that the DSS estimates that losses through error and fraud for income support and jobseeker's allowance in 19992000 were £1.32 billion, and in 19981999 the CAG noted that the Department had estimated that the combined level of fraud on income support and jobseeker's allowance could have been as high as £1.53 billion. Those are huge sums. If one
I share the concern expressed by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) that in recent years the Committee has spent about 4 per cent. of its time examining the accounts of the royal household. Although it is entirely appropriate that the royal household, which is the subject of great interest, is transparent, open and accountable and that its accounts are examined by the House, we should concentrate on going after the billions before we worry about the £5 million spent by the royal household. In any case, that figure is a reduction because the household is being extremely well managed, as was made clear in the evidence that we heard last week.
The final matter that I want to mention is less significant in macro-financial terms, but it is none the less of huge importance for many people. I refer to the sources of public funding for students. The NAO has recently produced a report on the subject, "Improving Student Achievement in Higher Education", on which we will shortly take evidence from the permanent secretary at the Department for Education and Skills.
The report contains an interesting chart that shows the 23 different sources of public funding from which students may seek support. The system is extraordinarily complex; for example, single parents who want a child care grant go to one source and those who are eligible for school meals grants go to another. One practically needs a PhD simply to understand the method of obtaining student support. I have raised the matter with the NAO, and I continue to encourage it to examine it.
The complexity of the system has direct implications for the economy, effectiveness and efficiency with which public money is deployed for student support. On the two occasions on which tranches of the student loan book were sold, it was at a very large discount to face value. The reason is that the quality of the student loan book is not very higha lot of the debt is not repaid. As a result, the market requires a high discount before it will buy the debt.
As I said, last year the then Financial Secretary alluded at the end of his speech to the importance of focusing on collection systems as well as on systems for deploying public expenditure. If we could find a more economical, effective and efficient system for collecting the moneys that students owe, and there are many possible models, we would do a great service to the taxpayer but, equally importantly, make it much easier for students from disadvantaged backgrounds to go on to higher education.
Talking to people in my constituency on the doorstep and elsewhere has left me without the slightest doubtI am sure that hon. Members on both sides of the House have had the same experiencethat the extraordinary complexity of the student loan system has a big deterrent effect on a certain stratum of potential students who are on the cusp of deciding whether to go to university. That decision is as important for people from well-off backgrounds, but it is extraordinarily important to those who have not been used to getting into debt or who are from families in which no one has ever been to university. I hope that the NAO will take the issue seriously in future.
In conclusion, I would just like to say what a privilege it is to serve on the Committee. As a new Member I still have a lot to learn, but I have been thoroughly enjoying the Committee's work. I believe that it plays an absolutely central role in ensuring that the money that we take from taxpayers is accounted for in an open and transparent fashion. The House of Commons, in sanctioning the Committee, is doing a very fine job.