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  The attraction of complexity and the need for simplicity  
 

This speech was given in the House of Commons on 15 May 2008 as part of the Public Accounts Committee debate

Mr. Richard Bacon (South Norfolk) (Con): It is a great pleasure to follow the hon. Member for Great Grimsby (Mr. Mitchell). He is a colourful member of the Committee, and he certainly enlivens our proceedings. It was also interesting for me personally to hear him confirm what I had long suspected—that he cranes over to look at my notes in order to steal my best questions. I am glad that he has finally “fessed up” to that.

I too pay tribute to Sir John Bourn, the recently retired Comptroller and Auditor General. He has rendered the country an extraordinary service in the way in which he has led the National Audit Office over the past 20 years, and the way in which he has built it up. He has done nothing less than create a world leader among supreme audit institutions. We need only speak to people in those institutions to understand that that is their view of the NAO. Having visited the Bundesrechnungshof in Germany, the Cour des Comptes in Paris, the Tribunal de Cuentas in Madrid, the Government Accountability Office in Washington and the Kyrgyzstani national audit institution in Bishkek—I will not try to pronounce its name—I can confirm, on the basis of worldwide experience, that the NAO is held in very high regard. I also pay tribute to Sir John Bourn’s successor, Tim Burr, and to the entire staff of the NAO. As our Chairman said, we could not possibly do our work without them.

Before I deal with the reports that are the subject of the motion, let me briefly discuss the terms of the motion itself, which require the debate to be confined to the reports from our Committee—named and numbered on the Order Paper—to which the Treasury has issued a minute in reply. There are good reasons for that, in particular that it ensures that the Treasury Minister—in this case, our distinguished colleague the Exchequer Secretary—can be properly briefed and give informed answers. It might also be argued that it prevents the debate from drifting off in too many different directions—although I think that our friend the hon. Member for Great Grimsby has proved that wrong. However, we are in any case discussing 32 different reports, whose subjects vary from the coal health compensation scheme to the Icelandic trawler compensation scheme; from costs in primary care to use of the Heritage Lottery Fund; and from the recovery of the ill-gotten assets of criminals to the management of sickness absence in the Department for Transport, so the argument that the motion as constructed stops the debate going off in lots of different directions is a non-starter, as that is in the nature of what we do.

The key question for me is whether the terms of the motion restrict the topicality of our debate in a way that is unhelpful to the public interest and to effective scrutiny by Parliament of what the Government do. I think that they do, and although I do not want to make too much of this point, I shall give two brief examples of why that is the case before I move on to discuss the reports listed in the motion.

The national programme for IT in the health service is an ongoing concern of the Public Accounts Committee, the NAO and commentators on health IT. It is the world’s largest health technology programme, and it is not unfair to say that it is in serious trouble. A report will be published on the subject tomorrow. It is a curious fact that in the last of these PAC debates we could, and did, refer to the NHS IT project, whereas we could not do so in the one before that. If your eye, Mr. Deputy Speaker, was sufficiently acute in attending to the 32 reports on our list for today, you will be aware that we cannot refer to it. It seems rather arbitrary that in some debates we can and in some we cannot, when this concern is both long running and ongoing. There have been developments since our last debate. Ministers have made statements about the timetable for the deployment of systems into acute hospital trusts, and there have been problems with slippage on those timetables. It would be appropriate and topical to be able to talk about that, but it is not technically in order to do so.

My second example involves Postcomm and the regulatory framework that Royal Mail works under. We have frequently looked at regulators, including Postcomm; we did so most recently yesterday. This is an important issue for our constituents. In particular, the maintenance of the universal service obligation, which has been referred to, is a matter of great importance in rural areas such as my constituency, and it has also been a matter of some controversy in the press recently, as Postcomm has commissioned an economic consultancy firm to study the costs underlying the universal service obligation—or, to be accurate, some of those costs, because it failed to include the international component. It would be good to be able to raise this matter, and to hear the Treasury’s thoughts on it. Once again, however, it is outside the terms of the motion. That seems a little odd given that yesterday we could discuss it in Committee, and that this morning the chairman of Postcomm went on Radio 4 and said that a universal service obligation that is viable for the future is most likely to be achieved through a radical transformation of the governance and structure of the Royal Mail, including the introduction of private capital to safeguard the universal service obligation. The best adjective to describe that remark might be “startling”, and it at least seems worthy of debate—and debate now. However, we cannot discuss that.

For future debates, I propose the slight change—I would be interested to know what the Exchequer Secretary thinks of this—that we add that the House takes note not only of the numbered reports and the Treasury minutes, but of “the work of the National Audit Office and of the Public Accounts Committee in general.” This is not an attempt to catch the Treasury out. It will plainly be the case that the Minister who appears before us will want to talk about our most recent reports, and the Treasury employs some very bright civil servants—it attracts some of our brightest university graduates—and I think they are more than capable of briefing Ministers on the work of the NAO and the Committee in general.

I must say to the Exchequer Secretary that we miss her on the Committee. She is still a member of it ex officio, but when she was a full-blown member she was a very incisive questioner, and I have no doubt that were we to have a more wide-ranging debate, technically speaking, she would have no difficulty at all in coping with it, and I doubt whether any of her Treasury colleagues would either.

With those preliminary remarks, may I turn to some of the reports detailed in the motion? The first one that I wish to discuss is “Building for the future: Sustainable construction and refurbishment on the government estate”. The NAO’s trend of increasingly examining real estate issues in Government is a welcome one. We examined the national health service estate a while ago, and we have examined property issues across different Departments. There are huge potential benefits for the Government in managing those estates more efficiently.

I wish to raise one particular recommendation with the Exchequer Secretary. Recommendation 4 states:

“Departments are failing to implement Treasury guidance and assess costs and benefits of sustainable design options”.

What I want to ask her touches not so much on sustainable design options but on the generic question of Treasury guidance. The Treasury issues guidance on a range of subjects, and I am interested in understanding what the Treasury does to ensure that that is followed.

The theme that one finds repeatedly across Departments—we examine 600 billion or 700 billion of income and expenditure across virtually every public sector activity—is that guidance, advice and clear instruction was given as to what ought to happen, but that it just did not happen. Does the Treasury just rely on the NAO, which, after all, in its earlier incarnation was the Exchequer and Audit Department, to check that its guidance is being followed? Alternatively, do the responsible policy desk officers in the Treasury covering different Departments have an ongoing responsibility to check that what they say should be done is being done. I have had a deep suspicion for a long time that perhaps it is not that, as people often say, the Treasury is too powerful, but that it is not powerful and big enough, and that we need a stronger centre.

The second report that I wish to discuss dealt with maintaining river and coastal flood defences. Recommendation 2 stated:

“There are significant shortcomings in the Agency’s”

—the Environment Agency—

“ ability to prioritise expenditure on the highest risk areas and assets.”

Prioritising expenditure is an absolute basic for any Department or Government agency, so why does a significant and important agency, such as the Environment Agency, have such difficulty doing something as basic as prioritising expenditure? Once again, what is the Treasury doing about the situation—I hope that someone is doing something—to ensure that that lesson is being learnt elsewhere and that people are capable of prioritising expenditure in the way that they should?

I commend the right hon. Member for Islwyn (Mr. Touhig) on confining his speech to the issue of dementia. I thought that our hearing on dementia was one of our most important in that Session. Professor Bannerjee, one of the chief witnesses, was an exceptional witness. The right hon. Gentleman made the point that is covered in recommendation 2, which states:

“Unlike cancer and coronary heart disease there is no single individual with responsibility or accountability for improving dementia services.”

The Treasury’s minutes of reply state that it is considering

“as part of the strategy work whether there is a compelling case for a national clinical director.”

That reply was published at the end of March, but our hearing took place in October, so six months had passed in between. I distinctly recall the officials before us saying at the time that they would not regard any bureaucratic hurdles spoken of as a reason for delay or as preventing them from acting, and that if there were a case for a national clinical director for dementia, they would get on with it. I think that Professor Mike Richards has proved a success as national clinical director for cancer and that that system has proved a success. I urge the Treasury to apply as much pressure as possible to the Department of Health to get this matter moving along, because there does not seem to be any obvious or easily explicable reason for further delay.

The next report that I want to examine is entitled “Helping people from workless households into work”. I think there is agreement across the political parties that something needs to be done in this area. Much more needs to be done than has been done hitherto in terms of welfare reform and helping the hard core of people who live in workless families. They have not experienced people going out to work, because they do not have that around them in their own households.

In recommendation 9, we say that the Department for Work and Pensions could not tell us how many of the 2.9 million people who had started a new deal programme were still participating in it, nor what proportion of workless households chose not to work rather than being out of work because of personal circumstances. That suggests that there is still a lot to do. How can we assess objectively the success of the new deal programme, which we would all like to do—there is much party political banter about the new deal, but I would like a reliable, objective assessment of its successes and failures—if the Department cannot even tell us how many of the people who started a new deal programme are still on it or what proportion choose not to work?

The coal health compensation scheme was an extraordinary subject—I know that the right hon. Member for Islwyn has a personal constituency interest in it. The scheme provided compensation for miners afflicted by various industrial diseases and was very worth while. What was extraordinary about it was that the then Department for Trade and Industry—now the Department for Business, Enterprise and Regulatory Reform—managed to make several solicitors multimillionaires. A small firm in Doncaster called Beresfords had a senior partner, Mr. Beresford, who had a personal salary of 16.7 million. I asked the permanent under-secretary, Sir Brian Bender, about that:

“Now under any view, the purpose of this scheme wasn’t to make individual solicitors in Doncaster multi-millionaires, was it?”

He agreed that that was not the purpose of the scheme. Notwithstanding the difficulties about people’s common-law rights, it was extraordinary that a way could not have been found—statutorily if necessary—to get the money that Parliament had voted for the purpose to the people who needed it and to contain and control the risk of people such as Mr. Beresford clawing it up for their own purposes. To me, that was unacceptable and obscene—

Andrew Mackinlay: He’s good for a knighthood.

Mr. Bacon: I hope not.

The next report I wish to consider is on the efficiency programme. We have had much discussion about the extent to which efficiency savings can be relied on and whether they are cashable or non-cashable. We accept that there are technical difficulties in that area, but I hope that the Minister will accept that we all have an interest in having efficiency numbers that we can rely on so that we know that real efficiency is delivered, not measures that cut into the bone of Departments. Real efficiency will help to deliver better public services while providing more taxpayers’ money for other areas. That is especially important in the light of the article in The Guardian that I read the other day, which said that the Government are now embarking on Gershon 2, a second round to identify savings in addition to the 21.5 billion to which the hon. Member for Great Grimsby referred.

I do not know what the second round will be called yet, although I suggest that it should be called Eagle. Then when the efficiency savings have been delivered, the Treasury can tell the Prime Minister that the Eagle has landed.

Angela Eagle: I was seven years old when the eagle landed before, and the hon. Gentleman may also remember that occasion.

Mr. Bacon: I do remember that occasion, and it is time for a reprise. Harrison Ford has made a comeback, so I do not see why the eagle should not do so.

Justine Greening (Putney) (Con): My alternative suggestion would be “Gershon and on”, because that is what it will do.

Mr. Bacon: I thank my hon. Friend for that intervention.

The Assets Recovery Agency has recovered only 23 million against expenditure of 65 million. Most of us are at a loss to explain how 65 million can be spent to recover only 23 million by an agency that has the law on its side. The only thing to do with the people who were responsible for the agency—I think that they have now moved on—is plant them in the institutions of this country’s enemies to find out whether they can destroy the economic and financial viability of those countries as well as they have managed the Assets Recovery Agency.

I turn to the delays in administering the 2005 single farm payment scheme in England, which is a good example of my earlier point about the unnecessary restrictions in the motion. On the Rural Payments Agency and the single farm payment scheme, the permanent secretary to the Department for Environment, Food and Rural Affairs, Helen Ghosh, told our Committee:

“Ministers were being told it was possible when it was not in fact possible”.

I am glad to have got that on the record, Mr. Deputy Speaker, but it was out of order for me to do so, because that was said in a hearing that we had with the permanent under-secretary to the same Department on the same subject this January, and the report has not yet been published and is not part of report HC 893, which comes within the motion. I hope that that makes my point for me.

Mr. Deputy Speaker (Sir Michael Lord): Order. To some extent, it does, and I am grateful to the hon. Gentleman for pointing out that he was out of order. He made some valuable points earlier, but it is now important that he stay within our guidelines.

Mr. Bacon: Not only will I do so, but I am nearly finished. I have the reports with me to try to ensure that I stay strictly on the rails.

The Thames Gateway report was also interesting for the wider issues that it raised. I quote very briefly from paragraph 13, where we said:

“The Department’s overall management of the programme has been weak. It is yet to establish arrangements for controlling the programme such as a budget, implementation plan, joint risk management, appropriate financial incentives, a performance management framework for delivery partners, public reporting on progress, and measurable performance indicators.”

Those are among the most basic things that we would expect anyone who manages a large Department, agency or project to have taken on board from the start, but to have managed to spend 670 million without doing any of them takes some doing. I hope that the Treasury is not only on the case, but involved in allied areas where similar management failings may have arisen.

I want briefly to turn to the private finance initiative, because the figures published in the appendix of our report on tendering and benchmarking show that, when the whole stream of payments going forward is added up, the total liability that now faces the public purse is 170 billion. Of course, the Treasury was anxious to point out—Mr. John Kingman wrote to the Committee to make this clear—that, in doing so, one is adding future and non-comparable figures to present figures without applying any appropriate adjustment and that aggregating the stream of future payments gives a net present value of 91 billion. In complaining that he did not like giving us the 170 billion figure, Mr. Kingman said:

“It is rather as if we were adding a figure in to one in $, without converting the currencies, and ending up with one that is not denominated in any currency at all. I am obviously uncomfortable providing the Committee with a figure which is meaningless”.

That takes the prize for being unnecessarily complicated and almost guilty of sophistry, because 170 billion is a fairly easily understandable number. It is fairly obviously true that 170 billion in 35 years’ time will not be the same as 170 billion today—we can all understand that—and that the two factors that must be taken into account to get from one number to the other are time and interest rates; quite where foreign currencies come into it I do not know. I can only assume that Mr. Kingman, whom I know to be a very bright man, is guilty of having a trait to which many bright civil servants sometimes fall prey: an attraction to complexity. The hon. Member for Great Grimsby said that the Rural Payments Agency chose the most complex scheme available, the dynamic hybrid. Quite why it had to choose that scheme I do not know. The Germans chose the dynamic hybrid, too, but they managed to make it work. We did not.

I fear—this is probably a subject for a book—that one of the problems facing our public sector, and affecting the way in which our senior civil service conducts itself and advises Ministers, is that senior civil servants are attracted to complexity like moths to a bright light. We need a bit of simplicity. We need to concentrate on basics, including having a budget for a project, making sure that there is an implementation plan, and ensuring that the delivery partners know what on earth the project is supposed to do. If we get back to that, we will have a greater chance of ensuring decent taxpayer value for the expenditure for which Parliament votes.



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