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The appointment of Mr Amyas Morse as Comptroller and Auditor General  

 

 

This speech was given in the House of Commons on 20 May 2009 as part of the debate on the appointment of the new Comptroller and Auditor General

Mr. Richard Bacon (South Norfolk) (Con): I am pleased to take part in the debate to confirm the appointment of Mr. Morse as Comptroller and Auditor General. Having seen him in the hearing, I have no doubt at all about his suitability. His experience of running a large international accountancy practice, PricewaterhouseCoopers, combined with his experience as commercial director of the Ministry of Defence, renders him highly suitable for this very difficult job.

In appointing Mr. Morse as Comptroller and Auditor General, the Government are going to have to fix several things. It is a pleasure to see a number of former members of the Public Accounts Committee now sitting on the Treasury Bench and taking part in the debate. I saw the hon. Member for Hemsworth (Jon Trickett) earlier. When he was a member of the Committee, I always used to feel that he and I were hunting together as a pack when we were probing the civil servants before us. Unfortunately, he is now engaged on other responsibilities—bunker maintenance might be the best description for them. There are others sitting on the Treasury Bench who have had recent PAC experience. I enjoyed their incisive contributions through the years when they were members.

There are aspects of the Comptroller and Auditor General’s access to the information he needs that will have to be fixed. The National Audit Act 1983 states that the Comptroller and Auditor General should have complete discretion in the exercise of his functions. One might assume that this is completely true, but in fact it is not true at all, as there are three obvious exceptions.

The first is the Financial Services Authority, to which the Comptroller and Auditor General does not have access. That means that he cannot carry out an audit of the effectiveness, efficiency and economy of the FSA in the way he can with, say, the Ministry of Defence or the Department of Health. I personally believe that that has had significant consequences—for example, in respect of Northern Rock. When it got into huge difficulties, it was discovered to be subject to a regulatory system under which the different players did not know what they were doing. It became very obvious in the autumn of 2007, as seen in the National Audit Office report based on evidence from the Comptroller Auditor General, that the three parts of the regulatory system did not know what the others were doing. That was the result of a lack of scrutiny of the FSA. The Comptroller and Auditor General would have carried it out, I believe, if he had had the right of access to do so—but he did not, so when it was done, it was done by the Treasury.

I am afraid that only once over a period of seven or eight years did the Treasury ask the NAO to look at the activities of the FSA. In that regard, it failed in its functions. I do not blame the Exchequer Secretary, who was a very incisive member of our Committee when she was on it. Functionally, however, the Treasury has failed, and Sir Nicholas Macpherson has more or less admitted that point and agreed to go back and look over the matter.

Secondly—

Mr. Deputy Speaker (Sir Michael Lord): Order. I think the hon. Gentleman is ranging rather wide of the measure before the House, which is specifically about an appointment.

Mr. Bacon: Indeed, Mr. Deputy Speaker, so I shall try to confine my remarks to the appointment of the Comptroller and Auditor General. In talking about that appointment, I hope it is in order to discuss the functions of the Comptroller and Auditor General once he is appointed and whether or not he is able to exercise them.

Mr. Deputy Speaker: Perhaps—narrowly and briefly.

Mr. Bacon: I will be very narrow and very brief, Mr. Deputy Speaker.

My second point concerns the BBC, to which the Comptroller and Auditor General does not have access either. That has an impact on the effectiveness, efficiency and economy of the BBC and on the extent to which it is scrutinised. When Dame Ellen MacArthur sailed around the world, 64 television producers turned up in Falmouth to cover it. I am not sure that that would have happened if they had known that they were going to be subject to public audit in the way that most Government Departments are. That has nothing to do with editorial control.

The third point, and it is the most serious of all, concerns this House. I hope that you will agree, Mr. Deputy Speaker, that it is directly relevant to this debate. What better time to appoint the nation’s chief auditor than after what has happened over the last couple of weeks? I can think of no more important appointment for us to make. According to statute, the Comptroller and Auditor General has all the authority over the National Audit Office. As the Government well know, that is why we are soon going to see changes. As I say, the Comptroller and Auditor General has all the authority under statute and the NAO is organised under his control into value-for-money divisions and financial audit divisions.

Mr. Leigh: Will my hon. Friend allow me?

Mr. Bacon: I would rather keep going, if I may, as Mr. Deputy Speaker has asked me to be brief.

As it is organised, the Defence, Health or Transport audit will have two sub-branches: financial and value for money. Within the NAO, there is also a section called “Justice and Parliament”—and I had always assumed that the Justice and Parliament section could audit the House of Commons administration in exactly the same way as the Health audit section can audit the Department of Health or as the Culture, Media and Sport section or the Transport section can audit those Government Departments. It turns out, however, not to be the case.

I discussed this issue with an assistant Comptroller and Auditor General last week. Previously, I had always thought that the auditors could go in and examine the House of Commons administration and do all the audit they needed to perform to satisfy themselves in exactly the same way as for Departments. It turns out, however, that for all these years, all they have been able to do is to compare the claims made by Members with the amounts paid and check that the two are the same—that is all they can do. When I asked one of the assistant auditors general why it was not possible to do more, the reply was, “That is all we could get.”

I hope that you will agree, Mr. Deputy Speaker, that what I am saying now is directly relevant to this debate and to the appointment of the Comptroller and Auditor General. The truth is that that is not good enough. It is not the fault of the Comptroller and Auditor General that it is not good enough, as it is the responsibility of the Government and this House. When the Government fix the problem, they have to ensure that the new Comptroller and Auditor General we are appointing—I think he is the right person for the job—has all the access he needs to do the job properly.



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