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Public Accounts

I am only too aware of that. Even in my constituency, the very small firms that can be light on their feet, which are often set up by people who come out of the military to set up their business on retirement—experienced technicians with enormous experience and the qualifications to undertake some of this work—find it difficult to engage with the large firms on the contracts. One way in which procurement can be speeded up and quite a lot of money can be saved is if the small and medium-sized enterprises are much more engaged in the process, perhaps through some sort of contractual arrangement. I entirely agree with the hon. Gentleman. The strategy may be a bit outdated, having been written more than 10 years ago. We know that there is to be a strategic defence review, but many of the earlier assumptions have been undermined by our experiences in Iraq and Afghanistan. The fact that our enemies can move around much more swiftly and expose weaknesses in our defences means that we need to review our urgent operational requirements much more often. As the PAC report pointed out, future contracts need to be much more flexible and adaptable so that we can be much lighter on our feet. The key question is how that recommendation can be taken into account, as this has always been an extremely difficult and perennial problem, going back decades if not longer. The Committee Chairman mentioned the report into the oversight of the CDC group by the Department for International Development. The matter had been brought to hon. Members’ attention somewhat before the report was begun, although I suspect that the fact that everyone had so much on their plates meant that not many got around to looking at it. I was extremely pleased with the report, and mention has been made of matters such as the chief executive’s salary and so on, but what stands out for me is the fact that CDC is not doing what it was set up to do. We need to revisit how CDC operates. Of course it is important that it makes a profit, but that is a heck of a lot easier to do if it deals only with certain markets and businesses. Enhanced performance may lead to larger bonuses—who knows?—but the assumption was that CDC would work in smaller markets, with more difficult companies and in the more difficult areas of the world, because that was where there would be a crying need for support. It appears that DFID has taken its eye off the ball, so it needs to go back and make sure that CDC does what we believe that it should. That may make the sort of profitability that CDC has achieved a heck of a lot harder, but the organisation was not set up to make easy profits in easy markets. That is not what Parliament or the country want: we want it to go into the more difficult areas of the world and help developing countries to get their indigenous businesses going. In that way, they can become more successful economically and less in need of aid and assistance as a result. The report contains some excellent stuff. I know that it has probably been alighted upon because the media are very interested in matters such as the salaries of chief executives, but it put a spotlight on the operation of CDC and showed that it was not really doing what we wanted it to do. I turn now to the letting of rail franchises. I use the train to and from Cornwall every week and am only too well aware of the performance of the rail franchises, especially First Great Western. The company’s acronym is often expanded in a rather derogatory way but—I do not know whether this has anything to do with the PAC—there has been a lot of improvement even though there is still a long way to go. However, there are many matters on which it has been difficult to shine a spotlight. In my part of the world, for instance, FGW’s intention to raise car parking charges did not exactly encourage people to use trains. Another problem has to do with the massively complex and expensive fare structures. A fortnight or so ago, I bought a ticket at Paddington using my senior rail card. I was given a ticket for £40, and I said, "No, you must’ve got this wrong." The person in the ticket office replied, "No, this is a special deal for people over 55. We assumed that you must be over that age because you’ve got a senior rail card." I asked whether it was a return, and was told that it was. It is astonishing that one can get a return all the way to Cornwall for only £40. I was not aware that it was possible—although I suppose the offer had been marketed—because the normal cost is around £200. The fare structure is so extraordinarily complex and expensive that it must be beyond most people. The problem is that the train companies are competing against internal flights. I suppose that some people might see it as unfortunate, but it is cheaper to get a flight from Plymouth to London City airport than it is to travel by train. The flight takes an hour and half, but the train takes three and a half hours, plus half an hour on all the other bits and pieces. We are trying to promote rail use, but it is cheaper to travel by air. Then we have the overcrowding problem. Some people thought that that was a planned strategy—that if there was lots of overcrowding, the company could stick the price up and thereby both adjust its profitability and decrease the overcrowding. The whole question of rail franchising will come back again—at least I hope it will. Although there has been reasonable improvement recently, there is still a lot to be done. If we want public transport that is inexpensive and easy for people to use, so that we can meet our emissions targets and so on, we will have to look more closely at how rail franchises are operating and whether the companies are doing what they said they would do. As a member of the Treasury Committee, it was inevitable that I would want to discuss the PAC’s 31st report, on the nationalisation of Northern Rock. The Treasury Committee reported on that as well, of course, and I think our reports complemented the PAC report well. I have never taken the view that the Northern Rock affair was necessarily a forerunner of the disaster that we have seen unfold since. Northern Rock was not, in the jargon, a casino bank; unfortunately, however, it had access to the casino and it was that access that greatly assisted its downfall. Very early on, the FSA, if not the Bank of England, identified Northern Rock as one of the legendary outriders, operating way beyond the general mass of its competitors and going far out on a limb. However, had that bank undertaken some de-leveraging and sorted out some of its wholesale contracts and so on, I think it would have had a fighting chance of avoiding failure and subsequent nationalisation. I wish to examine the idea of success and the direction in which we are to go now. The PAC report comments that""Goldman Sachs commenced work as the Treasury’s financial adviser in September 2007"." It has been interesting to see reports of Goldman Sachs’s current profitability and the bonuses it is paying—no doubt, it secured a decent fee for its work for the Treasury. It is also interesting to read that the agreement between the Treasury and Goldman Sachs, which""included a monthly retainer plus a success fee"," was not reached until some time after Goldman Sachs commenced its work, but that "success was not defined." I am not certain whether success is defined now or what Goldman Sachs is likely to receive by way of a success fee. Nationalisation is one thing, but if the public are to get some success out of Northern Rock, some hard work needs to be done. It is not just a matter of paying Goldman Sachs some sort of success fee, based, no doubt, on its view of what constitutes success. Some work has recently been done on the potential for restoring Northern Rock as a mutual—dividing it into a good bank and a bad bank, with the bad bank being managed out by UK Financial Investments and the good bank being put back into the market as a mutual, perhaps to encourage revitalisation of the mutual sector. Some good work has been done on that, particularly by the Building Societies Association. I hope that the Treasury, the Public Accounts Committee, or both will consider the possibility that value for money for the public may be gained from more than the financial repayment of the support Northern Rock was given. If Northern Rock was returned to the market as a mutual, it could be a catalyst for the revitalisation and expansion of the marketplace for financial companies—banks and mutuals. Our aim could be not only to get Northern Rock back into the market and to get back some of our money, but to use it as a means of kick-starting a renaissance in the mutual sector. I hope that the PAC, the Treasury or both will look at that in the not-too-distant future. Finally, I thank the members of the Committee for all their hard work. I think that it is about the oldest Committee, and it is clearly one that should be given all the support and resources that it needs. After the next election and over the next few years, saving money, as opposed to just spending less, will be an extremely important component of any Administration. Whoever serves on the Committee, they will be providing a valuable service to this country and to the enormous number of people who feel very let down in many ways. If they begin to see that Parliament is on their side in saving their money and improving their services, that will do a great deal more to restore the reputation of this House.