Finances of the House of Commons

Debate between Viscount Thurso and Greg Knight

Tuesday 11th November 2014 Commons Chamber

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

I beg to move,

That this House notes the First Report of the Finance and Services Committee, HC 757, and the draft medium-term financial plan for the House of Commons as set out in the Appendix to the Report; and endorses the intention of the Finance and Services Committee to recommend to the House of Commons Commission a House of Commons: Administration Estimate for 2015-16 in line with the financial remit set by the House of Commons Commission.

I am very grateful to the Backbench Business Committee for giving me this opportunity again to present the financial plan for the House of Commons. This is the third occasion on which the Finance and Services Committee has sought such a debate. It provides an opportunity for Members to have their say on the House’s finances and the services provided for them.

In my judgment, these debates have increased transparency. They have allowed Members to question the finances and the services that come from them. They have enabled not only questions to be asked but amendments to be made to the plans. All of that has led to a greater ownership by Members of the plans. During this Parliament, the Finance and Services Committee has been working to improve governance, including promoting better oversight of the Members estimate by Member bodies and a new Standing Order on motions with financial consequences for the House, as well as its reports and these debates.

[Sir Greg Knight (East Yorkshire) (Con)]

We should all strive to save money, but will my right hon. Friend nevertheless point out in his speech that some economies available to business are not available to the running of this place? In particular, will he refer the House to paragraph 26 on page 10?

[John Thurso]

My right hon. Friend makes a very important point, one that informed the very beginning of our first debate. Above all else, our job as a Parliament is to scrutinise Government, to legislate and to work for our constituents. The application of resource must be for that purpose. The savings we make, or the efficiency with which we undertake that operation, come as a consequence; they do not drive the way in which we seek to do our business. The overall point my right hon. Friend makes is absolutely taken and I will allude to it at various points during my remarks. I pay tribute to the fact that he has raised the point now and to his excellent contribution to the Committee.

I thank the director of finance and the other House staff for their positive engagement with the Committee, and for all their work and assistance in helping us to prepare the report and our advice to the Commission on the estimate. The finance team, led by the finance director, has undertaken very considerable improvements, including to the accounting system, management accounts, budgeting processes, management accounts and procurement systems. All are helping us to be more efficient and to get better outcomes both in terms of the costs of services and, importantly, what they deliver for us.

May I also use this moment to pay tribute to all the staff who serve us throughout the House service in all areas? I truly think, having now engaged with them for the best part of four years, that had I had such a staff in private life, I would have considered it a privilege to have had them working with me. I think they can be proud of everything that they do for us and we should be very grateful for it.

The Commission is required, under the House of Commons (Administration) Act 1978, to lay an estimate each year seeking the House’s approval to fund administration services. These include the maintenance of the estate, security, the Clerks and the Library staff who advise us, and all the other staff who look after us so well: Hansard; the printing of papers and reports; education, visitor and outreach services; and IT systems. The role of the Finance and Services Committee is to work with the management of the House to prepare a draft estimate for the Commission to consider in December.

The Committee also monitors—this is a new task we have taken on recently—the Members estimate, which funds the Treasury contribution to the parliamentary contributory pension fund, Short money and Members’ ICT equipment. However, the role of the Finance and Services Committee does not extend to the Independent Parliamentary Standards Authority or Members’ pay and allowances, which are dealt with separately.

I am pleased to report that the savings target, which we set in 2010, has been achieved—although there are one or two loose ends currently being tidied up in the savings programme. The House is not bound by the Government’s spending plans. As I said to my right hon. Friend the Member for East Yorkshire (Sir Greg Knight), it is absolutely correct that we have the appropriate resource to undertake our work of scrutiny of Government and as legislators. None the less, it is important that we do so while taking account of the world we live in. The Commission therefore decided, before the 2010 election, that the House needed to reflect what was going on in the wider public sector and to ensure best value for the taxpayer. The Commission committed itself to a reduction in the administration estimate of at least 17% in real terms between 2010-11 and 2014-15. That meant setting a budget of £210 million for 2014-15 compared to a baseline of £231 million for 2010-11.

In December 2013, the Commission agreed an administration estimate for 2014-15 of £201.3 million. However, because of transfers between votes—most notably the merger of the House staff pension scheme into the civil service scheme and other exceptional factors—some adjustments are required to compare that figure with the target of £210 million. However, allowing for all of those factors—details are in the Committee's report—the estimate laid for 2014-15 is some £2 million below the target set in 2010. Part of that is due to a change of culture that has taken place within management and staff, and the fact that we now recognise that resource, once allocated, does not belong to a department and where not required can be returned rather than being spent to preserve the budget. I commend them for that change.

The Commission also decided that savings should be achieved, through detailed analysis of services and how they were delivered, to arrive at something better—not simply cheaper. For example, changes have been introduced in the way in which Select Committee evidence is submitted, processed and published. Less Select Committee evidence is being physically printed. That has not only reduced printing costs, but has allowed a reorganisation of staff in the Committee Office that has provided increased resources for priority areas within the Select Committee work stream.

Members will also be aware that the system for providing them with written answers has recently changed. In the past, written answers were walked across Whitehall in multiple copies—sometimes 500 to 600 answers a day in the Commons alone—and Members mostly received their answers only the following day when they were published in Hansard. They are now delivered electronically. Not only do Members receive their written answers by e-mail as soon as the answer is submitted by a Government Department, but the House will be saving nearly £800,000 every year in printing and related costs.

[Sir Greg Knight]

The changes to written questions are a vast improvement. In many cases under the old system, the press received the answer before the Member.

[John Thurso]

I concur with my right hon. Friend. It is a saving that has made life better for us, which is our objective.

Major savings have been made through reducing the amount of printing undertaken. For example, some lightly used publications are now only available online and most Committees have agreed to distribute papers electronically. The House is aiming for a “digital first” approach, and the Committee expects this to be a source of further financial savings in the coming years.

As someone who spent his professional life in the hospitality industry before entering this place, it gives me particular pleasure to report that significant progress has been made in the past few years in reducing the net cost of catering. My right hon. Friend referred earlier to paragraph 26, which relates to catering, and I fully accept that because of the hours we work and the way we need to be serviced, it is not possible to make the same profit as if we were a fully operational food and beverage operation, but that should not stop us seeking to be as effective as possible in the delivery of the service.

In 2009-10, at the end of the last Parliament, the net cost of catering and retail services was £5.7 million. In the current financial year, at an equivalent point in the electoral cycle, it is forecast to be £2.7 million. That exceeds the target set of reducing the net cost to under £3 million by 2015. I particularly compliment my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst), the Chairman of the Administration Committee, and his Committee on all the work they have done in this area. The savings have been achieved by good old-fashioned sound management of costs and by benchmarking, and it has been achieved at a time when the House has moved to being a living wage employer and has got rid of zero-hours contracts. The staff and the unions, as well as the management, should be applauded for their help in that.

I never expected to see it in my lifetime, but we are now making great progress in working together with the other place. Under a joint procurement process, procurement for the House of Lords, the House of Commons and Parliamentary Information and Communications Technology is all operated by one dedicated service that must produce savings for all three.

The report also considers the prospects for the next four years. In June, the Commission agreed that forward plans for up to 2018-19 should be based on an assumption that the budget for core activities is flat in real terms—that, taking account of Government pay policy and the target for consumer prices inflation, the expenditure envelope for the administration estimate is assumed to increase by 1% in 2015-16 and by 2% thereafter. I stress that this is a working assumption, not a target; actual budgets will be set annually, and clearly it will be for our successor Parliament to decide what it wishes to do, but this establishes a good working base from which the management can proceed.

Even on that relatively generous assumption, it is projected that further savings will be required in 2016-17, 2017-18 and 2018-19. The House service will continue to look for opportunities to make further efficiencies and ensure value for money in the delivery of services through a continuous improvement process that focuses on making services more effective by improving their quality, increasing productivity, cutting costs—or, in the best of all worlds, all three. That most often takes the form of process reviews that engage staff in a continuous review of their work and harness their own creativity to solve problems. There are numerous examples of this, but the goal is to make small savings in time and effort, while maintaining or improving services.

In setting the financial remit, the Commission agreed that some new activities could be undertaken without necessarily having to be financed from within the existing budget. The two main areas are, first, scrutiny and related functions—the Committee received a bid from Chamber and Committee Services regarding Select Committees that we were minded to advise the Commission to accept—and, secondly, the resource consequences of major building refurbishment.

The Commission is keen to deliver a resolution of the House passed in 2007 that there should be dedicated space for education visitors. Construction has now started on a new education centre in Victoria Tower gardens that will accommodate 100,000 children a year, as opposed to the 45,000 we can currently accommodate. In addition, the facility will reduce pinch points, such as the Portcullis House entrance, and release the Macmillan room for other uses. It is due to open, we hope, in 2015.

Following the Wright Committee report at the end of the last Parliament, Select Committees have been one of the success stories of the Parliament, and the Liaison Committee is keen that this success be built on. As I just mentioned, the Finance and Services Committee is recommending a modest increase of £900,000 in the resources available to Select Committees, either in the form of additional staff or by providing additional budget. The Committee is also due to consider a bid from the Library that would enable it to provide more research support.

Members will be aware that the two Houses need to decide how the backlog of work required on this building is to be tackled—a project known as the restoration and renewal programme for the Palace of Westminster. R and R will be a major infrastructure programme that will not start in earnest until after 2020—well beyond the time frame of the budgets we are considering today. An independent options appraisal has been commissioned and is due to be published shortly after the election. Current thinking is that the two Houses might be asked to take a decision on their preferred option in spring 2016.

In the meantime, other buildings we occupy, including 1 Canon Row, the Norman Shaw buildings and 1 Parliament street, require significant refurbishment. This work will not only tackle the day-to-day problems that many colleagues have encountered—leaking toilets, rodents and other problems—but optimise the accommodation we occupy outside the Palace and complete that work before R and R begins. I warn hon. Members, therefore, that in the next Parliament many colleagues and staff will need to move offices as work on the various buildings proceeds. Office moves by House staff to facilitate this process and to co-locate Committee and Library staff have already begun.

Although much of the refurbishment work is capital spending, it can result in quite large accounting changes, largely because heritage and security issues mean that the value of refurbishment is not fully reflected in an increase in the book value of the buildings and that therefore a charge needs to be made. The Commission’s remit does not require the substantial notional charges or other resource consequences of the building work, such as decant space, to be met from within the core budget.

Finances of the House of Commons

Debate between Viscount Thurso and Greg Knight

Thursday 21st November 2013 Commons Chamber

[John Thurso]

I am grateful to the hon. Gentleman for that point and he and I have corresponded on the matter. It was precisely to ensure the robustness of the decision that the Commission decided to look for external professional assistance with no optimism bias, internal bias or anything else. I have a private view on what the result will probably be, but it would be quite wrong of me to state it publicly before we have seen the results of the work. If we get the best experts we can to consider the issue completely dispassionately and judge it against the criteria we put forward, we must wait and see what they say. I will not prejudge the outcome of their work. It will take a little time to do the report and I suspect that the decision will therefore be one for the next Parliament—although probably for very early in that Parliament. That is probably the correct way forward.

Let me now turn to the education centre. In the last Parliament, a decision was made on the recommendation of the Admin Committee to create a dedicated education centre substantially to increase the number of school visits to Parliament. In the light of the likelihood of the restoration and renewal programme’s going ahead and the financial conditions prevailing at the time, the Commission decided not to proceed with the full-on version but instead to proceed with a more modest approach, which is that being proposed at the moment. The proposal is for a demountable building to be placed on Victoria embankment. It will comprise five education rooms with appropriate facilities for looking after schoolchildren and a dedicated security entrance. The latter, of course, will have the added benefit of meaning that they will not have to come through security at Portcullis House. I know that occasionally there is a clash between the interests of Members and those of the education centre, so that is a happy bonus.

[Sir Greg Knight (East Yorkshire) (Con)]

I am grateful to my noble and hon. Friend for giving way. Will the separate entrance to the proposed building have annual security cost implications? Is not the estimate for maintaining security at the education centre almost £500,000 a year?

[John Thurso]

Indeed. I would say to my right hon. Friend, who also serves on the Finance and Services Committee, that I was about to bring out the proper concerns he and other members of the Committee hold on that point. I will deal with them fully in just a moment.

The plans I have outlined will allow an extra 55,000 pupils a year to visit us. The current number is 45,000, so it will more than double. I emphasise that quite a lot of research has been done that makes it very clear that engaging with schoolchildren by getting them to come and see this place first hand and be shown how we work is by far one of the most effective ways of securing engagement in politics. I therefore set out not only to defend the education centre, but to advocate it robustly—we ought to be very proud of it.

The plans will depend on a number of factors, one of which is planning permission, which probably will not be dealt with until January or February. I thought it appropriate to draw that to the House’s attention today, as with a bit of luck, a fair wind and planning permission children could be using the new education centre this time next year.

Some Members have made the valid point that perhaps we should put the education centre on hold until renewal and restoration have taken place, but I respectfully argue the exact opposite. The centre will allow twice as many children to come here, so if we were to wait the likely five to 10 years for R and R it could be 12 to 14 years before the additional children came here, by which time several generations of schoolchildren would have missed their chance completely, so it is very important.

The costs involved—about £7 million in capital costs and approximately £1 million in running costs—are quite appropriate and proportionate to what is proposed. My right hon. Friend the Member for East Yorkshire (Sir Greg Knight) is correct that a substantial chunk of the running costs—£470,000 or thereabouts—is for security, but the House’s total security costs are about £25 million, so in context it is not a particularly large sum. My point of view—I happily recognise that it is purely personal—is that £1 million, which we hope their lordships will consent to share with us, would be a suitable and proper investment in the education of our children and in getting them engaged with politics.