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Public Accounts

I am dimly aware of that case. It casts a comic light on the whole procedure, but I am concerned about the rush to employ consultants without checking whether people in the Department can do the work. The problem is that we seem to need to reassure ourselves of the value of any change by getting it authenticated in a consultants' report. We need tighter management, so that those firms of consultants that have failed, or whose reports have proved inadequate, are excluded from future contracts. That lack of control is another problem but, although I have spent so much time talking about consultants, it is not a matter that appears in any of the reports that we are dealing with today. I shall therefore move on, delicately and gently, to another common obsession—the private finance initiative, which our Chairman mentioned in his speech. More than 600 PFI projects have gone through so far, and more than 100 are in the pipeline. We are reaching a difficult moment, as many PFI contracts—such as Building Schools for the Future, and others—are crumbling because of the credit crunch, with the private sector no longer able to provide the necessary credit. This is an emergency, and it is interesting that the Government have said that some projects will be paid for out of the public purse. In my view, that is what they should have done in the first place. In this country, the PFI amounts to a sort of outdoor relief for capitalism: we shove money into the pockets of the private sector, at no great risk to it or benefit to us. The one benefit to the Government is that the use of PFI keeps projects off the public sector borrowing requirement. If we had been willing to defend borrowing and accept a higher PSBR, we could have done everything more cheaply and efficiently. However, PFI is a fact of life. Our report on it dealt with the need for proper project management in the service or sector where the contract work is being done. Again, the Treasury has failed to provide advice—to local government, for example, or the NHS—about how a project should be managed, or to ensure that a proper manager is in place to control the contract. When one looks at PFI contracts, one finds all sorts of excesses, such as the management charges that are imposed, for instance when a PFI contract is transferred to a special-purpose vehicle, or when services are provided. One of the more ludicrous examples was the charge for replacing light bulbs. How many PFI contracts does it take to change a light bulb? At the present rate, we might need another PFI contract to find out, but the imposition of management charges in an unsupervised and uncontrolled manner is a way for companies to extort money from a contract. The lack of specific management control by the recipient of a project, and of specific advice from the Treasury about how the project should be managed, is leading to waste. That brings me to another common failing: the inability of Departments to deal effectively with business or organised unions and pressure groups. For example, the management of health service contracts for GPs resulted in their being made much wealthier, but there was no dramatic improvement in the service provided to patients. We are now trying to catch up by asking GPs to provide more services and to open for longer hours, but the contract should have provided for such things in the first place. We more recently examined the new system of health service pay, and although it is right to provide a proper, effective structure, everyone ended up being better paid. The system did not achieve the purpose of having more effectively trained and qualified staff, although that should have been what the contract was all about. That was a failure. We have not considered in these reports further failures in defence issues, but there is an inadequacy in dealing with those big interests and big problems. The last common fault that is worth considering overall is that, while we are spending money through the PFI contracts and consultancies, we are less adequate in raising the tax revenues to support doing so. We have been soft on tax avoidance and tax evasion. That comes out in the report on large company tax payments, where the resort of Her Majesty's Revenue and Customs is to appoint a customer manager to each company to maintain friendly relations, rather using than strict, powerful supervision like the American tax authorities, which are pretty tough on tax avoidance and tax evasion. We highlighted the problem of the relative inability of the teams that deal with tax matters and tax havens. Fortunately, we are now committed to dealing with tax havens. I am glad that the Prime Minister has made that a central issue. For many years, we have told HMRC and Treasury Ministers that the issue needs to be dealt with, and they have said, "Very interesting. That's slightly shocking. Thank you for the information." We have gone away, and nothing has happened. Now, it will be a front-line issue. Jersey and Guernsey are already saying, "Well, we are not tax havens. We're just rather nice islands, with a pleasant existence and a low-tax regime, so please don't call us tax havens." It is a big issue. The TUC report on the amount of money lost to the Revenue by tax manipulated through tax havens is startling. What we came across in the report on large companies is that Revenue staff are comparatively underpaid and under-skilled in dealing with the large teams that big businesses and tax consultants can mobilise. They are always leaping one step ahead in developing new devices, and the Revenue is lumbering slowly behind. It now proposes to bring back retired staff and put them into service again, but the problem is one of building up the expertise, paying them sufficiently and keeping them, given all the poaching done by the accountancy houses and big business. It is unsatisfactory—this, too, comes from the customs and excise report—that the means of bringing in the tax are less well developed than the procedures for spending it. That is the essence of my observations today. Not only do we have a problem in ensuring that the reports are implemented—on the whole, they are—but the procedure is unsatisfactory for us, because we are always being confronted by officials who are not responsible for the mess that has been created who promise to clean it up and ensure that things work okay. We are making posthumous changes. We are successful in individual reports, but we need to look at the common patterns of failings that produce such reports, because it has become clear over a long period that there are common patterns and that they should be dealt with as a pattern, rather than as specific issues.