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Greg Clark (Tunbridge Wells) (Con): Thank you very much, Mr. Deputy Speaker. I am grateful to have caught your eye. Like the hon. Member for Portsmouth, North (Sarah McCarthy-Fry), I am thrilled to be a member of the Public Accounts Committee. It is the best possible training to see not only how parliamentary Committees work, but how Whitehall works, and I am grateful to have that opportunity.

Like previous speakers, I pay tribute to the work of the Committee secretariat, to the National Audit Office and to the chairmanship of my hon. Friend the Member for Gainsborough (Mr. Leigh). Like the hon. Member for Portsmouth, North, I found that attending my first sitting of the PAC rather took my breath away, with the ferocity of the questioning, but we have got into our stride and started to give as good as we get.

It is important that we question witnesses robustly. One of the things that I have noticed during the hearings that we have had so far is that increasingly, there are organisations that are neither directly accountable to the electorate nor subject to the rigours of the marketplace, so it falls to us as the Public Accounts Committee to be almost the only possible scrutineers of their performance. That is not a happy situation. A class of organisations is developing that are neither part of the accountable public sector, nor subject to market disciplines. They are part of a kind of para-state that it is particularly difficult to interrogate. I refer to three examples.

The first example causes me frustration because it was the subject of one of our hearings and has been covered in the reports before us: Her Majesty's Revenue and Customs. In a hearing on the complexity of benefits and tax credits, we considered a recent change in policy—the increase in the earnings disregard for tax credits from £2,500 to £25,000. Clearly, such a step change has a cost attached to it, and it strikes me that part of our core remit in assessing the value for money of Government policy is to find out what those costs are.

The transcript of the evidence reads like an episode of "Yes, Minister". It took about 19 questions to solicit from the officials responsible whether any estimate had been made of the cost of the change. It turned out that there was an estimate. Of course there was; any increase in a disregard from £2,500 to £25,000 is clearly a major policy decision and Revenue and Customs had assessed it. An undertaking was given that not necessarily a robust estimate but the one that was made in assessing the policy would be disclosed to the Committee. I waited for that disclosure to be made, and I waited and I waited, and I continue to wait.

I tried the route of parliamentary questions. I tabled a question before Christmas for answer on 20 December, but no answer came from the Treasury. There was neither a Christmas card nor any form of greeting from the Chancellor. I asked for the estimate that had been made when the policy was being assessed, but the answer that was finally given on 10 January was entirely unsatisfactory and diversionary:

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The PAC gives us our one and only opportunity to ask questions of officials who are not directly accountable in any other forum, so it is particularly important. It is therefore disappointing that such an important Committee does not have quite the set of teeth that we need. Parliament's role of scrutinising the Government is very important and should be treated with respect. To exclude from scrutiny by the Committee and therefore the House such a major area of Government spending is not in accordance with the principles on which the PAC was established all those years ago.

The second area is the national health service. In this arena of para-state organisations, where accountability is difficult to exercise, we have different parts of the NHS going by different names. We have primary care trusts, strategic health authorities and trusts, but they are all part of the NHS. We should have one NHS and that should be accountable. Indeed, it is important to getting value for money that it is accountable. By way of illustration, in my constituency operations and out-patient appointments are no longer being allocated or offered to those who need them, but the identity of who can be held responsible for that is obscure.

Helen Goodman: The hon. Gentleman's point is interesting but issues concerning the hospital in his constituency prove the exact opposite. It is because hospitals are accountable and because there are limits on the amount of money that they can spend that such management action has been taken—albeit with the unfortunate consequences to which he refers.

Greg Clark: Let me describe those consequences. As the hon. Lady knows, we are a value-for-money Committee: we scrutinise the value for money of public expenditure. What is going on in my hospital trust is illustrative of a national problem and of exactly the kind of problem that our Committee is here to interrogate. The problem is that the primary care trusts are running out of money. The financial year end is on 31 March and the PCTs are telling the hospital trusts that they will not finance any more out-patient or in-patient procedures in this financial year.

Let me explain the consequences of that in value-for-money terms. Hospital consultants and surgeons continue to be employed by the trust and to have their salaries paid. The operating theatres remain open and available, but they are not used. Patients are waiting to be treated, yet consultants and surgeons are being told to go off and play golf, read the newspaper or twiddle their thumbs, on full pay, because they are not allowed to trigger a charge—which is, after all, just a mark on an electronic ledger—this side of 31 March.

None of us would doubt that the patients need to be treated. People need to have their hip operations, for example, and they will have to be carried out at some point. However, because of this arbitrary deadline, capacity that is available now is not being used, but it will have to be used in the next financial year, and shared with the patients who come on to the lists in that year. Who knows, perhaps that will give rise to overtime payments or to capacity constraints. This is clearly not offering value for money.

I have spoken to the executives in these organisations, and I feel for them. It is very difficult to know what to advise them to do. The trust is merely following the
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inevitable consequence of the PCT's decision not to fund any further procedures. The PCTs are under apparently irrevocable instructions not to make funds available if there has been more activity during the year. Whoever is responsible, the consequence is a loss of value for money.

There are solutions available, however. One possibility is that, if a PCT and a hospital trust have had their allocation of activity for one year, any further activity could be charged at marginal cost, rather than the full tariff. After all, the only costs that would be incurred in carrying out these operations would be the cost of lighting the operating theatre and of any consumables used during the operation. That is one example, but who would take responsibility for making such a decision? Not the Secretary of State. She would say that these matters are now devolved to the PCTs and the hospital trusts. Yet the PCTs and the trusts have no locus to be able to take decisions that would remedy the problem. So we have a situation that, in economic and value-for-money terms, is completely mad.

This is an example of the lack of accountability that is fundamental to the system, and our Committee has an important role in scrutinising such issues. I just wish that the powers of the Committee extended perhaps not to the ability to interrogate Ministers, but to the ability to cause Ministers to take responsibility for some of the consequences of their policy actions.

My final observation is on the Office of Fair Trading. This is a body that is only very indirectly accountable to Parliament, but it nevertheless exists to enact the will of Parliament as expressed in, among other things, the Competition Act 1998.

Mr. Leigh: I thank my hon. Friend for giving way. I just want to put it on the record, in regard to the point made about tax disregards, that the Comptroller and Auditor General has full access powers and I have asked him to go in and get the relevant information himself if it is not forthcoming. He can go into the Treasury and get it.

Greg Clark: This is a useful power, but there is a disappointing aspect. We know that the information is available; it merely needs to be disclosed to us, and the idea that it may not be is worrying. Perhaps the Financial Secretary will tell us that he can remedy the problem.

The Office of Fair Trading was equipped with vigorous powers to promote competition, which are crucial to the economy, but its performance seems quite lax. Powers such as the power to compel evidence and the power to fine miscreants up to 10 per cent. of their turnover are not being used, and seem not to be used at the discretion of the officials responsible. Ministers are not responsible for the decisions, and it is difficult for anyone other than the PAC to exercise any leverage on whether the OFT is implementing the will of Parliament, which it was set up to do.

Our Committee has a crucial role, and as more organisations that are not directly accountable either to customers or to Parliament are established, its role will become even more important; but we should not kid ourselves that our present powers are more effective than they are. We have power to expose poor practice,
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and to commend good practice where we find it. I hope that, if we take the suggested route, a new culture will develop. I hope that, as our findings and the recommendations of the National Audit Office present a unique opportunity for scrutiny, they will be taken particularly seriously. That is important to the efficiency and performance of the public sector.

6.6 pm

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