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Mr. Smith: I am grateful for the hon. Gentleman's kind remarks, and I join him in congratulating officials not only from the Treasury but from the National Audit Office and the office of the Comptroller and Auditor General. As the hon. Gentleman said, this is a model of how working sensibly, often in sensitive areas, can lead to a sensible way forward being found. I also acknowledge the contribution of his predecessor as Chairman of the Public Accounts Committee, and the contribution that the hon. Gentleman himself is making.

The hon. Gentleman reminds us of the importance of the constitutional legacy of probity and regularity, and of shining the light of audit and accountability on to affairs for which we have a responsibility. I note what he says about the BBC; I do not intend to repeat my previous remarks on that. He acknowledges that the civil list is a sensitive area. There has been a longstanding bipartisan agreement that Ministers should stand between the civil list—the royal family—and accountability to Parliament, except when there are grant-in-aid issues, as in the examples that the hon. Gentleman mentioned. I think it wise to leave those arrangements in place.

Roger Casale (Wimbledon): I welcome these reforms, which will bring greater accountability and transparency to the public finances. As we move to spend more on public services, it is clearly in the public interest that there should be independent external validation of how that money is spent. Do not these reforms mark a real break with the past, as we give substance to our determination deeply to entrench the reforms we are making to the public finances? Opposition Members tend to emphasise that we must stamp out waste, and of course that is right, but greater transparency will also help to identify areas in which we need to spend more. An audit, for example, might have helped the Opposition realise that the capital funding of schools in my constituency fell to £15 per pupil in 1996-97. It is more than £200 per pupil per annum today.

Mr. Smith: My hon. Friend is right. There is a break with the past that is a great step forward in terms of accountability and security of value for money. Value for money does not imply spending as little as possible. Instead, it implies spending for the best possible effect. Without being drawn into my hon. Friend's invitation to make party political points, the Government are keen to engage in that spending.

Mr. Nick Gibb (Bognor Regis and Littlehampton): The Chief Secretary's statement is extremely welcome,

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and especially his acceptance of the importance of strong management across government. To that end, he will be aware that one of the greatest achievements of the NAO in recent years has been the exposure of the level of social security fraud, with about £3 billion being lost every year in terms of both jobseeker's allowance and income support. There are more than 300,000 cases of fraud every year, but only 5 per cent. of those cases are prosecuted. I am not making a party political point. The situation has been the same for more than a decade, during which the accounts of the Department have been qualified by the NAO.

Will the Minister enter into discussions with his colleague, the Secretary of State for Work and Pensions, with a view to increasing the proportion of prosecutions in an attempt to introduce strong management in this area and to reduce the level of fraud?

Mr. Smith: Not only will I do so, but the Government are already acting on that agenda. We are identifying and bearing down on fraud in social security as in other areas. That did not always happen until quite recently. Performance was not even measured by previous Governments. Further strong management to cut fraud will be brought to bear.

Mr. Tam Dalyell (Linlithgow): My question is churlish and ill tempered. As one who was rebuked and chastised by the late Donald Dewar, in 1998, for daring to suggest that the Scottish Parliament's costs would rise a penny above £40 million, will my hon. Friend ask either the Paymaster General or the Financial Secretary to examine carefully the assertions in today's edition of The Scotsman that consultant's fees alone are now £40 million? The cost of the project has increased by at least eightfold on what was originally envisaged. Is my right hon. Friend able to draw any lessons from a giddy escalation in costs?

Mr. Smith: My hon. Friend will be well aware that these are devolved matters for which the Scottish Parliament and its audit and accountability relationships are responsible.

Mr. John Burnett (Torridge and West Devon): It is important that the full audited accounts of the bodies concerned be put in the public domain. Does the Minister agree that these accounts, and district auditors' full accounts on local authorities, should always be put in the public domain in unabridged form, with names and details provided in respect of all major contracts?

Mr. Smith: I support the general principle of publication and information being in the public domain. I hesitate to give a blanket commitment, because I think that we can all imagine circumstances of individual privacy or commercial interests where that would not be appropriate.

Geraint Davies (Croydon, Central): My right hon. Friend will know that for a cost of about £50 million a year, the NAO and the Public Accounts Committee save billions of pounds of public money during a Parliament. Does he agree that the recent extension of their franchise to be the auditor of the Housing Corporation, English Heritage, the

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Environment Agency and other non-departmental bodies, and access to social landlords, the train operating companies and PFIs, for example, will enormously increase the savings by multi-million pound figures?

Will my hon. Friend continue to have an open mind on further access to other bodies that have already been mentioned? Will he extend his thoughts also to international contributions that we make to various bodies to ensure that, through the help of the Comptroller and Auditor General, we can deliver value for money to the taxpayer?

Mr. Smith: My hon. Friend is undoubtedly right about the enormous savings made through proper scrutiny of public expenditure, and through the Government's acting on the recommendation of the Comptroller and Auditor General and the Public Accounts Committee. Contributions to international bodies are already scrutinised, but the accounts of the bodies themselves fall outwith the arrangements for domestic audit and accountability.

Although, as my hon. Friend says, the proposals will involve the Comptroller and Auditor General in a good many additional responsibilities, he has made a clear commitment—as the proposals show—to contracting out a significant proportion of his work. Indeed, he has already done that.

Where the audit is being taken over by the CAG, money to pay for it will be paid to him rather than to a private sector auditor. Any additional net costs should arise principally in relation to the external validation of public service agreement systems, rather than the rest of the CAG's audit and accountability.

Mr. Michael Fallon (Sevenoaks): Proper external validation of public service agreement targets will be a big step forward, but will the Chief Secretary say a little more about the new access to bodies involved in the private finance initiative? Will the CAG be able, for example, to investigate the increasingly opaque nature of some of the special-purpose vehicles that are being established for PFI schemes, and will he be able to comment on the extent to which some longer-term liabilities are now being kept off the public balance sheet?

Mr. Smith: Access for the CAG will depend on the status of the vehicle, company or organisation concerned. In general his rights of access follow the money, whether it be by grant or by contract. The big step forward that today's proposals represent is that whereas in the past the CAG has had to negotiate access or agree it by administrative means, which has not always been easy—there have been delays, and so on—he will now have a statutory right.

Adam Price (East Carmarthen and Dinefwr): I too welcome the Chief Secretary's proposals, particularly the proposal to extend access to PFI contractors. Will that include access to documents pertaining to pre-contractual negotiations between Departments and preferred bidders appointed at the outline bidding stage? Concerns have been raised over why the final agreed contracted price for PFI projects is sometimes as much as two or three times that envisaged at the outline bidding stage.

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Does the Chief Secretary agree that that is a legitimate area of inquiry for the CAG, especially as preferred bidders have never been deselected, so effectively this is a single-tender process?

Mr. Smith: When documents, evaluations and so forth are relevant to the CAG's inquiries, whether as part of his normal audit work or as part of a value-for-money study, he will have access to them.

Mr. Brian Jenkins (Tamworth): As my right hon. Friend knows, the Audit Commission and the National Audit Office have areas of responsibility that abut one another and sometimes almost overlap. That causes difficulties with certain arrangements. When my hon. Friend the Member for Dumbarton (Mr. McFall) asked whether he and his Department had even considered the possibility of a merger, he said no. Why?


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