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Public Accounts

We can assume that this will be the final debate about the reports and activities of the Public Accounts Committee before the election, which will probably be on 6 May next year, I understand. Before people rush from the Chamber to make a note of the date in their diaries, I should say that it is not infallible. I hope that this will not be the last debate, however, because we will continue to work for up to six months until the election and there will be matters to report on during that period. We need to keep up the pressure on government to improve performance which these six-monthly debates give us. This is our one voice that is heard more widely than our mere Committee hearings and reports, and we should use it to the maximum. As befits a deferential member of the Committee, I agree absolutely with our Chairman, the hon. Member for Gainsborough (Mr. Leigh). He gave a commanding overview of what we have reported, and he pointed out the serious savings that, based on our reports, can and should be made. The Committee has identified a number of failures that if rectified would produce serious money that could be used for other things which, if implemented, as I hope they will be, would provide better government and a more efficient public service. We need to keep up the pressure, rather than say that we will abandon it now to go into the wild fields of electioneering, with all the media exaggeration of what can and cannot be saved. Today I am perfectly happy to echo the hon. Gentleman, and to take time out of my own campaign to retain Great Grimsby as a Labour seat to back him and the Committee’s efforts. Being a member of a Select Committee is generally one of the few delights of a Back Bencher’s somewhat dreary and pressured existence, but being a member of the Public Accounts Committee, which as the hon. Member for South-East Cornwall (Mr. Breed) said is the oldest—and certainly the best—Committee, is the best part of the job. It has been a sheer pleasure to be on the Committee and see so much of the inner workings and possible failures of government, so I congratulate the Chairman on his chairing of the Committee and his summary today of our performance. With that grovelling servility, I shall move on to my own remarks. These debates are a chance to establish an overview of the Committee and the failures in government that it points up. At the Public Accounts Commission the day before yesterday, I was delighted to hear that that is also the intention of the new Comptroller and Auditor General. He wants to develop a system for bringing out the common patterns of failures and weaknesses in the public services. I hope that that will ultimately produce a manual of mistakes that have been made, which will be an invaluable practical teaching guide, particularly for the training of civil servants. It will also be valuable to us, as a Committee, in letting us know what to look for in terms of the common patterns of failure and chief weaknesses. That will put our debate on a very practical level as opposed to the emotive comment and populist onslaught from the media, who take minor failures, exaggerate them as if they were general practice and then denounce the entire machine—the civil service and Government Departments—for failing to take account of them. That emotive level of debate is not an appropriate one for us: our job is to find the common patterns of failure and to eliminate them. That will become even more necessary as the recession increases the importance of Government intervention. From my point of view politically, the problem is not big government, as the Leader of Opposition has identified it—it is not about the scale of government but about the efficiency of government. Bigger government is inevitable as the only way of coping with a recession and economic difficulties. Our job, as a Committee, is not to argue about the scale of government but to make it more efficient and to see that it functions economically and effectively to serve the purposes of the public. We are not part of the populist argument, but we are an invaluable tool. The real need is not for bigger or smaller government but for efficient government and an efficient public service, which will itself be more economical, as our Chairman said, and save an enormous amount of money for the wider purposes of government, giving more satisfaction to the people. I want to concentrate on the pattern of common failures and weaknesses in government that are responsible for a lot of the opprobrium in which Government Departments can be held. I am interested in the notion of the continuous grinding away of efficiency savings year by year whereby we can count on a certain amount for, say, this year. That is often responsible for fairly disastrous failures. At the Rural Payments Agency, for instance, the efficiency savings led to the firing of public servants and a diminution of the role of the RPA just as it hit the crisis of rural payments and the common agricultural policy, and it had to re-employ people to do the job and provide the knowledge that the fired civil servants had provided. That is not efficiency, but gross incompetence. This is not just about relying on a grinding process of efficiency savings—we need an invigilation of the processes to ensure that they are effective instead of imposing a general restraint on them. Let me give my view of the common problems. First, there is the propensity to spend huge sums on consultancy payments, largely to the big accountancy houses, which under this Government have grown fat on enormous contracts. Admittedly, I slightly exaggerated in our last debate when I gave the figure in billions rather than millions of pounds; I do not suppose that it is possible retrospectively, at a six-month remove, to correct Hansard. However, whether it is millions or billions, these sums are still huge and unjustifiable. It is an abdication of responsibility by Ministers, who formulate a policy and get it sanctioned by a consultancy report without giving the civil service—the senior civil service, in particular—its normal role in policy formulation, which is to encourage, to advise and to warn. It becomes a coalition of Ministers and consultants who justify the policy on the basis of consultancy reports and then use them to argue in its favour. However, those consultancy reports are often ineffective and they are all an expensive way of anointing and sanctifying particular projects. Many of the reports have been inadequate—we heard of an example in our hearings just this Monday as part of our inquiry into Metronet. Tens of millions of pounds were spent with Freshfields, PricewaterhouseCoopers and other big consultancy houses for auditing the contracts, giving advice on them and ensuring that they were okay. At the end of it all, despite all the advice and what it cost, the contract with Metronet effectively bombed. It was not valid or effective. It did not provide the Department for Transport with a means of controlling output or performance, or really with any role in performance at all. It was partly responsible for the failure of the Metronet project and the fact that the Government had to pay £1.7 billion in the four years before that failure. That should have been the sum of the payments over the full life of the contract. It was a big expenditure of public money—more than £400 million effectively wasted —because of inadequate corporate governance and oversight, and because the contract itself was not an effective way of maintaining control. That is the situation all too often. We get advice from consultants, who are not then held accountable for the failure that they should have anticipated. There needs to be more effective oversight, and not just by the Committee, because our oversight is posthumous. The money is gone by the time we come to deal with it. We try to close stable doors after horses have bolted at enormous expense. Oversight should perhaps be provided by the Office of Government Commerce, which needs a stronger and more effective role than that of an advice service or the toehold of accountancy houses in Government so that they can push their case for contracts. It should have an audit and control role over those contracts, and it should ensure that performance is adequate. If it is not, it should demand sanctions and penalties. The same is true of IT contracts. All too often, Departments seem incapable of dealing with the wily stratagems and sales patter of consultancy salesmen, particularly from the big houses, who offer expertise, but over-praise the product in question and forecast that it can do more than it actually can. Departments, in turn, try to set too many objectives to be accomplished, which always leads to failure in IT contracts. When we try to do more with an IT system than it can bear, it inevitably breaks down and performs inadequately. There is failure on both sides, on the part of the Department and the salespeople. We see that problem in various reports before us. Implementation of the defence information infrastructure programme is running 18 months late. We recommend that the Ministry of Defence should ask its contractor ATLAS to monitor and report regularly on the health of legacy systems and develop contingency plans for each system, funded by the management fee that it receives. That is an explicit criticism, but it is too late. The matter should have been overseen by the OGC and the MOD itself when the contract was agreed. The hon. Member for South Norfolk (Mr. Bacon) will no doubt wax eloquent about the NHS national programme for IT, as he has so often in the past. Here is a contract, however, that is so curious that it is inexplicable to me. Our report showed that the care records service is at least four years behind schedule. Of the original four local service providers—the main suppliers responsible for implementing systems at local level—only two remain. The others have dropped out. The Government have found that while they can direct NHS trusts and primary care trusts to take the systems, they have no such power over foundation trusts, even though the system would generate substantial benefits for patients. Therefore, foundation trusts have not participated, which pulls the plug, in my view, on the whole system. That is another example of a contract that was not adequately thought through or adequately audited right at the start. The Government were trying to do too much with the systems, which were over-sold. Departments need better advice to put them on a more secure and effective platform for controlling the suppliers of IT systems they deal with. As the Chairman said, no taxpayer pound should be the source of easy profit. That is an absolute maxim. However, in consultancy and IT services, the taxpayer pound has been a source of far-too-easy profits. We need to control that, exact penalties where necessary and blacklist firms that are over-selling in that fashion to see that they do not make the same profits and mistakes in future. The third common factor that we point out and which I derived from the reports we are dealing with today is that the Government do not think through their purposes or the difficulties of achieving their objectives clearly enough. Because they are an idealistic Government, and because my party is idealistic, they are a Government of impulsive gestures—"We will do so and so!" The gestures come from the heart, which is okay—most of my gestures come from the heart; it is just that I am less competent than I assume the Government to be—but the consequences of implementation are not thought through. If projects fail, it increases public alienation and cynicism about the Government’s purposes and objectives. Our report on the letting of rail franchises by the Department for Transport includes another example. One would have thought that that was a fairly straightforward technical and financial matter, but our report shows that promises, with Government concurrence,""of bringing 1,300 new rail carriages into service by 2014"—" we should do that because of the overcrowding and pressures, particularly on London commuter services but also on the east coast main line, which I use—""look over-optimistic"," which they are. We promised 1,300 new rail carriages by 2014, but, as the report continues:""There are only 423 on order so far, and another 150 carriages are the subject of negotiations. It takes 30 to 36 months to mobilise the supply chain"," so there is no prospect of that happening. It just was not thought through. We issue the promise—rightly, because it becomes something that we want to achieve—but we do not take account of the practical considerations in delivering it. There are more examples of things that have not been thought through in our "Widening Participation in Higher Education" report, the result being:""The Department…"" has not developed""a single source of information to enable potential students to identify easily the bursaries and grants for which they may be eligible."" If participation is to be widened, that is a fundamental, straightforward requirement, but it was not done. Guidance to young people on how to access higher education is a variable quantity. The Department and its partners should develop guidance on the financial support available. Again, we will the end, but do not define the means. It is another failure to think things through. The same problem is seen in improving adult literacy. We proclaim the intention, but we do not use the practical means of fulfilling it, such as educating people in prison. The same is true when it comes to energy use reduction. There is a confusingly wide range of energy saving advice. In that case, we will the end but provide too many means, none of which make enough of an impact to achieve the objective. That is the third common pattern of weakness. I also include tax credits, which have been the subject of a long series of considerations by the Committee and the NAO. Tax credits were well intentioned. It was right to put money in the pockets of less well-off working people and pay it to them directly through the tax system. But because of the excessively strict rules on which the Treasury insisted, the system was inflexible. The earnings of people who are in and out of work fluctuate wildly, and the result is overpayments or underpayments, and poor families end up facing demands for enormous sums that they cannot possibly pay back in the time allowed.