Public Appointees (Tax Arrangements)

Baroness Hodge of Barking Excerpts

Wednesday 23rd May 2012 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

I welcome the Chief Secretary’s statement and I join him in congratulating David Hencke on the work that he did in uncovering the situation. Will the right hon. Gentleman confirm that he and his officials will co-operate with the investigation that my Committee will now undertake on his review?

Will the Chief Secretary comment on the fact that HMRC authorised the payment to the Student Loan Company’s chief executive under this arrangement? What instructions has he given to HMRC to deal differently with exceptions, which he is still allowing? Scope matters. Although his review has looked at the senior civil service, it matters how people are paid, whether they work in NHS trusts or for private companies delivering public service funded through the taxpayer’s pound—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The right hon. Lady is not asking a series of questions. This is a statement. I have given her considerable latitude, given her seniority, but I think she has asked enough questions now. Perhaps she should leave some for other Members who are rising.

Jobs and Growth

Baroness Hodge of Barking Excerpts

Thursday 17th May 2012 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

Today’s debate on jobs and growth is of huge importance not only to the constituents of Redcar but to those in Barking and Dagenham in my constituency. All too often, particularly in this Chamber, people believe that London’s streets are paved with gold, and that there is little poverty or joblessness in the capital. All too often, again in this Chamber, people believe that the challenges facing Londoners are concentrated in the inner boroughs. Sadly, and with a strong sense of anger and frustration, I must tell the House that the reality for families in Barking and Dagenham demonstrates that those beliefs are not only misguided but just plain wrong.

Any set of statistics will demonstrate a high level of joblessness in my constituency and, under this Government’s legislative programme, there is little hope for the future. A datablog published by The Guardian shows that Barking and Dagenham is ranked eighth out of 326 local authorities for long-term unemployment, and 11th for child poverty. If we look at the latest unemployment figures, we see that the unemployment rate in my constituency, across all people of working age, is almost double the national average, and that the number of people on jobseeker’s allowance for 12 months or more has doubled in the past year.

Growth and jobs are vital for my constituents, yet they have become the victims of the Government’s stubbornly blinkered and highly ideological approach to the economy. This involves putting tax cuts for the rich before job creation for the poor, putting deficit reduction before poverty reduction and putting the interests of the few before the well-being of the many. Without active Government intervention, my constituents will find it harder than most to find the jobs that they need to pull themselves out of poverty. Almost 60% of 19-year-olds do not have a level 3 qualification, nearly half the people of working age who are out of work have no qualifications at all, and one in four of my constituents work in the public sector. Faced with cuts in public sector jobs, cuts in training and employment opportunities, a failed growth strategy, little business investment and miserable levels of bank lending, the future for them is bleak.

As Chair of the Public Accounts Committee, I also know that when the Government talk about private sector job creation, the reality is something else. Many of the new private sector jobs are simply public sector jobs that have been transferred to the private sector as a result of the Government’s privatisation programme. We have only to look at the Audit Commission, at the privatisation of the Work programme and of prisons, and at private contractors providing health care to NHS patients to see that many of the so-called new private sector jobs are jobs funded by the public purse. That is scarcely a surge in private sector growth.

The Government claim that they are running the biggest-ever welfare-to-work programme with the Work programme. Let us inject a bit of reality into that claim. I shall look at the Work programme both as a constituency MP and as Chair of the Public Accounts Committee. I have always been an optimist, but I have grave concerns about whether this will be an effective value-for-money programme. Ministers claim that it is value for money because it is paid by results, but surely the programme’s purpose is to get people into work, not to cut the welfare-to-work budget. If we end up spending less, we will do so by achieving less. A detailed look at the programme shows that one in four of those referred will get a job anyway, with public money being spent both on the attachment fee and on the placement. Unemployment is much higher, so referrals are greater and more money is going to private providers, but with fewer people placed in a job.

[Stephen Lloyd (Eastbourne) (LD)]

The right hon. Lady talks about value for money, but does she not agree that the prime providers of the Work programme will be paid only if, first, they get people into jobs and, secondly, they sustain those people in jobs for two years, which will provide the bulk of the money. That sounds like good value to me. Does she disagree?

[Margaret Hodge]

I have two points on that. First, it is not good value if people do not get into work, which is the whole purpose of the programme, and, secondly, one in four of those who get into work would have done so anyway without any intervention at all. Given the black box nature of the programme, we will not know whether people have actually been given support. All the indications I have seen suggest that that is highly unlikely. We are beginning to get evidence to show that the more difficult cases are being parked, simply because all the money is focused on those most likely to get into work.

[Kate Green]

Does my right hon. Friend share my concern that Work programme providers are reporting that when they do succeed in getting people into work, it is usually short term and temporary? If people are cycling round and round the programme, that is certainly not good value for money.

[Margaret Hodge]

We have been looking into the issue of whether short-term or part-time work is being provided. When I tried to meet prime providers locally, they would not tell me how many people had been referred to them, how many people they had got into work or how long those people had been in work. The Government claim to be committed to transparency, but any decent assessment of the Work programme is greatly inhibited by such lack of transparency.

Finally, I shall speak about Barking and Dagenham as an excellent example of where opportunities exist for the Government to stimulate jobs and growth. We might have lost many Ford jobs over time, but we have massive potential for expansion, with Barking Riverside, Dagenham dock and Barking town centre. The lack of public sector investment in infrastructure and services, however, is the major barrier to achieving growth and jobs. There is potential in Barking Riverside, with planning permission granted by the local council for 11,000 new homes, but at the current rate of building it will take 50 to 60 years before the scheme is completed. If those homes were built, it would stimulate jobs and help to tackle housing need.

We cannot get the school that we need in order to assure families who move into the area that their children will have a school place; we cannot get the transport infrastructure we need through the docklands light railway extension, because there is no money there; and we cannot get the Mayor to do anything to stimulate private sector house building. What we need is action, not words. Not a penny of the regional growth fund moneys has come to an area like ours, which needs a huge amount of resources.

I am conscious that many Members want to speak, so let me briefly say in conclusion that although the hon. Member for Redcar (Ian Swales) devoted about half his speech to the previous Government, we are now two years into this Government—and things have got only worse. During the two years on their watch, living standards for hard-working families in Barking and Dagenham have declined. Since they came into office, people’s hopes for a better future—with jobs for their children, homes for their families, and economic growth for their children and grandchildren—have been smashed.

The Queen’s Speech has nothing to say to the people of Barking and Dagenham. It does nothing for a community where needs are great. It fails the hard-working families of my constituents, it fails the businesses in my borough, and it fails to meet the aspirations and needs of future generations who will make Barking and Dagenham their home.

Tax Avoidance (Public Servants)

Baroness Hodge of Barking Excerpts

Thursday 2nd February 2012 Commons Chamber

[Danny Alexander]

I am grateful for the hon. Gentleman’s support for the action I have taken. I was not aware of the example he gave in relation to the Rural Payments Agency. Of course, if other such cases still exist in other parts of Government, that is something the review I have instituted will bring out. I do agree with the statement the hon. Gentleman read out, which is why the Government have taken a series of strong steps—much greater steps, frankly, than the previous Government—to deal with tax avoidance and make sure that everyone pays their proper amount of tax.

[Margaret Hodge (Barking) (Lab)]

I welcome the commitment that has been made to review the arrangements relating to this individual and to review whether such things happen anywhere else across Government. Will the Minister agree to publish the complete list of senior civil servants whom the Government pay through companies when he completes his review by the end of March? In particular, will he report to the House on the role of Her Majesty’s Revenue and Customs in authorising the arrangement with this individual? Will he also report to the House on why the Cabinet Secretary appears to have authorised it? Will he ask officials about, and report to the House on, why a contribution to this particular individual’s pension was also agreed?

[Danny Alexander]

First, I am grateful for the right hon. Lady’s welcome for the action we are taking on this issue. As I said in answer to the original question, I will certainly make available to the House, and indeed to the Public Accounts Committee, if she is interested to follow the issue through that route, too, the results of the inquiry that we have set out and the information on the number of individuals—if there are any others—who are paid under similar arrangements. As I have also said, if there are such arrangements in other places, Departments have actively and urgently to consider unwinding them and making sure that proper arrangements are put in place so that people pay their full share of tax.

There will be opportunities for the right hon. Lady’s Committee to scrutinise the role of HMRC and the Cabinet Secretary in these issues, if it wishes to. It is a matter of public record that the Cabinet Secretary signed off these arrangements. The original arrangements were put in place before I was appointed Chief Secretary, but the salary was brought to me when the appointment was turned from an interim one into a temporary one for two years, which is what the arrangements now are. I am delighted that my right hon. Friend the Minister for Universities and Science has decided, through the Student Loans Company, to make sure that these arrangements apply no further in this case.

Autumn Statement

Baroness Hodge of Barking Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

I agree with the Chair of the Treasury Committee that the impact of the financial crisis and the deleveraging in the British financial system and other financial systems are having a huge impact not just on our recovery but on recoveries around the world. I completely agree that we need to try to clear the impaired balance sheets of the banking system. We need to try to get new lenders on to the high street. That is why we took the decision we took on Northern Rock—to get Virgin Money out there on the high street. I will have more to say on the banking system next month when I respond to the Vickers report and to the very good report from the Treasury Committee.

[Margaret Hodge (Barking) (Lab)]

I welcome the announcement of more investment in infrastructure, but the more I hear about the proposal, the more it sounds like PFI by any other name. Pension funds will invest in public projects only if it is a good deal for them. As with PFI, any sweetener that the Chancellor offers to the private sector will be at the expense of the taxpayer, both in the short term today and for future generations, so what precisely is he offering and proposing to attract pension fund investment, and how is he going to ensure that his scheme represents value for money for the taxpayer?

[Mr Osborne]

Let me explain to the right hon. Lady that what we are seeking to do is to get the pension funds investing in British infrastructure. We are not proposing to provide, in this respect, guarantees for these projects. There are some guarantees set out for specific Government infrastructure projects such as the Thames tidal waste tunnel. What I am talking about with the pension funds is not guaranteed projects like PFI; it is simply about trying to get private sector money invested in British infrastructure. [Interruption.] Let me explain, briefly.

We have Canadian and Australian pension funds investing in Britain, but not British pension funds investing on a sufficient scale. We are going to try to bring them together, through a private sector agreement, into vehicles where they can co-operate and then invest in infrastructure. This is not about the Government underwriting those investments; it is about trying to get the industry together to make private sector investments. There is a memorandum of understanding which sets out how this is done.

Civil List

Baroness Hodge of Barking Excerpts

Thursday 30th June 2011 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

I join others in welcoming today’s announcement and the motion put forward by the Chancellor with the agreement of the royal household. Like others, I recognise the fantastic contribution that the Queen and members of the royal family make to the United Kingdom, and acknowledge the respect and warmth that the Queen commands among the British people. Most recently, as others have said, the royal wedding of the Duke and Duchess of Cambridge gave us all an uplifting moment of joy, allowing us to celebrate with the royal family on an occasion filled with happiness at a time when so many families are facing difficulties and insecurity in their daily lives.

Clearly, if the Queen and the royal family are to carry out their constitutional duties effectively, they need appropriate funding. Some of this funding comes from the taxpayer, so we need to have in place an open and accountable system. The Chancellor’s announcement today puts the direct support from the taxpayer to the royal family on a transparent footing, which will enable both Parliament and the public to understand how much taxpayer money is being spent annually by the royal family and what it is being spent on. This is undoubtedly an important change for the better, and as Chair of the Public Accounts Committee, charged with following the taxpayer’s pound, I warmly welcome it.

I also recognise the historic significance of the changes proposed, and believe it is hugely important for the future stability of the monarchy and its role in our constitutional settlement that we should modernise our structures so that they are fit for purpose in today’s world, and properly meet the legitimate expectations of the taxpayer and the general public. As others have acknowledged, the Queen has acted sensitively and prudently in managing her finances over the past two decades. That is right and proper, and she should be applauded for doing so. She has cut her real-terms expenditure by more than 50% in the past 20 years, and at a time when we are asking every family to tighten their belts, people will be heartened to see that she is playing her part.

The powers proposed in the legislation, as outlined by the Chancellor, are hugely significant for Parliament. The Comptroller and Auditor General will be appointed by statute to audit the sovereign grant accounts and he will be empowered to prepare value for money reports that the PAC can consider. This puts, for the first time, those parts of the royal finances that come directly from the taxpayer each year on a transparent basis, consistent with other public expenditure. The PAC has a long and well-established history of effective public scrutiny, and we will, I am sure, approach these new responsibilities in our traditional way, working objectively and thoroughly on behalf of Parliament and the taxpayer.

We will show no fear or favour. On the one hand, we will not give this new area of our work special treatment, but on the other hand, we will take the issues seriously and ensure that we hold the appropriate accounting officers to proper public account. In our approach, we will examine critically both how the Government allocate funding to the royal family and how the royal family then spend that allocation. As right hon. and hon. Members know, we have a reputation for being straightforward, direct and clear in our recommendations, and I hope that both the Chancellor and the royal household will welcome the new accountabilities and the implications for them. You never know, Mr Deputy Speaker, we might, in years ahead, end up praising the royal household for providing value for money and criticising the Treasury for its meanness. Time will tell.

In this instance, I expect us to take evidence from the Keeper of the Privy Purse and Treasurer to the Queen, Sir Alan Reid. Although the incorporation of the civil list into the new sovereign grant gives us new powers, with new audit and access rights for the Comptroller and Auditor General and new areas for public scrutiny of this expenditure by Parliament, the PAC has in the past examined areas of expenditure by the royal household covered by the grant for royal travel from the Department of Transport and the grant aid for the royal palaces from the Department for Culture, Media and Sport.

As the Chancellor said, in 2010, £5.4 million was granted for royal travel and £15 million for aid to royal palaces. When the PAC reported on the occupied royal palaces in 2008-09 we found that, although the royal household claimed a £32 million backlog of maintenance work, that figure was not supported by rigorous analysis. We said then that in the absence of a consistent approach to assessing the condition of the Crown Estate and calculating the backlog, and without an assessment of the practical consequences of the backlog, the Department and the household could not be sure how big the problem was or what to do about it. We said that the household should define the criteria for inspecting the condition of the estate, agree with the Department the basis for calculating the maintenance backlog and, before the end of 2009, set out a plan for managing it.

As a result of that recommendation, the household adopted a new system for monitoring the condition of its estate to better manage prioritisation of the maintenance work. In the same report, we noted that the Royal Collection Trust received more than £27 million from visitors to the occupied royal palaces, of which just £1.8 million was passed to the royal household to top up the resources available to maintain the palaces. The report found that the arrangement by which money paid by visitors to the palaces went to fund the trust dated from 1850. Clearly times have changed. More palaces have opened to the public and hundreds of thousands of tourists visit them each year, yet only a fraction of the income generated has, in the past, been used to maintain the palaces. The amount paid to the household is at the discretion of the trust, but some staff of the household are also involved with the trust and have potential conflicts of interest.

We said that the Department should work with the household and the trust to revise the arrangements for the collection and distribution of visitor income to reflect the fact that visitors come to see the palaces as well as the works of art in them. In response, the royal household announced a new arrangement under which, in 2009-10, the trust started paying an amount to the royal household in respect of visitors to Buckingham palace, which again helps offset public funding.

To give another example, following a visit by the then Public Accounts Committee to Kensington palace on the back of a report on maintaining royal palaces, the Queen agreed to pay rent—initially £60,000 a year, rising to £120,000 a year—for the Prince and Princess of Kent’s apartment at Kensington palace from her own income. We understand that from 2010 the Prince and Princess of Kent will remain at their apartment but will pay the rent from their own funds.

Those have been our past successes. In future, we might well want to look at a new range of issues, such as whether the royal estate is being used in the most cost-effective and efficient way, with the royal household maximising the potential for income from commercial lettings, and whether maintenance work is being properly prioritised given the backlog. On travel, we might also look at the cost-effectiveness of the options chosen by the royal household—for example, between road, rail and air—to ensure that best value for taxpayers’ money is secured.

On the former civil list, we might want to examine procurement, staffing costs or expenditure on receptions and entertainment. Having listened to the Chancellor’s welcome statement, I would appreciate it if he dealt with a number of issues that I believe arise. He has said that the sovereign grant will be reviewed every seven years. As I understand his statement, he will be taking new powers to reduce the sovereign grant year on year if the income from the Crown Estate exceeds his expectations. I understand that such a power does not exist at present and I would be grateful if he confirmed that it will be a new power. A similar issue arises on the income that the royal household receives from opening the palaces and the royal art collection to the public. How in those circumstances will any increase in income be treated in determining the sovereign grant?

Finally, today’s proposals deal with the annual income received by the Queen from the taxpayer, but we need to ensure that the public interest in all the assets and estates held by the monarch on behalf of the public is accounted for in a transparent and consistent way. This is particularly important in these stringent times when we are asking so much from hard-working families. I would be grateful if the Chancellor addressed this issue in his reply.

I warmly welcome today’s announcement by the Chancellor. This is a truly historic occasion. For the first time ever, we are placing the royal expenditure financed by the taxpayer on a proper footing—transparent for all to see and consistent with all other public expenditure. This is a sensible act of modernisation that I am sure will be welcomed by Members on both sides of the House and by the general public at large. It will help to ensure continuing admiration and support for the Queen and for the role she plays in our constitutional arrangements.

Public Accounts Committee

Baroness Hodge of Barking 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.

Autumn Forecast

Baroness Hodge of Barking Excerpts

Monday 29th November 2010 Commons Chamber

[Mr Osborne]

Yes, I have, of course, seen the forecast for the savings ratio and we will want to address it. It has the savings ratio returning to its average of before the recession, and I think all parties in this House, and certainly the Government, will want to find ways of encouraging saving more effectively than was the case in the past, and to address that particular problem.

[Margaret Hodge (Barking) (Lab)]

What is the forecast for the gap between the richest and the poorest in Britain by 2015? Do the Chancellor and the OBR expect it to grow?

[Mr Osborne]

I am not aware that the OBR makes that forecast, but obviously everything we are doing—whether increasing free nursery care provision for some of the poorest two-year-olds or introducing the pupil premium—is designed to encourage social mobility and to give those on lower incomes a chance to increase their incomes over this Parliament.

Comprehensive Spending Review

Baroness Hodge of Barking Excerpts

Thursday 28th October 2010 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

Given the shortness of time, I will focus on my observations as Chair of the Public Accounts Committee, but I cannot let the moment pass without reflecting on constituency interests, particularly in relation to housing benefit. I share the views of my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock). The housing benefit policy will simply not even meet the Government’s intent. It will not cut housing rents in the private sector in London. If the Government wish to do that, I say to them: do not punish the tenants, cut the rent. The policy will not cut public spending, but it will increase homelessness in London and that will have its impact. It will not help people get into jobs. The very people who will be frozen out of London are those who come in to clean the House of Commons at 4 in the morning and who cannot come in from places such as Dover. We will have more people coming into Barking as a result of these reforms. The policy will inflame community relations in constituencies such as mine, which will simply provide more food for the extreme right, which will exploit such issues to vicious political ends.

I want to talk about issues that I have observed in the few months that I have been Chair of the Public Accounts Committee. Whatever the political intent, I am worried that the capacity of the Government machine to respond, to manage the process and to realise the intended savings is highly questionable. If the Government fail to deliver the vicious savings that they have planned, I fear that they will return for a series of further easy but highly damaging cuts to achieve the £81 billion target. Those cuts might include further slashing the benefit bill, on which the most vulnerable depend, or introducing charges into the NHS so that it ceases to be a service that is free at the point of need.

The record of the civil service in securing efficiency savings and value for money savings is poor. We recently reviewed the performance of Departments in delivering the value for money savings required in the 2007 comprehensive spending review. After two years only a third of the savings had been achieved, and of those reported only a third were sustainable value for money savings. The great tanker of Government was unable to deliver a budget imperative. I note that the Government expect to deliver a further £6 billion from savings in back-office costs, but I am sceptical about whether that will be achieved.

There is also a presumption that closures, mergers and job cuts achieve immediate savings, but in the real world these changes involve massive upfront costs. The Government’s promise that in abolishing the Audit Commission they would save £50 million started to unravel before the ink was even dry on the letter to the chairman of the Audit Commission announcing its abolition. We saw in yesterday’s papers that Barnet, Britain’s first “Easy Council”, was embarking on a programme of savings and was planning to save £3 million in the first year, yet not only is it not going to save that amount, but it is going to spend more on the programme of savings than it will save in the year itself.

Departments operate in silos and appear to have limited understanding of the extent to which cuts in one area impact on the budget of another. Let me give just one example. Her Majesty’s Revenue and Customs has planned to get tougher on fraud and theft, which we all welcome, and it expects to collect a further £7 billion in taxes, but the law officers are taking a 24% cut in their budget, so the Crown Prosecution Service is far less likely to be able to prosecute complex tax cases. If the Government do not consider the effects of the cuts on a whole-system basis, I have absolutely no doubt that my Committee will see Departments passing the buck among themselves for this failure.

If the Government are driven by ideology and do not intend to pursue their policies pragmatically, we will fail to deliver value for money and we will waste public money, forcing cuts elsewhere. In this respect, I offer the example of the pathways to work programme. We demonstrated in our report that private providers perform far less well in delivering jobs and cost more, and that Jobcentre Plus is much more effective, yet the Government, driven by ideology, are determined to privatise that programme.

My Committee will keep a close eye on whether the Government meet their own objectives and do actually deliver on fairness and efficiency in the cuts they make.

Alignment (Clear Line of Sight) Project

Baroness Hodge of Barking Excerpts

Monday 5th July 2010 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point and I will come later to the treatment of income in the clear line of sight project, to address in particular the issue he raises.

[Margaret Hodge (Barking) (Lab)]

May I ask a number of questions on the non-departmental bodies with which the hon. Gentleman was dealing? First, when will they be incorporated into the estimates? Secondly, how will NDPBs that get some of their grant funding from a number of Departments be dealt with in the estimates? The third, and contentious, issue is NDPBs that may have reserves of moneys raised outside of Government, and which want the freedom to spend those moneys in ways appropriate to their governing bodies.

[Mr Hoban]

The right hon. Lady raises some interesting points. On her first point, my understanding is that this provision will come into force for the financial year 2011-12. On her third point, we of course want to make sure that NDPBs still have the freedom to act, and we have said that they will—they will have the independence they had prior to this process. That issue was, I think, taken into account in drafting the 2010 Act, which the right hon. Lady will have supported as a member of the then Government. So those controls are in place.

[Margaret Hodge]

On my second point, the freedom of NDPBs to spend reserves from moneys they themselves have raised was not dealt with under the 2010 Act, which I did indeed support. As a member of the then Government, I pursued that issue and did not get to a good end. I hope that the Minister will undertake to look at it, in order to give those NDPBs their freedom.

[Mr Hoban]

We will look at it, but incorporating NDPBs into the clear line of sight project so that their results are reported in estimates and departmental annual accounts is something that should be done, and the principle underlying these reforms is to do it in a way that does not compromise their status.

--- Later in debate ---

[Margaret Hodge (Barking) (Lab)]

I join others in warmly welcoming the moves that are being taken to simplify and align the reporting mechanisms to Parliament and to make better sense of the arrangements for budgets, estimates and the accounts. I also pay tribute to all those hon. Members who played a part in ensuring that we reached this point. This is the first opportunity that I have had in the House to acknowledge the contribution of the hon. Member for Gainsborough (Mr Leigh) when he held the position that I now hold. Throughout his entire tenure of that office, he did a brilliant job of ensuring proper accountability for Government expenditure, and I know that he also played a part in developing these particular proposals. My grateful thanks go to him.

The proposals are being put forward at a particularly important time for Parliament. As we go through a period of financial constraint and cuts in public services, it is hugely important that the decisions taken by the Government are properly accounted for to Parliament. If the new arrangements make it easier for Parliament, either through its Select Committees or through debates in the House, to ensure that the Government are better held to account, we will all welcome that. This is a particularly important period, in which real value for money for every taxpayer’s pound spent is of paramount importance to members of the public.

Better, more consistent figures are one part of the story, but I would like to raise two further issues. First, we need proper time in which to debate the issues that will come out of the special financial accountability to Parliament, and I hope that Ministers will not always designate the days that are controlled by the Back-Bench Committees as those on which we can debate them. These matters are of enormous importance to Members, and should not be contained within those 35 days. I ask the Minister to ensure that the Government will make time available for the proper debate of pre-Budget reports, the spending review and Select Committee reports on expenditure.

My second point is that we all need proper time to carry out financial scrutiny of the figures for the public, whether in the form of estimates, budget estimates or accounts. I hope that Parliament will be given appropriate time to do that, to ensure that accountability.

In generally welcoming these measures, I want to ask the Minister a couple of questions. First, if we are to be able to exercise effective public scrutiny, we shall need timely presentations of the estimates—as close as possible to the Budget or to the start of the financial year. What precise undertaking can he give us on when the estimates will be presented to Parliament?

My second question is on supplementary estimates. In the report produced by the Liaison Committee, there was a suggestion that we would strive to—[Interruption.] Is that ringtone an attempt to cheer up my contribution? There was a suggestion that we would strive to reduce the number of times that it was necessary for us to consider supplementary estimates. Has any advance been made on that matter, and on the Liaison Committee’s recommendation that supplementary estimates should come before the House only once a year? I also agree with my hon. Friend the Member for Harrow West (Mr Thomas) that it would be helpful to know what progress has been made on the development of mid-year reports on spending and performance, with an update on the provisional allocations for next year. When can we look forward to those being introduced?

I warmly welcome the Government’s decision to publish online all expenditure over £25,000, but will the Minister tell us what steps he is taking to calculate the administrative costs and bureaucratic burden of that new measure of accountability? As well as putting that information on the website, will he also ensure that it is placed in the Library, so that all Members of the House may have easy access to it? With that, I join others in noting that there is agreement across the House on these proposals, and I look forward to their early implementation.