Finances of the House of Commons

Viscount Thurso Excerpts

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.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Given that the northern estate refurbishment project is likely to cost about £500 million and, on these capital budgets, is not likely to start in earnest until the end of next year, does my right hon. Friend think there is a danger that this big refurbishment project, the specifications for which are not yet even fully known, could run into the period when we will want to start the R and R project and that therefore the decant space, let alone the budget, might not be available?

[John Thurso]

My hon. Friend has highlighted a clear and obvious red risk to the R and R programme. The management are well aware of the risks, and discussions are already taking place about how they can be mitigated, but I know from the conversations he and I have had with Facilities staff that the critical nature of completing the northern estate prior to commencing R and R has been fully taken on board. The fact that they have taken it on board does not mean that they will make it happen, but if we have not at least understood the risks, we cannot take the mitigating action. At this stage, that is the best answer I can give.

[Geoffrey Clifton-Brown]

The full extent of the project is not yet known—for example, we do not know whether there will be a broadcasting studio in the new refurbishment—so does my right hon. Friend agree that it is now urgent that this work be undertaken so that we at least have a project on which proper quotes can be obtained? The delivery mechanism is not even known yet, and time is beginning to creep on for this very big project.

[John Thurso]

I understand that the Commission has reviewed the paper and that the initial decisions that needed to be taken to start that work have all been taken. As my hon. Friend knows, the decant space, which would have been one of the biggest blocks, has been acquired and is being fitted out and made available. My understanding is that work properly to scope the project is now under way. Clearly, in order to ensure the best value for the money spent, the work undertaken in scoping the project will reveal whether or not overall savings are available. At the moment, the budget is at its maximum because, quite properly, it has all the contingencies that could be put in. One hopes that proper scoping, including the point my hon. Friend raised, will lead to a tighter budget going forward and the work being completed on time. As he and I both know, however, public procurement is littered with projects for which aspirations were expressed that were not met. Hopefully, we have all learned lessons from that and will make sure that we deliver on time and on budget.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

For the benefit of those of us who are not entirely familiar with the Commons accounting procedures—I appreciate what the right hon. Gentleman said about the R and R costs; because it has not yet been agreed whether we will decant at all, those costs have not been included—could he say what, if any, costs in the preparatory period have been accounted for in the tables set out?

[John Thurso]

Obviously, the cost of the options appraisal that is currently going through is, in part, being paid for out of the current estimate and might well be paid for in part from a future estimate, but it is in the budget and properly accounted for. I believe that we are talking about a total of around £7 million. If I am wrong, I am sure I will get inspiration in due course and come back to it. I might even read my vast file and come up with the figure before the end of the debate.

It has been said that spending £7 million on working out what needs to be done is a great deal of money. All my experience of working in the private sector on the refurbishment of large buildings and all I have observed from big projects such as nuclear decommissioning is that the more professional money spent in advance in scoping a project, so that it is really understood, the more effective the actual spend. I suggest that every pound spent now on working out what the problems are is at least a pound spent going forward. If I am wrong, I will come back to the hon. Gentleman.

In closing, I would like to commend again the professionalism of the House service and all those who work for us, and the tremendous improvements that have taken place in management systems and how things have been done over the years that I have been involved in the Finance and Services Committee, the Audit Committee and other bodies. This is the last occasion during this Parliament on which we will discuss the finances of the House. In commending the motion to the House, and in addition to the tributes I have paid on behalf of the House as a whole, I would like to express my personal gratitude for the support and help that I have received from the team, many of whom are watching us today. It has been a pleasure and a privilege to see this process through. The fact that there are in attendance fewer hon. Members than those who put their names down to speak today does not indicate any disinterest in the process, but is perhaps a reflection of the fact that we now publicise the plan so well that they do not feel it necessary to be present to suggest amendments to what we have put before them.

[Geoffrey Clifton-Brown]

I am grateful to my right hon. Friend for giving way to me a last time. He will be glad that he has given way this time because I would like to commend him for the way in which he has chaired our Committee so professionally. I have been a member of it for many years, and I think that the chairing of it in this Session has been outstanding.

[John Thurso]

I am very grateful, and that will do as a peroration. I commend the motion to the House.

--- Later in debate ---

[John Thurso]

I am most grateful to all Members who have taken part in the debate. It has been quite wide-ranging and had its light-hearted moments, but it has also been very serious, and I think that it does us credit to have discussed our affairs in that way. I will attempt to answer the questions that have been put directly to me, but if for any reason I miss one, I will certainly write to the hon. Member concerned.

The hon. Member for Hayes and Harlington (John McDonnell) asked about security. I have in my brief, in huge, red, block capitals, the words, “You’re not allowed to talk about security in the Chamber”, so I will not. However, I will say that obviously our security is of paramount importance, and so too is value for money. I observe that many places similar to ours get that best security and best value from an in-House security force. I have no idea what the House might do, but I am sure that it will be based on the best evidence externally.

[John McDonnell]

I do not want to tempt the hon. Gentleman any further, but can he indicate what the time scale is for decision making on that?

[John Thurso]

Proposals on the principles of the way forward, rather than the detail, have been received and will be put to the Commission and the House Committee of the Lords at their next meetings. If the proposals are agreed to in principle, the detailed work will take place, but I would not anticipate any particular changes until well into next year. I hope that answer is sufficient for the hon. Gentleman. The director of security would probably give him a fuller briefing, if he would like to take him up on that.

I thank my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) for his full account of the work of the Administration Committee. One of the features of this Parliament has been the Administration Committee and the Finance and Services Committee finding a very good way of working together, with the Administration Committee taking the lead on the services and the Finance and Services Committee taking the lead on the financial implications of that. I am most grateful for his contribution.

The shadow Deputy Leader of the House, or deputy shadow Leader of the House—I am not sure which way around it is—the hon. Member for Dunfermline and West Fife (Thomas Docherty), asked a number of substantial questions. The first was where I got the figure of £2.7 million from. The answer is page 10 of the report, which states:

“In the current financial year, at an equivalent point in the electoral cycle, it is forecast to be £2.7 million.”

However, he is absolutely right to ask, as always, because the update is that the like-for-like total net cost for catering services was £1.2 million in the first six months of 2014-15, against £2.25 million in the equivalent period of 2013-14, a reduction of £1.5 million, or 47%. Certainly, that being £360,000 better than budget, it is to be hoped that that will be carried through to the end of the year. I hope that is a reasonable answer. I will write to him about the first question he asked during my speech, but I direct him to annex D on page 32 in relation to the costs of restoration and renewal.

The hon. Gentleman mentioned charities. I absolutely agree that charities should not be penalised. That is part of the policies that have been adopted, and I see no chance of their being changed.

With regard to raising funds from those who come to watch us in this Chamber, there has never been any suggestion, ever, that money be paid by our constituents and the public to view the legislative process, Select Committee hearings, or any other part of our work—and nor should there be. There is a very distinct difference between people coming as members of the public to engage with the political process and those who come as tourists and pay for the privilege. The two are absolutely not linked.

[Thomas Docherty]

We entirely agree about the difference between tourism and watching the democratic process, but will the right hon. Gentleman confirm that the Commission supports the position of the Standards and Privileges Committee and the Opposition that political fundraising should not be allowed on the premises?

[John Thurso]

Indeed; I was about to come to that. It is in the purview of the Administration Committee, principally, but I am fairly certain that the policy is rigid and there is no known attempt to change it.

The hon. Gentleman raised the issue of bicameral services. It is of course worth remembering that the other place is a sovereign House, and therefore, in all we do, we negotiate with it, but cannot force it. This is not a matter for those on the Treasury Bench; it is a matter for the two Houses to reach a conclusion on. The reasonableness that their lordships demonstrated in so rapidly agreeing to a common procurement service bodes well for the future. Certainly, in any sane world, the whole Palace would be run as one, and I am sure that one day we will get there.

This has been a good debate, and I commend all Members who have taken part in it.

Question put and agreed to.

Resolved,

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.