Public Accounts Committee

Margaret Hodge Excerpts

Thursday 16th December 2010 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

I beg to move,

That this House calls on the Government to ensure that all recommendations contained in Reports of the Committee of Public Accounts and accepted by Government Departments are implemented and that the relevant Minister makes a statement to the House on any recommendations accepted but not implemented within a year of their acceptance.

Over the past nine years, this debate has been ably led by my predecessor, the hon. Member for Gainsborough (Mr Leigh), to whom I would like to pay tribute. His tireless contribution to improving public services and delivering value for money has been acknowledged and recognised by hon. Members across the House.

The very first Public Accounts Committee debate was held on 19 December 1960. The then Chair, one Harold Wilson, began his speech by saying

“in my view, the confrontation in this debate is not between Government and Opposition but between the House of Commons, with its traditional responsibility for controlling the public purse on the one hand and the Government on the other.”—[Official Report, 19 December 1960; Vol. 632, c. 894.]

Those are words that should continue to guide us today. The PAC has never been, and should never be, a creature of either the Government or the Opposition Front Bench. We are a creature of Parliament, working together for the benefit of the citizen, holding the Executive to account and constantly seeking improvements in the value that the Executive give for the money that they spend.

As well as reflecting that long and proud tradition, today’s debate reflects important changes that we have collectively made to strengthen the role of Parliament. For one thing, I am the first Committee Chair to be elected to the post, as well as being the first woman in the job. It is also the first time that my fellow Committee members have been elected to their positions. I think we would all agree that that additional democratic legitimacy increases both the responsibility and the authority with which we carry out our duties.

The PAC has made changes to our standing orders. As well as allowing us to meet even when the House is not sitting—on Christmas day if need be, as we are often reminded by the hon. Member for South Norfolk (Mr Bacon)—it will make it easier for us to gain access to specialist advice from sources other than the National Audit Office should we need to do so. Furthermore, this is the first occasion on which we have had to bid for our slot from the Backbench Business Committee. That, too, strengthens our accountability to our colleagues.

The motion before us today is different from those of the last 50 years. Rather than simply calling on the House to note our reports, it specifies the changes that we want to see in the way in which the Government respond to our recommendations. That is definitely progress.

The final reason why today’s debate is particularly important is the context in which it is taking place. The new Government, for good or ill, have embarked on major changes. The spending review marks the first wholesale fiscal retrenchment for 20 years, and by some measures the greatest such retrenchment for several generations. Other reforms, in the national health service and the benefits system, are similarly ambitious. The Government want to achieve more for less. They want to achieve value for money, and the people of the country want the same. They want real value for money, real efficiency and real cost-effectiveness, so that the financial cuts have as little detrimental effect as possible on front-line services.

We are still in the very early stages of implementation of the spending review, and the question of whether or not the changes will prove to be value for money is still up for grabs, but there is no doubt that the work of the PAC is hugely important at this time. I firmly believe that if our recommendations are heeded, value for money will improve and the delivery of services will get better. Therefore, I strongly urge the Treasury to give diligent consideration to our reports, and then, after not too much consideration, to ensure that concrete action is taken. I can assure the Treasury that we will monitor implementation much more closely than may have been the case in the past.

I thank all those who help to make the work of our Committee effective. It is no mean feat to question senior civil servants from two different Departments every week—three this week—especially given that our hearings range over every conceivable aspect of public service. As might be expected, that does not happen by itself. I pay tribute to all my hard-working fellow Committee members, who turn up to hearing after hearing impeccably well informed and full of incisive questions. I thank the people who ensure that each hearing runs smoothly: the Clerk and his team of hard-working assistants, and the Comptroller and Auditor General and his staff at the National Audit Office. We are able to perform our role only because of the high quality of work carried out by the Comptroller and Auditor General and his staff.

I want to make three observations about the motion. First, Departments have achieved some notable successes, which we applaud. However—this is my second point—value for money is still too patchy. The same issues arise time and time again. Thirdly, in the past, Governments have too often been too slow to act on some of our recommendations. We will be much less tolerant of that inaction in the future.

The PAC has a reputation for tearing senior civil servants to shreds. Its members have been seen as “glass half empty” rather than “glass half full” people. We have been depicted as the hunters, and the poor accounting officers as beleaguered victims. Actually, the Committee has always tried to give credit where it is due, but the fact is that the amount of waste and poor value for money that it must consider has often been overwhelming. We are redoubling our efforts in this regard, however. It is important that success is celebrated, not just because that is fair, but because it is rare that success in one Department does not produce lessons from which the rest of Government can learn.

Two reports that we have considered in the last six months stand out, both from the Department for Education, which is therefore accorded star pupil status, at least on a provisional basis. The first was the welcome success in raising standards in the academy schools programme launched by the previous Government for struggling schools working in challenging circumstances in deprived areas. The second was the success of the programme to increase the take-up of science subjects right the way through the education and training systems.

Regrettably however, more often than not we have to consider failures rather than successes. Despite all the years of recommendations from us, the National Audit Office and others, and despite much good will and many good intentions on the part of Ministers and civil servants, we still find lots to concern us. Everyone pays lip service to the need for value for money, but genuine and detailed consideration of value for money across Government is still far too patchy.

One of the first evidence sessions we held was on the last Government’s attempts to realise value-for-money savings targets set as part of the last spending review in 2007. I was a member of that Government, and let me say that I believe those attempts were serious and sincere. Nevertheless, I must admit that I was shocked by the results. Halfway through the programme, Departments had reported only just over a third—30%—of the savings required, and only a third of them were genuine, sustainable savings.

Faced with the much more challenging task set by this spending review, what needs to change? I want to highlight two issues. First is the Government’s inability to deliver projects to time and within budget. For example, let us consider two of the hearings we have had this week. The Ministry of Defence is renowned for always delivering late and invariably overspending, but yesterday’s session, with the evidence we had before us, was truly shocking. Committing to the aircraft carrier project only to delay it eight months later at an extra cost to the taxpayer of at least £1.56 billion is truly shocking. While that did happen on Labour’s watch, I am strongly of the view that the permanent secretary at the time should not have allowed the signing of the contract, which so quickly led to such a terrible waste of money. On the Typhoons, taking £1 billion out of the budget when the MOD knew we had a contractual commitment to a third phase of the contract, leading to us having to put in £2.7 billion now to pay for a further 16 aircraft that we do not need, is completely scandalous.

Today’s evidence session on the project to widen the M25 left us all flabbergasted. Never mind the nine years it took from concept to contract or the £650 million extra because the contract was signed during the credit crunch, and never mind the £80 million spent on consultants, one of whom went on to employ the senior responsible official; the real point is that we probably should never have undertaken to widen the road in the first place. We should instead have used the hard shoulder, which would have been cheaper and almost as effective.

The second issue I want to highlight is that, time and again, we identified the lack of good and appropriate data, which leads to poor value-for-money decisions and bad choices. Whether through the evaluation of the pathways to work scheme, which measured effectiveness by including all those who asked to go on to incapacity benefit rather than those who were eligible for it, or through the failure of the Department of Health to give primary care trusts the data telling them what works in helping people to stop smoking so that they stopped wasting money on ineffective programmes, the lack of appropriate data too often results in money being wasted.

I cannot leave this subject without mentioning the Government’s recent publication of large amounts of new data on public spending. It is inconceivable that somebody in my position would do anything other than welcome this move towards greater transparency, but I must also sound a word of caution. I must be frank and say that it seems that the problem has never been the amount of data, because an almost infinite amount has always been available; the problem has been how useful the data are, where the gaps are and how well the data have been analysed. To be useful to decision makers in government, as well as to parliamentarians, the National Audit Office and the ordinary citizen, the data must be presented in a way that allows them to be understood and used. I hope that the Minister can give us some comfort that the publication of hundreds of thousands of receipts through the Combined Online Information System—COINS—database is not being done at the expense of the analytical capabilities of Departments.

To date, the Committee has focused on the actions of the previous Administration, which is entirely to be expected because the nature of audit and accountability is to be backward-facing. In time, we will consider the actions of the coalition Government and, as a cross-party Committee that jealously guards its reputation for objectivity, we shall do so impartially. I say clearly to the House that the problems we have identified will not go away simply because of a change of Administration. On the contrary, dealing with them will require concerted action, a willingness to confront age-old ways of doing things and a commitment to improve the skills of civil servants and to get better evidence with which to take decisions.

There seems to be an inbuilt resistance to change in the huge tanker that constitutes the Government machine. Why are projects so often late? Why are we invariably looking at cost overruns, rather than savings? Why can the civil service not build in-house capability to provide effective management and delivery, as well as sound advice? Why is there no culture of proper personal accountability in government at senior levels? Why can Departments not co-operate better and compete less? Why can government not learn from its mistakes?

This is not about political will; it is about institutional inertia and institutional resistance to change. All politicians want better value, enhanced efficiency and improved effectiveness. All politicians, of all allegiances, get blamed when they fail in that regard, yet the ability to succeed in securing those things seems all too often to elude us. That is partly because of the conservative aversion to risk among public sector workers and partly because nobody stays in their job long enough to see things through and be truly accountable. It is also partly because we do not recruit the right people with the right skills and partly because political expediency too often overrides economic efficiency—that is true of all parties.

That brings me to my final observation, which is the one that forms the backbone of today’s motion: the degree to which the Government act on the Committee’s recommendations. It is inevitable I would say this, but it is my sincere belief that the process of improving value for money in the public sector would be made easier if the Government made more effort to implement our recommendations. All too often, too little effort has been made. Indeed, all too often our recommendations have just been quietly ignored.

Let us consider the example of the Government use of consultants. The PAC examined that issue in 2002 and 2006, recommending on both occasions that the then Government do more to grow the skills that they need within the civil service, rather than paying out money to costly consultants. What did we find when we looked at the issue again just a few weeks ago? We found that the proportion of spend on IT and project management grew from 50 to 60% between 2006 and 2010. One of the most staggering revelations was that the Department for Transport’s spend on consultants came to the equivalent of 70% of its expenditure on in-house staff.

There are plenty of other such examples, which is why we are going to get tougher on following up recommendations. When they are not accepted by Departments, we will want to know why. When they are accepted, we will expect them to be implemented. Hence our call that the Minister responsible should make a statement to the House about any recommendation he or she has accepted but failed to implement within a year.

Today marks the publication of the first two Treasury minutes on hearings that we have had in this Session, another reason why the timing of the debate is so good. We obviously need time to study the detailed content of the documents, but they represent a relatively good start. In the response to our report on the future strategic tanker aircraft, I particularly welcome the commitment to fit these planes with a defensive aid package so that at least they can deliver troops to the war zones, as was originally intended. I also welcome the wider commitment from the MOD to work with the Treasury on renewing its guidance about where and when to use the private finance initiative. I must say, however, that is it dismaying to see how the Department is still determined to justify the decision to use PFI on that project. In my view, that is nothing less than an attempt to defend the indefensible.

On pathways to work, the response we have seen is similarly mixed. It is good to see that the Department is seeking to put proper incentives into the new Work programme so that contractors will not get paid unless they deliver. I welcome the commitment to allocate cases to private companies on a random basis in the future so that they cannot cherry-pick the easiest ones. Moreover, the results of Professor Harrington’s review of the new work capability assessment shows that it is more than just our Committee that has concerns about it, and I look forward to the Department’s response. I dislike the assumption that outsourcing these duties to the private sector is definitely the value-for-money thing to do. After all, our report found that Jobcentre Plus, almost without exception, did better than private contractors, even though they were given a smaller caseload in easier parts of the country.

I want to draw the House’s attention to one important aspect of our work over the coming months. Our work will be dominated by the implementation of the spending review. We have already held sessions with experts outside Government, and we have taken evidence from senior civil servants to understand the new framework of accountability and the role and purpose of the business plans and we will develop our own framework for ensuring proper value for money in the cuts and changes Departments make. We will rigorously hold the Government to account, but in doing so we want to assure the House that our purpose is one we share across the Benches. We want to help eke out best value for every penny spent on behalf of the citizens of the country and we want to contribute to the improvement of public services in coming years. All we ask is for serious engagement from Ministers, accounting officers and their staff across government and for the Treasury’s assistance in making that happen.

[Several hon. Members]

rose—

--- Later in debate ---

[Margaret Hodge]

I had the opportunity at the start of this debate to say a lot, so I shall say very little now.

First, I am very grateful to the Government for agreeing to the terms of the motion before us. I simply draw to their attention the fact that there should be no need for any written ministerial statements if every Department responds properly to the recommendations to which they have agreed and implements them. We hope that the device will empower action rather than lead to further ministerial statements.

Secondly, I warmly and genuinely thank all the members of my Committee. The hard work of all my colleagues has led to the rather good reports—I think—that we now put out. We are a team, not an individual, and the quality of our reports reflects the brilliance of that team—all of us who are Committee members. My thanks also go to the National Audit Office, because its work is of an extremely good quality.

In respect of civil servants, on the whole we do not want to criticise what the Government do; we want to celebrate success wherever we can. We just wish that we were able to do so more often. I know from my time in government, as do other former Ministers, that there are a lot of dedicated and very able civil servants, and the question is just one of whether we can get the work going beyond that.

Finally, our Committee’s work is important. Last night, after our evidence session with the Ministry of Defence, I went out for dinner and just happened to talk about what we found. Totting up the amount of money wasted, I noted that £3.7 billion was binned because we cancelled Nimrod; £1 billion was mostly binned because we cancelled Sentinel; £1.56 billion was wasted because we delayed the aircraft carrier; and £2.3 billion was wasted because we ordered Typhoon aircraft that we do not want.

That shows the importance of the vigilance that we intend to continue to have over how the Government spend their money. We cannot afford to waste it, because we need it too much, particularly in the current circumstances, so we look forward to working with the Government to ensure value.

I wish everybody a happy Christmas.

Question put and agreed to.

Resolved,

That this House calls on the Government to ensure that all recommendations contained in Reports of the Committee of Public Accounts and accepted by Government Departments are implemented and that the relevant Minister makes a statement to the House on any recommendations accepted but not implemented within a year of their acceptance.