Examination of Witnesses (Questions 60
TUESDAY 21 NOVEMBER 2000
DAVIS MP AND
60. You made the point, did you not, in your
first reply that this Section 82 procedure was neither discussed
on the floor of the House nor was it discussed in Committee?
(Mr Davis) That is right. We talked about that very
briefly in the Committee of Public Accounts some time ago now.
The viewpoint is reflected in the correspondence with which I
imagine you have been provided between Jeff Rooker and ourselves
which reflects almost exactly the view at the time.
(Mr Kirkwood) There were two elements which I think
left a good deal to be desired from our point of view. Firstly,
you rightly point out the fact that the discussion that took place
on the floor of the House when the Bill continued (it was Clause
57 in the original Bill, which became Section 82 of the Act) got
no discussion at all. I myself, because I had been discussing
it with David Davis and some other colleagues, tabled an amendment
on the report to try and delete the clause simply to provide a
vehicle for having a short discussion to try and get assurances
from Ministers. I do not blame Ministers for this because the
"usual channels" are responsible for the timetabling
of legislation, but the guillotine meant that there was no discussion
of any kind. It took a bit of creative ingenuity on the part of
Mr Davis in order to get anything out of Mr Timms who, to be fair
to him, responded to a point of order as helpfully as he could
under very severe time constraints, and the chair glowering at
him rather heavily. We tried to pick up some of the issues in
the other place but, of course, the other place is severely constrained
in terms of what it can do in terms of financial powers. We were
all left dissatisfied that the House of Commons had not been properly
apprised of what the full consequence and extent of this new power
was, and that was a serious matter as far as we were concerned.
The second area of disappointment came when the Government gave
us notice that they wanted to implement a Section 82 procedure.
It came in a letter from the Secretary of State dated 3rd December
1999. The import of the letter was quite explicit. It wanted the
Committee to sign off this proposal under Section 82 before the
Christmas recess. That caused us some consternation because, acting
responsibly, we knew as a Committee that Parliament did need help
to get the computer system up for the Child Support Agency and
it was no part of our brief to slow that down in any way whatsoever.
It was in no-one's interests so to do because the Government Minister
had already given the Committee an undertaking that the new system
would not come on-stream until the computers were up and running.
We were then left with a situation where we were under a lot of
pressure to get it signed off before the recess which we, with
some trepidation, refused to do. We decided to have a hearing
in January. We summoned officials on the 12th January and we had
a full hearing and the whole edifice of the proposal that they
had originally sent to us before Christmas crumbled in their hands.
They started asking for sums of money in the region of £60
million to be spent before Royal Assent. This was a Bill that
was going through Parliament at the time. Eventually, after a
lot of toing and froing and a lot of very heated and concerned
discussion and cross-examination by my colleagues in the Select
Committee (unfortunately I was not present myself that day) the
Department admitted that they had done their sums wrong and they
only needed £6 million. I repeat again; in fact they did
not even need the £6 million because they did not sign a
contract until after Royal Assent was given later that summer.
So it was disappointing in that the House was not given any real
chance to understand anything at all about the consequences and
the precedents that this new procedure was introducing into our
parliamentary rules and ways of doing things. The Department did
not seem to know what it was doing and was trying to frogmarch
the Select Committee on Social Security, which Mr Rooker and Stephen
Timms had agreed would take the lead in terms of the content of
any of these orders brought forward by the Department, in a quite
unconscionable time. We could quite easily have said, "Okay,
this is so important we will give the Department what they want."
If we had given them what they wanted, they would have had £60
million of expenditure. They only needed £6 million and at
the end of the day they did not need any of it at all in the fullness
of time. So you begin to wonder to what extent these orders are
a sensible thing to be promoting in the first place.
Chairman: On the same point, before I pass the
questioning to Mr Stunell, Clive Efford?
61. You are quite forceful in your criticism
but the recommendation of conclusion J in the your first report
accepts the principle that a realistic, properly costed, suitably
safeguarded amount in order to bring forward the Child Support
arrangements should be implemented without delay. If what you
are saying to us is accurate, I would have expected a tougher
report. Would you care to comment on that.
(Mr Kirkwood) That is a fair question, Mr Chairman,
but we were facing two ways. We were desperate to get this Child
Support Agency computer working as soon as we could. If we had
given the Department everything they wanted when they brought
forward the first draft, they would have gone home with the authority
to spend £60 million, and we did not feel in our heart of
hearts that we had the evidence to be able to do that safely and
recommend to the House that this was a proper use of money. So,
it is a bit ambivalent to that extent. I think that the work that
the Committee did was effective because it brought forward a second
and better report, one that was better prepared later in the year
with which we were then quite happy. Although it did not meet
all of our concerns, particularly about risk and the final amounts
involved in the contract, we were much happier about the second
report that was brought forward. We were prepared to accept that,
and that involved a total delay of maybe three months maximum
whereas, I say again, the Department really did not need to use
this power at all because it signed the contract after the Bill
got Royal Assent.
Mr Stunell: I have to say, in contrast to what
you have been saying, the Minister last week was very enthusiastic
about this report and went to some pains to explain to us what
a useful process it was. She said she was more accountable than
she would have been if it had been done by any other process,
paving Bill or whatever. I wonder whether in retrospect you can
say how, if we are going to have this process at all, it might
be improved and made more watertight. That might be a question
for Mr Davis and perhaps, secondly, Mr Kirkwood in more specific
Sir Paul Beresford
62. Can I add some bits so that you can pick
them up. The Minister said that the Section 82 procedure, as it
was carried through, was open and transparent. She said there
was no diminution of parliamentary scrutiny. She also disagreed
with your comment, David Davis, that the items of preparatory
expenditure approved under Section 82 should be identified separately
in the Supply Estimates. She said that could not be done, even
though as I read the procedure the Government was talking of using,
that was exactly what they were proposing to do.
(Mr Davis) If I can deal with a technical issue first,
Chairman. There is a distinction between "preliminary"
and "preparatory". This procedure applies to preparatory.
I give examples of the distinction in the Treasury Minute on this
which says, for example, that hiring extra staff or buying a computer
or renting a building would be preparatory, ie getting ready to
go, whereas preliminary would be piloting, scoping, that sort
of work. For example, I would assume that use of consultants,
as the Government use consultants so much, would be preliminary
rather than preparatory in this context, so there is a distinction
there between those two. It is a very difficult distinction but
an important one in the context of this discussion. Can I come
back to Mr Stunell's point where I think, if I may Chairman, I
will refer to the Department's note to you, Section 5(i) and Section
3(ii), where they make a great deal of "Parliament has to
agree both the amount of expenditure, which cannot be exceeded
under the purpose of the expenditure ..." which to me would
imply that the limit is one which is meaningful. Bearing in mind
what Mr Kirkwood has said, that in effect they were asked for
£65 million in the beginning and it ended up as probably
less than £3 million, if that, then that limit was not meaningful
in the first sense. Secondly, that adds a certain amount of scepticism
to the sentence used in 3(ii) which says: "Her Majesty's
Treasury would expect any such proposal to be cleared by them,
and they would not agree unless there was compelling justification."
The reason I raised those two points is that in the conversations,
and I have to say very helpful conversations that Mr Kirkwood
and I had, with Mr Timms after the end of the debate, this notion
that there was a tight control was implicit, and that simply is
not what we have observed here. The first thing I would say to
you is just in managerial terms I would expect the Treasury to
do a rather better job than clear an Estimate which is 2,000 per
cent over the top and, similarly, as a result of that I would
expect to have limits which are real and not nugatory or otiose.
The second thing I would say is we are told it is more accountable,
more transparent, but I cannot see how this is more transparent
and accountable because, apart from anything else, due to the
practicalities of the matter we agreed to a procedure which in
effect means that it goes through the Committee of Public Accounts
(we do not have expertise in any of the individual areas) and
it is effectively passed straight on to Mr Kirkwood's Committee.
That means that no-one else in the House of Commons has a sight
of it and that in itself is very important. The reason we agreed
that procedure was because we were told that it would have to
be fast. You can see some sense of that in one of the letters
that Mr Timms or Mr Rooker wrote, I cannot remember which, where
they talked about the "emergency procedure", whereby
the draft Order would be passed to the two Committees but they
would go ahead without clearance. So you can see that there was
an impression around the whole discussion which implied that it
should be very fast. The result of the speed on this has been,
in my view, actually to get a rather sloppy procedure. I cannot
find any other word to describe £65 million for £3 million
real expenditure. I would be very, very cautious. Implicit in
this note to you is the idea that it might be extended to other
departments. I would be incredibly cautious about doing that before
seeing this work for several years.
63. Before Mr Kirkwood adds anything, the evidence
we were given last week was that the authorization was for £6
million of spending within the Department and £39 million
potential liability with an IT supplier. In your first introductory
answer you referred to the possibility of having a £2 million
ceiling that you might agree to. Do you think that the imposition
of an absolute limit for any Section 82 in the future is a way
ahead in forcing this into an envelope that you could deal with?
(Mr Davis) No, the reasoning for that was going straight
back to the original cause of the problem, which is that departments
do not, as a rule, do a very good job of the first stage of creation
of information technology projects. If you will forgive me, I
will give a parable example: NIRS2, the most scandalous of the
projects at the moment. In that project you had a bunch of civil
servants who understood the complex National Insurance regulations
on one side of the divide, and you had a company with lots of
very skilful programmers and systems engineers who understood
all the complexities and difficulties of computer language on
the other, and before they got the project up and working they
did not make sure that a massive knowledge transfer occurred.
It has to be a massive knowledge transfer. NIRS2 was described
to the Committee of Public Accounts as "the most complicated
piece of software in Europe". That was why I said, if I had
been asked what I thought about the preliminary stage, I would
have been quite willing to see for IT projects quite a high number.
I cited £2 million for that. Frankly, that was just by reference
to the £900,000 currently applied, to give us an order of
64. Can you define and spell out what NIRS2
(Mr Davis) National Insurance Recording System 2.
That is it. Does that answer your question, Mr Stunell?
65. It goes some way because it is a point that
I hope we can explore elsewhere about what sort of constraints
there should be on this. Granted you do not feel that Section
82 is necessary, the fact is that we have got it in legislation,
so a concern of ours has to be about what constraints ought to
be there which are not there now.
(Mr Davis) If I wanted to cripple it I would say put
an absolute limit on it. That is not the point of what we are
after here. We are trying to get the best outcome in terms of
both scrutiny and effectiveness in terms of government. If you
are going to have any oversight you have got to have some flexibility
in the oversight. My concern is that the oversight is not wide
enough or transparent enough for the whole House on the one hand,
and there is a perfectly good procedure in the form of a paving
Bill procedure, on the other, and it does not, as far as I can
see, add much.
66. You are being very moderate in your language.
Are you trying to tell us in any coded way that you think this
particular event was an abuse of the system?
(Mr Davis) No, Chairman, I am not trying to do that.
What I think in truth it demonstrates is that the Department themselves
did not know what they were trying to do with Section 82. They
did not know what ought to be in or out of this procedure. That
is where the £65 million came from. Then it dropped to 39
plus six. That is how those numbers came about. They did not really
know what they were trying to do. They just knew that every time
they had an IT project they felt under time pressure and this
was a way of relieving it, with not a great deal of attention
to Parliament's rights, but a great deal of attention to their
Mr Forth: I am always interested in thin ends
of wedges, and it does strike me that we have to be very clear
here as to whether we are talking about something specific or
something which potentially has a much more general application.
I would feel more comfortable if I thought it was specific, but
I am afraid my comfort level is endangered by the fact that I
suspect that this is potentially a very large wedge. That is especially
so since we are talking about a complex relationship here between
the roles of statute as the framework of Estimates, as a vehicle,
a mechanism for what I thought was the control of supply by the
House of Commons over the government, the role of Commons Committees
vis-a"-vis government departments, all contained within a
time line where we thought we understood the way things worked
in that something was requested, authorization was granted and
expenditure took place. That was the way I have been brought up
in this place. Now, suddenly, the world seems to be changing.
For reasons which obviously the Department thinks are important,
we are being asked to go down this route. The key question for
me is can we be satisfied, or are you satisfied that there would
be sufficient control and accountability with which we could all
feel comfortable if we were to proceed down the route that is
now being suggested? Are control and accountability going to be
enhanced, are they going to the lessened, are they going to remain
the same? I am assuming that we think that the historical relationship
between government and expenditure and the House of Commons is
a satisfactory one. Let us not go into that too much at this stage.
But even assuming that, what I would be very interested in is
your judgment as to whether or not this is going to make things
better or worse and therefore should I feel comfortable about
67. Briefly, because we are going slightly broader
than the questions that we are on now.
(Mr Davis) Very quickly in a nutshell, I have already
said, possibly before Mr Forth arrived, that I was uncomfortable
with going away from the paving procedure in terms of the fact
that it reduces transparency, it reduces the access of the ordinary
Member of Parliament, and this is a matter for all Members of
Parliament, not just members of the Committee of Public Accounts
and the Social Security Committee. I think the practical procedure,
which we have heard about already, indicates so far that as a
mechanism of control it is not very good.
68. I wanted clarification on one or two things.
You have outlined preliminary and preparatory expenditure, but
this is neither of those from the description you gave because
this was the Department asking for the ability to sign a contract
ahead of Royal Assent, which is not preparatory or preliminary
expenditure. I would like you to comment on that. The second point
is that there were two sums of money involved, if I have understood
what the Minister said to us last week. There was £6 million
for internal expenditure within the Social Security Department
and the figure that was given to us last week was £39 million
for the IT contract. That was asked for on the basis they did
not know when Royal Assent was going to be granted. As it turned
out, it came through four months ahead of their worst case scenario.
That is why they needed the Section 82 permission, in order to
be able to sign the contract if necessary ahead of Royal Assent.
Perhaps on those two points you would like to comment.
(Mr Davis) Some of it would have fallen within all
of those categories. Certainly the £6 million which was within
Department involved taking on extra staff, that is an allocation
if you like, and that would fall within both preliminary and maybe
preparatory expenditure. I do not know what the details of it
are, but certainly some are preliminary and some preparatory.
The second point you have to understand is that, even as it stands
now, we have procedures for the use of the contingency fund which
require two things really. One is urgency. After all, that is
the whole premise of this procedure. The other one is near certainty
of passing into law, in other words near certainty of parliamentary
procedure, which normally means that that procedure can be precipitated
after second reading. I suspect the Treasury might balk a bit
if the second reading won by one vote but I do not think that
applied in this case. There is another procedure as well. In terms
of the actual numbers we are talking about, one of the concerns
I have is, sure, we ended up with 39 plus six (although we did
not use the 39 as it turned out) but the other side of the coin
is that it started out as something over 60, and where that number
came from to this day I am not sure. Maybe Mr Kirkwood knows.
It only came down to 39 plus six as an effect, as I understand
it, of Mr Kirkwood's Committee which threw it back and said come
69. Mr Kirkwood, if you would deal with Mr Stunell's
questions and any other observations resulting from the subsequent
(Mr Kirkwood) The honest truth is that I believe that
the Department, if you pushed Section 82 procedures to their limits,
could apply for Section 82 consideration every year because the
Department is locked into a commercial relationship with Affinity
and they are working on projects all the time. After Child Support
the same platform will be rolled out to accommodate Income Support,
Jobseeker's Allowance and the rest. It is sensible to do that.
You asked a very important question which I have asked myself
often through this procedure, whether this was a set-up, and the
Department was doing it deliberately. I do not think there was
any mens rea involved in any of this. I think that they
were looking for extra flexibility and if they are going to do
this regularly I would get very concerned about Mr Forth's question
about whether this really did give us increased control because
I think there is danger that it would not. I think my view would
be that if we are going to use this procedure on a regular basis,
based on my own Committee's experience, there would be some minimal
requirements that we would have as parliamentarians to insist
upon before you could have any confidence that the control is
even being maintained, never mind enhanced. There would be issues,
for example, like producing a more realistic timetable than my
Committee was originally faced with. Getting a letter on the 3rd
December saying we want this signed off by Christmas is impossible
and completely unrealistic. I think the Department should have
taken far more care about preparing their draft report for my
Committee to consider because it did not last for two minutes
when we started cross-examining them when the officials appeared
to try and defend it. They have to take a lot more care about
what expenditure power they already have under the Appropriation
Votes and the like before they start drafting these reports in
the future. I would insist that if any such Section 82 reports
were taken to a Delegated Legislation Committee, that members
of the Social Security Select Committee who studied the report
and cross-examined the officials should be members of that Committee.
As a matter of record, none of my Committee were put onto the
Delegated Legislation Committee that considered the reports. I
do not think that proves anything conspiratorial or untoward about
that, but I do think it was impossible for us to tag our reports
because of the way the Delegated Legislation Committee was structured.
Contrary wise, if it was required that discussions were taken
not in Delegated Legislation Committee but on the floor of the
House in an hour and a half's debate, Select Committee reports
could then be tagged and members who went to that debate on the
floor of the House or in Westminster Hall or anywhere else, would
be able to be signposted and pointed to the work that the Select
Committee members had already done in the cross-examination of
officials. Otherwise, I do not see there is any other way they
can know or be expected to know. There might be a report in the
Order paper but I would not be confident that that would be safe
to rely on as a method of informing people on the Delegated Legislation
Standing Committee that previous work had been done and some concerns
had been raised by members of my Committee. I would be much happier,
if we are going to proceed under Section 82 methods in future,
if we insist, if we do not have the limits that were suggested
by David Davis, on an hour and a half debate on the floor of the
House with tags being placed on the Order Paper drawing attention
to the Social Security Committee's consideration of the reports.
I think a one and a half hour debate would give me some confidence
that I was able to answer Mr Forth's question in the affirmative.
Finally, I think that each and every Section 82 procedure should
be followed ultimately by a wrap-up report as to what extent it
was used in reality and what the implications were for the Department
so that in the fullness of time user committees and we as the
Social Security Committee can work out whether they were effectual
at all, whether they were worth the candle, and we can build up
our body of knowledge about to what extent these procedures can
be used. I am very nervous that the Government will start finding
Section 82 so convenient and also flexible, that other government
departments will use them (a point Mr Forth makes and makes with
some force). The DTI, for example, might decide they wanted to
make preparations with computers for going into the single European
currency. That is £10 billion going on £36 billion,
if you believe the DTI report last week. This is a game that we
can all play. If other departments latch on, very quickly I believe
that expenditure will spiral out of the control of the legislature.
70. I can assure Mr Kirkwood that a matter relating
to IT and entry into the Euro was raised, albeit briefly, last
week with the Minister. I asked the question myself whether or
not any of the money that might be sought under Section 82 procedures
might be used to, as it were, prepare the computer to take the
software. Unfortunately, we did not get a substantial answer.
I will go no further than that.
(Mr Davis) May I add one point to Mr Kirkwood's suggestion.
I have not thought through his suggestion of a tagged report in
the House and a vote in the House. If we went down that route,
one of the weaknesses in Section 82 procedure is because it uses
the certain legislation route, it is not amendable. I think that
is actually important for two reasons. One is in terms of power.
The other one, frankly, I take the view that civil servants in
particular in preparing these things take a much more serious
view if they feel it is something where they can be given £6
million rather than £30 million, whatever the numbers might
be, so if you are going to look at that, I suggest that you look
at the question of amendment too.
71. Not just the vote, but whether or not it
is after ten o'clock?
(Mr Davis) That is not a matter for me.
72. You have given us some very good ideas and
information which no doubt we shall process. Let us suppose for
the moment that another Section 82 comes along in the next Queen's
Speech and you are dealing with it sometime in the New Year. What
lessons have you learned about the way your two Committees would
operate or how you would process it, if we assume we have essentially
the same system now?
(Mr Davis) As I said before, Chairman, the Committee
of Public Accounts's role in this, in a sense, is a post box at
the moment. It would only be if it was something enormous that
the Committee of Public Accounts would spend a great deal of time
pursuing the matter or if it looked in some sense extraordinary.
It is true to say that the last one did not look extraordinary
except for the sheer speed. What that led us to do was to pass
it on very quickly to Mr Kirkwood.
(Mr Kirkwood) We have learned a lot from this experience.
I would be expressing my Committee's view, I am sure, when I say
that we would defer to the Committee of Public Accounts in terms
of the financial strategy involved in all of this, but of course
the Committee of Public Accounts cannot possibly be expected to
have a detailed knowledge of the internal working of the Department.
So I think that the working relationship we have established is
that the Committee of Public Accounts will make sure that we get
a maximum amount of notice of the intention to move in this direction.
We will do the detailed policy study, looking at the content of
the proposal, but at the end of the day your report and your consideration
in the inquiry you are doing is very important. I think it needs
to look at the strategic financial control of the House of Commons
and that has to be a matter for the Committee of Public Accounts
more than the Social Security Committee.
73. We have already started to deal with this,
but I would like to turn to the question of the possible extension
of powers to other government departments. The Government has
reserved their right to seek powers for other government departments
analogous to those in Section 82. The Treasury has set out conditions
which would need to be satisfied before it granted leave to the
departments to seek such powers. Do you think that such an extension
of Section 82 powers would be wrong in principle or should any
such request be treated on a case-by-case basis?
(Mr Davis) Firstly, it should be clear to the Committee
that I am uncomfortable with the procedure as it now stands so
I have a view that this would not be a route that improved either
transparency or accountability. But if the Government insisted
on going down that route, and there is some indication in their
note to the Committee that that is the route they are considering,
I would look very hard at the extent to which this Department,
the Department for Social Security, has taken on board the lessons
in the Information Technology White Paper which the Cabinet Office
published this year, which was based largely on the Committee
of Public Accounts' report that preceded it. I started out by
saying how the weaknesses were engendered in Government IT projects.
The first use of this procedure has not recognised that and I
would not dream of arguing that we should look to other departments
until we can see serious benefits coming from what the Government
claims its procedure will deliver, and we have not seen it yet.
(Mr Kirkwood) It is a very important question. I cannot
believe that the Government will not expand the use of Section
82 procedures and I think the Committee in its deliberation of
what I consider, as I said before, a very important inquiry, should
bear that in mind. I think that any precedents you establish and
any conditions and requirements that you set down to be implemented
in future use of these procedures, should be done in a way that
bears in mind the fact that other departments will start resorting
to these kinds of powers in future. Therefore, I do not think
you can be too careful about getting the precedents of this case
absolutely right and capable of use in strengthening the scrutiny
of the legislature in future in other departmental situations.
74. In the light of the experience which you
have had, briefly, particularly I think Mr Kirkwood first because
have you had this experience through your own select committee,
what lessons can Parliament learn about future Section 82 applications?
I feel alarmed that you have indicated that you feel that other
departments are likely to resort to this procedure.
(Mr Kirkwood) I only fear that, if fear is the right
verbI think it can be anticipated that more and more government
business will be done using information technology across the
range of public services. Government departments and Next Steps
agencies and the like will have to get engaged in the procurement
of these huge systems, and therefore I think it is inevitable
that other departments will be able to make use of this procedure.
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. If there are some guidelines established
about timetables, the kind of things I adverted to earlier about
getting the timing right and getting the draft report that goes
in front of the relevant select committee clear, if it then has
got a second phase here in Delegated Legislation Committee, about
which I am slightly more sceptical as I explained to you, but
more importantly on the floor of the House for an hour and a half
with tagged reports, I think I can see a set of procedures that
would give confidence that departments would be properly held
to account in terms of this preliminary expenditure. The outcome
report is an essential part of that because if departments year-in-year-out
come along and say, "We really, really need this. It is an
emergency. It is urgent. It is a one-off special occasion",
and then we start finding that six or seven out of every ten are
not used at the end of the day, then I think Parliament can start
saying, "Well, what is the point of bringing these things
forward?" and government departments will start getting a
much harder time in terms of justifying their use at all.
(Mr Davis) One of the arguments put, certainly to
us, was that the reason for the Department for Social Security
justifying this procedure was the fact that they were the direct
government interface to some 77% of the population, and that both
the quality of that interface and the speed with which it could
change to reflect government policy were critical matters. 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 pick the nice
soft target here and once they have the soft target in hand they
can extend it beyond that. I would be more comfortable, the more
I think about it, if we had a procedure which was a halfway house
between this procedure and the paving procedure which, in a way,
is what Mr Kirkwood was describing. Then it is on the floor of
the House, it is amendable, it has got a tagged report to it,
and everybody can know the issue. If it is not controversial,
it will go through like that, but if it is controversial, if it
were about, as Mr Kirkwood raises, European Monetary Union expenditure,
the House would want to know about that. I would be more confident
under those circumstances, but I would still, frankly, want to
see what at the moment is just a pilot study run to the point
at which the prototype's wheels do not fall off. I have to say
in this last episode the prototype's wheels did fall off and were
glued back on again and I do not think that is a very good precedent
for any legislation.
75. I would agree, that if Geoff Hoon were to
pop along to the Defence Select Committee and say, "Give
us a Section 82 because I want to buy myself a new nuclear weapon,"
I would be concerned about that.
(Mr Davis) You would do that under the contingency
fund under the Polaris precedent!
76. As you said yourself, the timescales and
sheer scale of changes in IT do suggest that there is some justification.
I was wondering if there are any areas where you think Parliament
could seek further restrictions on Section 82 and the application
of it and also, because there is no upper limit in terms of expenditure
that can be asked for under Section 82, whether there should be?
(Mr Davis) I have already said once that if you want
to cripple the procedure, that is the way to do it. It seems to
me there are appropriate areas where you have strict limits. Those
are ones where, broadly, they do not come to Parliament, the preliminary
expenditure type. We have them all over the place in the Treasury
in different things you can do, everything from gifts you can
give without parliamentary approval through to this sort of thing.
I think when you come to asking Parliament's approval, it is a
little odd to put a limit on what that approval can be, so long
as the procedure works. A limit amounts to an admission that the
procedure is no good. That is what it is, in truth. So if you
accept that the procedure is no good, you might not want to limit
it, you might want to just change it. My view is that limits are
not the appropriate mechanisms.
(Mr Kirkwood) I would add to that that I think there
is a powerful case for limiting Section 82 to computer development
simply because it is a unique process. If are you buying a nuclear
weapon, I guess people know what the nuclear weapon is and what
it does. If you are trying to, as David Davis said earlier, work
out what the National Insurance Recording System is doing at the
moment, the professionals in the DSS are very skilled at that,
and then you hire in a lot of rootin', tootin', shootin', young,
very bright computer boffins, they talk past one another for the
first three months and there is nothing that is quite like that
in any other public procurement. In my view, there could be a
powerful case. I do not think that the Department for Social Security
would ever contemplate bringing forward Section 82 procedure for
anything other than computer procurement because the experience
is that if you do not plan it properly you get very bad value-for-money
or you get delays or you get both. I do not know about limits.
That is more a matter for the Committee of Public Accounts in
financial terms but I think there may be a very powerful case
for saying a government department can only use Section 82 procedures
for computer procurement.
77. Thank you. Mr Kirkwood, a little earlier
you talked about the "outcome report". What information
should routinely be supplied as part of a Section 82 report? What
information should be contained in the outcome report which the
Minister has promised at the end of the process after Royal Assent?
(Mr Kirkwood) The draft that they showed to our Committee
and, by definition, any draft that would come in the situation
where they were looking for advance approval for expenditure,
would have to involve estimates. I was criticaland I think
with some justificationabout the levels of magnitude of
money they were asking for and the money they eventually needed,
but there have to be ball-park scoping estimates which give them
some flexibility in terms of estimates for preparatory work. I
think that one of the essential elements of the outcome report
would be to confirm how much money, if any, they had used and
for what purposes. There is a series of other things that I would
like to see. The Department itself felt that some of the things
that my Committee was asking for were a bit unrealistic, and maybe
they were, and we compromised on that. That is why, although we
accepted the draft report that they eventually produced, we did
so on the basis of a compromise and there were some issues in
the Department's proposals that we still would have liked to have
gone further on. There are clear categories of things, including
the timing and the amounts of money that it actually had to use,
that would inform the process and make Section 82 procedures more
efficient and more realistic in the future if we were able to
study outcome reports from each individual case.
78. Which really leads to me to the last question
I want to put specifically to the Chairman of the Committee of
Public Accounts, Mr David Davis. It really dovetails in, Mr Kirkwood,
with some of what you have just said. You have suggested, Mr Davis,
that items of preparatory expenditure approved under Section 82
should be identified separately in the Supply Estimates, and that
to an extent dovetails in with what Mr Kirkwood has just said
and some of the remarks he has just made. The Minister, who was
before us last week, argued that it would not be easy to do this.
Do you accept that the timing of the Estimates process may mean
it is not always possible to do as you have actually suggested?
(Mr Davis) No, sir. The reason is straightforward.
Let us divide the issue into two components. That piece of IT
expenditure was related directly to a new piece of legislation.
A new piece of legislation does not spring fully forward to the
parliamentary stage. A considerable amount of work takes place
even before Parliamentary Counsel sees it. One of the problems
in Whitehall is that Whitehall does not think early enough about
the management of the new policy (management with a small m),
about getting the software worked up, about what changes in the
rules of National Insurance or whatever benefit it is, disability
benefit or whatever. We see the wreckage of this down the ages
from the DLA disasters under the Conservative Government through
to NIRS2 today. It seems to me that we have to say to Whitehall,
"You have to start thinking a little earlier about this."
The policy stage should be matched with a management planning
stage. That is all it needs. It means starting thinking a little
earlier, not when you have a slot in the Queen's Speech programme,
which is how it works at the moment, then you start thinking about
whether or not you are going to put out a new contract and all
of the rest of it, which is the problem today. It is really the
fight for legislative time that dictates the process. I think
that goes back to Whitehall's method of managing IT projects in
conjunction with legislative change.
79. Mr Kirkwood, would you like to respond to
(Mr Kirkwood) I concur with what Mr Davis says.
80. Does any member of the Committee wish to
put any further questions to our witnesses. We have covered a
great deal of ground. I hope they think we have covered most of
the valid points on this Section 82 procedure. What about our
witnesses? Were there any other matters you would like to draw
to the attention of the Committee?
(Mr Kirkwood) I just wanted to say that we were deeply
grateful after our experience that you took on this inquiry because
we can now have some confidence that other more objective people
are looking at this. We were left with some misgivings and we
are very reassured. I think your inquiry is a very, very important
piece of work.
(Mr Davis) Can I add my concurrence with that. The
assumption around Parliament tends sometimes to be that the Committee
of Public Accounts is omnipotent. The simple truth of the matter
is that we have a vast throughput of work. We have five minutes
to think about things like this from time to time and when we
have discussed these matters they were in very short deliberatatives
at the end of discussions back in October of last year. Although
from time to time we mount a major procedure where the National
Audit Office has got involved, we tend not to take the length
of time over issues that you are taking over this. I also say
to the Committee thank you for taking it on. It is something which
is a well worthwhile exercise. You know my own view that the Estimates
and Supply procedures of this House are a disgrace at the moment.
This is an added weakness of that disgrace as it now stands.
Chairman: I am sure I speak on behalf of all
members of the Procedure Committee when I say to Mr David Davis,
Chairman of the Committee of Public Accounts, and Archy Kirkwood,
Chairman of the Social Security Committee, thank you very much
for coming before us today, spending time with us, and answering
so fully and directly the questions that were put to you. Thank
you very much indeed.