Holding Government
to Account
150 years of the Committee
of Public Accounts
1857 – 2007
The Committee of Public Accounts would like to
acknowledge the use of a number of sources in the
preparation of this document. In particular, it has
drawn heavily on “The Control of Public Expenditure:
Financial Committees of the House of Commons”
by Basil Chubb (Oxford 1952) and made use of
“The Accountability and Audit of Governments” by
E L Normanton (Manchester University Press 1966),
“Harold Wilson’’ by Ben Pimlott (Harper Collins 1993)
and ‘‘Westminster: Does Parliament Work?’’ by John
Garrett (Victor Gollancz Ltd 1992) and the Oxford
Dictionary of National Biography (Oxford University
Press, 2007). We are grateful for the assistance of the
National Audit Office in preparing this history and the
House of Commons Library for supplying invaluable
reference material.
Holding Government
to Account
150 years of the Committee
of Public Accounts
1857 – 2007
‘‘
That there shall be a standing Committee to be designated
’’The Committee of Public Accounts’’; for the examination of
the Accounts showing the appropriation of sums granted by
Parliament to meet the Public Expenditure, to consist of nine
members, who shall be nominated at the commencement of
every Session, and of whom five shall be a quorum.
‘‘
31 March 1862
Houses of Parliament 1860
As current Chairman of the Committee
of Public Accounts, I am delighted to
present this short history, which has
been prepared to celebrate 150 years
of the Committee.
History should continue to inform the
present. This booklet reminds us of
the contemporary relevance of the
centuries old desire to strengthen
Parliamentary scrutiny over the public
finances. It shows how our approach to
public accountability has evolved as the
nature of government has changed.
Edward Leigh
Introduction
Expectations about the proper stewardship and accountability for
public money go back many centuries. Generations of politicians and
public officials have recognised the significance of the proper handling
of public funds, the need to combat fraud and corruption and the
importance of getting the most from tax revenue. Such themes have
been at the heart of relations between the Crown and Parliament, and
then subsequently have featured in numerous Parliamentary debates.
The Committee of Public Accounts is a key part of our accountability
arrangements to safeguard public money. One hundred and fifty years
ago this year – in 1857 – a select committee of the House of Commons
recommended the creation of a committee to oversee government
accounts. This was a crucial step in the already long running efforts to
secure proper stewardship. In 181, the Committee came into being
and continues to this day to examine the use Government makes of
public money. Over time, the role of the Committee has changed in line
with the needs of the day – for example, widening the type of subjects
considered from purely financial matters to broader concerns about
the effectiveness of public programmes; increasing the number of
hearings held and reports produced; and taking evidence from a wider
range of witnesses, including from outside the public sector.
At times, there has been resistance to the expansion of the focus of the
Committee’s enquiries: in the late nineteenth century, for example, to
the consideration of more than just the regularity of expenditure; in the
1940s to the desire for access to public corporations; and in the 1990s to
its desire to examine public sector companies. Nevertheless, the mutual
interest in the effective use of public money between Government and
Parliament is clear and only recently, the Government stated in its
response to the Committee’s 17th Report 2005-0 ‘‘Achieving Value for
Money in the delivery of public services’’:
‘‘….that it takes the Committee’s recommendations seriously as the fruit
of the accountability process. The best proof of this is that, as the report
acknowledges, the vast majority of the Committee’s recommendations
have been acted upon. The Committee has thus helped the Government
to secure financial savings, raise the standards of public services and
improve the quality of delivery.
‘‘
This history of the Committee of Public Accounts – once described by
Professor Peter Hennessy as “the queen of the select committees…
[which]…by its very existence exerted a cleansing effect in all
government departments’’ – starts with the creation of the Committee
and then charts the expansion of its interests, the challenges of two
world wars and the subsequent growth of public expenditure with the
development of the welfare state in the 1940s and 1950s. It highlights
the Committee’s championing of higher standards of auditing in the
late 1970s and 1980s, its concerns for maintaining standards of conduct
in public business in the 1990s, and its efforts to modernise audit and
accountability arrangements in the 2000s. A lot has changed, but much
of the work of today’s Committee of Public Accounts would be very
familiar to those who have served on it throughout the last 150 years.
7
8
Creating a lasting structure of
accountability – the 1850s and 1860s
There is a long history in the United Kingdom of attempts to improve
stewardship over money raised through taxes. Often this was stimulated
by the consequences of war. In the 1780s, for example, William Pitt
the Younger took steps to gain control of national finances after
the American War of Independence, but it was in the middle of the
nineteenth century that major changes in public finances began to take
shape. At the time, the role of Parliament in the process of control was
limited. Whilst it had, for several centuries, been responsible for raising
revenue and authorising expenditure, its scrutiny of public spending
was weak. Intermittent attempts had been made to gain greater
control, but these were often thwarted by a lack of information. The first
systematic presentation of accounts to Parliament began at the turn
of the nineteenth century, and in the 1830s accounts showing actual
expenditure by the Admiralty were introduced, followed subsequently
by the Army and other departments.
In the eighteenth and early nineteenth centuries, a number of financial
committees were established in Parliament, but real and permanent
change was slow. Within the House of Commons there existed a
small group of interested Members of Parliament who pressed for
improvements and in 1857 one of them, Sir Francis Baring, successfully
called for a Select Committee on Public Monies. The Committee,
which Baring was to chair, secured the support of Gladstone (page
12) and Palmerston, and was set up to inquire into “the Receipt, Issue
and Audit of Public Monies in the Exchequer, the Pay Office, and the
9
Sir Francis Baring
The driving force behind the
moves that led ultimately to the
creation of the Committee of
Public Accounts. A grandson of
Francis Baring, the founder of
Baring Brothers banking house,
he was one time Chancellor of
the Exchequer and First Lord of
the Admiralty. He was involved
in finance committees in the
House of Commons for several
decades, pressed for a committee
of accounts in the 1850s and
chaired the Select Committee on
Public Monies, which made the
recommendations which shaped
the reform of public finances in
the 1860s. He became the first
Chairman of the Committee of
Public Accounts.
Audit Department”. The Committee’s efforts formed the basis for the
financial reforms of the next decade, and it was described by a Head of
the Treasury a generation or more later as “having practically decided
the form in which Parliamentary control over expenditure should be
established”. It recommended that the system of appropriation accounts
in use for the services was extended to other civil departments, with
accounts to be compiled annually and considered by a committee of
the House of Commons nominated by The Speaker.
Despite this development, progress in implementing the
recommendations was slow, with Disraeli, as Chancellor of the
Exchequer, not minded to act. Only in 1859, with William Gladstone
in this post, did the idea of a Committee of Public Accounts receive
the necessary support, and in April 181, Gladstone moved for a
committee and the motion was carried to create the Committee of
Public Accounts.The following year, the House of Commons passed a
Standing Order, which read:
George Ward Hunt, the
Committee’s chair between 1870
and 1871, later became Chancellor
of the Exchequer. By repute, when
he presented his one and only
Budget speech to Parliament
he discovered that he had left
the ministerial Red Dispatch
Box containing it at home in
Northamptonshire. This is said to
be the start of the tradition that,
when a Chancellor leaves for the
House of Commons on Budget
Day, he shows the assembled
crowd his box by holding it aloft.
“That there shall be a Standing Committee of Public Accounts; for
the examination of the Accounts showing the appropriation of sums
granted by Parliament to meet the Public Expenditure, to consist of
nine members, who shall be nominated at the commencement of
every Session, and of whom five shall be a quorum.”
10
Lord Frederick Cavendish, who chaired the Committee of Public Accounts from
1877 to 1880, was murdered in Ireland in1882 – along with the Permanent
Under Secretary, Thomas Henry Burke – on the day of his appointment as
Chief Secretary for Ireland by several men from an Irish nationalist group
known as the Irish National Invincibles. The event became known as the
Phoenix Park Murders. Burke, not Cavendish, was the target of the assassins.
11
Sir John Eldon Gorst – chair of the Committee of
Public Accounts in 188 – was entrusted by Disraeli
with the reorganisation of the Conservative Party,
following its defeat at the general election of 188.
The Conservative success at the general election of
1874 is widely attributed to his efforts.
William Gladstone
The structure and function of
the Committee date back to the
reforms initiated by William
Gladstone when he was Chancellor
of the Exchequer in the midnineteenth century. Gladstone
was born in 1809, the son of a
prosperous merchant. He was
elected to Parliament in 1832 as
a Tory, and then led four Liberal
governments for a quarter of a
century (1868-74; 1880-85; 1886;
and 1892-1894). He held the post
of Chancellor of the Exchequer
between 1852 and 1855 and then
resumed the post under the Liberal
premiership of Lord Palmerston
in 1859.
Whilst it took several years to establish the Committee of Public
Accounts, it took even longer to introduce more of the proposed
reforms and it was not until 18 that the Exchequer and Audit
Departments Act was passed. The Act marked a significant step in the
development of Parliamentary control. It required all departments, for
the first time, to produce annual accounts, known as appropriation
accounts. It also established the position of Comptroller and Auditor
General (C&AG) and set up an Exchequer and Audit Department
(E&AD) to provide supporting staff from within the civil service. The
C&AG was given two main functions – to authorise the issue of public
money to government from the Bank of England, having satisfied
himself that this was within the limits Parliament had voted, and to
audit the accounts of all Government departments and report to
Parliament accordingly. This created a uniform system of accounting
and in 189 the first complete appropriation accounts were laid
before Parliament.
The Committee of Public Accounts quickly developed the practices
that continue to this day. It obtained information by questioning
officials from the departments, although it was not until the 1870s that
the Treasury agreed on a uniform basis for representation under the
title of Accounting Officer. It was agreed that “wherever it is practicable,
the Permanent Heads of Departments [will] render the Appropriation
Accounts of grants for the services under their control”. The Committee
produced reports on a range of topics, based on evidence, and
began to comment on action that had been taken to respond to
previous recommendations. It avoided policy issues but took a wide
interpretation of its role in reviewing the accounts.
12
In 185, Sir John Lubbock
(Committee of Public Accounts
Chairman, 1887–8) published
what was probably the most
influential archaeological text
book of the nineteenth century,
entitled ‘‘Pre-historic Times, as
Illustrated by Ancient Remains,
and the Manners and Customs
of Modern Savages’’, in which he
coined the distinction between
palaeolithic and neolithic man,
summed up existing evidence in
favour of human antiqiuity and
drew attention to the similarity
between prehistoric tools and
those in use by ‘modern savages.’
13
Extending the focus beyond regularity
– 1890s and 1900s
Much of the focus of the Committee of Public Accounts during its early
years was on the regularity of expenditure (that is spent in accordance
with the authorities governing its use) and on urging government
departments to improve the standards of accuracy of their accounts.
It also pressed departments for explanations for why they had spent
money in certain ways. The Committee built up its expertise and
improvements in the standards of accounting by the 1880s were a
testament to its influence and persistence.
Towards the end of the nineteenth century, the Committee gave
support to the C&AG as he developed his work to examine the
economy and efficiency of government expenditure, as well as
regularity. Although such themes had often arisen, there was nothing
14
in the legislation that suggested that the C&AG had a broader role.
Despite this, the Committee of Public Accounts stated in 1887 that
‘if, in the course of his audit, the Comptroller and Auditor General
becomes aware of facts which appear to him to indicate an improper
expenditure or the waste of public money, it is his duty to call the
attention of Parliament to them’. This issue arose during work on the
War Office accounts. When the C&AG had queried a contract for ribbon
costing 20 shillings when a previous contract had cost only 14 shillings,
the War Office had refused to respond.
The Committee’s position was not supported by government
departments or by the Treasury, with the latter arguing that, whilst
departments were bound to provide information to establish the
regularity of expenditure, they might refuse to explain why they
had spent money in one way rather than another, although the
Government accepted that departments might have to account to
Parliament for their refusal.
However, further work established precedents for such examinations.
In the 1890s, the Committee supported the C&AG in investigations
into the costs of shipbuilding. On this occasion, the Treasury gave
its support. Some years later, audit reports on massive waste and
mismanagement in the South African War, led in 1904, to a Royal
Commission of Inquiry and a new emphasis on the importance of
value-for-money in public spending. In 1911, the Committee again
supported the C&AG in investigations into price discrepancies in the
purchasing of horses and the absence of competitive tendering. Having
extracted a promise from the War Office to ‘furnish explanations’ in
future on such matters, departmental attempts to limit the C&AG’s
discretionary powers came to an end. As a result, auditors were able
to undertake more ambitious work, looking, as one Committee
member put it, “beyond the formality of the expenditure, to its wisdom,
faithfulness and economy.”
15
Maintaining careful oversight – World War One and the inter-war period
The First World War saw the relaxation of established financial controls.
The swift setting up of new departments, often with insufficient financial
staff, and the need to purchase supplies urgently, all led to a lowering of
standards of financial management. These developments preoccupied
the Committee, which undertook considerable work on the spending
of the Army and Navy, their relations with contractors and their supply
systems. They were particularly concerned to make recommendations
on forms of contracts and pressed government departments to ensure
they curbed excessive profits amongst their suppliers.
1
Personal liability of
Accounting Officers
The realities of the expansion of government over many years before
and during the war meant that automatic audit checking of all
transactions became wasteful and impractical and this requirement
ended with the Exchequer and Audit Departments Act 1921. The
same year also saw the last recorded instance of an Accounting Officer
personally repaying funds not considered chargeable to an account.
After the war, the Committee sought to enforce the traditional
principles of control again, with many of its reports in the 1920s
and 1930s – not unlike those of the nineteenth century – criticising
the failure of departments to comply with standards of reporting
and accounting. The Committee was also a strong critic of what it
saw as excessive expenditure, commenting on one occasion on the
“imperative necessity for securing economy in every department
of public (as, indeed, of private) life, if national bankruptcy is to be
avoided”. Much of its work focused on the C&AG’s reports of waste
and extravagance, looking beyond the accounts to consider whether
money had been used wisely. Increasingly, this developed into
considering issues relating to the ways in which departments were
organised and their staff deployed.
17
In 1920, it came to the
Committee’s attention that
the Accounting Officer of the
Ministry of Information who
served between April and
December 1918 had failed to
gain Treasury approval for a
number of payments described
as “personal remuneration
and allowances” totalling a
sum of £101 6s. 3d. In 1921
the Committee ordered that
the monies be repaid, which
they were – in full – by the
Accounting Officer from his
own pocket.
Walter Guinness, 1st Baron Moyne,
chairman of the Committee of
Public Accounts in 1924, was
assassinated in Cairo in 1944 by the
Zionist group Lehi, known in the
United Kingdom as the Stern Gang.
The 1920s and 1930s also saw the Committee focus on a number of
matters of accounting policy as Government changed the manner in
which it sought to meet high and long-term expenditure in ways seen
as inconsistent with traditional principles of operating according to
an annual budget. The Committee criticised the use of statutory loans
to meet capital expenditure, previously met by the annual budget.
It was very wary of the development of new methods of financing
government projects such as the Road Fund and the National Health
Insurance Fund, fearing that expenditure would be incurred without
prior Parliamentary authority. Such concerns led it to ask for, and
secure, an extension in its terms of reference in 1934 to allow it to
consider, “such other accounts laid before parliament as the committee
may think fit”.
Around the same time, the Committee considered how far annual
Parliamentary authority could be regarded as sufficient for a
government department to exercise its functions in cases where
no other specific statutory authority existed. The Committee was
concerned that government was gaining Parliamentary authority for
some areas of expenditure simply by use of the Contingencies Fund,
but without troubling to obtain specific statutory powers. These
concerns, dating back to the 180s, led to the 1932 Committee of
Public Accounts Concordat: a long-standing agreement between the
Treasury and the Committee of Public Accounts which established
the general rule that continuing functions of government should
be defined in specific statute. The Concordat underscored the
Committee’s desire to curtail Government spending without statutory
approval by permitting only “certain recognised exceptions” to this
general principle.
18
Scrutinising an expanding public sector
– the post-war period
The Second World War created considerable challenges for the
Committee. It increased the volume of spending and the pace of
demands again made it hard to enforce its traditional standards. As
in 1914-18, the Committee increased its concentration on contracts
and contract procedure, on price reviews and profit fixing, as well as
the state’s role as a buyer within the country and overseas. It had to
accept a relaxation of standards of accounting and non-compliance
with many of the practices that in peacetime it would have been able
to insist upon.
The subsequent post-war growth in public expenditure and the
creation of the ‘welfare state’ underlined the importance of ensuring
public funds were well spent and the Committee examined many
aspects of government financial management.
19
Harold Wilson
Between 1959 and 1963 Harold
Wilson, later Prime Minister, was
Chairman of the Committee of
Public Accounts. His biographer,
Ben Pimlott wrote:
“In addition, Wilson increased
his influence within the House by
becoming Chairman of the Public
Accounts Committee, the powerful
select committee responsible for
ascertaining how money voted by
Parliament has been apportioned
and spent. Though this post was
always held by a senior member of
the Opposition, there was no recent
precedent for a Shadow Chancellor
taking it. Wilson, however, saw a
number of advantages to the new
position. In accordance with his
20
long-held principle that power was
best consolidated by taking a range
of key offices, it complemented
his already unique collection of
strategic positions. In particular,
it enabled him to tighten his grip
on the parliamentary party’s
economic and financial policy,
at a time when this had become
a matter for debate. It also had a
practical benefit: at a time when
accommodation in the Palace of
Westminster was not available for
senior Opposition front-benchers,
the Chairman of the PAC was
provided with a room of his own
– a citadel of great importance
in Westminster’s psychological
battleground.”
Major subjects pursued included: Defence procurement; contract
control and pricing; project management in such areas as weapons
systems, civil works, roads and hospitals; a wide range of grants and
subsidies; National Health Service programmes; agricultural schemes;
and assistance to industry. Indeed, value for money work became an
important feature of the Exchequer and Audit Department’s audit for
the Committee, with well developed methods and techniques.
The period saw some challenges to the ability of the Committee to
scrutinise some new areas of expenditure. The creation of publicly
owned corporations after 1945 provided for accounts to be audited
by commercial accountants and laid by sponsoring ministers in
Parliament. Although the Committee’s standing order allowed it
to consider the accounts, the C&AG had no rights of access and
thus could not assist the Committee. The Government was keen to
avoid what it saw as interference in the day to day operations of the
corporations, and without audit reports, the Committee’s reviews were
severely circumscribed.
The Committee, led for a time by future Prime Minister, Harold
Wilson, investigated a number of high profile cases in the 1950s and
190s. In 1958-59, the Committee reported on poor estimating and
financial controls in contracts for the development of aircraft and
engines, and in 192-3 its report on the Ferranti case was debated
in Parliament. The report showed that the contractor – which had far
better information available to it than was in the hands of the Ministry’s
officials – had made an estimated profit of 3 per cent, which the
Committee described as excessive. This examination was one of many
looking into major defence projects – Chevaline in the 1980’s being
another important investigation.
21
Chevaline
The Public Accounts Committee’s
report into the Chevaline
Project in 1982 prompted
reform to the way the Ministry
of Defence reports its spending
to Parliament. The Chevaline
Project was to update Polaris
missiles at an estimated cost
of £175m in 1974. This figure
rose to £530 million in 1982.
The project had been devised
in 1967 but Parliament was not
informed until 1980. The affair
prompted an examination by the
Committee of Public Accounts
which led to two concessions
from the Government. After
1982, the Ministry of Defence
was to make a Major Project
Statement to the PAC and
Defence Committee – effectively
disclosing the existence of
projects costing more £250m.
In addition, after 1987, Defence
Equipment Project Reports
have been provided for items
over £25m.
Championing higher standards of audit
for public money – 1970s and 1980s
During the 190s and 1970s, a number of commentators inside and
outside of Parliament expressed concerns about the effectiveness
of the process for scrutinising public money. There were complaints
that many of the events considered by the Committee of Public
Accounts had taken place long before they were reported. There were
a number of other restrictions on the C&AG’s value for money work for
Parliament. In particular, he did not have specific statutory authority
to carry out such examinations, and he was advised that legislation
precluded him from reporting to Parliament on matters arising from his
examinations other than when accounts were laid before the House.
The Committee first
admitted the public and
press to hearings in the
1977–78 session.
The Committee’s reports regularly featured recommendations arguing
for a widening of the C&AG’s access rights, some of which, such as
for universities, were accepted by the Government. Subsequently,
Parliament – initially through the General Sub-Committee of the
Expenditure Committee in 197-77 – began to examine and comment
on the need for reform of state audit and in particular, the importance
of the independence of the C&AG. The PAC reported in 1979 and
issued a Special Report on ‘The Role of the Comptroller and Auditor
General’ in 1981, which argued for a statutory basis for VFM work as
‘a logical part of the C&AG’s work’. It also endorsed the wide-ranging
cross-departmental studies that had started, and supported the
view that there was no reason why the C&AG’s VFM reports should
necessarily be published with the accounts.
The first televised hearing of
the Committee took place
on 4 December 1989 when
it considered a report on
the Sale of Rover Group.
22
The attention of the PAC – chaired during this period by Joel Barnett
(later Lord Barnett) – increased the pressure for reform, but it took
a Private Member’s Bill, introduced by Norman St John Stevas (later
Lord St John of Fawsley) in 1982, to generate the reforms that set up
the National Audit Office. The National Audit Act 1983 confirmed
the C&AG as an Officer of the House of Commons, and head of the
National Audit Office, whose staff were no longer civil servants. The Act
gave the C&AG statutory power to produce value for money reports
and enabled him to report to Parliament in a more timely manner on
discrete subjects. It also established the Public Accounts Commission
to oversee the budget of the National Audit Office.
The Act gave a new lease of life to the work of the Committee, with
VFM studies forming the basis for almost all of its hearings thereafter.
The widening of the focus of the work of the C&AG provided the
Committee with a broader range of topics to consider. Increasingly, its
hearings tackled more extensive issues of the quality of public services,
the effectiveness of policies and programmes, and the consequences
for citizens of shortcomings in administration. Nevertheless the De
Lorean case (page 24) showed traditional concerns remained a key
part of the Committee’s work.
23
Joel Barnett
Joel Barnett was born in 1923
and is a Labour member of the
House of Lords. He served as
Chief Secretary to the Treasury,
from 1974 to 1979 gaining a seat
in the cabinet from 1977 onwards.
During this time he oversaw the
devising of what is known as
the ‘Barnett Formula’ by which
public spending is apportioned
between England, Scotland, Wales,
and Northern Ireland. He was
Chairman of the Committee from
1979 to 1983.
De Lorean
Between July 1978 and February 1982, the Government provided assistance
totalling some £77 million to establish the De Lorean manufacturing project in
Northern Ireland. The company aimed to produce up to 30,000 cars a year, with
a workforce rising to 2,000 over five years.
In February 1982, some 12 months after starting full-scale production, the
Northern Ireland company went into receivership. Production ceased in May
1982 and the plant closed six months later.
In July 1984, the Committee of Public Accounts reported that, “the De Lorean
project represents one of the gravest cases of the misuse of public resources
to come before us in many years”. The Committee noted that there were still
a number of matters which had not been fully resolved. A key issue was an
alleged fraud of some £8.8 million. The Comptroller and Auditor General for
Northern Ireland undertook to monitor progress and published his report on
the outcome in February 2004.
24
Safeguarding public money in times
of change – 1990s
The 1980s and 1990s saw many changes in the way Government in the
United Kingdom was organised. The creation of executive agencies,
the privatisation of many public assets and the establishment of many
arm’s length organisations spending public money presented new
challenges for the Committee, chaired from 1983 to 1997 by Robert
Sheldon (later Lord Sheldon). In 1993 the Committee issued a report
entitled “The Proper Conduct of Public Business” in which expressed its
concern that:
“In recent years we have seen and reported on a number of serious
failures in administrative and financial systems and controls within
departments and other public bodies, which have led to money
being wasted or otherwise improperly spent. These failings represent
a departure from the standards of public conduct which have mainly
been established during the past 140 years. This was the period
following the publication of the Northcote – Trevelyan Report which
condemned the nepotism, the incompetence and other defects of the
Civil Service and brought about fundamental change. It is from that
period that we acquired the principles and the standards which have
come to be copied by some countries and admired by many more. It is
our task to retain those standards.”
The Committee argued that although the changes had been intended
to improve the provision of public services through greater delegation
of responsibilities, streamlining and a more entrepreneurial approach to
the work of Government, “at a time of change it is important to ensure
that proper standards are maintained in the conduct of public business”.
The report identified a number of failings on which the Committee had
reported in key areas of financial control, compliance with rules, the
stewardship of public money and assets, and generally getting value for
25
Robert Sheldon
Robert Edward Sheldon (later
Lord Sheldon) was elected
Member of Parliament for
Ashton under Lyne at the 1964
general election, serving until the
2001 general election, when he
was created a life peer. He was
Financial Secretary to the Treasury
from 1975 to 1979. He was
Chairman of the Committee
of Public Accounts from 1983
to 1997 – the longest serving
Chairman to date.
the taxpayer’s money. Alongside each of these failings was a checklist
of points for public bodies to keep in mind in order to guard against the
risk of such lapses in the proper conduct of public business.
The Committee’s determination to maintain a robust oversight
of public expenditure was further highlighted in the case of the
Pergau Dam. In July 1991, the Secretary of State for Foreign and
Commonwealth Affairs overruled the advice of the Accounting
Officer of the Overseas Development Administration and ordered
the expenditure of up to £234 million on the project. The go ahead
was given despite warnings given by the Accounting Officer that
the project was “unequivocally bad … in economic terms”. This case
led the Committee to conclude that its responsibility to examine
value for money made it particularly important that it conducted
inquiries in cases where an Accounting Officer has been overruled.
It recommended that the Treasury memorandum setting out the
Accounting Officer’s responsibilities be amended to provide that such
officials communicate, without undue delay, papers relating to all
cases where Ministers issued a direction on matters involving prudent
and economical administration, efficiency and effectiveness. This was
accepted by the Government.
2
Modernising accountability
arrangements – 2000s
In the late 1990’s, continuing changes in the government
landscape stimulated Committee concerns about the ability of
traditional arrangements to support proper accountability. This was
neatly summarised by the Committee of Public Accounts in 1999,
which suggested:
framework established by Gladstone provided for the
‘‘…The
Comptroller and Auditor General to give assurance, through
his audit of departments’ accounts, that funds approved by
parliament had been spent in accordance with the principles
of appropriation.….But government has changed out of all
recognition since the 19th century; funds are now spent by a
range of bodies which help to deliver departmental programmes.
‘‘
It added that “Parliament has the right to expect the same standards of
probity and regularity in the use of public funds however they are spent’’.
Disquiet at the impact changes in government were having on audit
and accountability took a number of forms. One concern related
to the consequences of the changes in service delivery bodies. The
Committee noted that government departments had established
a variety of “arms-length” public bodies: executive agencies, NonDepartmental Public Bodies (NDPBs) and other local spending bodies,
and had established private contracts for the delivery of services.
The scale of spending outside of traditional channels was significant;
between 1979 and 1999, the annual spending by non-departmental
public bodies more than doubled, in real terms, to £18 billion.
27
Of more specialised interest – but going to the heart of parliamentary
concerns about accountability – were the apparently arbitrary
decisions about who audited many of these bodies. Although there
had never been any doubt that the C&AG would audit executive
agencies (which remained legally part of their parent department),
this was not the case for NDPBs. By the late 1990s, although the C&AG
audited around two-thirds of these bodies, the remainder were audited
by private sector firms appointed by, and reporting to, Ministers under
legislative powers. As a consequence of decisions taken during the
1970s, 1980s and 1990s around 0 organisations were in this position,
spending more than £3 billion a year.
28
In 180, public expenditure was £87 million
– approximately £8 billion in today’s money. By 2007,
the Committee of Public Accounts was responsible
for scrutinizing £587 billion of expenditure
Another fear of the Committee was that the NAO and, by extension,
the Committee, was in many cases being excluded from specific areas
of spending. The Committee quoted examples where it felt the C&AG
had had problems scrutinising spending; Training and Enterprise
Councils, Housing Associations, Royal Palaces, Private Finance
Initiative contractors, and Camelot (the Lottery company). Similarly,
the Committee drew attention to what it saw as the restrictions on
the C&AG’s access, compared with the apparently stronger powers of
access within the United Kingdom of the European Court of Auditors
and the European Commission.
The Committee, led by David Davis MP, saw parliamentary
consideration of the Government Resources and Accounts Bill – the
first major reform of government accounting since the 18 Act – as
the opportunity to strengthen the C&AG’s powers. In response to the
Committee’s concerns, expressed in two reports, the Government
asked Lord Sharman of Redlynch to review audit and accountability
arrangements for central government. His recommendations were
substantially accepted by the Government and led to reforms of the
audit arrangements for NDPBs, greater access for the C&AG to a range
of lower tier bodies spending public money and ultimately, following
the passage of the Companies Act 200, the right to audit companies.
29
David Davis
David Davis was elected Member
of Parliament for Boothferry at
the 1987 general election. He
was Parliamentary Secretary at
the Office of Public Service and
Science from May 1993 until
July 1994 when he was appointed
Minister of State at the Foreign and
Commonwealth Office. In 1997,
he assumed the chairmanship of
the Committee of Public Accounts,
holding it until September 2001
when he was appointed Chairman
of the Conservative Party. Since
November 2003, he has been the
Shadow Home Secretary.
Members of the Committee, November 2007: (L to R)
Keith Hill, Nigel Griffiths, Austin Mitchell, Angela Eagle, Ian Davidson, Edward Leigh
30
Making accountability real today
Today’s Committee of Public Accounts consists of sixteen members.
The members are nominated at the beginning of each Parliament
on the basis of a motion made by a Government minister, after
consultation with the Opposition. Changes in membership are made
from time to time during the Parliament, often because Members have
become Ministers or front-bench opposition spokesmen.
The party proportions of the Committee, like other committees, are the
same as in the House, and at present this gives nine Labour members,
five Conservative members, and two minority party members (at
present from the Liberal Democrats). Divisions in the Committee are
very rare. One of the members is the Financial Secretary to the Treasury,
who, by convention, does not normally attend. The Committee
chooses its own chairman, traditionally an Opposition member.
The Committee is assisted by the C&AG, a permanent witness at its
hearings, along with his staff, who provide briefings on each report and
assist in the preparation of the Committee’s own reports.
The Committee of Public Accounts today holds more than 0 hearings
a year, and in 200-07 published 2 reports. These ranged right across
the work of government from major projects such as the Thames
Gateway and the preparations for the 2012 Olympics, administrative
processes such as helping companies fulfil their tax obligations and
the implementation of child support reforms, social issues such as
legal aid and anti-social behaviour, as well as timeless value for money
concerns such as procurement and employment programmes. The
effectiveness of the Committee’s work can be gauged by the high
proportion of recommendations accepted by Government and acted
31
upon in ways which lead to better public services. Its impact can be
seen, for example, in the clawback arrangements following the sale of
public assets, the sharing of Private Finance Initiative refinancing gains,
improvements in the service provided by those managing the financial
affairs of people with mental incapacity and a wide range of other
ways in every part of government.
Edward Leigh
Edward Leigh was first elected
as Member of Parliament for
Gainsborough & Horncastle in
1983 and later to the new seat of
Gainsborough in 1997. From 1990
to 1993 he was a Parliamentary
Under Secretary of State at
the Department of Trade and
Industry. Prior to that he was a
Parliamentary Private Secretary
in the Home Office. A former
member of the Social Security
Select Committee, he became
Chairman of the Committee of
Public Accounts in 2001.
The most recent period of the Committee’s history has seen a number
of developments under the chairmanships of David Davis and Edward
Leigh. The Committee has produced a number of cross-government
reports, pulling out lessons from its work on particular topics. These
have included privatisation and the Private Finance Initiative, as well
as a compendium on lessons from more than 20 reports on problems
with IT projects during the 1990s. More recently, it has published
reports drawing on more than a decade’s worth of material to
comment on the obstacles to government achieving greater value for
money, and to highlight the factors behind high quality public services.
In addition, as well as senior government officials, the Committee has
increasingly taken evidence from representatives of private sector
organisations responsible for supplying government or delivering
services on its behalf. They are present alongside the main witness, the
relevant Accounting Officer. The Committee has also made a series of
visits overseas – to the United States, the institutions of the European
Union, Denmark, France, Portugal, Spain and Sweden – in order to
inform itself of parallel developments in other accountability regimes.
32
The Committee has seen its role change in certain areas. The creation of the devolved
assemblies in Scotland, Wales and Northern Ireland, ended the Committee’s role in
scrutinising much of the expenditure in these countries, but the privatisation of many
utilities and the creation of new regulatory regimes, for example, for water, gas and
telecommunications, has provided new opportunities to examine key public services.
This is in contrast to the situation when such industries were in state hands (see page 21).
Despite the continuous changes in government, an examination of the history of the
Committee of Public Accounts shows considerable continuity in terms of the areas of
interest and concern about the ways in which public money is spent. The language
may have changed and the size of the sums of money involved may have grown, but
the themes of identifying waste, tackling poor performance and making the best use of
public funds remain as they were 150 years ago.
33
The impact of the
Committee of Public Accounts
In October 2007 the Chairman of the Committee of
Public Accounts highlighted the positive response of the
Government to recommendations made in recent reports
from the Committee. These examples give a good sense of
the breadth of the Committee’s interests.
l
l
The Child Support Agency is taking
steps to make better use of the
methods it uses to calculate and collect
maintenance payments. The number
of cases in receipt of maintenance is
reported to have increased from 385,000
in March 2005 to 48,000 cases by
June 2007, benefiting around 0,000
children. And the Department for
Children, Schools and Families has put in
place measures to improve the financial
management of children’s centres and
their ability to direct resources where
they are most effective.
Work is planned by the Home Office
to support victims and witnesses of
anti-social behaviour, including advice
on providing help-lines in support
of a 24-hour service, and a national
support network.
34
l
The Ministry of Defence has introduced
a range of actions to increase
recruitment and retention, including
the new One Army Recruiting change
programme which will provide a more
efficient and effective recruiting process
across the Regular and Territorial Army.
It is also examining better ways of
recruiting, training and supporting
Reserve Forces, and offering enhanced
medical support to Reservists on their
return from operations.
l
The Department for Culture, Media and
Sport is addressing key risks to delivering
a successful Olympic and Paralympic
Games in 2012 and legacy benefits in
the longer term, by developing plans to
secure wider benefits for London and
the rest of the UK, and strengthening
oversight and risk management for the
programme as whole.
The PAC published 1300 reports
between 1945 and 2007
l
HM Revenue & Customs is taking
steps to reduce IT running costs and
has set more rigorous targets for the
delivery of IT projects by its suppliers.
The Government has agreed that, if a
department decides to pay an incoming
supplier its transition costs, the supplier
will not be paid a profit on those costs.
The Department is also tackling VAT
Missing Trader Fraud by improving the
timeliness and quality of information
exchanged with other EU Member States.
l
The Office of Government Commerce
has launched a new programme, with
Permanent Secretary oversight, to
improve the value for money of the
government’s spending on external
consultants. OGC is also exercising
tougher scrutiny and oversight over all
high-risk and mission-critical IT-enabled
programmes and projects. And the
Government’s central procurement arm,
called OGCbuying.solutions, has now
been set a tougher target to save £1
billion a year by 2010-11, compared with
£500 million in 200-07.
l
The Department for Business, Enterprise
and Regulatory Reform plans to produce
frequent estimates of the cost of British
Energy’s liabilities.
l
Primary Care Trusts are implementing
electronic rostering to improve the realtime monitoring of temporary nursing
staff and associated costs. Following the
joint venture between the Information
Centre (established by the Department
of Health to centralise the collection and
dissemination of information accross the
NHS) and Dr Foster LLP (a private sector
company), the Department of Health
has accepted that open competitive
processes for awarding contracts should
be the norm.
l
Train users should notice
improvements to their service as
the Government encourages the rail
industry to simplify the fare structure
and refund customers with the
difference when they are charged more
than the lowest fare on offer.
35
Chairmen of the Committee of Public Accounts 181–2007
Year
Chairman
Party of
Chairman
Administration
181–3
Sir Francis Thornhill Baring
Liberal
Liberal
Liberal
Liberal
184–18 Rt Hon Edward Pleydell Bouverie
18
Mr George Sclater-Booth
Conservative
Liberal
187–8
Mr Hugh C E Childers
Liberal
Conservative
189
Mr William Pollard Urquhart
Liberal
Liberal
1870–71
Rt Hon George Ward Hunt
Conservative
Liberal
1872–73
Mr George Sclater-Booth
Conservative
Liberal
1874–7
Rt Hon John George Dodson
Liberal
Conservative
1877–80
Lord Frederick Cavendish
Liberal
Conservative
1880–83
Sir Henry Holland
Conservative
Liberal
1884–85
Mr Thomas Salt
Conservative
Liberal
188
Sir John Eldon Gorst
Conservative
Liberal
1887–8
Sir John Lubbock
Liberal Unionist Unionist
1889–92
Sir Ughtred Kay-Shuttleworth
Liberal
1893
Mr Edmond Wodehouse
Liberal Unionist Liberal
1894–5
Sir Richard Temple
Conservative
Liberal
Irish National
Unionist
Liberal
Unionist
189–1900 Mr Arthur O’Connor
Unionist
1901–5
Rt Hon Sir Arthur Hayter
190–8
Rt Hon Victor Christian William Cavendish Liberal Unionist Liberal
1908–18
Col Robert Williams
Unionist
Liberal
Coalition
1919–20
Rt Hon Sir Francis Dyke Acland
Liberal
Coalition
1921–22
Mr Aneurin Williams
Liberal
Coalition
Conservative
3
1923
Mr Frederick William Jowett JP
Labour
Conservative
1924
Lt Col Rt Hon Walter Edward Guinness
Conservative
Labour
1924–29
Rt Hon William Graham JP
Labour
Conservative
1929–31
Mr Arthur Michael Samuel
Conservative
Labour
1931–38
Mr Morgan Jones
Labour
National
1938–41
Rt Hon Frederick William Pethick-Lawrence Labour
National
Coalition
1941–43
Lt Col Rt Hon Walter Elliot
Unionist
Coalition
1943–45
Lt Col Sir Assheton Pownall OBE TD
Unionist
Coalition
194–48
Rt Hon Osbert Peake
Conservative
Labour
1948–50
Ralph Assheton
Conservative
Labour
1950–51
(1) Sir Ronald Cross
(2) Rt Hon Charles Waterhouse
Conservative
Labour
1951–52
Mr Lewis John Edwards
Labour
Conservative
1952–59
Sir George Benson
Labour
Conservative
1959–3
Rt Hon Harold Wilson
Labour
Conservative
193–4
Rt Hon ALN Douglas Houghton
Labour
Conservative
194–70
Rt Hon John Boyd-Carpenter
Conservative
Labour
1970–73
Rt Hon Harold Lever
Labour
Conservative
1972–73
Rt Hon Edmund Dell
Acting – due to Lever’s illness
Labour
Conservative
1974–79
Rt Hon Edward DuCann
Conservative
Labour
1979–83
Rt Hon Joel Barnett
Labour
Conservative
1983–97
Rt Hon Robert Sheldon
Labour
Conservative
Conservative
Labour
Conservative
Labour
1997–2001 Rt Hon David Davis
2001–
Mr Edward Leigh
37
Photography acknowledgements
Alamy
Getty Images
Mary Evans Picture Library
London 2012