Alignment (Clear Line of Sight) Project

Nadhim Zahawi Excerpts

Monday 5th July 2010 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I, too, welcome this opportunity to debate the clear line of sight project. What happened this weekend will have dispelled any last remaining doubts about the need for more clarity, transparency and scrutiny of the Government’s plans for public spending. The measures that we are debating will help to make that process a little easier.

As the Financial Secretary said, this project to align better the measures of Government spending was initiated by the previous Government and was strongly supported by many of the Committees of the House. I should, at the outset, acknowledge the important contributions made by the Hansard Society—its contribution went back as far as 2006—the National Audit Office, and, of course, the Treasury Committee, the Public Accounts Committee and the Liaison Committee in championing these reforms.

The Financial Secretary alluded to the fact that in our June 2007 Green Paper, “The Governance of Britain”, we announced the establishment of the clear line of sight project. In a memo in November 2008, we published the first broad ideas, which were then developed into a clearer set of proposals published in March 2009. These ideas set out to do the following: first, to modernise the public spending process to make it more transparent and easier for parliamentary scrutiny purposes and, therefore, to make the Government more accountable; secondly, to make the public finances easier to understand by reforming the way in which the Government publish financial information; and, thirdly, to create greater incentives for value for money by improving the way public spending is managed.

In short, the project was designed to resolve the basic problem that Treasury budgets, which are announced in spending reviews and published in the departmental annual reports, estimates laid before Parliament and resource accounts each currently measure and report expenditure in different ways. That inevitably makes it difficult to compare figures, thus creating, on occasion, confusion and a lack of understanding. Given the Budget that we have just seen, with the scale of impact on the poorest, this has never been more necessary to resolve.

In March 2009, we set out a series of specific proposals in a Command Paper proposing key changes. The first was that the estimates presented to Parliament would be organised, so that when Parliament voted on them it was voting on the same totals as the Treasury would be using to control Government spending—as the Financial Secretary has said, that is particularly significant for non-departmental public bodies. The second was that parliamentary controls over expenditure would be on a net basis, rather than on a gross and net basis. The third was that Parliament would actually approve the capital spending plans of Departments, rather than just be made aware of them. Other proposals were that there would also be changes to the format of the estimates to help simplify them further, and that financial publications would be rationalised to three annual publication events.

The March 2009 proposals had identified misalignments between budgets, estimates and resource accounts of almost £500 billion from the 2008-09 departmental resource spending plans. The extent of misalignment after today’s proposed changes would have reduced to approximately £22 billion—that is a very significant and substantial improvement. Nevertheless, I hope that the Financial Secretary will undertake to keep under close scrutiny, in partnership with Parliament, the scope for any further reductions in this level of misalignment.

We demonstrated our further commitment to this project by taking forward within the Constitutional Reform and Governance Act 2010 the one aspect of these proposals that required a change to legislation. That proposal—the consolidation of non-departmental pubic bodies within department resource accounts—was included within the Act and passed in the wash-up period before the general election. I welcome the fact that the explanatory note that the Financial Secretary has put in the Table Office gives some indication of the timetable for introducing the order that will list the bodies to be consolidated into the estimates and accounts—that relates to part of the point raised by my right hon. Friend the Member for Barking (Margaret Hodge). However, I would welcome his including in his winding-up speech an explanation for the somewhat lengthy time lag between the primary and secondary stages of this particular process.

In the previous Government’s original proposals of March 2009, we said that we wished

“to develop, over time, a set of ‘mid-year’ departmental reports giving a provisional view of spend and performance for each department during the current financial year”.

The Liaison Committee strongly supported that proposal, so will the Financial Secretary explain how he sees the Treasury developing that particular part of the March 2009 proposals?

Perhaps, the Financial Secretary could also set out how the proposals might impact on some of the new bodies that he and his Department have announced. The Office for Budget Responsibility has not had the best of starts, with its independence being questioned and its statistical analysis set for early scrutiny. At the moment, the OBR sits within the comfortable embrace of the Treasury and I wonder whether the Financial Secretary can explain to the House whether he has plans to establish the OBR as a non-departmental public body. I ask because, if that were to be so established, under these proposals the House would be able more clearly to see what the OBR was costing and on what it was spending its money. The House would be more able to make a clearer assessment of whether the OBR’s communications and economic analysis were genuinely independent of the Treasury. If he does not plan to establish the OBR as a non-departmental public body, perhaps he can explain how he plans to offer the House the same level of scrutiny over the OBR’s spending and therefore help the House to assess how independent of the Chancellor and his spin doctors the OBR is?

Perhaps the Minister, too, can set out how these proposals will impact on the independent Equitable Life commission that he plans to establish. Again, will he establish this commission as a non-departmental public body? I ask this without prejudice.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I am slightly puzzled by the shadow Minister’s speech, because it sounds like a debate for tomorrow.

[Mr Thomas]

With all due respect to the hon. Gentleman, if he had done some research into what these proposals are about, he would understand the significance of including non-departmental public bodies in the estimates and accounts and would therefore understand the advantages for the House of these proposals.

If the Equitable Life commission that the Government plan to establish were to be set up as a non-departmental public body, the House could assess how much the Government were spending on the administration of the commission as well as on the payments of the scheme. The House could therefore potentially understand more easily how the functions of the commission, which, incidentally, are yet to be made clear, were being implemented. If the Financial Secretary and his colleagues do not intend to set the commission up as a non-departmental public body, will he tell the House how it will be able to scrutinise how the commission is funded and what it spends its money on?

Similarly, the Financial Secretary’s proposals, announced in this House, for a consumer protection and markets authority and a new economic crime agency have not so far been subject to any scrutiny other than that given to the original statement to the House. Under the alignment project proposals, the House could scrutinise more effectively their spending plans and compare them to their predecessors in that regard if they were established as non-departmental public bodies. If he does not propose to establish these two bodies as non-departmental public bodies, will he explain how Parliament will be able to approve their spending plans and scrutinise their accounts? Again, I ask that without prejudice.

One of the real concerns about the Minister’s proposals was the loss of energy within regulatory agencies as individual staff focused, inevitably, on their own futures. The Minister still needs to explain how such a loss of energy in regulatory oversight is being prevented. Will he recognise today that clarity on the status, budgets and ultimately expenditure levels for the new bodies will be fundamental in giving the House confidence in the ability or not of these agencies to do the job that the coalition plans for them?

I welcome this further opportunity to confirm support for the sensible changes that the last Government created under the alignment project, which have taken place after considerable useful debate, but I look forward to the Financial Secretary giving some more clarity on the questions that I have asked.

--- Later in debate ---

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I rise to speak on a topic that is of great importance to this House but that sadly, as my hon. Friend the Member for Gainsborough (Mr Leigh) said, is not engaged with in the same way as some of our policy debates are engaged with. However, I have to say that the name of the project is rather unfortunate. As well as confusing me the first time I read it, it definitely does not do what it says on the tin. I, for one, would have preferred a simpler name.

Transparency in all areas of Parliament, specifically in the use of the public purse, is of course of paramount importance. We must ensure that the public can follow and understand the decisions that are taken here. It should be a lot simpler for those who are interested to interpret the expenditure of Government, so that taxpayers can see where their money is being used. The clear line of sight project is a step forward in that regard. It is intended to simplify Government public expenditure information in both its presentation and publication, something that I as a businessman firmly believe is imperative, especially in such difficult economic times. Now more than ever, we must ensure that every penny we spend is spent wisely.

It is very important that we mention the achievements of the previous Government when considering this project, as it is one of their successes. It was established in 2007 by the previous Government and is now supported by the new coalition Government. The aim behind it is to simplify how the public can view Government expenditure, which can be done by ensuring that it is published in a simple format and that the information is presented in as easy and accessible a way as possible. I must say that even with those changes, I am not convinced that the documents in question will ever become bestsellers.

The current arrangements must be seen for what they are—confusing and unhelpful. They have even been described as obstructive of proper scrutiny. Given the recent trials of this House, I strongly believe that a change has to come. One of the most obvious ways in which that can occur is if we ensure that public expenditure is controlled and measured in one clear way. At the moment we have Treasury budgets, parliamentary estimates, resource accounts and others, each using different methods and subsequently giving us different answers.

The clear line of sight project will do a number of things to rectify that situation. It will align the different measures of public spending and ensure that the estimates are configured so that Parliament and the Treasury use the same control tools. The expenditure of non-departmental public bodies—quangos—will be incorporated into the estimates and resource accounts of the sponsoring Department, which is a good thing. The project will also ensure that financial publications are rationalised into three annual results. As a result of those changes, departmental annual reports, estimates and resource accounts will all include figures on the same basis, making it easier for the House and the public to compare figures and trends on a like-for-like basis.

Sadly, it is important to note that the current view of politics held by many of our constituents is negative. We have been through a difficult time in recent years. The expenses scandal galvanised public anger towards politics and politicians, an anger made all the greater by the perceived lack of transparency when the scandal arose. The public believe that our political system is broken, and upon taking office this Government promised changes to the political system to make it far more transparent and accountable. The clear line of sight project will hopefully be a small step forward. That is why we are here today—we need to start to fix what has been broken. The coalition has an opportunity to right the wrongs and thus lay the framework for a new politics.

Transparency is a simple thing, yet it will make a huge difference to the view of those outside the House. It will be a powerful instrument for change. If we allow the public to scrutinise and understand the things that are done here, I believe we can have a positive debate about how we want to be governed. We talk about engagement with people, yet our system of government works against that very goal. I firmly believe that, if more people understand the figures and are not put off by what they see as Government mumbo-jumbo, more people will engage in the decisions that have to be made and that affect their lives. That can only be a good thing.

A large part of what we describe as political apathy is people not feeling like they are included in the system. At the moment things are dauntingly complex, and the clear line of sight project is one way in which we can simplify them. It is for those reasons that I believe it is an important step to take, for the sake of both transparency and encouraging the public to analyse and discuss the important financial decisions that need to be made.

That is why I am a huge supporter of the opening-up of government. We have had an unprecedented amount of bureaucracy since the second world war, whether from Europe or from our own Departments in the UK—I would say that it has been an extraordinarily bureaucratic time. The coalition has an opportunity, with this drive for transparency and openness, to create a post-bureaucratic age. I commend the motion to the House.