Alignment (Clear Line of Sight) Project

Michael Fallon Excerpts

Monday 5th July 2010 Commons Chamber

[Michael Fallon (Sevenoaks) (Con)]

It is a pleasure to follow my hon. Friend the Member for Gainsborough (Mr Leigh), and all of us look forward to hearing from him in this Chamber on his 90th birthday.

I, too, welcome warmly and, I hope, briefly the motion and the Government’s early action on the clear line of sight project. As my hon. Friend the Minister said, it has had a very long gestation. We are being asked to take note of a document that is 16 months old, and of a proposal that is at least three years old, and probably four years old. For all that, it is a welcome proposal, because it puts budgets, estimates and accounts on the same basis, and the Treasury Committee has long encouraged such a move. It is very good news to hear from the Government that the budgets will be aligned from this April, and I understand that the estimates will follow from April next year. I welcome that.

I have only three technical points and then a proposal. I hope that they are not too technical, but if they are I am happy for my hon. Friend to write to me. First, I understand that in budgets, public capital expenditure by private bodies is treated as capital expenditure, but that, when it comes to estimates and accounts, it is treated as recurrent expenditure. My hon. Friend proposes to remove the cost of capital charges from the accounts, but I am still not quite clear how the estimates and how Parliament will see the capital that private bodies expend on the public’s behalf.

My hon. Friend the Member for Chichester (Mr Tyrie) has already discussed my second point at length, and I am grateful to him for his kind words. It is about the loss of control—to which my hon. Friend the Member for Gainsborough referred in an intervention—between the gross and net income totals. We have to accept that there is some loss of control, but I hope that my hon. Friend the Minister will reassure us that what matters is the detail of the net income to be provided. For current expenditure, that might be fees for capital expenditure, receipts or whatever, but it is important that we have sufficient sight of the income totals, and I am sure that my hon. Friend will reassure me on that.

The hon. Member for Birmingham, Yardley (John Hemming) touched on my third point, which is about the treatment of private finance initiative contracts. I understand that, under international finance reporting standards rules, PFI contracts are now shown on the balance sheets of individual departmental accounts, but that they might not appear in the calculation of net debt in the new, whole of Government accounts. Therefore, I would be grateful if my hon. Friend the Minister could explain how he proposes to reconcile public sector net debt, which is calculated on the national accounts basis, with the same figure that appears in the departmental accounts using the IFRS standard. That will be especially important as the PFI process peaks.

As the proposals are adopted, and as the assessments are prepared on that basis next year, the ball returns to our court. Therefore, I shall touch on the suggestions that my hon. Friends the Members for Chichester and for Gainsborough made and, indeed, what the Minister and his shadow, the hon. Member for Harrow West (Mr Thomas), said. It is true that we will have the advantage of the Backbench Business Committee being able to allocate further days for debate, but they will be for debate only. What is unsatisfactory about the current process, particularly when it comes to the supplementary estimates, is that literally billions of pounds go through on three particular evenings a year after only a single debate or, perhaps, two debates about just two items of departmental expenditure, important though they are. Those huge sums flash through on three particular evenings.

We have the new Select Committee structure and the new Select Committees, which have been elected by the whole House, and I am therefore wary of the suggestion from my hon. Friend the Member for Gainsborough that we set up yet another Committee. I think that he was going to call it the Budget committee, but we have an awful lot of Committees, and given that we now have elected Select Committees I ask the House to think again about how we involve them more in the process under discussion. I fully take the objection to pork barrel politics, which bedevils the United States Appropriations Committee that my hon. Friend seemed to like so much, and I should not suggest line-by-line amendment or, indeed, veto by a Select Committee. However, I should suggest that no supplementary estimate be presented to the House by any Minister unless it has first been approved by the relevant Select Committee. Nothing would transform the power of Select Committees more than my simple suggestion.

It would be up to the Department to establish a proper relationship with its Select Committee, and it would be up to the Secretary of State to plan his expenditure properly, knowing that if he went back to the Department with a huge supplementary estimate and wanted suddenly, mid-year, to transfer a vast sum from one end to another, he would have to explain himself to the Committee and win its approval. I do not suggest that the Committee should have the power to amend the proposal, simply that it should have to give its approval before that supplementary estimate is presented to the whole House. At a stroke, we would transform the relationship between the Executive and Parliament and give our Committees the power not simply to grandstand, ask questions and hurl abuse at witnesses, but to become more thoroughly involved with the work, planning and control over the money of the Departments that they scrutinise. The Committees would, therefore, become interested not simply in policy but in the huge sums that Departments spend. With that proposal, and my three technical comments, I warmly welcome the motion.