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Commons Chamber

Volume 941: debated on Monday 9 January 1978

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House Of Commons

Monday 9th January 1978

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Energy

Energy Policy

1.

asked the Secretary of State for Energy if he will make a statement detailing the implications for British energy policy as a result of the proposed enlargement of the European Community.

The process of enlargement of the Community is still at an early stage, but nothing has been said which leads me to expect it to have any significant implications for the United Kingdom's own energy policy.

As there is a considerable oil-refining capacity in Spain, will the Secretary of State indicate whether he thinks that that capacity might have any impact upon his own objective of securing the maximum possible refining within the United Kingdom of oil from the North Sea? Will the right hon. Gentleman undertake to report to the House any observations that he may receive on this subject from the European Commission?

As I said in my initial answer, these matters have not arisen. On the general issue of refining policy, the hon. Gentleman knows that there was a discussion at the last Council and the previous one. I have made our own position clear, namely, that I must consult the oil companies and the trade unions in this country about the development of our refining policy, and that the Government's statement of broad objective on the refining of North Sea oil stands as it did when my right hon. Friend the former Secretary of State for Energy made a statement in 1974.

As the candidates for admission are likely to be Mediterranean countries, is it not wise to hammer home to the Commission the importance of the use of energy sources such as solar power and other benign sources, which could be much better alternatives than nuclear energy?

I understand what my hon. Friend is saying, but I consider that it would be both premature and misunderstood if I were to argue for federal control of energy policy in the Commission, to which I am totally opposed, and start by saying that it should apply to those who themselves are only contemplating the possibility of entry.

22.

asked the Secretary of State for Energy if he will make a statement on his latest talks with other EEC Ministers on energy policy.

I apologise, Mr. Speaker, for the length of the reply.

The EEC Energy Council of Ministers met in Brussels on 13th December 1977. The Council considered the energy situation in the Community and the world and a report from the Commission on the achievement of Community energy policy objectives for 1985. It reached agreement on objectives for reducing the Community's dependence on external energy sources and for reducing the rate of growth of energy consumption, and commissioned further study of this question.

In the field of energy conservation, the Council agreed a framework directive on minimum performance standards for heat generators. Plant for which type testing is not practicable will be excluded pending further technical study. Ministers were also favourably disposed towards a draft regulation for support of energy—saving demonstration projects on which further work was commissioned.

The Council did not discuss the draft directive on the modernisation of existing buildings. I much regret, however, that the Council was unable to reach agreement on proposals to assist the Community's coal industry by support for construction of power stations using coal and by coal stocking aids. The Council also discussed the situation of the refinery industry in the Community and agreed an outline of its work programme for 1978.

I thank my right hon. Friend for that reply, but can he spell out in rather more detail what occurred regarding conservation policy, and will he consider publishing a White Paper on that matter? Further, can he say exactly what the position is regarding the draft directive on the modernisation of existing buildings, since that is an extremely important part of the same problem?

If my hon. Friend will allow me to say so, I do not think that it is for me to publish a White Paper about Community energy policy. I made a statement to the House just before Christmas on our own conservation policy, and I have strongly urged—[Interruption.] I take hon. Members to be supporting me—that the Energy Council should meet in public so that everyone may know what goes on and that its documents should be made as widely available as are our domestic energy documents. Were that to be done, it would be found that there were technical problems and conflicts of interest in the Community, just as there are in the United Kingdom, which hold up progress in certain areas. But, for my part, the more sensible co-operation there can be within the Community on energy matters, the happier I shall be.

Did the Commission get round to discussing the longer-term difficulties and the need to develop safe methods of generating power by nuclear energy owing to the likelihood of fossil fuels becoming too valuable a source of raw materials for them to continue to be burned in the 20 to 30-year period?

Everyone in the world concerned with energy policy is engaged on exactly those matters, and what are called the "COCONUC" options—the coal conservation and nuclear options for the future—are widely shared. But I have made clear to the Commission and in the Council of Ministers that decisions about nuclear policy must be made by Ministers accountable to the House of Commons, and it would not be acceptable for decisions about nuclear systems or the planning and operation of nuclear power stations or the disposal of waste to be transferred from member States to the Commission. I think that this view is pretty widely shared among member States. These matters must be held within the responsibility of Ministers and their own Parliaments.

Were there any discussions relating to the selling price of United Kingdom oil, in view of various Press reports over a period that there is an attempt by the Common Market countries to ensure that the price of United Kingdom oil will be the same on the Continent as it is here?

The world arrangement for oil prices is that they are dictated by the Gulf price, and we sell North Sea oil already not only at the world price but slightly above it, because it has a low sulphur content and attracts a premium price. There has never been any question of our supplying oil or wishing to supply oil to ourselves in the United Kingdom at a price different from the world price. I think that the anxieties that exist about a possible intrusion into British oil policy emerge much more from the telegram that was received by the hon. Member for Harrow, East (Mr. Dykes), which came out in a recent debate, whereby it appeared that the Conservative Party had been trying to get the Commission to intervene directly in the operation of the BNOC and our participation policy.

Energy Industries

4.

asked the Secretary of State for Energy when he next expects to meet the chairmen of the boards of the energy industries.

5.

asked the Secretary of State for Energy when he next proposes to meet the Chairman of the British Gas Corporation.

12.

asked the Secretary of State for Energy when he next intends to meet the Chairman of the British Gas Corporation.

14.

asked the Secretary of State for Energy when he next expects to meet the National Coal Board and the National Union of Mineworkers; and if he will make a statement.

My next meeting with the chairmen of the boards of the energy industries, and with representatives of the energy unions, will be at the next meeting of the Energy Commission on 13th February. However, I may well see individual chairmen and union representatives before then in the normal course of business as matters arise.

Will my right hon. Friend ask the chairmen of the gas and electricity boards why they use private credit checking agencies to check on potential customers in respect of the supplying of fuel or for hire-purchase agreements? Is it not intolerable that public bodies should use private snoops, who go around spying on people and prying into their financial affairs, simply in order to put them at a disadvantage?

Subject to the fact, as the House knows, that I am not the manager of the fuel industries, I shall inquire into the point that my hon. Friend has raised and write to him upon the matter.

As the Secretary of State now believes that the prospects of an energy gap are receding, how does he see Denis Rooke's recently reported suggestion that supplies of North Sea gas might be limited this year? Will not this artificial restriction at source by a monopoly supplier mean higher prices for gas and fuel generally than might otherwise need to be the case?

The hon. Gentleman has raised many complicated issues in his supplementary question. As for the energy gap, the House knows that we published forecasts in September which implied that the gap might be very much narrower by the year 2000, to the extent of 60 million to 90 million tons of coal equivalent. That is partly because we allowed greater scope for conservation, partly because of change in methodology and partly because of the impact on energy demand of the current recession in the Western industrialised world. These factors have no bearing on the second point to which the hon. Gentleman made reference. I would rather have the opportunity of giving a considered view in response to his question. However, it has no bearing on the gas price decisions that might be taken this year, which will be governed by other considerations.

Is my right hon. Friend aware that the respective bosses of the NUM and the National Coal Board have conspired together to smash the unity of the NUM and to ignore the result of a democratic ballot? Will he recommend to Sir Derek Ezra and others in the higher echelons of the National Coal Board that when they go for a massive pay rise, as is being suggested by certain people—for Sir Derek Ezra it is suggested that his salary will be in the region of £40,000—they had better ask for a productivity deal?

My hon. Friend knows that the payment of the chairmen and board members of nationalised industries has been handled on the basis of the Boyle recommendations. It has been the subject of a general statement. My hon. Friend may also know that discussions have taken place on whether it would not be better for these matters to be considered in the context of each industry. Were that to be the case, considerations of the sort that my hon. Friend mentions might come to the forefront. However, in general I take the view that in this respect it is for the NUM to consider its own position and not for the Minister to comment.

When the Secretary of State meets the chairmen of the nationalised industries, will he follow up the idea put forward by his hon. Friend the Member for Bolsover (Mr. Skinner) and discuss their remuneration and that of the other directors of nationalised industry boards? For how long will the Government tolerate a situation in which people who are not board members are in many cases paid more than those with board responsibility? What representations did the right hon. Gentleman make on behalf of board members in the recent discussions?

I have had a number of discussions with board members of all the fuel industries on this matter. They have been to see me over a period of time about the anomalies and inverse differentials that exist between the most highly-paid officials and the board members. This is one of the problems that causes the greatest concern in the nationalised industries. It was with that in mind that, in passing, I made the point about these matters being considered in the context of each industry. The decision on this matter falls to be announced on behalf of the Government as a whole covering all board members and chairmen arising from the Government's response to the recommendations of the Boyle Commission. That is the basis upon which these matters are handled.

Will my right hon. Friend say whether he hopes soon to meet again the Chairmen of the Electricity Council and of the Central Electricity Generating Board and whether, after that next meeting, he will be in a position to announce the choice of the next nuclear reactor?

I shall not be in a position to announce the choice, because the decision has not yet been made by Ministers. However, as the House knows, a further round of discussions is taking place. I think that the House is also familiar with the alternatives being pressed by various interests. I have to do the best I can in the light of these further consultations. When the Government have reached a decision, it will fall to me to announce it.

Will the Secretary of State take this opportunity to say that, when he next meets the Chairman of the National Coal Board, he will make clear to him that, if the various ballots go in that direction, area or pit-by-pit productivity schemes will have the warm support of the Government?

:There is no doubt or argument that the 1974 productivity agreement entered into by the Government, the National Coal Board and the unions referred to productivity schemes, and these have been handled in the normal way by management and unions. It does not fall to me to make any further comment on that matter.

:When my right hon. Friend next meets the Chairman of the National Coal Board and one of the barons of the National Union of Mineworkers, will he draw their attention to a report that a productivity agreement had been reached at Bevercotes Colliery which awarded coalface workers an increase of £23 without any extra effort of productivity? Is this not either indecent propaganda or a flagrant breach of the Government's 10 per cent. policy?

I think the House knows that the nature of such arrangements is that they be locally negotiated. It is not for the Government to comment on that matter.

Energy Commission

6.

asked the Secretary of State for Energy when he next intends to call a meeting of the Energy Commission.

11.

asked the Secretary of State for Energy if he will make a further statement on the progress made by the Energy Commission; and if he will detail its future programme.

The Energy Commission had its first meeting on 28th November and discussed the Department of Energy's working document on energy policy. Its next meeting is to be held on 13th February at Lancaster House, and it is intended that further meetings will be held at intervals of about three months. The agenda for the next meeting is not finally settled.

Before the meeting on 13th February, will the Secretary of State urgently review the composition of the Energy Commission, because there is a certain absence of representatives from a number of energy arenas? For example, does he recognise that there is no representative from the energy research or conservation arena? Is he also aware that there is no representative from the engineering profession's Watt Committee?

I am afraid that I cannot review the membership of the Commission before the next meeting. We had great difficulty in settling on the membership that we have, because, frankly, everybody wanted to be on the Commission. In fact, Sir William Hawthorne is a member of the Commission. Therefore, the hon. Gentleman's comment about conservation representation is not entirely correct. Sir Brian Flowers and others with great experience on the research side are also represented.

What I have done—I think that this is appreciated—is to ensure that the documents are made public. It is my intention, so long as I can carry the Commission with me, to publish the transcript of the last Energy Commission meeting. Therefore, everybody will have an opportunity of seeing how the discussion developed. Unless we were to have national energy conferences at quarterly intervals with everybody present, it would not be possible to operate on that scale. I think that it is fair to give the Commission a chance to show what it can do.

Is it not fair to say that the advice that the Commission gives to the Secretary of State reflects closely the participation of its members? Would it not be more correct to say that if, for example, the Chairman of the Electricity Council was on the Commission we should get one set of advice on nuclear reactors, whereas if the Chairman of the Central Electricity Generating Board was on the Commission we should have different advice? Does not that underline one of the weaknesses of the way that matters are conducted?

I hope that the House will not be too ungenerous. Hitherto, Ministers have received advice secretly from their officials with advice from individual nationalised industry chairmen both directly and through the Department. I have substantially broadened the publication of documents and the range of advice available to me. I have not limited it by making the documents private. I think that the House would do less than justice to this experiment, which I hope will succeed, if it suggested that it is still no different from what it has been before.

In the end, I must be responsible to the House of Commons for energy policy decisions, including the choice of reactor. I could not, and would not, wish to shield behind advice that might be given to me by those who are present. I must accept my responsibility, but at the same time I must be able to get a wide range of advice. That is what I have sought to secure.

At the next meeting of the Energy Commission, will the Secretary of State consider nuclear reactor policy and use that occasion to rehearse his well-known ambivalence towards pressure water reactor design?

I do not think that either part of that question is correct. At the last meeting, the point about reactor choice was raised. A number of people gave their views on the matter, as will be evident when the transcript is pub- lished. As I think is known, there was a strong view in favour of the adoption of the advanced gas-cooled reactor. However, it does not fall to the Energy Commission to express a decision on that matter. I hope that the Government's decision on this matter will be a great deal closer, if not already made, by 13th February. That decision will be made on the basis of a wide range of factors which have to be taken into account, including the advice of those who are represented on the Commission.

Is not a major weakness in the composition of the Energy Commission the fact that, in its initial findings on the advanced gas-cooled reactor, the largest producer of energy in this country was not represented and the largest user of nuclear reactors—the CEGB—had no representative on that body?

I think the hon. Gentleman knows that the CEGB has made its own recommendations to me. I have met the board of the CEGB and the Electricity Council on a number of occasions. It is also known, because, fortunately, all these matters have become public, that the CEGB and the South of Scotland Electricity Board wish to order advanced gas-cooled reactors. The discussion is about what will follow at a later stage. I think that all this is clearly understood. Nothing that has followed from the establishment of the Energy Commission has in any way limited the range of discussions, which, as the House also knows, will be renewed.

The Energy Commission was set up to look at the wide range of energy policy, not to be the sole channel through which advice was offered to Ministers. The views of the Energy Commission, as expressed by those who spoke, were clearly explained by me when I met the Press after the meeting and will emerge from the transcript when it is published.

Pay Claims

7.

asked the Secretary of State for Energy what progress has been made in settling pay claims within those nationalised industries for which he is responsible.

I understand that discussions are proceeding in respect of all claims so far received.

Can the Secretary of State confirm that it remains the Government's policy and his own personal policy for all the nationalised industries, including those involving the miners and the firemen, to settle claims within the 10 per cent. guidelines?

The Government's policy has been made clear on so many occasions that I can say categorically that there is no doubt that management, in negotiations with the unions, has this in mind when reaching conclusions on negotiations when they take place. Some of them are now taking place.

I was going to ask my right hon. Friend whether it is true that Mr. Frank Chapple is now a secret Communist.

North Sea Oil

8.

asked the Secretary of State for Energy if he is satisfied with the current off-take of oil from the North Sea oilfields.

17.

asked the Secretary of State for Energy whether oil production from the North Sea is in line with the targets set by his Department.

I am satisfied with the level of production, which is now meeting nearly half our requirements. Figures for 1977 production, when available, are expected to show a slight shortfall on our forecast.

Does my right hon. Friend consider that oil is in very short supply, not only in the North Sea but throughout the world, when compared with the amount of coal that is available? Will he ensure that the smallest quantity of oil is consumed in power stations, if its use is not abolished altogether? Will he ensure that coal takes the place of oil? Does he agree that that would give the mining industry the impression that the Government were giving their support to increased productivity?

I agree with my hon. Friend. What he suggests has already been done. There has been a substantial shift away from oil burning. New arrangements have been made governing the import of coal, and Drax B has been ordered. I am not suggesting that the switch has gone as far as some would like it to go, but the pattern of our energy policy is firmly based upon coal, and forward forecasts, which have now been made public, indicate the rôle which coal will play. There should be no fears in the mining industry on that score.

Is the Secretary of State aware that oil production is at present four or five times Scotland's annual consumption and that by 1990 Britain—if it still exists—will be importing oil at a much higher cost? Will he give urgent consideration to the request by the TUC that an oil depletion policy should be followed?

There has been a statement on the Government's depletion policy, which is set out in the working document which went before the Energy Commission and which will appear in its final form in our Green Paper. This sets out our position that we are aiming to move towards self-sufficiency. Beyond that, we shall take account of the desirability of preserving oil in the ground and the impact on the industry of the long-term interests of the United Kingdom.

Every part of the United Kingdom is dependent to a substantial extent on every other part in terms of one fuel or another. For example, Yorkshire coal is an important part of our coal reserves and it is transported to other parts of the United Kingdom and used there.

I appreciate all that my right hon. Friend has done in moving towards coal-burn in power stations, but will he again look seriously at the proposal for producing one new oilfired power station?

I understand that my hon. Friend is referring to Insworke Point. I have made it clear that the Government do not favour further oil-fired capacity, for the reasons which I have given in the House today and which emerge clearly from general statements on energy policy that I have made.

Will alterations be made to future Government estimates to take account of the delays incurred by the Government before the announcement of the fifth round of licences? Does the Secretary of State recall that the Government assured the House that there would be no delay in drilling and that the 1977 drilling licences would be caught? But delays have taken place. Does this not fully substantiate what my hon. Friend the Member for Bridgwater (Mr. King) warned would happen when the Secretary of State made his statement on 9th February?

The hon. Member is oversimplifying the matter. There was too large a block of licences in 1972, which had the effect of creating a demand which industry in this country could not meet. I am not blaming anyone for the decision, since I understand the reason. There was a substantial release of licences under conditions that were not favourable. We had to balance out the demand for industry and the demand for oil itself at home and put the participation agreements into place to ensure that we had a proper advantage from them. Taken overall, the speed with which we moved on this was about right. I cannot accept the hon. Member's criticism.

Electricity (Bulk Storage)

9.

asked the Secretary of State for Energy how many research or development projects he is currently sponsoring into improved methods of the bulk storage of electricity; and if he will make a statement.

None. Research and development into methods of bulk electricity storage in England and Wales are the responsibility of the Central Electricity Generating Board. My right hon. Friend's Advisory Council on Research and Development is satisfied that appropriate attention is being given to this subject, and there is nothing I can usefully add by way of a statement to the House.

Is the Under-Secretary of State aware that that is a most unsatisfactory reply? Is he aware that there is an enormous potential prize to be won here—namely, if we could find an economic method for the bulk storage of electricity, we could reduce by about 25 per cent. to 30 per cent. the need for installed electricity capacity in our supply industry, because it would iron out the peaks and troughs? We could save hundreds of millions of pounds by such a method. Could the Minister and his right hon. Friend take this matter more seriously?

We do take the matter seriously, but I was answering the hon. Member's Question, which involved costs. The CEGB is currently assessing the possibility of two methods of storing off-peak energy for recovery at times of peak demand. These are the storage of hot water at nuclear power stations and the combined storage of compressed air and heat for recovery via a gas turbine. The CEGB also has a watching brief on the requirements involved in the question of battery development. The pumped storage scheme is expected to be sufficient for CEGB needs until the 1990s. The technology of pumped storage is well known to the CEGB.

Does the Under-Secretary agree that none of the research suggests that the Dinorwic project is behind the times but that it is very ambitious? Has he any indication that the CEGB is looking for a further pumped storage scheme for the 1990s?

There is no pumped storage scheme before the Department at present. I have visited Dinorwic and I was impressed. The first set will be in commission in 1981 and the full station should be in commission in 1983.

Will my hon. Friend further examine what could be done by using a system such as that which is operating in Wales, I think at Ffestiniog? I know that I have got the name wrong, because, being a Yorkshireman, I have difficulty in pronouncing Welsh names. Will my hon. Friend ensure that this type of system is further advanced throughout the country, especially in parts of Scotland where there is power from water to make the turbines go round and thereby create electricity?

I do not quarrel with what my hon. Friend says. I am sure that Welsh constituents will agree that Dinorwic is not the only place where we have pumped storage. I have already said that the technology is well known to the CEGB although there are no further plans. Such plans would come forward with a change in demand and economics would be taken into account.

Is the Minister aware that his earlier answer was disappointing in that it indicated a negative attitude on the part of the CEGB? Will he be more serious about renewable sources of energy and put more effort and money into energy storage?

If the hon. Gentleman will study some of the answers I have given, he will agree, as, I think, will the whole House, that no negative approach is being taken by the CEGB. In answer to his hon. Friend's Question I mentioned ACORD, which will be looking into this whole question sometime this year. This matter is under constant examination and revision.

Joint European Torus

10.

asked the Secretary of State for Energy if he will give a regular progress report to Parliament on the Joint European Torus project; and if he will make a statement on the progress achieved to date.

Yes. The Council of Ministers has chosen Culham as the site for JET and agreed the broad outlines of the management structure. An interim JET council consisting of officials and experts from the 10 participating countries is preparing the statutes of the joint undertaking which will manage the project and taking the decisions necessary to maintain the momentum of the project during this interim stage.

Will the Minister give an assurance to the House that every effort will be made to press ahead with the project, bearing in mind that it could enable us to avoid using the fast breeder reactor at all?

How many staff were lost to Culham owing to the inordinate delay in taking a decision?

I cannot give the hon. Gentleman any figures. I can only say that the whole of the staff at Culham and the whole of the staff at Bicester welcomed the efforts by the Department to bring JET to Culham. It is a United Kingdom-based project.

Oil Platform Construction

15.

asked the Secretary of State for Energy if he anticipates future orders will be attracted to the oil platform construction yards at Portavadie and Hunterston.

We are reviewing the position at Portavadie and Hunterston in consultation with my right hon. Friend the Secretary of State for Scotland, but no final conclusions have yet been reached.

Do the Government now realise that this was an ill-conceived project which served only to waste £20 million or more of taxpayers' money? When the Cabinet gives further consideration to how oil revenues should be spent, will it bear this salutary lesson in mind?

I cannot agree exactly with the hon. Gentleman. Indeed, as the hon. Gentleman knows, the background to this was that the decision to support the development of these sites in 1974 and 1975 was taken in the light of the buoyant platform demand forecasting by oil companies and independent authorities and against the background of the loss of several orders for concrete platforms overseas because of lack of sufficient capacity in the United Kingdom. There was pressure from the House of Commons in relation to concrete platform orders. Concrete platforms seem to be out of fashion at present, although their prospects cannot be entirely ruled out.

Power Station Coal Stocks

16.

asked the Secretary of State for Energy why power station coal stocks have been allowed to fall by about 2·1 million tons as compared with a year ago.

Power station coal stocks at 24th December 1977 were about ½ million tons less than at the same time a year ago. This is the result mainly of increased coal consumption at power stations last year.

Is power station coal stocking left to the CEGB according to normal, prudent and commercial considerations, or has pressure been brought to bear by the Department on the CEGB to reduce stocks?

Is the hon. Gentleman aware that some years ago his right hon. Friend recommended that the miners should be enabled to acquire shares or a holding in individual pits where they worked so as to encourage their involvement in the industry? In view of the miners' determination now to relate their good capitalistic output to productivity, what does the hon. Gentleman think about that idea now? Is he prepared to admit that there is advantage to be gained now for miners by their becoming financially involved in the pits in which they work?

If the hon. Gentleman is asking what I think of the idea, I think that the idea would be rejected out of hand by those who work in the industry. Producing coal is not a matter of drawing up balance sheets. It needs men and machines to produce coal. The miners have made very substantial progress over the years, particularly since public ownership. They will not want to go back to being treated as a subject of accountancy. I remember the idea very well. It was put forward in a Private Member's Bill or in a motion. The miners have rejected it out of hand.

Offshore Oil Exploration

20.

asked the Secretary of State for Energy if he will make a statement on current offshore exploration.

Exploration and appraisal activity in 1977 was higher than in the previous year with over two dozen rigs engaged on average. Exploration results were down on 1976.

Is the Secretary of State aware that the suspicion is developing in Scotland that because of the delay in forwarding exploration in the south-west approaches of the English Channel the policy of the present Government is to try to exhaust Scottish oil reserves first by leaving English oil reserves for the future benefit of England?

The hon. Gentleman misunderstands our purpose, our problems and our progress.

Will my right hon. Friend take an opportunity to inform the House of what control the Government have over the extraction rate from oilfields within United Kingdom jurisdiction?

The powers of depletion and the associated powers over the approval of the development programme were given to me, or to the current Secretary of State, by the Petroleum and Submarine Pipe-lines Act. These are limited only by assurances given by my predecessor at the time when we came into office necessary to secure that the investment went forward. All these matters are described as fully as I can describe them in the working party on energy policy strategy document published in December.

Could my right hon. Friend give the House a progress report on explorations taking place in the Irish Sea and in the mouth of the Mersey?

Not specifically without notice, but I will make available to my hon. Friend all that I know. The brown book is published annually and gives a full account of what is taking place.

Will the Secretary of State rest assured that there is a great deal of interest not only in the Irish Sea but also in the Celtic Sea? Will he publish his reply to his hon. Friend the Member for Chorley (Mr. Rodgers) in the Official Report?

All the information is public, but the House must understand that I do not carry in my head all the relevant statistics for every sector to the extent that would enable me to answer off the top of my head. I will ensure that the hon. Gentleman has all the latest information. We publish an annual report, and the brown book, as it is called, which is due in April, will bring together all the information we have about exploration, development, and the rate of success of drilling, which has hitherto been somewhat disappointing, in the Celtic Sea.

Nuclear Power Stations

21.

asked the Secretary of State for Energy whether he has received any proposals in the last 12 months from the Central Electricity Generating Board for the construction of further nuclear power stations

In 1977, the CEGB sought approval for a capital investment programme including a nuclear station to begin construction in 1979. Nuclear orders are under discussion in connection with the Government's decision on thermal reactor choice.

Can the Secretary of State give any information about any proposals for a further atomic power station in the county of Gwynedd in view of the impact study made by the Gwynedd County Council which named a number of sites, which has caused not only worry from the safety point of view amongst those who fear fast breeder reactors but also planning blight in the areas which have been named as possible sites for further nuclear power stations?

The hon. Gentleman will know, and I think the House will think it right, that as the Minister dealing with energy matters I am not responsible for planning permission for power stations. Indeed, my view is that it is much better if all these matters, including the handling of waste and other matters with a high environmental interest, are handled independently by another Minister under provisions laid down by Parliament for handling these considerations. I will certainly ensure that the hon. Gentleman's point is put forward, but I cannot answer questions about planning approvals for power stations. I am concerned with the reactor choice, a matter which was referred to in an earlier Question.

Since there is general agreement about the urgency of the decision on thermal reactor choice, and since there is disturbing evidence of the Secretary of State's practice of sacking those who disagree with him—starting with the Chief Scientist and now, it is alleged, even threatening his own Under-Secretary—and since it is now alleged that the latest gentleman to disagree with the Secretary of State's views is the Prime Minister, what plans does the Secretary of State have for him?

The hon. Gentleman systematically fails to rise to the occasion when these matters are under consideration. He must know very well that, far from dismissing my scientific adviser, I appointed Dr. Walter Marshall to the post of Deputy Chairman—

No, I appointed him as Deputy Chairman of the United Kingdom Atomic Energy Authority and asked for a full-time scientific adviser. If the hon. Gentleman repeats every bit of tittle-tattle that he can pick up, he will not do justice to the magnitude of these matters. I should add that the question of reactor choice involves a lot of interests and pressures which have to be taken fully into account, but there is no doubt that the demand of the customer—or the customers, if one includes the South of Scotland Electricity Board—is for early orders for the advanced gas cooled reactor. There is no doubt about that. As every bit of information on this is now public, I hope that the House will not be tempted into error by the hon. Gentleman's notions about "Whitehall behind closed doors", which he must have picked up from watching too much television over the Christmas period.

Oil Supplies

23.

asked the Secretary of State for Energy when he estimates that the world supply of oil will fail to meet demand; and if he will make a statement.

Various forecasts have been made of the future balance of oil supply and demand. These depend on so many factors that I cannot give any meaningful estimate. As I made clear at the IEA Ministerial Council, Her Majesty's Government would welcome a United Nations rôle in world energy forecasting and policy discussions.

Has my right hon. Friend forecast the effect on price of excess demand and the consequent effect on consumer industries, such as transport, and energy-producing industries, including possible new ones such as the Severn barrage scheme?

What I have done—this is a different question, but I do not complain about that—is to publish our own forecasts going up to the end of the century, and I have made available our forecasts, very preliminary in character, going up to the year 2025, to give an idea of what might happen. But these forecasts are subject to great uncertainty. It is expected that the price of energy may double in real terms by the end of the century. The relative prices of coal, gas, oil and nuclear energy could all be subject to great variations. The more we look at them, the wiser it becomes to take these matters on an annual basis for discussion, to publish a Green Paper for the Energy Commission, and then try to reach the best decision annually, so far as that can be done.

Does my right hon. Friend agree that the demand for oil will far exceed the supply in the next two decades? Therefore, what consideration is he giving to the by-products of coal? Should we not be thinking about building more chemical plants and especially about rebuilding the Manvers Main chemical plant, which it is rumoured will close down?

My hon. Friend the Under-Secretary is the Chairman of the Research and Development Committee, which will be publishing a report shortly and which has looked into all the matters connected with the by-products of coal. We also invited the House to pass the Coal Industry Act, which it did. That Act gave the National Coal Board the power to move into refinery and other operations. There is a great deal of scope for further development in the marketing and use of coal other than by burning it. If we can make progress in that direction, it will be highly advantageous

Wales

Welsh Development Agency

24.

asked the Secretary of State for Wales what arrangements he has to review the membership of the Welsh Development Agency.

As with all appointments which my right hon. and learned Friend makes to public bodies, he will review the membership of the Agency in good time before the term of office of individual members expires.

Is the Minister aware that whereas there is general satisfaction with the work being done on laud clearance by the Agency, and with its preparation of advance factories, there is considerable disappointment that it has initiated very little public enterprise or joint ventures? When it comes to the time to reappoint members or to appoint new members, will the Secretary of State bear that in mind and make appointments that can bring about a dynamic change in that direction?

In appointing new members, we shall take that and many other matters into consideration. One of the encouraging features is that the Agency is now investing at an average rate of about £200,000 a week.

Does my hon. Friend agree that Wales has suffered for long enough from Tory nominees on non-elected bodies, which have proliferated throughout Wales? Therefore, until the Welsh Assemebly is created, will he ensure that people appointed to such bodies are more representative of the people of Wales?

In appointing to the Welsh Development Agency, my right hon. and learned Friend is concerned that people should not be appointed as representatives of specific organisations but should be appointed in the light of their experience and ability. The experience and ability of members of the Agency have not been brought into question.

Prices And Consumer Protection

Building Societies

25.

asked the Secretary of State for Prices and Consumer Protection when he next intends to meet the Chairman of the Building Societies Association.

The Minister of State, Department of Prices and Consumer Protection
(Mr. John Fraser)

At present neither my right hon. Friend nor I have any arrangement to meet the Chairman of the Building Societies Association.

What progress is being made in discussions between the Director General of Fair Trading and the building societies about the introduction of a scheme for combined valuation inspections and structural surveys? Does my hon. Friend agree that the introduction of such a scheme would be an added protection to would-be house purchasers?

These discussions are continuing. No conclusion has been reached. There could be some value in making building society surveys available to the prospective purchaser. This is also being looked at by the National Consumer Council.

When the Minister next meets the building societies, may I ask him to remind them that, in addition to being lenders of money, they also receive money from vast numbers of our constituents and that these depositors deserve careful consideration and ought not to be subjected to wild ideas aimed at getting rid of all the caution which building societies now exercise when investing other people's money?

The hon. Gentleman ought to specify the incautious activities he has in mind before I comment further.

Overseas Development

Mozambique

30.

asked the Minister of Overseas Development what are the proposals of Her Majesty's Government for additional financial assistance to Mozambique.

The Parliamentary Secretary to the Ministry of Overseas Development
(Mr. John Tomlinson)

My right hon. Friend will be making a statement on this matter very soon.

Bearing in mind the Government's decision to cancel their £19 million aid programme to Bolivia, will the hon. Gentleman tell us to what extent the Government take into account the policies of the donee Government in deciding whether to give aid and the amount of aid to overseas countries?

Obviously, the Government take this into account very significantly, and we consider that there is every justification for the change of decision to which the hon. Gentleman referred. I do not consider that that has any bearing on our aid to Mozambique.

Is it not a fact that almost every other European country has a substantial aid programme for Mozambique? As someone who recently visited Mozambique in connection with that country's projected membership of the Lome Convention, may I ask my hon. Friend to accept that it would be absurd for Britain to go slow on the aid that we are giving, and that many of us hope that we may be able to step up that aid in order to compensate for the great difficulties that Mozambique is suffering as a result of invasions from Rhodesia?

I readily recognise the point that my hon. Friend makes. In fact, over 50 other donor countries and agencies are already providing support for Mozambique. They include a number of Governments in the Commonwealth, they include the European Community, which provides food support, and they include a wide range of United Nations Agencies. Mozambique's needs are serious, and this has been reflected by the recent United Nations missions which have gone there. We hope that all donors will continue to give the help that that country so obviously needs.

In what way can the British Government guarantee that no part of our provision of aid to Mozambique is being used directly or indirectly to sustain the guerrillas operating againest Rhodesia?

We have made sure in our bilateral dealings with Mozambique that there is a full understanding, and we are satisfied from our negotiations with Mozambique and through the involvement of our own diplomatic mission there that there is no use of Government funds for the purposes to which the hon. Gentleman refers.

Engineering Industry

31.

asked the Minister of Overseas Development what evaluation she has made of the impact on British engineering of any likely increase in overseas aid arising from Great Britain's improved balance of payments situation.

As my right hon. Friend the Chancellor of the Exchequer informed the House on 26th October last, the previously announced amount of the aid programme in 1978–79 is to be increased by £20 million. The programme is planned to increase further in real terms in subsequent years. I would expect this to lead to increased orders for British engineering products, but no precise evaluation of such an effect is possible.

But if there is to be this increase, cannot the Minister accept that there is a duty on the Government, who, by delaying investment decisions on the British Steel Corporation, for example, have held up much of the work of the metallurgical plant industry in this country? Therefore, given the Third World interest in becoming steel producers and the BSC commitment to those developments, cannot the Minister say that the Government are determined to try to ensure that at least some part of that comes back to our hard-pressed plant makers?

It is the Government's policy to consider the interests of British industry. In 1976 about £180 million of United Kingdom exports were directly financed from our bilateral capital aid programme. This represented about 5 per cent. of United Kingdom exports to developing countries. If the hon. Gentleman has in mind a problem of a particular industry, and if he writes to me about it, I shall look into it, but I am sure that he would not expect me to be able to give a detailed response now.

Is my hon. Friend aware that a small but important British engineering product is the Medresco hearing aid, and that there are tens of thousands of those aids now available in Britain because they are being phased out to be replaced by a more sophisticated model? If they were given to developing countries they would solve the problem of deafness for many thousands of people in those countries. Therefore, will my hon. Friend discuss the matter with my hon. Friend the Minister with responsibility for the disabled to see what can be done about giving away these technically efficient models?

I was not aware of the availability of those hearing aids, but now that my hon. Friend has drawn my attention to the matter I shall look into it and see whether it is appropriate to enter into discussions with my hon. Friend the Minister with responsibility for the disabled. If my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) has further information that he would like me to consider, I look forward to hearing from him.

Are not some of the positive arguments put by the Minister to my hon. Friend the Member for Arundel (Mr. Marshall) a few moments ago examples of the sort of arguments that should be put more forcefully to British public opinion as a whole? Therefore, is it not regrettable that only about £150,000 goes towards the Government's Development Education Fund when, if we matched the Dutch, for example, on a proportional basis we should be spending about £12 million on such a project?

I appreciate what the hon. Gentleman said. It is lamentable that the whole of our development assistance receives so little attention in the media and in public discussion. I have taken every opportunity to see what other nations are doing in development education. I welcome the creation of at least the small beginnings of our Development Education Fund. We are considering its report.

Crown Agents

32.

asked the Minister of Overseas Development how many representations she has received about the Fay Report on the Crown Agents.

My right hon. Friend has received 20 letters concerning or referring to the subject matter of the Fay Report.

Will my hon. Friend now add any further detail to the statement of my right hon. Friend the Prime Minister last month about the tribunal of inquiry, bearing in mind the great public concern about the loss of more than £200 million of public money? Does not this whole scandal underline the need for new legislation to make the Crown Agents, Treasury officials and other public servants more accountable to the public, and also the need for a Freedom of Information Act to enable the public to know precisely what is being done with public money?

I regret that I cannot add any information to the statement of my right hon. Friend the Prime Minister on 8th December, when he told the House of the Government's conclusion about the most appropriate form of inquiry. The tribunal's scope and procedures will be for approval by Parliament when the resolutions required by the 1921 Act are brought before the House. It is intended that this should be done in the very near future. My hon. Friend's other general points will be appropriate for consideration in the discussion in the House then.

Since, as the hon. Member for West Stirlingshire (Mr. Canavan) has just said, there is an urgent need not only to incorporate the Crown Agents but to make them fully accountable to Parliament, is there not an immediate need to introduce legislation to deal with the problem? When do the Government propose to do this?

I can add nothing to the statement that I have just made to my hon. Friend the Member for West Stirlingshire (Mr. Canavan). These matters are subject to consideration, and the House will have the opportunity to express a view on them in due course.

Will my hon. Friend suggest that when they are brought before the House the powers should include the ability to force the Bank of England to explain precisely how, seemingly with the connivance of the Bank of England, payment of the dollar premium was evaded to such a large extent that, according to reports, as much as £100 million was stashed away abroad? May we be assured that those powers will be brought before the House?

I cannot give assurances about any particular matter, but I shall make sure that my hon. Friend's comments are brought to the notice of the appropriate authorities. I hope that when we discuss the powers of the proposed tribunal my hon. Friend will have the opportunity to make the point that he has just made.

Military Equipment (El Salvador)

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"the proposal to sell £850,000 worth of military equipment to E1 Salvador."
I apologise, Mr. Speaker, for failing to give you notice before 12 o'clock today, but unfortunately I was unable to confirm certain facts before 2 o'clock this afternoon. I notified you of my intention to raise this matter at that stage. The issue is obviously specific in so far as it relates to a specific consignment of arms and it is urgent since, as I understand it, shipment of these arms is due to take place this coming weekend or as soon thereafter as the ship, the "Suzanna Vinnen", can be loaded at Sheerness and put to sea.

Before Parliament went into recess the matter was raised in the House in a number of parliamentary Questions. My reason for raising this issue now is that the information provided by my right hon. and hon. Friends who replied to these Questions does not conform to the facts which have come to light since. I can only assume that my right hon. and hon. Friends must have been misled.

Parliamentary Questions were tabled by myself, by my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) and the hon. Members for Colne Valley (Mr. Wainwright) and Reading, North (Mr. Durant), asking whether the military equipment could be used by El Salvador in support of Guatemalan claims on Belize, thus involving, possibly, its use against British troops stationed there. It was also asked whether the equipment could be used in suppressing the legitimate aspirations of the El Salvador population in relation to policies on human rights which have been approved by my right hon. Friend the Foreign Secretary. There were also two Early-Day Motions, supported by hon. Members on both sides of the House, including the hon. Member for Essex, South-East (Sir B. Braine). My hon. Friend the Member for Oxford (Mr. Luard), the Under-Secretary of State for Foreign and Commonwealth Affairs, in a ministerial Answer to the hon. Member for Reading, North on 16th December said:
"in the case of the contract for the sale of arms to El Salvador a specific assurance was demanded and received that the vehicles would not be used against British Armed Forces in Belize.'—[Official Report, 16th December 1977, Vol. 941, c. 482.]
A national newspaper in El Salvador, E1 Diario de Hoy, had already published a story on 22nd November headlined
"El Salvador does not accept London's conditions."
It went on to say:
"El Salvador will not submit itself to the criteria of any foreign power with respect to the purchase of military equipment or anything else."
The same story was carried on 30th November by La Nacion, one of the national newspapers in Guatemala.

It might have been thought that these declarations had been overridden by statements made by my right hon. and hon. Friends. In the recess, however, it has come to light that this is not so and that El Salvador does not accept Britain's conditions. The Foreign Minister of El Salvador, Snr. Alvaro Ernesto Martinez, was reported in The Guardian on 3rd January—based on a United Press internal cable report—as saying that:
"El Salvador was not interested in buying British arms if Britain makes the sale conditional on the formal promise not to use them against Belize."
It is obviously an extremely important matter if arms are to be shipped to a country which could use them against British troops. It is an urgent matter of which we in this House should take urgent cognisance.

There is no doubt about El Salvador's attitude to Guatemalan claims against Belize. The Government there have repeatedly expressed their support for Guatemala and demonstrated it in the United Nations. President Romero of El Salvador has clearly been associated with this viewpoint. If it were possible that arms could be sold to a power which could use them against British forces, it seems that there are few more important and vital issues which we should be discussing as a matter of urgency.

There is an additional reason why this issue should be discussed. Ministers who have replied to Questions have stated—I believe that I am correct in saying this—that the consignment consists of Saladin armoured cars. But there is a report in Defence and Foreign Affairs Digest of last month which also lists rifles and radio equipment. This report could be false or misinformed, but it is vital that we should know the facts before the issue is allowed to rest.

This subject was raised in the House of Lords on 8th December by Lord Chitnis. My noble Friend, Lord Goronwy-Roberts said that he shared the concern about human rights and felt that President Romero had already:
"given proof of his desire to engage in internal reforms and to moderate tensions."—[Official Report, House of Lords, 8th December 1977; Vol. 387, c. 1746–7.]
If the information which has been given to Members of this House and the other place on the question of the possible use of arms against Belize is incorrect, may it not also be false on the question of the attitude of President Romero towards human rights? Much information exists to suggest that President Romero's regime is not taking human rights into cognisance as we in this House and my right hon. Friend the Foreign Secretary would wish.

For all these reasons, I believe that this is an important and urgent issue which should be discussed by the House. I believe that in the long run lives could be at stake. We in this House cannot lightly dismiss issues involving arms.

The hon. Member for Harlow (Mr. Newens) indicated to me that he was unable to obtain his information before 12 o'clock today. He asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,

"the proposal to sell £850,000 worth of military equipment to El Salvador."
As the House knows, under Standing Order No. 9 I am directed to take into account all the factors set out in the Order but to give no reasons for my decision. I have listened with care to the hon. Gentleman's arguments, but I am afraid that I cannot accede to his request.

Question Of Privilege

On a point of order, Mr. Speaker. I should like to raise a matter of privilege about which I sought to give your prior notice. It relates to a copy of the Observer of Sunday 8th January. Page 1 carries an article headed:

"MPs to Call for Secret Steel Papers"
There then follows a considerable article on pages 1 and 2. For example, it says on page 2 that
"The report will recommend"
and there then follow certain items which the Select Committee will bring before the House. This is a Select Committee of the House. It is presenting its first report, which I think is due for publication on Wednesday. At this time it is not available to hon. Members.

Anyone who has read this article will realise that it contains detailed information about what the recommendations of that Select Committee are likely to be. I would ask for your guidance, Mr. Speaker, on whether you think it is right to refer this matter to the Committee of Privilege. However, there may be difficulties about this, and that is another point which I ask you to consider.

I understand that technically the report of the Select Committee must be laid on the Table so that the House can give its permission for the printing thereof. At that point it is not available to the House, because it is in draft form. It becomes available to the House only when it is published. There is, therefore, a technicality in this regard.

I have been advised by Officers of the House, to whom I am obliged, that in ruling on such matters Mr. Speaker often says that he deprecates the practice of anyone leaking information in this way, but that, as the report was technically on the Table of the House, the situation presents certain difficulties.

The appropriate Sub-Committee of the Select Committee sat for about 18 months on this particular matter. As we all know, there is a crisis in the steel industry. We in this House are about to consider it in a serious way, perhaps as the present Session continues. Members of Parliament are involved. It is an area which affects all aspects of our public life. The constituency interests of indivi- dual Members are referred to in detail. That is clearly unsatisfactory and that is a further point to be considered if, technically, the matter cannot be sent to the Committee of Privileges.

Over the weekend hon. Members have been telephoned and badgered. Out of courtesy I informed the two hon. Members who are Chairman of the Sub-Committee of the Select Committee and Chairman of the full Select Committee on Nationalised Industries that I intended to raise this matter. They have certainly been badgered over the weekend, as have many other hon. Members. They have been asked to comment on matters that vitally affect the country and their constituents although the details in the article can be only part of a report which hon Members have not yet received. How can hon. Members comment on such matters such in this particular situation?

It is a grave situation and one which cannot be tolerated. We cannot conduct our business in this way. I do not want to accuse anyone about anything, but the fact is that these are grave issues. I ask you, Mr. Speaker, to take these two matters into consideration.

Perhaps, because of the technicality of the report lying on the Table, you cannot recommend that this matter should go to the Committee of Privileges. But it may be that you could make recommendations to other bodies whereby we can stop this sort of thing happening. There is no question of the House or Commons seeking to hush up matters. That is not the case. Rather, it is the House of Commons exercising a watchdog procedure in respect of a Sub-Committee that laboured for 18 months producing a very important report which will be revealed in its entirety on Wednesday.

Under the present system anyone who is malevolent, or who has vested interests, can get hold of such a report and slant it in a particular way. I ask for your earnest consideration of this matter which has been followed up in the national newspapers—in The Guardian and perhaps others—before hon. Members of this House have seen the report in its entirety.

I am grateful to the hon. Gentleman for indicating to me that he wished to raise this matter. Following precedent in recent days, I shall give my ruling tomorrow.

Orders Of The Day

Supply

[3RD ALLOTTED DAY]— considered.

Public Accounts

3.45 p.m.

I beg to move,

That this House takes note of the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute and Northern Ireland Memorandum on those Reports (Command Papers Nos. 6977 and 7017).
It is an honour to move such a motion in this House for the fourth time. It is customary for the Chairman of the Committee to open these debates by referring to those who have contributed most directly to the working of the Public Accounts Committee. That may be the convention, but it is not mere politeness. The Committee has had outstanding service and help from a number of people to whom I wish to refer.

First, it has come from the Clerk, Mr. Clifford Heathcote-Smith, who retired in August 1977. The Committee now welcomes Mrs. Irwin. This House always gets extremely good service from its Clerks and certainly the Public Accounts Committee is being, and has always been, extremely well served.

Second, our thanks go to the Treasury witnesses, of whom the principal was Mr. McKean. The basis of the Committee's work is, after all, a partnership with the Treasury. If there is not that, there is nothing and the Committee cannot be as effective as I hope the House believes it to be.

Third, I express our thanks to the Comptrollers and Auditors General, Sir Douglas Henley for that part of the United Kingdom excluding Northern Ireland and Mr. Sythes from Northern Ireland. I think that successive Public Accounts Committees have been remarkably well served by Comptrollers and Auditors General. The help that we received from Sir Douglas Henley and Mr. Sythes was preeminent in that fine tradition.

Fourth, I express our appreciation of the continuing frankness and helpfulness that we have invariably received from accounting officers.

Lastly, I hope the House will allow me to thank my fellow Committee Members for their assiduity and competence and not least for many personal kindnesses to myself and for their unvarying support.

I said that these remarks were no mere politeness. They are not. Perhaps the House will appreciate the strength of my feeling for my fellow Members of the Committee when I say that we have had an even heavier programme of work last Session than we had in the Session before. The 10 reports deal with no fewer than 60 main subjects compared with 43 in the previous Session. I am grateful for the attendance of Members, for their pertinent questioning of witnesses so clearly demonstrated in the transcripts of evidence and especially, if I may say so, for the spirit that existed in the Committee.

As in former years, the Committee has continued to carry out its work in an entirely non-partisan spirit. Whatever differences of opinion Members may have on the Floor of the House—and sometimes they are very keenly felt—in Committee we united in our aim of contributing to the better management of our nation's resources and to obtaining value for money. If the Public Accounts Committee of this House had a coat of arms with a motto beneath it, "Value for Money" would certainly be it.

The House may like to know that, in our probings of the quality of departmental administration we had no difficulty in agreeing on the terms of all our reports without any formal division in the Committee. I hope that the House may think that that work and the spirit in which it was executed was in the highest traditions of this House.

In asking the House to approve these 10 reports, I should like first to mention briefly some of the issues which arose from our work last Session and then later, perhaps, and more importantly make some general comments about the control of public expenditure as exercised by this House, especially in regard to its shortcomings, and perhaps propose some ways in which it might be improved.

As for the style of our reports, whether or not the Committee thought it necessary to be critical—and on occasion obviously we did—we also sought to be constructive in our approach. We have been concerned not simply with individual administrative failures but with the broader lessons for the future of Government administration as a whole. We believe that, even if one stable door has been found unlocked, action should be taken to see that other stable doors are properly bolted.

As right hon. and hon. Members know, this House continues to have responsibility for Northern Ireland, and I am glad to see my right hon. Friend the Member for Down, South (Mr. Powell) and my hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) in their places to attend to this matter. The Committee examined the Northern Ireland accounts on the basis of the Reports of the Comptroller and Auditor General for Northern Ireland, Mr. Sythes, to whom I have referred already. We were able to take oral and written evidence from some of the accounting officers for the Northern Ireland Departments. The House will see that our Seventh Report deals with five separate Northern Ireland subjects. I shall leave it to my Northern Ireland colleagues who are hoping to take part in this debate to comment on these various matters.

I make this one observation. We in the Committee were very much struck by the conscientiousness and devotion of Northern Ireland's most senior public servants, working, as they are, in circumstances often of much difficulty. We hope that it will assist them and their colleagues and the cause of public order if we continue to insist in the Public Accounts Committee on the highest standards in that part of the United Kingdom as everywhere else in the United Kingdom.

I should like to comment in some detail if time allowed on each of the 60 subjects upon which we have reported. Each is worthy of its own full debate in this House. But Members of the Committee and other right hon. and hon. Members will no doubt choose their own favourite topics. I shall comment to any extent on three only, and I shall say a sentence or two on a few others.

Apart from these Northern Ireland subjects, I divide our examination under five broad heads. I take first, because it begins with the letter "A", agriculture and food: subsidies, grants and the EEC. Here we were looking at five subjects, and I think that our reports very largely speak for themselves. Then there are the beef support arrangements and the arrangements for the supply of cane sugar, largely misreported in the newspapers, I thought. I am glad that the Treasury has the matter under control. Then we have the Covent Garden Market Authority's financial performance, and then the Central Council for Agricultural and Horticultural Co-operation.

The second group is larger, perhaps more significant and perhaps more immediately interesting. I am talking about the control of administrative expenditure and grants. Under this head, I lump 19 subjects. One was food aid to Lesotho. It seemed a disgrace to us in the Committee that aid, given with taxpayers' money and with the best of good will, designed to alleviate suffering, should very largely have been wasted in this case. I hope that the lessons of that matter have been learned.

The House may remember two matters that we were looking at in regard to the Crown Agents and their affairs. The Crown Agents and their affairs have been much reported on and very much discussed, and I do not suppose that the House will want to go over all that ground again. If I may be allowed a personal expression of view which I tried to express in a letter to The Times recently, I think it most unsatisfactory that we in this House should allow much of the blame for this affair to fall upon public servants. The buck should stop here. It is up to the House of Commons to exercise and to maintain a proper supervision of expenditure, and it is up to us to provide ourselves with the apparatus to do it. That was the fault in that case, in my view.

Going on under this head, we investigated the delay in the receipt of audited statements from overseas in respect of funds from the United Kingdom, supplementation of overseas pensions, accounting arrangements for magistrates' courts transactions. Then we examined the cost of administration of both the Customs and Excise and the Inland Revenue. We were very much concerned to find that the cost of administration in this connection seemed to compare unfavourably with many other developed countries. I know that there is a great agitation amongst our constituents and in this House for a reduction in taxation. It seemed to the Committee that equally important was the aim for simplification of the tax structures.

Then, lands managed and farmed in Scotland: £500,000 was the net cost of servicing a number of estates in Scotland. The usefulness of this arrangement is long outlived. Then came control of the production of the Concorde aircraft and the effect on staff numbers of cutbacks in the road-building programme. It seemed unusual to us that, though the road-building programme had been cut, there had been no commensurate cuts in the civil servants responsible for it.

Then there were two British Rail matters. One was the grant to British Rail for passenger services and the freight deficit. The other was grants to British Rail to fund pension schemes. I believe that this is a matter that the Committee will wish to examine further. It is doubtful whether it is appropriate to fund schemes in any event. It is probably more appropriate that the pensions schemes for British Rail should be dealt with on a year-to-year financing basis as other analogous scheme are. But it was a great surprise to many members of the Committee to learn that British Rail pension schemes are index linked. It might be to the advantage of this House if a full inquiry were made into exactly how many pension schemes are index linked these days. I do not suppose that I am alone in saying that, however generous one wishes to be to pensioners, it is extraordinary that people who are in receipt of pensions for past services are getting larger increases than many of those who are at work today.

There were several matters under the head of universities. Then there were a number of matters in relation to the National Health Service, the administrative costs, clerical staff, overtime and extra duty payments, and the like. It may shock the House to know, as it shocked the Committee to discover, that some 18 months after reorganisation the administrative and clerical staff of the National Health Service has risen by no less than 20 per cent. and the higher posts by no less than 30 per cent. We were glad to note that this matter was now being tackled. If ever there was an instance of a case where it is necessary to see that the nation obtains value for money, surely it is in the National Health Service. There is the very greatest need for much to be done. That administration should have been allowed carelessly to grow is a reflection on the supervisory work of this House in general.

Overpayment of social security benefits is another matter that has been spoken about rather too much. But again it became perfectly clear that one of the reasons for overpayment undoubtedly was the fact that the systems of benefit payment were very much more complex than they need be. I hope that that matter is being looked at.

Then I mention employment and training schemes and the purchase of computers for deferred payment. So much for that head.

Thirdly, there is expenditure on goods and services and large capital projects. This includes the allocation of orders to one company for construction of destroyers, ammunition development and urgent works projects. You will be shocked, Mr. Speaker, as we were, to hear about one example at which we looked. It was thought necessary urgently to make some developments at the Devonport Dockyard which were originally estimated to cost some £20 million. Because the work was not properly planned and thought out beforehand, the eventual out-turn was no less than £83 million.

Another example was the Inland Revenue Centre at Bootle. Originally this was estimated to cost £2·6 million, but once again, because the work was not properly planner, the eventual cost was £7·6 million. We made some very strong observations about the need for proper planning in future.

One smaller item was the construction of the fisheries research vessel called the "Scotia", which, when delivered, was found to be quite unsuitable for the work for which it had been designed. Yet the vessel had a full crew who were fully paid for two years while the vessel was lying alongside the harbour wall. Added to which, the crew were given a distant water allowance as well.

There are other examples, such as the yet unfinished story of the Liverpool teaching hospital which was originally estimated to cost £11 million. The likely outturn now is more than £50 million, including—so we were informed at the time, although the Treasury mitigates this point—something around £10 million, originally for fire precautions which were not properly designed in the first place. I am sure, Mr. Speaker, that you will find this as scandalous as we did.

Fourthly, there is control over revenue and public expenditure generally. Here we were reporting on 16 subjects, including two defence subjects. In this House we talk a lot about the cost of defence. Many hon. Members may be interested to know that we make substantial revenue out of defence. Sales of Ministry of Defence equipment netted some £200 million last year. We think that it is appropriate that a formal account should be presented to the House.

On the question of VAT, which comes under this heading, I do not know whether other hon. Members' postbags are as heavy as mine on this subject. There can be no doubt that in dealing with this tax a substantial burden is imposed on traders. VAT has been in operation now for four years and the Committee warmly welcomes the examination by Customs and Excise to see whether the tax can be simplified.

The heading also includes British Nuclear Fuels Ltd., its dividend policy and financing, the National Oil Account and BNOC, the disposal of National Health Service land and accountability in the National Health Service. These last two provided worrying aspects about the way in which this tremendous organisation is administered. However, we were impressed to hear the plans that the Department has for the collection of national insurance contributions.

I come to the accounts of the Manpower Services Commission. The House will be interested to know that the budget for that body has multiplied four-fold over several years to £500 million a year. In the same period its administrative expenses have multiplied 17 times. I am told that the Commission proposes to build a great new headquarters in Sheffield at a time when the IMF diktat has called for a moratorium on all office building. Of course, maximum attention must be paid to the reduction of the scourge of unemployment, which is a striking reproof to all of us about the way in which we attempt to manage the economy of this country. However, there is no reason why we should not insist on cost effectiveness on the part of the Manpower Services Commission.

Also included under this heading are fees and charges, Inland Revenue—verification of tax returns, the Royal Mint trading fund, the Independent Broadcasting Authority—additional payments by programme contractors and contingent liabilities on public funds from Government guarantees. We thought it proper to examine these guarantees in the aggregate to see exactly the total of contingent liability. We are happy to report that we saw no reason for any particular anxiety at this time.

The fifth heading concerns assistance to industry, including selective assistance to workers' co-operatives, and I, for one, rejoice when that is successful.

We thought, and have reported accordingly, that there should be a review of these regional development grants, because the taxpayers have given £100 million for projects which would have been sited where they were eventually sited, whether the companies had been given grants or not. One happy spin-off item here was that £8 million was prematurely paid, of which perhaps £3 million should never have been paid in the first place, and we got that money back. This showed the cost effectiveness of the Public Accounts Committee.

Another aspect of this very important subject is that one of our major concerns was to examine, on behalf of Parliament, the arrangements for establishing the National Enterprise Board, particularly in view of the very substantial public funds that are being placed at the Board's disposal. About £1,000 million is proposed by Parliament for the NEB, although so far only about £240 million has been issued. These public funds have been put at the Board's disposal to fulfil a function that some people feel is very important to the industrial life of this nation.

It is important to investigate this matter as thoroughly as we can, and it was our concern to look into the Board's relations with and control over its two inherited major subsidiaries—Rolls-Royce, happily making good progress now under Sir Kenneth Keith, and British Leyland. It was important to take a preliminary look at how the Board made its judgments on new investments in British industry in order to achieve its objective of increasing industrial efficiency. We were concerned especially with the need for proper parliamentary scrutiny and control of the very large funds made available to the Board.

The Committee was not satisfied with the present arrangements for accountability to Parliament in the absence of access by the Comptroller and Auditor General to the books and records of the Board. It cannot be right that servants of the House should be denied access to the books and records of the NEB. We propose to review the effectiveness of the arrangements after a year's experience has been obtained of their operation.

As the House knows, there are many politically sensitive issues involved in the operation of the Board. We are not concerned with those issues today. We know that there are serious practical difficulties, but I wish the Board every success. I am grateful to the Department of Industry for its agreement to keep the House informed about further advances of funds to the British Leyland Company. Persistent questioning by the Public Accounts Committee has achieved this success so far.

I regard the present situation where, however meritorious the reasons, huge investments of public money are made in an existing enterprise which is the property of the State, or in a new enterprise such as Fairey which occurred during the parliamentary recess, without scrutiny by Parliament and without any specific or particular authority in certain cases, as plainly quite unsatisfactory, and we should not tolerate it.

Would the right hon. Gentleman treat with the same fervour and passion the necessity for Parliament to investigate why a figure of £120 million or thereabouts was supplied by the Government to various financial institutions, in the form of what was known as the lifeboat scheme, to bail out secondary banks and others in trouble? He is well aware of one such organisation that was bailed out and finally rescued by the Big Four. Does he believe that that expenditure of £120 million should be investigated, and does he think that his Committee is the right Committee, in view of his past association with one of those companies, to be involved?

I know that the hon. Gentleman has a bee in his bonnet about this matter. I have no objection in the least if an inquiry of that sort is made. He knows the routines involved and appreciates the way in which the Comptroller and Auditor General operates. If he would like the PAC to make an investigation into that matter or any other, let him please put the matter formally to the Committee and the Committee will decide. I shall be happy if he does so.

On a slightly different point, does the right hon. Gentleman agree with the Report of the Expenditure Committee that the legislation relating to the Exchequer and Audits Department should be amended so that the Comptroller and Auditor General should be able to examine any set of accounts of organisations into which public money goes, whether a public or private organisation, and that he should invariably audit any sets of accounts most of the receipts of which involve public money? Finally, does he agree that the Committee should be empowered to require the Comptroller and Auditor General to investigate such a matter as that which the Comptroller, according to his evidence to us, said he was not necessarily asked to do by the Public Accounts Committee?

Could we be clear that this is not my Committee but a Committee of the House of which I have the honour, for the time being, to be Chairman. I know that the hon. Member for Nottingham, West (Mr. English) takes a great interest in these subjects and we all know his pertinacity as Chairman of the General Sub-Committee of the Expenditure Committee, and his work in matters affecting public accountability is much admired. I give a clear and unhesitating "Yes" to his question. I have long argued for an extension of the authority of the Comptroller and Auditor General, although whether he and the Exchequer and Audit Department would agree is another matter. I have also argued for a great strengthening of his staff. My views and the hon. Gentleman's coincide precisely on that matter.

I have said plainly to the House, in a non-partisan spirit, that it is the responsibility of this House not to accept the present position. It is the duty of this House, in our capacity as guardians of the public purse, to insist on closer observation and scrutiny of the activities of the National Enterprise Board. But the massive costs—and the figures relating to the NEB are massive by any standards—are not unique. I refer also to the newly established British National Oil Corporation, which has drawn down sums of money now amounting to more than £600 million. The position in regard to accountability to this House is on all fours with the case of the NEB. Although copies of the corporation's annual accounts are laid before Parliament and fall within the scope of the PAC, I wish to emphasise that the Comptroller has not been provided with the statutory right to access to the corporation's books and records. We in the Committee were concerned that in this respect the Comptroller would be able to give us only restricted assistance, but the Department of Energy and the Treasury were good enough to assure us that if these arrangements proved difficult to operate in practice, they would re-examine the question of the Comptroller's access to such matters.

I welcome this open-mindedness. I am the first to recognise that with such bodies, responsible for investing and disposing of very large sums of public money—and these sums will grow greatly—in a variety of commercial and industrial activities, a reasonable degree of managerial and administrative flexibility and freedom is essential.

However sympathetic one may be to the BNOC and the NEB, the issue of public accountability is fundamental, and the means to secure that end deserve serious consideration by us all.

On reflection, that is putting it pretty mildly. I wish to emphasise that as Chairman of the PAC I am not concerned with political issues one way or the other, but I am deeply concerned to ensure full accountability and parliamentary control of the money that is entrusted to us. I gave the House earlier some individual examples showing an obvious waste of resources. Therefore, having regard to the great needs that exist in so many places, for example in the National Health Service, not least in the expenditure of further money, and having regard to current levels of taxation, I believe that we must insist on the full implementation of accountability and parliamentary control in practical terms.

I wish now to say a few words about the work of the Public Accounts Committee and its place in the apparatus of financial control. The Committee has a narrow remit which has been largely unchanged for a period of one hundred years. Speaking from the experience which I have been fortunate enough to have had, I wish to make it clear that in my view the work of the PAC has shown its effectiveness in the management of the public sector, and I believe that that rôle must be maintained. This view was strongly confirmed by evidence given to us on certain general issues by senior Treasury representatives last summer, as the Chief Secretary to the Treasury will be aware. There was something of an innovation in the ways in which the PAC and the Treasury work together, and the Committee found this process interesting and rewarding. I shall be grateful if the Chief Secretary will convey to the Treasury officials how much we appreciated their co-operation and helpfulness on that occasion.

The PAC normally proceeds on the basis of agreed and ascertained facts, and can concentrate on examining accounting officers on the inferences to be drawn from the facts and improvements to be made in future. I believe that there will always be a case for the PAC or something very similar to it. So far so good, the House may think. It is agreeable to read consistently in the newspapers from the Sun to the Economist—or should it be the other way round?—and even sometimes in local papers, tributes to the work we attempt to carry out. That is all very gratifying, but the reality is that the work we do is only a tiny fraction of what needs to be done. It is the tip of the iceberg. We have already touched on the subject of augmenting the devoted staff in the Exchequer and Audit Department, but the truth and reality remain that Parliament hardly controls public expenditure at all. The inquests and post-mortems of the PAC are invaluable and an effective method of improving administration through constructive criticism in seeking to obtain better value for taxpayers' money, but they are hardly an exclusive recipe for a healthy, living, effective democratic process.

The more one serves on PAC the more conscious one becomes of the shortcomings of this House in seeking to control, or even attempting to control, public expenditure. The following words of Tennyson from "In Memoriam" come to mind:
"So many worlds, so much to do,
So little done, such things to be".
Surely the chief characteristic of a democracy is that the elected representatives of the people—Back-Bench Members—should control the Executive. This we do not do in this House. The parties have far too much power to allow us to do that. In consequence, we have an all-powerful Executive. I have called it an elected dictatorship. In his Dimbleby Lecture, Lord Hailsham called it an elective dictatorship. We do not need to quarrel over the language, but I argue that if we control carelessness, we can expect and demand efficiency in its place. If there is no control or if the controls are inadequate, inefficiency will follow as surely as night follows day.

The easiest way to control the Executive would be by controlling the purse-strings. Again, we do not do this and, like Topsy, public expenditure has grow'd and grow'd—in absolute terms and as a proportion of GNP. I am not arguing against public expenditure; I am arguing for its proper command and control by the one body in the United Kingdom which is qualified to control it and has a duty to do so.

We hardly use the opportunities for control that we have—and we have them in abundance. Our debates on the Estimates, Supplementary Estimates and Supply have become farcical in the context of control of public expenditure. They are either attended by a handful of specialists or used as an excuse for a series of Adjournment debates or as a platform for set-piece debates on strictly party lines with predictable party votes at their conclusion. So it is that we vote millions of pounds on the nod. In the context of parliamentary scrutiny of public expenditure, questioning of Ministers and the investigation in depth of what is being done with the taxpayers' money, there is no doubt that our procedures for scrutiny are largely ineffective. Parliament is failing the nation at this time.

Let me give the latest specific and remarkable example of the apparent indifference in these matters The cash limits system was introduced two years ago. The Third Report of the PAC refers to it particularly. The system now covers 65 per cent. of Government Supply expenditure, that is £25,000 million out of a total of £40,000 million. It is remarkable to relate that the system has never been sanctioned by Parliament. The limits have never been discussed in this Chamber either in the aggregate or in their individual pieces. No Back-Bench Member has had the chance to discuss and therefore to decide the cash limits on defence, aspects of the Health Service, agriculture, or any of the 125 items that make up this astonishing total of £25,000 million.

That is the way the Executive treats this British Parliament. That is the contempt it shows for us. There has been only one debate in the House on cash limits in the two years since they were introduced. That was on the Consolidated Fund Bill of 14th December last year, when I raised the matter after sitting up all night in order to do so. It is shocking that we have a purely administrative system introduced by the Government and not subject to formal parliamentary procedures of any kind. Any true democrat must be dismayed at the way we have been so careless of our parliamentary traditions.

The question is what is to be done so that the present situation—which everyone, and especially every commentator, agrees is unsatisfactory—can be changed for the better. How can parliamentary control be improved as a first step towards its full restoration?

I have expressed views on this subject many times in speeches, pamphlets, in this House, in articles, on television and I even had the pleasure of expressing my views to the Select Committee on Procedure to whose report later this year I look forward as, I hope, does the whole House. I have already paid tribute to the hon. Member for Nottingham, West and to the Expenditure Committee. I hope that the House will think it right that its Select Committees have been busy on its behalf and have made recommendations. Those of the Expenditure Committee will need careful digestion. They go very far and I am not sure that I agree with them all.

Perhaps I may make some recommendations on behalf of the Public Accounts Committee. I refer particularly to our Third Report, which was published nine months ago. It is impossible to overstate the importance of the new cash limits system. By general consent, it seems that they have greatly helped to keep Government expenditure within the limits originally agreed and, through their application to the rate support grant, they have contributed to the welcome restraint on local authority expenditure. The imposition of short-term budgetary cash control on large areas of public expenditure is a welcome development and the PAC certainly welcomed it.

For the first time in my 21 years in the House, we now have a clear analogy with the ordinary way in which any corporation budgets or any family does its budgeting, and that must be a good thing. We also believe—and this was confirmed by Treasury and other departmental witnesses—that the need to work within firm cash budgets has had a marked advantageous impact on the way in which Departments handled their business at all levels. This was admitted more than once, and I found it shocking, because it showed that there was slack in the system which had not been taken up in the past as it should have been. But we gave full credit for what had been done.

The Committee also drew attention to the necessity for improving parliamentary control. I repeat that, however effective they may be, cash limits are a purely administrative system, introduced by the Government and not subject to any formal parliamentary procedure. We therefore recommended that the limits and the system of Parliamentary Estimates and Accounts should be brought together in an integrated and fully effective system. We recognised that, though this objective can be stated simply, it involves a major reform of a system that has been long hallowed by tradition. But frankly it is of little more than mere historic interest now.

We were glad that the Treasury accepted our view in principle and grateful that when the Financial Secretary met the Committee—he is, by tradition, a member of it—a few weeks ago, he said some further encouraging things in this regard. If we integrated the system, as I believe we must, it would mean, among other things, that Parliament could once again concentrate effectively on the much smaller number of Supplementary Estimates which would come before us instead of being faced, as we have been year after year for several years now, with inexorable demands for very large sums of money to meet pay and price increases.

The Committee has agreed to discuss this subject with Treasury officials in our programme for this Session. We shall undoubtedly wish to discuss a number of other matters which come under this heading, including, for example, whether it is possible to extend the scope of the system. As the Chief Secretary, the Chancellor of the Exchequer and other Ministers know, we shall also want to discuss the rationalisation of the size of individual blocks. It seems extraordinary that we have blocks that can be as small as £5 million or as large as the £5,000 million of the whole Defence Vote. But, most important, I hope that we shall be able to report to the House of Commons within six months from today that the merger of the cash limits system will be accomplished during the financial year 1978–79 and to set out detailed recommendations, of course in conjunction with the Treasury, to that end.

My right hon. Friend has made the point that control by Back Benchers is being steadily eroded. He has been here three times longer than I have, and he has been a Minister. Does he not accept that in the end the Government Front Bench will always have before it a Civil Service brief which will say "Minister, it is not advisable to tell Parliament quite as much as you would wish"? I respect my right hon. Friend, but how does he believe that any Government will be as open with Parliament as he would wish?

I am willing to agree with my hon. Friend the Member for Hampstead (Mr. Finsberg), whose acumen in these and other matters I greatly respect, that there are immense difficulties. Of course, we have got into certain habits and we are sliding happily down a comfortable slope. There is only one way for matters to be restored. There is only one way to improve the scene and the system. There is only one way in which we can recapture so much of the public confidence that we have regrettably, but deservedly, lost. That way is for Back Benchers—they form an overwhelming majority in this House—to do their constitutional duty and insist upon their rights.

Here is one proposal. If it is the wish of the House, the Public Accounts Committee will produce its proposals in conjunction with the Treasury, whose natural ally we are. I agree that in a sense we are attempting to climb an Everest, but mountains are for climbing and the House may think it important that we should be making a start now for this reason. The Everest that we are discussing is a mere European foothill, for when we have put our own house in order here we have presumably to attempt to put that house in order afterwards, and heaven knows that will be an immense task. I believe that is all the more reason for our beginning now.

I said how grateful I was to my colleagues for their discharge of the duty that the House has imposed upon the Public Accounts Committee. There is, however, another reason. There is one group of hon. Members who are deeply concerned about the effectiveness of Parliament's financial control of the Executive and who are determined to see it improved. If the parties will not lead, we most certainly will. In the end, if our nation is to retain its support for democracy and our processes it must have confidence in them. I have said in another place in a sentence "Parliament must rule—OK." I believe that should now be the slogan of this House.

4.33 p.m.

The right hon. Member for Taunton (Mr. du Cann) has expressed a natural pride in his Committee, and I am sorry if I shall strike a sour note. I pay tribute to the hard work done by the members of the Committee in very exceptional difficulties. We have had an indication from the right hon. Gentleman's speech, with its catalogue of work done by the Committee, of the enormous size and detail of the subjects that it has scrutinised. But I cannot follow the right hon. Gentleman in his automatic assumption that where the Committee scrutinises all is well and that there is not enough scrutiny.

I strike this note this afternoon. My anxiety is that the scrutiny by the scrutineers is as thorough and informed as it should be in order to enable justice to be done to those who are scrutinised.

The right hon. Gentleman is fond of giving the House his great panoramic speeches about public expenditure. We all fall for it. He rattles off figures about how estimates have been exceeded, and we all shake our heads. Assumptions are made that there has been the kind of slackness of administration that would not have occurred if only more of us had been doing our duty and keeping watch.

The right hon. Gentleman can get away with speeches like that, sowing doubts in the minds of the public—in my view he does it intentionally—about the desirability and effectiveness of public expenditure. He gets away with it because this is a vast and complicated subject. It is only when a Member of Parliament, doing his or her constitutional duty, takes up a constituency example that he or she discovers that the reports of the PAC may not be such perfect paragons of control as the right hon. Gentleman would like us to accept.

I took down the right hon. Gentleman's words, I think correctly, when he said in a grandiose sweep that the Committee's reports contained agreed and established facts and conclusions to be drawn from those facts. That is why I shall commit the sort of crime that the right hon. Gentleman sneered at a few moments ago. I shall introduce a sort of Adjournment debate note, because it is on the basis of an individual case that I have gone into thoroughly that I find a section of the Fourth Report of the Committee inaccurate, misleading and damaging. I think this may be just one of the creepy-crawlies under the stone. If we were to go in more detail into more of these reports, we might find more.

We all respect the right hon. Lady and her vast experience as a Minister, but is she not prepared to state, before she plunges into an individual case, that it is the backup of particular Select Committees that she, like many of us, is concerned about? My right hon. Friend the Member for Taunton (Mr. du Cann) quite fairly pointed to the failures of his own Committee. Will the right hon. Lady come off the fence before she goes into a particular case and say whether she agrees with the strengthening of Select Committees?

I am dealing with this particular Committee and this debate. We are asked to take note of reports by the PAC, the work of which has been extolled to us by the right hon. Member for Taunton as our safeguard. I say this advisedly. Of course I have been a Minister, and of course I have known examples of where waste has taken place. But I have known, too, cases where a generalised argument against public expenditure has been based on examples which really have not been justified. That is why I am giving this as only one example.

I would say this in reply to the right hon. Gentleman's more sweeping arguments. I think that the best form of scrutiny still remains that of the Back Bencher operating on detailed knowledge of examples in his own constituency that no one else can share. That is the best form of scrutiny. I hope that the House will bear with me while I give my example as the reason, because it is not only a case of doing justice on the Floor of the House, where an injustice has been done to a group of people in my constituency—

No, I am sorry. I shall not give way.

It is not only a question of that. It is a question of exposing to the House the totally inadequate procedures of the Public Accounts Committee for getting at the facts.

I am referring to the section in the Fourth Report, dealing with ammunition development. Three ammunition projects were examined. I am interested in only one of them—the combined proximity and point of detonation artillery fuse. Surprisingly, that is of interest to me. Some may think it to be an esoteric taste, until they learn that most of the work done on this fuse was done in the Royal Ordnance Factory at Blackburn, where a number of my constituents work. That Royal Ordnance Factory has long experience of and a high reputation in the manufacture of fuses. Therefore, the House will understand the dismay that was caused among those who work there when the Fourth Report appeared, implying that design mistakes had been made and that considerable time and public money had been wasted because of a decision to make the ROF Blackburn, as the Report says, the sole production authority of the new fuse.

This is another example of where the public should be concerned—nine years wasted, and God knows how many millions of pounds, all because of two things. On the one hand there has been lack of proper care about public expenditure, and on the other hand there is the implication here—it permeates a number of these reports—that the work was being done by a public authority. That comes out time and again.

The right hon. Gentleman said that his Committee was not political and that he himself did not bring any political views to his reports. However, we are all incapable of detaching ourselves from our subjective biases. No one is going to tell me that the right hon. Gentleman is biased in favour of public authorities.

The design fault of the fuse, which caused the strictures of the Committee in the Fourth Report, was the omission of the usual clockwork delay mechanism in the combined fuse which was being developed. The major damage to my constituents in the ROF, whether directors, management or trade unionists, was done in the evidence, in the replies from General Sir John Gibbon, then Master-General of the Ordnance, and Mr. Lord, the Director of the Royal Armament Research and Development Establishment. In the questions put by my hon. Friend the Member for Oldham, East (Mr. Lamond), who, as the House knows, is a member of the Public Accounts Committee, my hon. Friend acted in good faith. He, too, has a constituency interest. He, too, was carrying out his constitutional duty and pointing out that he, too, has a fuse factory in his constituency—Ferranti—which wanted to be the main contractor for this fuse. However, the fact is that the answers given to my hon. Friend were misleading and in some cases, by implication, downright wrong, and they led to conclusions by the Committee that are totally unjustified.

As much damage is done to the public interest when unjustified attacks and smears are made as when some slackness escapes the scrutiny net. I give the House one example from paragraph 392, when my hon. Friend was cross-examining General Sir John Gibbon and Mr. Lord on the history of the development of the fuse. My hon. Friend referred to what he called the decision of the Ministry of Defence that Blackburn ROF should be the "sole production authority." He added:
"We can see from the following paragraphs, I think, that this was really a disastrous decision."
My hon. Friend's assumption was wrong, but it was not challenged by the Master-General of Ordnance or by Mr. Lord, and so his conclusion was not challenged either.

I have no doubt that General Sir John Gibbon and Mr. Lord acted in good faith too, but they are very busy top civil servants. They cannot possibly carry in their heads every detail of policy. There was no one there from the ROF to give the facts.

A number of other innuendoes went unchallenged too, including the suggestion that the ROF Blackburn was responsible for "a fiasco" and that it would therefore—here comes the point—be desirable to give a greater share of fuse work in the future to private firms. Surprise, surprise. This was reflected in paragraph 30, in the Committee's conclusions, where it said,
"we recommend that MOD should be more ready to supplement their own resources by using private industry to participate in development projects whenever commercial firms possess, or"—
listen to this—
"have the potential to acquire, the necessary expertise."

I have been reading the report very carefully. Will the right hon. Lady say where she found the quotation about private firms? I have read the evidence, and it refers to British industry, not to private firms.

I have just quoted from paragraph 30, where the Committee concludes that the MOD should consider

"using private industry to participate."
Private industry is made up of private firms, is it not? Certainly in the evidence there are many references to the use of private firms. Perhaps I can find them quickly. I have so many references marked that it may take me a little time.

The right hon. Lady will find one reference in paragraph 339. However, I wonder whether I may put a point to her. If she is saying that the evidence that the Committee was given was wrong, that is a very serious thing to say. I am sure she will appreciate that on occasions of this sort those most distinguished public servants, senior people, who appear before the Committee have the advantage of long notice of the subjects on which they are to be cross-examined, and they also appear with very substantial back-up teams, usually consisting of people representative of many detailed aspects of the departments concerned. It is, therefore, a great surprise to me to hear that the evidence that we were given was inadequate. However, if that is so, we shall consider it again.

I have no doubt that the Master-General of the Ordnance and Mr. Lord acted in good faith. I have been a Minister and I know of the massive amount of administrative detail that a Minister and back-up civil servants are expected to carry in their heads. My complaint is that I would not expect my Permanent Secretary to carry in his head every detail of what happened in a local office. If there is to be cross-examination on the work of a specific factory or local office, that factory or office should be represented before the Committee. It is not a question of Sir John or Mr. Lord having volunteered inaccurate evidence. It is merely that my hon. Friend the Member for Oldham, East put certain questions to them on the basis of certain assumptions that he held in good faith. [Interruption.] Perhaps I may be allowed to proceed. I have gone into this matter extremely carefully—

No. I do not want to give way and perhaps miss out half the argument. I must be allowed to proceed.

The publication of the report created an outcry in my constituency. Front page headlines were splashed across the local Press—"ROF Blackburn condemned". We cannot play ducks and drakes with people's livelihoods. That cannot be done in what I believe is sometimes a frivolous manner, even by a serious body such as the Public Accounts Committee.

I am glad to say that my hon. Friend, challenged by the ROF workers, agreed to go along to the ROF to conduct a little bit of public scrutiny. We were given a demonstration by the plant director of the construction of the new combined fuse and an account of its history. We were then left with the joint shop stewards committee to hear the point of view of the men, who took a great deal of pride in their work. As a result of our discussion—I am deeply grateful to my hon. Friend for his frankness and courage—my hon. Friend has stated publicly that the Committee was misled. He has been with me to see my right hon. Friend the Secretary of State for Defence to try to put the record straight for the sake of the future work at ROF Blackburn.

Perhaps I should not detain the House with the details at the establishment, but we found that the new fuse could not have contained the clockwork delay mechanism as the fuse was, by specification, too small. Secondly, the decision by MOD to go ahead without the delay mechanism was taken on the basis of failure rates of "early bursts", which the ROF challenged at the time as totally inadequate. However, it was told to go ahead.

Thirdly, the fuse as produced at the ROF met the failure rate. It is a lower failure rate that the MOD specification for the fuse did not and could not meet. Fourthly, Blackburn ROF had never been the "sole production authority". It made only one of the three sections of the fuse. The other two sections were made by McMurdo and Ferranti. Private industry had produced two-thirds of the fuse, yet on the basis of the Public Accounts Committee's report MOD is invited to place greater reliance in future upon private industry.

Fifthly, the section produced at ROF Blackburn proved entirely satisfactory and is to be incorporated in the new model that is now being considered, which will include an electronic delay mechanism.

Sixthly, contrary to the implications of the report, nine years have not been wasted. No other country has yet successfully produced this combined fuse. Thanks to the work that has been done, including the collaborative work between the ROF and private industry, we have learnt a great deal. We are well ahead and confident that in the light of the lessons that have been learnt we can go ahead and produce the combined fuse ahead of everybody else.

Having listened to us, my right hon. Friend agreed that a misleading impression had been produced and that Blackburn ROF was in the clear. He wrote:
"I have no hesitation in confirming to you what I said at our meeting, that in the Ministry of Defence's view the task placed on ROF Blackburn as a part of this project was carried out fully as required. In my view no slur attaches to them in any way. The Ministry of Defence has a high regard for the staff at ROF Blackburn and of ROFs in general."
There are important future implications. If I had not been able, with the help of my hon. Friend, to put the matter right, Blackburn ROF's chance of future tenders would have been put at risk. The new combined fuse with the electronic delay device is now going out to tender, incorporating much of the know-how developed by the ROF. If it had gone out to tender under the slur cast by the Public Accounts Committee and the open invitation to MOD to give a greater part to private firms in future, there would have been injustice of the worst kind to hardworking and reputable men.

I owe a great debt of gratitude to my hon. Friend the Member for Oldham, East for having had the courage to examine this matter in greater detail at my request and for helping to put the position right. I hope that members of the Public Accounts Committee will take a rather more careful look at the Committee's methods of scrutiny and at putting their own house in order before they engage so busily in condemning everybody else's slackness in scrutiny. When an individual firm or factory is singled out for criticism in a particular context, it is intolerable that workers and management should not be represented before the Public Accounts Committee. I know that such representation takes time. That is one of the problems. However, having read the report in detail in this case, I have been concerned by how loose and superficial is some of the much-vaunted scrutiny.

4.58 p.m.

I believe that the right hon. Member for Blackburn (Mrs. Castle) has it all wrong. I say that on two counts. The right hon. Lady is wrong in her assertion that only those who want less public expenditure want efficient public expenditure. Surely it does not matter which side of the political argument is taken about the total level of public spending. Surely those who argue for more public spending have an even greater responsibility to ensure that such spending is efficient. Whether we want more or less public spending, surely we must be in favour of much better scrutiny.

As for the right hon. Lady's second argument, obviously, it is inevitable that sometimes a Committee of this House may get the emphasis wrong in doing its job. It happens that in my opinion a previous report of the Public Accounts Committee got it totally wrong when reporting on a personal business interest. However, that does not invalidate the scrutiny of public spending. Surely what we want is far more scrutiny, not less.

I am with the right hon. Lady in urging that the Committee should ensure that its recommendations are based on facts. I am sure that that is what it endeavours to do. When I was a Member of the PAC I knew only too well how carefully all its Members went about their business. The right hon. Lady should not argue on the basis of one case in her constituency that the Committee should shut up.

We are discussing one of the most important matters to come before Parliament. It has long been my view that our traditional Parliament is ineffectual and feeble as an instrument for administering a modern industrial society. I do not want to amplify that general critique to- day, but if Parliament cannot control expenditure, it cannot control very much.

The right hon. Member for Taunton (Mr. du Cann) has been appointed by Parliament as its front-line general in command of the troops controlling the effectiveness and efficiency of public expenditure. What message does he send from the front line? It is that Parliament has no control over public expenditure at all. Basically, that is the continuing message that the right hon. Gentleman constantly gives to the House. It is time that all sections of the House took notice of that fact and of that message. I entirely agree with the message that he again brings today. Yet the traditionalists who run this place will go on doing so in the same way that they have always done.

I instance the Lord President of the Council, who has some responsibility for the way in which we conduct our affairs. The right hon. Gentleman's view is that we have handed too much power and scrutiny to Committees and that far more should be done on the Floor of the House. It is impossible to deal with all these items in these reports on the Floor of the House. It is nonsensical to suggest that we can. We must go along the parliamentary Committee path. There is no alternative. It behoves those of us who wish to improve the performance of Parliament to ensure that we get our Committee structures clear.

The right hon. Member for Taunton made it clear that we must change our ways. But it is absolutely certain that we shall not do so. I was somewhat amazed at the right hon. Gentleman's criticism of the party political game in this place. Of course, he did not use those words, but he implied them. The party dog fight is a good deal more amusing to politicians than the serious monitoring of public spending.

One strange thing about this House, which the right hon. Member for Taunton did not mention—but I am sure he has given thought to it in the past—is that Supply Days are not used for this purpose. The subjects chosen—all parties are guilty, although the Liberal Party does not have too many Supply Days to feel guilt about—are of a general nature. They are not, as was orginally intended, dedicated to the scrutiny of Supply, which is Parliament's first and foremost function.

What about the major recommendations for change that the right hon. Member for Taunton has placed before us, has written about in pamphlets and articles and spoken about in other speeches? I hope that the Procedure Committee will make the recommendations which he wants it to make and to which we must all look forward.

I should like to deal with only two items, because it is impossible to go over the whole range. Other hon. Members will no doubt deal with other matters.

First, I refer to the recommendations dealing with grants to industry, regional development incentives and money for the NEB, British Leyland and other industrial projects. I do not see how Parliament can get this right.

I represent a development area which has had a share of development incentives over the years. But I should be very hard pressed to put my hand over my heart and to say that every pound, or even 50 per cent. of every pound, that has gone in that direction during the last 10 years has been effective and efficient and provided real value for money.

We should be looking beyond the simple regional development incentive. We should be considering the whole question of aid to industry and asking ourselves whether it is possible for the Government to induce investment intentions in any private industry. I doubt whether, by grants or taxation incentives, there is any evidence anywhere in the world that that can be done. It may be possible to change the geographical location of industry to a limited extent, but there is no indication of which I know, either in Department of Industry reports or in any of the academic studies that have been carried out in this country or in the world at large, that it is possible, by Government hand-outs or tax incentives to induce private industry to invest.

Parliament must inevitably accept the view of the PAC that British Leyalnd must improve performance before it gets any more money. But how does one manage British Leyland on that kind of short rein? Michael Edwardes, the new chairman and chief executive, has the good will of almost all hon. Members in his efforts to turn the tide at British Leyland. It is almost impossible for Parliament to be breathing down Mr. Edwardes's neck at every turn and saying "You must improve performance this week or we shall not give you another pound next week." But unless Parliament does that, we may find British Leyland running away with more and more money. We can only lay down general policies governing the return on money. We must leave our nationalised industries and British Leyland management to get on with the job in hand.

I turn now to taxation, particularly the report on value added tax. I hope that the right hon. Member for Taunton will forgve me for saying that the report seems to raise more questions than it answers, even if one reads all the evidence. The report refers not only to the public finance efficiency aspect—in other words, the cost to the taxpayer of administering it—but to the cost to the trader. I am sure that the cost to the trader in terms of the efficiency of the total economy is more important than the cost of public administration. Indeed, if the public cost is just under 2 per cent., which it is in public accountancy terms, I suspect that traders and industry are in many cases putting a higher proportion of the tax which they pay over to the Revenue into the administration and collection of that tax. Therefore, I hope that in these general inquiries in future into taxation there will be a much greater desire to find out the cost to the taxpayer of paying these taxes as well as to public administraion of collecting them.

Finally, I wonder whether it might be a good idea at some time in future—I know not whether this is within the terms of reference of the debate, but I shall be told if it is not—we could devote a little of the PAC's attention to a success story. It might be helpful to find out how the success was achieved. We appear to spend all our time inquiring why there were failures, why there were lapses and what went wrong.

I should like to give one example. The whole set-up of aid to the Arts in Britain is an astonishing hotch-potch. It is difficult to understand the criteria by which grants are given by the various bodies which have this responsibility which is shared by many bodies and local authorities. Yet the one thing that we can say about Britain in 1978 is that it is a centre of excellence for the performing arts, whether orchestras, choirs, the theatre or whatever. This has been achieved by a hotch-potch solution of public authorities giving grants in aid or sometimes taking over the responsibility for financing whole operations.

We have achieved excellence in this area. We should know why we have achieved excellence in this area. I suspect that there is a lesson to be learned from the way that the money has been granted and from the partnership that exists between private and public interests. That may lead us to create excellence in other areas.

I welcome these reports, but I welcome even more the determination of the right hon. Member for Taunton to change this hide-bound traditional institution into an effective weapon of modern industrial and economic management.

5.10 p.m.

I wish to speak about the first part of the Ninth Report which deals with the University Grants Committee and university expenditure. Both the right hon. Member for Taunton (Mr. du Cann) and the hon. Member for Cornwall, North (Mr. Pardoe), the Liberal spokesman, stressed the inadequacy of our scrutiny procedures. I shall be critical of the report to some degree, but not in a carping spirit. The support and resources at the Committee's disposal are, perhaps, not adequate for it to perform the task which the House lays upon it.

The Ninth Report begins by saying that this is an important area of public expenditure because the total grants for 1976–77 exceeded £60 million. At 1976 survey prices, the correct figure was £844 million. I assume that the figure of £60 million was meant to be £760 million at 1975 survey prices, but I shall pass that by and assume that the error was typographical. But this is, indeed, an important area of public expenditure.

The report proceeds to discuss the impact of recent changes in tuition fees upon the financing of universities. It states that the Department of Education and Science tried to strike a balance between the two extremes of charging full econo- mic fees and charging none. I do not know what that means, because there has never been a policy of charging anything like the full economic fee. The report says that the revised level of fees would account for about 20 per cent. of total current costs—in line with what was suggested by the Robbins Report. The Committee did not question that assertion.

I raise this matter because the procedures of the Committee are deficient in part precisely because it does not have expert advisers in the specific field into which it inquires. When the Robbins Report was published, the expectation was of a continued rise in university student numbers for a further 18 years—the period of the Committee's review—but the latest figures for student tuition fees fit into the reverse of that picture.

In 1982 the 18-year-old age group peaks; thereafter there is, on present form, likely to be a decline in the absolute level of demand for places in higher education. Unless the phenomenon of this decade is reversed and there is a sharp take-off in demand for places in higher education, this decline will take place. There is no evidence of such a take-off. That is important, because, in a context where continued expansion is expected, it is helpful to institutions of higher education and to the nation that a significant proportion of their income should come from fees so that they are encouraged to take in more students, thereby increasing their income each year. They are encouraged to take more students on the margin, and to cram a few extra into each department.

In a situation where total demand is declining the effect of the same level of fees may be to encourage deleterious competition between institutions which will be to the disadvantage of the weaker elements in the education system. It is no good saying that this is broadly in line with the Robbins Report recommendations. I had hoped that the Public Accounts Committee would probe a little further, as it suggested it would like to do, into the balance of the elements of university financing.

A similar point arises in the section of the report on capital grants and grants-in-aid to universities. The Committee states:
"We accordingly recommend that future capital grants should be based on a considered policy and overall programme related to the essential needs of the universities as a whole."
Earlier in the paragraph the word "essential" is contrasted with the word "desirable". That sounds a reasonable contrast. We all think we know the difference between "essential" and "desirable". But how do we determine the cash value that we should give to the word "essential"?

First, we must know what is the estimated level of demand for higher education as a whole for which we should provide places, if we are to observe the Robbins principle that places should be provided for those who are qualified for them and who seek them. That is partly within public control. It has been said that it is something that is entirely outside the control of Government, but it is not, because the level of student grants affects it to some degree.

And there is little doubt that if we were to provide a universal system of maintainance allowances or awards for the 16–to–19–year-old age group we should see considerably more working-class students coming forward for places in higher education. That shows that total demand is to some degree within public control.

Secondly, the balance between the universities and the rest of higher education is entirely within public control. The 1972 White Paper "Education—a Framework for Expansion", for which the present Leader of the Opposition was responsible, proposed for 1981 an equal distribution of places in universities and other higher education institutions. My right hon. Friend the Secretary of State recently announced a revised total of places and a somewhat different distribution which was weighted more towards the universities.

One reason for that is that within a lower total number of places it is cheaper to provide some additional places within the universities than it is to expand non-university institutions. Universities in general already have excellent support facilities including libraries and catering. Therefore, it may make more sense, from a simple public expenditure point of view, to spend more money in the university sector than in the non-university sector and so provide the same number of additional places more cheaply. That is because the non-university sector has some way to go in catching up in the average standard of its physical provision. That aspect of the problem is not mentioned in the report, although it is one of the criteria that must determine what is essential expenditure and what is not.

But is the objective simply to provide a number of places in higher education as a whole at the cheapest possible cost to public funds or are there other objectives? Should we be considering whether we should build up non-university institutions at perhaps a greater cost, which would mean a reduction in "essential" capital expenditure in the universities? There is no clear definition in the report of the criteria for determining "essential" expenditure. Those criteria are more complex than the Committee appears to realise. It is not simply a question of what is
"appropriate in present economic circumstances."
I turn to the next section of the Ninth Report which is headed "Recurrent Grants". Here I want to make a somewhat different point. The Committee says:
"It seems to us that, in the country's present financial circumstances, grants which have enabled the universities to maintain their expenditure per student at about the 1971–72 level in real terms cannot be regarded as having imposed an unfair burden on the university sector."
I do not want to get involved in the argument whether there has been only a minor decline, a trivial decline, a marginal decline, in the level of university support per student from public funds since 1971–72 or a rather greater decline. The right hon. Gentleman has been somewhat embattled on that issue recently. Most of the figures which have been quoted have been less than relevant because they begin from a base line of 1973–74 whereas the right hon. Gentleman's report begins from a base line of 1971–72.

What I am concerned about relates to the whole question of the PAC's examination of the universities. I take the House back to the special report from the Committee of Public Accounts in Session 1966–67–10 years ago—on "Parliament and Control of University Expenditure". The House will remember that before that time the PAC and the C and AG did not have access to the books of the UGC and the individual universities. Paragraph 20 of the Report states:
"He"—
that is, the C and AG—
"would not question decisions reached on academic grounds any more than he would, in other fields of expenditure, question decisions reached (for example) on military, medical or scientific grounds. There might in some cases be difficulty in distinguishing the methods by which a policy decision was reached, or implemented, from the policy itself, but this difficulty is a familiar one in many other fields of the C & AG's activity and in practice is always overcome."
The Committee went on to say that it did not believe that the new system would do any harm to the proper autonomy of the UGC. I do not want to suggest that there has been such harm. I merely want to draw attention to the fact that 10 years later we have a report before us in which the PAC is expressing a general opinion on a policy issue, namely, whether the support which the UGC has recommended for the universities has imposed an unfair burden on them. I will not take any stand on whether it has or has not. That is not what I am saying. What I am saying is that perhaps the time has come when the House should, 10 years after the introduction of the new system, consider how it has been working and whether the assurances which were then given have been honoured or whether it is necessary for us to look again at the whole question and say that perhaps we were a little too reticent then and that, as we in the House have to account for public expenditure, we should qualify to some degree the assurances we then gave. The same point arises on other sections of the report.

Finally, I want to say a few words about one or two other elements in the same section of the Ninth Report which raise somewhat different points. The Committee spent some time discussing the inter-relationship of the various elements in university financing from public funds. For example, when it is talking about the financing of new residences, it says this:
"If the £25 million of debts are serviced from student rents, as DES said they would be, the costs could still fall largely on public funds if, as we assume, DES take account of these rents when determining the future level of students' awards. We therefore recommend that DES and the Treasury should review the merits of the loan-financing scheme."
I note that the Committee only assumed that the DES takes accounts of the rents. That is a clear indication that the Committee did not have within its membership—I am not in any sense criticising its membership—or even within its immediate advisers, anyone with expertise in this highly technical area of how the DES sets about fixing student awards. It takes account of the average cost of residence. So to some degree the Committee is right and there would be some effect on the level of student grants, though not necessarily a marked effect upon the level of grant received by those students who are in loan-financed residences. It is a much more complex question than the Committee suggests.

The major point that the Committee is making is quite right, namely, that the elements of university financing interact and if one saves public expenditure in one direction one may increase it in another. As the Committee rightly says, this is partly to do with the definition of "public expenditure".

If I may make a political point, this is often forgotten by right hon. and hon. Members opposite when they cry for a reduction in public expenditure. It is sometimes perfectly easy to achieve an apparent reduction in public expenditure, as happened with the loan-financed student residence scheme. It is no longer public expenditure if universities borrow upon the commercial market. However, as the Committee point out, it may all come back on to public funds in another direction by another route. So one can reduce public expenditure by cheating, but that is not the object of the exercise.

At the end of its report, when explaining the same point, the Committee points out that there are endless forms of Government support for the universities, and that in addition to general grants and grants-in-aid for capital and for recurrent expenditure
"other forms of Government support include grants and grants-in-aid for expenditure on computers, separate grants for Medical and Dental Schools, and grants and other support from the Research Councils."
Then there are tuition fees and the maintenance element in student awards, which is 90 per cent. in the case of mandatory awards financed by central Government and 10 per cent. by local government.
"Some of these financial arraneements involve a degree of circularity both in the assessment of grant needs and in the ultimate destination of the grants."
The Committee goes on to talk about the subsidisation of residence and catering services as another element of this. I agree with the Committee that there is a crying need for a review of the total system of financing, certainly of the interrelationship of recurrent grant and tuition fees.

My essential point is that it is impossible to look at the universities in isolation. If one were to say that it was absurd to subsidise residences and catering services partly through the student award and therefore question whether it would not make more sense in the case of the universities to provide that subsidy direct from public funds, so that we can account for it more easily, and reduce the student award commensurately, that could not be said of the universities alone. To be logical, we would have to say that about all institutions of higher education. Granted that in the public sector courses of higher education are run at no fewer than 400 institutions, we should be faced with a diabolical task if we were to determine what was an average or fair level of subsidy. If there were to be a varying level of subsidy institution by institution, the administrative cost of such a system would be very high.

I agree with the Committee that this matter should be examined, but I should not want to suggest, as is half implied by what the Committee says, that the present system is entirely accidental and is by its very nature inefficient. It may be the best that we can get, granted that we have a system of student maintenance awards and granted that there are specific elements in the expenditure of all higher education institutions which we need to subsidise.

I believe that the Committee made a mistake in examining university expenditure separately from DES expenditure on the universities and other higher and further education as a whole. I am aware that university expenditure is a separate Vote, but many of the same questions arise, and the public and the autonomous sectors of higher education interact in such a way that it is almost impossible sensibly to examine the university sector by itself.

For example, one may refer to the final passage in paragraph 18 of the Ninth Report:
"We accordingly recommend that DES should carry out their review of the problem as a matter of urgency so that any proposed measures"—
that is, proposed measures to increase the number of university students who are home-based—
"to reduce the burden on public funds may be introduced expeditiously."
That is splendid. But there is already a higher proportion of home-based students in public sector institutions of higher education than there is in the universities. I am speaking here of those institutions as two total groups, not referring to individual public sector institutions or individual universities.

One might note in passing here that there are dangers in the policy which the Committee blithely recommends at that point. Increasing the proportion of home-based students may well to some extent reduce costs, but it may also have an unfortunate social effect, since the result of doing it may bear more harshly on students from working-class homes than on those from rather more prosperous homes. We cannot, therefore, divorce financial from social considerations in this matter.

But the major question is again what the proportion of home-based students should be in higher education as a whole, not simply in the universities, and to ask that question of the universities alone makes very little sense.

I hope that I have not been unduly criticial of the report. The point which I seek to make is that, while the report goes a little of the way towards a detailed examination of public financing of higher education, it is only the beginning of the task, and the PAC in its present form and with its present support services will not be able to perform the whole task adequately.

5.31 p.m.

In his capacity as Chairman of the Public Accounts Committee, my right hon. Friend the Member for Taunton (Mr. du Cann) has fully earned all the tributes which the House can pay him. He has given clear-sighted and dedicated leadership to work of immense parliamentary and national importance.

It is, I regret to say, the fact that as the power and, with it, the cynicism of the Executive increases, so the need for parliamentary control—effective and efficient parliamentary control—becomes that much more urgent, and I entirely endorse my right hon. Friend's general comment on that topic which has exercised far greater minds than mine in the House over many years. I only hope that the hon. Member for Cornwall, North (Mr. Pardoe), who spoke for the Liberal Party, is not right in his view that little will be done to correct the omission. I say to him, with great respect, that it is the attitude of hopelessness on the part of Back-Bench Members in this case which plays straight into the hands of the Executive.

I wish now to turn to one small but none the less important matter—important for those directly concerned with it—which was considered by the Committee and reported in its Tenth Report. I refer to that part of the report which deals with the Independent Broadcasting Authority and the additional payments to be made by the programme contractors.

I was Minister at the time when the new levy system was first introduced. I say "first introduced" because, owing to the accident of the election which overtook me while I was Minister introducing that particular measure, it was introduced for a second time by my successor as Minister, the hon. Member for York (Mr. Lyon), who became Minister of State at the Home Office and took over what was virtually the duplicate of the Bill which I had previously introduced during the latter days of the Conservative Government.

I have, therefore, had opportunity to recall what took place during the negotiations leading up to the introduction of the new levy system. I must tell my right hon. Friend and hon. Members who serve on the Public Accounts Committee that I find that the substance of their report is hardly supported by the evidence published in the minutes attached to the report. In relation to the Independent Broadcasting Authority, I believe that the comments of the Committee do not carry a great deal of conviction.

The hon. Member for York, who became Minister in 1974 and who introduced the levy Bill in his day, and I both fully recognise, as did all concerned with this matter in the industry and in the Departments, that there would have to be a review before very long. However, all—I emphasise the word "all"—have been agreed since the introduction of this legislation that the IBA has correctly interpreted the terms and the spirit of the Act and has done its best to accord to the will of the House. This, indeed, was the view of the Public Accounts Committee as expressed in paragraph 50 of its Tenth Report, part of which I now quote:
"Your Committee accept that the IBA and the Departments have correctly discharged their existing statutory responsibilities; we also appreciate that the IBA has close knowledge of the operation of the programme companies; and we are satisfied that there has been adequate consultation between the Departments and the Authority. Nevertheless"—
the Committee goes on—
"we suggest that the Government should consider, when the new legislation is being prepared"—
that is, new legislation to continue independent television after 1979—
"whether it is appropriate that final statutory responsibility for assessments affecting substantial public revenue, amounting to £48 million in 1976–77, should continue to rest with the IBA alone."
The words which I emphasise in that passage are:
"Nevertheless we suggest that the Government should consider"
whether that responsibility
"should continue to rest with the IBA alone."
If it does not rest with the IBA alone, clearly, it will have to be with some other body in addition to the IBA, or perhaps even some other body in place of the IBA. I hope to show that that would be a grave error.

First, whatever else may be considered, I very much hope that it will in no way ever be suggested that the Inland Revenue should take over this responsibility. Perhaps I may let hon. Members into a little secret. I think that I am right in saying that, at the time when all this was being discussed, the Treasury officials were not frightfully happy about it. I can understand why. Many had doubts about how the new levy system would work and whether it would do the job that the House wanted it to achieve. They warned against excess profits, but they have since been proved to be wrong on that count.

I think that I am fair in saying that the Treasury does not like the idea of anyone else doing the job for it. It is rather jealous of its own position in these matters and does not believe that others can do the job as well. But the IBA, in this case at any rate, is a much better policeman than the Inland Revenue would ever be likely to be. The IBA knows what it is doing. It knows what it is meant to do. It has an intimate knowledge of the companies and of the business of making television programmes.

That was borne out by the Minister of State at the time, the hon. Member for York, in the debate on 29th March 1974, when he said:
"Our experience over the years has been that the IBA carries out its responsibilities efficiently and well and that it has gained the confidence of public and broadcasters. There have been criticisms of detailed programmes, but overall there has been confidence in the IBA. The Government can now accept that we should allow the IBA to have these wide powers in determining relevant income and relevant expenditure for the purpose of assessing profits."—[Official Report, 29th March 1974; Vol. 871, c. 815.]
That was also the view taken earlier by my hon. Friend the Member for St. Ives (Mr. Nott), then Minister of State, Treasury, who said:
"we are concerned here, as I have said before, with an industry which has a unique relationship with Government, through the aegis of the authority. It consists of a very small number of companies, all of which are intimately known to the authority, which is responsible for monitoring and supervising their activities. The problem of potential levy avoidance in such a situation is, in the view of the authority and of the Government, wholly manageable."—[Official Report, 31st January 1974; Vol. 868, c. 642.]
So I believe it has turned out to be.

There is no question but that the Authority has done all that has been asked and expected of it. The Authority has an accumulation of knowledge and experience that can be matched by no other body. It would be folly to try to make the Inland Revenue duplicate its work. If that were tried, we should run the risk of another Crown Agent-type situation. As it is, the solution that was devised in 1973–74 works well and should be left alone.

I turn now to another aspect of the Tenth Report, that part dealing with the question of overseas earnings of the independent television companies. Paragraph 55 says:
"The IBA recognised that the contractors were in a privileged position at home because of their control of the wavelengths, whereas overseas they were selling programmes in a competitive market which it was in the national interest that they should exploit as fully as possible. The relief given to the companies in respect of production costs which might be attributable to overseas sales, which accrued only if programmes they had made were in fact shown on British television, was in their view a justifiable export incentive."
In fact, it was more than the IBA's view. It was not really so much for the IBA to express a view on that point. It is exactly what the House wanted to achieve at the time. It is certainly what the Department of Industry was strongly urging. I remember that during the first debate on the Second Reading of the Bill I was strongly pressed by the hon. Member for Islington, Central (Mr. Grant), speaking for the then Opposition, to give some form of stimulus or incentive to the companies to make export earnings. I was able to tell him:
"The exemption"—
in the case of overseas earnirms—
"has been made deliberately to encourage the making of British television films for sale in overseas markets."—[Official Report, 31st January 1974; Vol. 868 c. 716.]
That has been very successful, as is shown by the fact, brought out in the report, that the companies are now earning £10 million to £15 million a year by this means.

The IBA is carrying out the intention of the legislation, the intention of the House. That was underlined in the evidence of Sir Arthur Peterson, then Permanent Under-Secretary of State at the Home Department. He was asked in Question 3108:
"Sir Arthur, was this one of the points that you were consulted about?"
That was a reference to the overseas earnings point. His answer was:
"Yes, indeed, it was. Our view is that the practice which the IBA have followed is clearly within the terms of the Act and certainly within the terms of the intention at the time when Parliament was discussing this."
When the Chairman, my right hon. Friend, put the same sort of question to Mr. McKean from the Treasury, he received a slightly longer and less precise reply. The fact is that the Treasury has long been terrified lest in some way the IBA is lenient to the companies. If that is what it believes, let it say so, and say so clearly. Let it challenge the IBA. It has not done so once. I believe that in truth it has a great respect for the work being done by the IBA.

The new levy system was the product of fairly lengthy discussion and negotiation. In its final form it was an agreed package. It would be unfair to pick out any one aspect of that agreed package and subject it on its own to minute scrutiny. If the system is to be reviewed, as it is right that it should be, it should be reviewed as a whole in the terms in which the negotiated agreement finally took place. The independent television companies did not receive all that they asked for. They received some things that they wanted, and those things which in the view of Ministers of both parties over that period were fully justified, to provide for the necessary incentives to produce quality programmes for both home and overseas consumption.

I hope that the spirit of that agreement will be honoured in the future and that it will not be put on one side. I hope also that there will be no attempt to change back to the old system of a levy on advertising receipts, but that we shall keep to the present system of a levy on profits, which more truly mirrors any changes in the companies' fortunes. It has resulted in increased revenue for the Consolidated Fund and has encouraged exports. It has worked, and it should be left alone.

5.49 p.m.

The right hon. Member for Taunton (Mr. du Cann), the very able Chairman of the Public Accounts Committee, referred in his speech to the excellent assistance given by the Press, television and radio to the Committee in its work. This may be true in an ideal world, but there is a great misconception among the public, perhaps among Members of Parliament, too, about the rôle of the Public Accounts Committee.

To give an example, which may have come to your attention Mr. Deputy Speaker, this morning I was listening to BBC Scotland at 8.40 when there was a political correspondent giving a five-minute talk about the activities of the House of Commons today on its return from the Christmas Recess. This correspondent mentioned that there were 10 or 11 reports from the "Public Expenditure Committees" of the House which would be scrutinised closely, that the right hon. Member for Taunton was in charge of the "Public Expenditure Committees" and so on. If we get this sort of remark from a political correspondent of the BBC I wonder how the general public gets its knowledge of the House.

I take this opportunity to say something about the points raised by my right hon. Friend the Member for Blackburn (Mrs. Castle).

I, too, heard that broadcast. Is there not an obligation on those who style themselves political correspondents of the BBC, be it in Scotland or elsewhere, to be a great deal more accurate about what happens than was the case this morning—

Order. We are not at present discussing BBC Radio.

Perhaps I may say that the distress felt by my right hon. Friend the Member for Blackburn arises from what I believe to be rather irresponsible behaviour by the Press. It has received these reports from the Public Accounts Committee and has reported in Blackburn that the Committee has been critical of the Royal Ordnance Factory and certain decisions reached. In fact the 10 reports which we are discussing consist of a part, at the front, which is a report from the Committee and a large part towards the back which is the evidence given to it. The report of the Committee headed

"Class I, Vote 9, Defence Procurement: Land Systems"—
which is the section complained of by my right hon. Friend—does not mention the Royal Ordnance Factory at Blackburn. It does mention the Royal Ordnance Factories collectively but is not critical of them. The reference is to steps being taken to ensure closer collaboration between the Royal Ordnance Factories and the RARDE. That was a perfectly reasonable step for the Ministry of Defence to take following, not the examination of the Public Accounts Committee, but its own experience with the Royal Armaments Research and Development Establishment.

A criticism made of the Royal Ordnance Factory at Blackburn perhaps arises from the questions which I asked in the Committee. I am sorry if there was any reflection on the able people who work in the Royal Ordnance Factory at Blackburn. I would not wish to be unfair to anyone. The people I went to see with my right hon. Friend were the trade unionists there and the management. Quite clearly, they were blameless in this matter. I support all that my right hon. Friend said. I withdraw any remark which implies that they were at fault and I am sure that no Member of the Committee would wish to blame anyone unfairly. But the Committee does not make any comment about this. It was examining not this one question concerning fuses but three projects in each of which the Royal Armaments Research and Development Establishment had played a leading rôle. It was RARDE which came in for criticism by the Committee, and rightly so, I think.

The hon. Gentleman and I were on that Committee. We sat next to each other. We heard all the evidence. I heartily support what he has said. Does he not share my surprise that the right hon. Member for Blackburn (Mrs. Castle)—whose Department when she was a Minister was criticised above all others for gross expenditure on hospital building—should make no reference to that but deal with a little thing like this fuse?

I do not complain of that. My right hon. Friend is entitled to raise this matter, which is an important constituency issue for her. She also mentioned that I have a constituency interest, something which would come as no surprise to anyone who read the evidence, because that was the first point I made before I asked any questions.

From time to time there must be questions before the Committee which impinge on an hon. Member's constituency. It would be impossible to avoid such a thing. I also said that any points I made were not made at the request of Ferranti, which had made no approach to me on this matter. All that I was seeking to do was to make sure that my constituents were not unfairly treated but were given the opportunity to enjoy employment like anyone else. If employment is to be judged on the basis of whether people are in private or public employment, it is worth pointing out that Ferranti, which is a fairly large firm only one part of which deals with fuses, has recently passed almost wholly into the ownership of the National Enterprise Board. I am glad to say that it has flourished exceedingly since. It is taking on more people in my constituency. I am glad that the NEB has been set up and is able to carry out this work.

I make this point merely to reinforce what my right hon. Friend has said. I accept her criticism but believe that it is wrong to aim it at the Committee as a whole. In my view the report of the Committee is well balanced. I support it. I learned a great deal more about this matter by going to this factory with my right hon. Friend, at my own expense I might add. That visit showed that if we had the time—I say that advisedly—to go into these matters more thoroughly, we would discover that there was more to them than is made clear in the brief which all Members of the Committee are given.

The Committee has also realised that, because of late it has taken a decision, to which the House has agreed, enabling it to meet in places other than the Palace of Westminster, which was the previous restriction. Now it will be able to go to places such as the Royal Ordnance Factory to discover more about a matter. It will be exercising this new right in the near future. The point made by my right hon. Friend has been met by the Committee.

We realise that there are occasions on which we need more information, and we try to obtain it. As for getting advice, the people who give evidence bring with them a number of advisers. In the past the Committee has been critical of the number of such advisers. I remember that on one occasion 26 advisers were brought along. We had a quiet word with someone in authority and the numbers were cut down a little in consequence. That may have been wrong. It may be that the case that my right hon. Friend has made today shows that we were wrong to do that. We realise that we cannot always be perfect. I accept my right hon. Friend's criticisms and withdraw any implications against Royal Ordnance Factory workers. I am sorry if this has had any adverse effect on their morale.

Would the hon. Gentleman not agree that his right hon. Friend the Member for Blackburn (Mrs. Castle) is wide of the mark when she seems to suggest that the PAC is in some way anti-public expenditure and in favour of the private sector? Is it not true that in this case all that we were trying to establish was that the RARDE was at fault in not having sought assistance from two firms in the private sector which happened to have the expertise in question when the Royal Ordnance Factory at Blackburn, possibly through no fault of its own, had not been able to solve the problem?

I would accept that to some degree. But as I see it, the Royal Ordnance Factory at Blackburn is in no way involved in the design. The design is all done at the Royal Armaments Research and Development Establishment. The Royal Ordnance Factory merely manufactures the finished design and, therefore, is not involved in the great delay and the great expenditure of money which rightly alarmed the Committee.

This matter, which is fairly complex, becomes clear when one goes to the site. I do not think that we can do it with every project. It is a minor matter within the whole range of the Committee's work. It is a major matter for the Royal Ordnance Factory, but the Committee cannot be expected to go into sufficient detail in its inquiries in order to be absolutely 100 per cent. accurate all the time. Therefore, I still support the Committee's Report. I do not think that it is in any way critical of the Royal Ordnance Factory and I withdraw any implications of my own.

6.1 p.m.

I should like to start by thanking my right hon. Friend the Member for Taunton (Mr. du Cann) for the way in which he has introduced the debate today and also for the enormous amount of work that he does as Chairman of the Public Accounts Committee. I am also grateful for the civil and courteous way in which he conducts our affairs and for the way in which he is always helpful and gives the Committee opportunities to raise points that it wishes. I am grateful for the general way in which the Committee is run.

I am also grateful to the hon. Member for Oldham, East (Mr. Lamond) for clarifying some of the remarks of the right hon. Member for Blackburn (Mrs. Castle). I was rather surprised that she started her speech by criticising the whole year's work of the Public Accounts Committee and then turned to one small constituency problem. I might add that she turned it into a successful small constituency argument.

In retrospect, I became slightly more confused because having started off by attacking the Committee and finished by attacking the Committee's work, the right hon. Lady in the middle of her speech said that we had got into this muddle because of the evidence that had been given to the Committee. As a former Minister of a Department she must realise as well as any of us that anyone attending the Public Accounts Committee with his advisers is thoroughly briefed before giving evidence to us. All I can say is that I hope that one of the suggestions that I should like to make this afternoon might to some extent stop this similar situation arising.

Looking back over debates in the House on the Public Accounts Committee reports I see that on nearly every occasion not only Members of the Committee but other hon. Members have continually called for means of strengthening the arm of the Committee—indeed, that comment has been made in several speeches this afternoon—so that we can make our work more efficient and be more successful in controlling excessive public expenditure.

We are all aware that in the eyes of the general public careful control of public funds is essential. In times of high inflation, when people from all walks of life are struggling to make ends meet, nothing creates more irritation than seeing Government Departments squandering money in inefficient and wasteful projects and overspending large sums of public money which, I might add, no individual or private business could do without ending up in the bankruptcy courts.

The Public Accounts Committee each year, with the able assistance of the Comptroller and Auditor General and his office, exposes a number of horrors with regard to overspending within different Government Departments. Each year, although we talk about strengthening the Committee's activities, little if anything is done between debates in the House. Each year the Committee continues with its work and seems to find an ever-increasing number of cases where the original estimates given to Ministers have escalated into serious overspending ventures. It is often difficult to judge how some of these horrific situations have arisen. It must be because on some occasions the original plans were totally underestimated.

Having sat on the Public Accounts Committee for nearly three years I have come to the conclusion that in a number of cases Government Departments get certain projects off the ground when they can have given only half the story to Ministers, knowing full well that if the Minister were confronted with the likely expense, he might well reject the plan. We have often seen situations where once a decision has been taken the Minister gets himself into a position of no return, because having spent a considerable amount of public money he has to complete the project. If any of the Ministers of Transport had originally seen the likely expense of the Vehicle and Driving Licence Centre at Swansea I have no doubt that the initial plan would never have been embarked upon.

Another reason for over-spending—I must say that in my view the Department of Health and Social Security is one of the worst culprits, although I notice that the right hon. Member for Blackburn did not deal with that—is bad planinng at the beginning. There is no better example in any of our reports than that of the Liverpool teaching hospital. How on earth could a hospital have been designed in which there was an unacceptable fire risk and the local fire authority completely rejected not only the materials used in the construction but also the design and fire precautions? It seems almost incomprehensible in this day and age.

Then there are cases where, because of technological developments, what looked like a fairly simple project has escalated out of all proportion to the original estimates because of improvements and alterations that have had to be made. The Ministry of Defence is often confronted with this situation. I think that most of us recognise that these are exceptional circumstances which are difficult to overcome because of sophisticated improvements in the whole area of weaponry. Some of these difficulties which we have investigated in the past have come under stricter control by the introduction of cash limits. But having said that, looking through the 10 reports that have been published this year, there are still a great number of loopholes that we as a Committee can investigate only after large sums of public money have been spent.

Most of us recognise that the recent discussions over the contracts for the Polish Government to build ships in this country will lead to massive Government subsidies to complete the contracts. I have read a suggestion in The Times and other newspapers that the Public Accounts Committee should investigate these contracts. I do not believe that we have the power to do so. Indeed, I was interested to see a letter from the General Council of British Shipping to Lord Harmar-Nicholls suggesting that it felt that an investigation by the Public Accounts Committee of the Commons would be the best way to investigate these contracts. I have little doubt that in the months and even years ahead, when these ships have been built, the Public Accounts Committee will be taking a careful look at the cost to the British taxpayer. I am sure that we have all seen the suggestion that the cost to the British Government might well be enormous.

Will my hon. Friend not concede that there is a case for the Public Accounts Committee carrying out an investigation rather sooner than waiting for some years?

I would certainly welcome that, but I do not think that we have the power to do so.

I do not think so. We have the power to see what the contracts are, but I do not think that we can make a full investigation at this stage.

I make these points about investigating now because I believe that it would be helpful to the House and I think that it is a matter we should look at as one of the ways of strengthening our arm.

I think that we might also consider ways of improving our operation by opening our Committees to the public. In the last 110 years, the Public Accounts Committee has always sat in private, taking its evidence and cross-examining witnesses in private. I am told that the Permanent Secretaries of Government Departments rarely enjoy their sessions in front of the Public Accounts Committee, and we all understand that explaining errors and mistakes made by their subordinates cannot be a very happy experience. I believe that it would have far more impact if this evidence were taken in public, with the Press in attendance and possibly with broadcasting facilities there as well. I believe that those on the Committee hold this view, and we as a Committee must decide whether we intend to experiment for a time to see whether this would not draw more attention to the work of the Public Accounts Committee. I believe that the problems raised by the right hon. Member for Blackburn today might very well have been overcome if the evidence that we took on her problem had been taken in public.

Because of difficulties in getting our reports printed in the past year or two, often public interest has been lost because so much time has elapsed between taking evidence and the reports being circulated. If evidence were taken in public, this delay would be overcome and, what is more, our inquiries would become more relevant.

I hope very much, therefore, that we change our methods and sit in public. Anything which may point more attention to the workings of Parliament in investigating excessive Government spending in certain areas will demonstrate to the public our concern as well as theirs with this overall problem.

Ten years ago, when I was a Member of the Public Accounts Committee, I put forward a rather similar argument and I was shot down on the ground that if the Press were there, and television especially, they would latch hold of some sensational story, but purely from one angle, and that in order to do its job properly the Committee had to have a balance. It was said that the balance would not come if there were that kind of immediacy about it. How does the hon. Gentleman reply to that kind of criticism?

I accent it, to some extent. Obviously, when it comes to taking evidence from the Ministry of Defence, and certainly when it comes to taking evidence on certain industrial matters, we should have to take the evidence in private. This might be for security reasons. At the moment, certain evidence that we take is sidelined in any event. Therefore, in certain circumstances I accept that we should have to sit in private. But I believe that we should start as an experiment taking our evidence in public to see whether it draws more public attention to the problems confronting Parliament on this subject.

6.14 p.m.

I agree with what the hon. Member for Richmond, Yorks (Sir T. Kitson) said towards the end of his speech. I have always been very much in favour of these Committees sitting in public. The same arguments that have been adduced against this Committee sitting in public were adduced against the Select Committee on Public Expenditure sitting in public. I am not aware that those criticisms have been borne out and justified in the event. In my view it is worth experimenting, and I hope that the Government will take account of that.

In view of the fact that we are debating or are presumed to be debating 10 reports it is not surprising that the debate is fragmented and disjointed, each hon. Member naturally tending to speak on the matters in which he is especially interested.

I agree with the right hon. Member for Taunton (Mr. du Cann) that we need to find some method of getting more control of public expenditure by this House. From time to time and from year to year we have all stated and restated that proposition. We have said that it is highly desirable and highly urgent. Equally, we know that it is highly unlikely that we shall get it, and probably highly impracticable, for reasons that I shall come to in a moment.

At a time when public expenditure is increasing and is likely to increase over the years—I think that all parties, whatever they may say in public, concede in private that that is the case—it is extremely difficult for Select Committees to probe and investigate with a view to reducing it. They would not be all that popular if they came forward with proposals to reduce expenditure when right hon. and hon. Members, individually and collectively, are putting pressure on the Government to increase it.

It is well known, too, that parliamentarians of great eminence sitting on the Front Benches on both sides of the House are violently opposed to the whole principle of Select Committee procedure. I have said that time and time again in these debates. Those right hon. and hon. Members, some of them Ministers at the moment, are very happy to play the general party political game on the Floor of the House where we have the concept of the theatre against the workshop. It is the whole idea of what this place is about. Here, we have to entertain. Those who take a jaundiced view of the operations of Select Committees tend to regard the Floor of the House as the national political theatre where the Press and the public can come to look at set party political pieces in which we paint a black or a white picture, depending on which side of the House we sit. We all know that neither is the truth. The alternative is to regard this place as a workshop where Members of Parliament investigate and scrutinise in depth civil servants and now Ministers in a way that it is quite impossible to do on the Floor of the House in the set debates to which I have referred.

I believe that the nearest approach that we can get to a non-party objective scrutiny and investigation is via Select Committees. They are more effective than most other instruments that I have seen in other parts of the world and, although they have their disadvantages, I see nothing better anywhere in sight.

Of course, party prejudice is never far from the mind of any Member of Parliament. He would not be here if that were not so. We are all party members who have our party prejudices and, if I may say so, no one more so than the right hon. Member for Taunton. He is as smooth as a can of Esso motor oil. He is highly plausible and an extremely cunning party politician. He will not deny that. In fact, I hope that he takes pride in it. Certainly I do. I am not as cunning as he is. I am rather more brutal and coarse than he is. But we seek to achieve the same objective: he wants to get his party into power and I want to sustain mine in power. In the event of his party assuming office the rôles will be reversed. The methods by which we seek to achieve our aim are different, however. The right hon. Gentleman uses the Public Accounts Committee as an instrument to that end. I shall amplify that and, I hope, in no undue sense of hostility. The right hon. Gentleman knows me very well, and I think that we can talk fairly frankly to each other.

I refer to one example. There is in the Ninth Report a fairly extensive reference to social security fraud. In the Tenth Report there is a less lengthy reference to Inland Revenue staff.

I refer first to the report on Inland Revenue staff. It shows that Inland Revenue staff increased from a figure of 74,171 in April 1975 to 81,524 in April 1976 and that there is a projected increase of up to about 90,000 in April 1977. It also gives the figures of the costs of administering tax. In 1974–75 the cost of collecting taxes was £250 million; in 1975–76 it was £354 million.

There are no very firm recommendations as to whether the staff is too large or too small, and there are no recommendations as to whether the cost of collecting taxes is too great or too small. A total of 40 questions were asked on this whole complicated subject. They were chiefly on administration and not on whether there was proficient collection of tax, or about fraudulent avoidance or evasion.

If we compare that with the section dealing with the abuse of social security payments we find that, in the latter case, not 40 but 100 questions were asked on fraud itself. The figures involved are quite startling, but let me put this matter into perspective. Each year we pay out in social security benefits of one kind or another a total of £13,000 million. The Committee was told that overpayment in 1975–76 totalled £10·3 million. That sounds a lot of money, and it is a lot of money, but putting it in perspective it means that out of every £8 spent on benefits, one penny is overspent. Of that penny only one quarter is due to fraud. The other three-quarters are due to genuine mistakes in administration, or by the recipient.

The Committee exercised itself rather unduly on this matter, in my opinion, because the right hon. Member for Taunton and some of his hon. Friends thought—and I believe that they were right—that there might be political capital to be gained out of the exercise. It was brought out very clearly in front of the Committee as a result of the activities of the hon. Member for Aberdeen, South (Mr. Sproat) that the investigators of fraud had spent more time on investigating the cases that he put forward than they otherwise would have done. They would have been more effectively engaged in investigating other things than the hon. Member's evidence.

However, the Chairman of the Committee made great play in his broadcast on the radio—and it may have been on television as well—about the element of fraud. He said, fairly, that it was a very small element, but he added—and this is where his cunning comes in—that £10·8 million was an awful lot of money.

When one compares that amount with the £200 million-plus lost by the Crown Agents, for example, one gets it in perspective. Far larger sums of money are lost every year from shoplifting. Also, far larger sums are lost to the Revenue by tax evasion, which the Committee has the power to investigate but never has done so. Why not? Why do not the right hon. Gentleman and his Committee look at tax evasion with the same relish with which they undertook the investigation into social security fraud?

We find that the total number of prosecutions for social security payments was 15,362 in 1975. There is evidence that there are gangs of crooks operating in this field. As a result, some of the penalties have been extremely strict, and very rightly so. Some of the offenders have ended up getting sentences of seven years in gaol.

On the other hand, convictions for tax evasion totalled only 140 in 1973–74, 123 in 1974–75, and 175 in 1975–76. Therefore, for every 1,000 prosecutions for social security fraud there are 10 for tax evasion. Yet it is estimated that revenue losses as a result of tax evasion are not just £10.8 million but between £200 million and £500 million. That was the range suggested by Mr. Anthony Christopher, the highly respected president of the Inland Revenue Staff Federation. In an article on 24th March, 1977 in The Scotsman, the highly respected Tory newspaper in Scotland—although it has become a "Scot-Nat" paper which is even worse—Peter Dean, of Heriot Watt University estimated that the figure was £1,000 million.

Despite this, the PAC chooses to chase up people who are defrauding social security of £10 million while leaving perhaps £1,000 million unscrutinised and uninvestigated. For every pound lost in social security fraud, £40 or more is lost by the tax gatherers. For every 100 prosecutions in social security there is one by the Inland Revenue.

I do not know whether the right hon. Member for Taunton is resigning or retiring at the next election—he may even lose his seat. Whatever the result of the next election, I hope that he comes back to the House and continues his service as Chairman of the PAC. I hope that he will give a public undertaking that his first priority when the new Parliament begins will be to investigate tax evasion, rather than concentrate his well-known energies and abilities on social security fraud

I have been counting the number of paragraphs in our report relating to the two matters that the hon. Member for Fife, Central (Mr. Hamilton) has mentioned. Far and away the smaller number is given to social security fraud—eight as compared with 14 for Inland Revenue matters. The examination of Inland Revenue matters commanded a large proportion of our attention compared with the proportion given to social security abuse, which I think—and I have said it before—has been overplayed. This comparison is remarkable and distinctive. There is no objection whatever to any subject being looked at by the PAC. It is only a question of time. There is no reason why the Committee should not look at the possibility of investigating tax matters in this Session.

The right hon. Member's smoothness continues. He is as smooth as ever. He knows the attention that his Committee has publicly paid to social security fraud, and the way in which it has ignored the question of tax evasion.

6.29 p.m.

I also pay tribute to my right hon. Friend the Member for Taunton (Mr. du Cann) for his admirable speech in introducing the debate and his labours all through the parliamentary Session is Chairman of the Committee. I pay tribute also to his fellow members of the Committee.

I have done a rough calculation, and I find that in the last 12-months' Session members of the Committee spent about 1,500 man-hours in the service of the House, and the Chairman spent about 300 hours. We should register our recognition and gratitude for work of that degree.

It is always a disappointing feature of these debates and reports that they do not, in appearance, produce a specific end-result. We must turn our minds in the direction of seeing how we can make them bite more effectively. The ideal would be to invent something in the nature of an annual ceremony centred on a figure who could be referred to as "The Public Accountee of the year". He would be a senior civil servant, of a rank not below Principal Assistant Secretary who would be one of three selected by the PAC as most blameworthy for the largest waste of public money in the previous 12 months.

Lots would then be drawn to see who was elected. The unfortunate person would be put in the stocks on the crest of Westminster Bridge, surrounded by police lights between the two sets of traffic, and perhaps set slightly behind him, at a slightly lower level, there would be a representative of the Treasury, not below Assistant Secretary level, as the person who should have been responsible for monitoring the money involved.

There should also be a "Roll of Dishonour" for each Public Accountee of the Year put up, first, in the Members' Lobby; secondly, in the ante-room of the Treasury room occupied by the Financial Secretary; and, thirdly, in the Strangers' Bar, which is generally known in this place as the Kremlin. That might remind us each year of the importance of the work of the PAC.

More seriously, I think that the House should turn its mind to seeing whether at some future date there should be a more specific form of debate than the mere take-note debates to which we are accustomed on these occasions. I think that it would be more satisfactory if we could table a motion specifically directed at something which the Committee recommended. For example, we could concentrate on the subject of cash limits, which my right hon. Friend the Member for Taunton rightly selected as one of the most important topics which the Committee has had under review in the past year. We find in paragraph 21 of the Third Report a specific recommendation in that respect which no doubt the Treasury would regard as entirely reasonable. Might it not give point and effectiveness to these debates if we sometimes incorporated a recommendation of this kind in a motion to be specifically discussed by the House?

It is important that we should take such a course if these debates are not to degenerate into party political discussions. Nobody who reads the Third Report and the passage on cash limits could accuse the PAC of having provided any ammunition for such a debate. Clearly, it was an important step forward to examine the matter of cash limits, and I believe that it would be of advantage if the recommendation in paragraph 21 could be carried into effect. The cash limit system has made itself felt in a number of areas, not least in local government, which is of great interest to me because I am a county councillor in Shropshire.

Debates could run the risk of becoming emotive if they concerned themselves too specifically with cases such as the National Enterprise Board. I should be prepared to declare a political interest immediately as being against most of the operations connected with that Board. Equally, I recognise that Labour Members take an entirely different view.

Whether one supports or opposes that concept, I think that it would be in the interests of both sides, particularly in the early stages of a board operating on this scale, if its operations could be monitored regularly and in detail. Critics such as myself might be satisfied if that were to happen, and indeed supporters of the system might find it an advantage, because it might avoid the risk of the NEB's operations ending in catastrophe and having to be abandoned. Equally, as regards the Polish ships deal, would it not be an advantage when a major project of that kind is launched on public opinion for it to be monitored at an early stage? All too often one feels that the wisdom of the PAC comes too late and after the event.

I do not want to take up the time of the House, because I have never had the honour to be a member of the PAC, but I wish to point out that these debates score only an apathetic response in the House. One could not say that the House has been crowded today, although I believe that this debate has provoked greater interest today than for some years. I take that as a good omen for the future. I take it also as a tribute to those who have done all the hard work. I wish to conclude this short speech by adding my good wishes to the Committee and gratitude for all the hours which it spends on its work.

6.37 p.m.

I wish to comment on the remarks of the hon. Member for Ludlow (Mr. More) about apathy, and I wish also to comment on the speech of the hon. Member for Richmond, Yorks (Sir T. Kitson). He said that the Press and radio should have access to meetings of the PAC. I intervened in that speech to point out the difficulties I experienced when I put similar ideas forward as a member of the Committee 15 years ago. The view was that if there were to be immediate Press or television comment it might be one-sided, and that any objective view by the Committee would, in a sense, be distorted by the immediacy of the moment. On balance, I believe that the topicality point is important, but although the House is fairly thin in this debate, one also notices that the Press Gallery is somewhat sparsely attended. It may be that anything discussed today on these reports is considered to be rather stale news and, therefore, of no great interest to tomorrow's newspapers. I come down on the side of those who suggest that there should at least be an experiment in having the Press present when the PAC is undertaking its work.

Those of us who are not members of the Committee should pay tribute to those of our colleagues who work extremely hard for long hours. Often their work is unsung.

I should like to ask one or two questions before I come to the one substantive issue I wish to raise. I wish to ask the Financial Secretary how he sees the work of the PAC, and indeed of the Treasury, linking with that undertaken by the European Parliament. My hon. Friend the Member for Fife, Central (Mr. Hamilton) and I serve on the Budget Committee of the European Parliament. I am the Vice-Chairman of the Sub-Committee of Control, which is the nearest equivalent in the European Parliament to the PAC.

There are a number of overlapping matters to be considered. For example, there is the recent problem about malt, which has concerned our Treasury as well as the treasuries and finance departments of our European partners. There is also the problem of the movement of butter across frontiers. How does the Financial Secretary see the relationship between the House of Commons, its public accountability and the relevant sections of the Treasury? On the other hand, what is his view on the work in this respect of the European Parliament and the Commission, and their relationship, which is a very important one, with the European Court of Auditors? I put that in the form of a question and will be interested in any comment that the Financial Secretary may wish to make.

On another matter, some of us have a high regard for the work done by the tax centre at East Kilbride. It has been much maligned in the Press recently, but I find that whenever I take up a constituent's case the staff at the centre are unfailingly helpful and pretty quick. That should be said, but I would welcome the Treasury Minute's proposal
"for the fuller and more effective use of computers in the Department's work",
I turn now to the Flotta terminal in which £21 million was involved. My question, in crude terms, is whether anyone turned a Nelson's eye to the position there before decisions were made. I see the Chairman of the PAC is nodding. He will know a great deal more about the background to this question. I know something of it, but I have not seen the confidential papers that the right hon. Gentleman will have seen. Did anyone turn a Nelson's eye while knowing perfectly well that the Flotta terminal did not qualify for a grant? If so, who was it?

As PAC reports go, the Committee's remarks in connection with this matter were extreme. The report says:
"The Department accepted that the premises would not have qualified for grant if the marine staff had been included; but were satisfied that it was right to exclude them despite the close relationship between their work and the effective operation of the on-shore facilities. For grant purposes the Department addressed themselves to the concept of 'premises' in a physical sense and the marine staff were excluded because they worked off-shore and not on the terminal premises. Your Committee acknowledge the necessity for working to rules which ensure consistency of treatment for all grant applicants, but we can only comment that qualification of the whole site depended on the Department taking what appears to be a very narrow interpretation of the rules in this case."
That was a rather generous way of putting it. The report continues:
"As grants of some £21 million were involved and because of the marginal qualification on headcount we find it difficult to accept"—
when I was a member of the PAC those words were a fairly tough condemnation and I assume that the mores have not changed and that the Committee feels strongly about this matter—
"that the Department were right not to apply other tests in this instance, if only for comparative purposes."
This is a fairly powerful condemnation.

The Treasury minute says simply that
"the Department has taken steps, within the resources available, to prevent similar errors in future".
What steps have been taken? There are certain matters which should be pursued. In the evidence, on page 536 of the Tenth Report, the Chairman says that
"you could very easily have people manufacturing components at Land's End and John o'Groats and they would be an integral part of the process of building the motor car although separated by a very great distance. Is distance really the appropriate criterion, do you think?"
In my view, that question was only half answered. What does the Financial Secretary think are the appropriate criteria? Mr. Prosser told the Committee:
"This arises from Section 2 of the 1972 Act and the various orders of general application which have been made and published, as to the way in which we will approach applications."
Is the important Section 2 as still as relevant as it once was? What is the Treasury view on that?

Paragraph 2980 reads that
"from looking at the papers in front of the Committee … the Department did take a very narrow view in the case of Flotta, thereby avoiding disqualifying the whole site. It naturally calls into question the whole approach to this subject. It seems that the headcount test was passed pretty narrowly in all three cases, in fact."
I want to know whether this was known before the event and, if so, by whom? Precisely how marginal—to use a generous word—were the decisions?

Bluntly, on the basis of certain Press reports and certain gossip in Scotland, there is a feeling that some people knew from the beginning that perhaps Flotta might not have qualified had not certain criteria and nomenclatures been stretched unreasonably beyond imagination. It is important for us on the East Coast that this whole matter should be put straight. If certain people are getting away with certain things, why should one discriminate against others who may be in a similar position? This is not a matter of the past. It is topical and of the future. Does the Chairman of the PAC wish to intervene?

No. I merely wished to indicate my agreement in general terms with what the hon. Gentleman has said.

Later, in paragraph 2980. Mr. Dickson told the Committee:

"The results of this exercise are being, and will be, carefully appraised and the Department will take technical advice about the proper manning of the schedules. We are being very careful about the service activities."
What has the Treasury done to follow up the Department in this matter? May we be assured that, since the Flotta incident, they have been very careful about these service activities?

I have one other general matter to raise. The Committee looked into the Customs and Excise Department. It reported:
"During Your Committee's examination of the Customs and Excise Department we enquired into the Department's total costs of administration. These rose by 41 per cent. from £123 million in 1974–75 to £174 million in 1975–76, whereas the net revenue collected increased by only 25 per cent. The proportionate cost of collection consequently rose from £1·66 per cent. to £1·88 per cent."
It is clear from those figures that Customs and Excise is an extremely costly business. My question, which may have been anticipated by the Financial Secretary, is simple. The time has come to do some calculations about what the Customs and Excise costs would be if there were a frontier running from the Solway to Berwick and a separate Scottish State. The SNP is absent from this debate, but it is fair for me to ask what will happen if it should win an election and set up a separate Scottish State. Hon. Members should make no mistake about this. According to the hon. Member for Perth and East Perthshire (Mr. Crawford), the Scottish pound would float up past sterling, the French franc and the deutschemark to heaven knows where. If we have all that we need a Customs and Excise Department, and it is fair, relevant and topical to raise this question in this debate in view of what is stated in paragraph 39. What calculations is the Treasury making about the costs of Customs and Excise in a separate Scottish State, if that were to be the will of the Scottish electors through putting the SNP into power? This should be known before any of us goes to the polls.

Has hon. Member made any investigation of the costs of tax collection in Switzerland, where 25 self-governing States collect customs and excise and inland revenue duties? Is the hon. Member aware that the cost of tax collection is rather lower there than it is here?

So many things are different about Switzerland. It is a country that does not even yet have female suffrage, and I do not think that we should follow the Swiss analogy too far. The Swiss are different. They are not members of the Community, and Switzerland's whole tradition is different.

Turning from Customs to the cost of tax collection, the whole issue of the financial administration of the Inland Revenue is dealt with in the Tenth Report on page xii, paragraph 18 onwards. Again I put the question. What would be the cost if a devolved Assembly were to have the kind of powers for which my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) will be arguing in tomorrow's debate on devolution? As always, he will no doubt be well briefed. My hon. Friend is seeking in an amendment to the Scotland Bill that there should be a Scottish Consolidated Fund with
"three sources of revenue … the proceeds of personal income tax levied upon Scottish residents as set out in Schedule (Income Tax in Scotland) and collected by the Inland Revenue. The Scottish Assembly may vary the rates at which this income tax is levied provided that the standard of rate of income tax in Scotland is not more than 10p in the pound above or below the standard rate levied by H.M. Government".
Am I not right in thinking that if such a scheme were introduced for a Scottish Assembly the number of staff required to administer it, which has risen from 74,171 in April 1975 to 81,595 on 1st April 1976, and which paragraph 18 expects to increase to 90,000 by 31st March 1977, would be increased still further? I have given some warning of this question to my right hon. Friends at the Treasury.

To be fair to my hon. Friend, he goes on to say that
"fifty per cent of the proceeds of assigned excise taxes levied in Scotland. The assigned excise taxes are tobacco duty, alcohol duty, the duties on hydrocarbon oils and the duties in betting and gaming. The administration and collection of these taxes will continue to be the responsibility of the United Kingdom Customs and Excise and the Scottish Assembly will have no power to alter the rate of these taxes".
He also seeks
"an equalisation payment from the Treasury which will he authorised by the Chancellor of the Exchequer if the receipts of personal income tax and the half share of the assigned excise taxes are together more than 10 per cent short of the Scottish proportion of public expenditure. In calculating whether a shortfall takes place, personal income tax will be assumed to be levied at the United Kingdom standard rate. The Scottish proportion of public expenditure will be that sum which stands in the same relation to each year's United Kingdom public expenditure as the sum spent on the total of devolved services stands in relation to United Kingdom public expenditure in the year in which this Bill is enacted. If the sums raised by personal income tax (again calculated at the standard United Kingdom rate) and the half share of the assigned excise taxes are together greater than the Scottish proportion of public expenditure by ten per cent or more of that sum the surplus will be paid from the Scottish Consolidated Fund into the Treasury.".
This is mind-boggling in its complexity.

I welcome this debate. My hon. Friend the Minister of State, Privy Council Office, has just entered the Chamber at an appropriate moment, because I am seeking to make it easier for him to confront my hon. Friend the Member for Berwick and East Lothian in the debate tomorrow and to reject my hon. Friend's case. I am loyally supporting the Government's case, because, as I have explained, the staff figure could well soar to 90,000 and might well even reach the six-figure mark of 100,000. Therefore, I ask my hon. Friend the Member for Berwick and East Lothian, and others, whether it is worth while, for the sake of the trappings of power—yes, the trappings of power—to put an extra burden on the already overburdened numbers and expertise of the Inland Revenue.

Will my right hon. Friend the Financial Secretary say what sort of set-up the Government would have in mind for a Scottish Public Accounts Committee? Where would the expertise come from, expertise which those of us who have been members of the Committee know resides in the Department of the Comptroller and Auditor General? What would be the cost of some kind of separate PAC organisation in Edinburgh, and what powers would it have over devolved matters in relation to the PAC of this House? These are very significant questions because one of the documents that we are considering concerns Northern Ireland, and I therefore ask the general question whether the Government are clear what items of public expenditure in Scotland would still reside with the right hon. Member for Taunton (Mr. du Cann) and his Committee.

It is fair to ask that in view of the opinion expressed in The Guardian of 16th May 1977 by Sir Basil Engholm, a retired civil servant and former Permanent Secretary to the Ministry of Agriculture. He said:
"When I first entered the Ministry many years ago there was a notice on the wall of my room which read 'Do not forget Scotland. It will be different.'"
Sir Basil Engholm went on:
"Any system of devolution is bound to create work and multiply officials particularly with duplication in the higher grades."
I ask the Financial Secretary what use he intends to make of Sir Basil Engholm's experience, and to consider whether in the financial field, as in so many others, relating to devolution, we are in danger of multiplying the number of officials and thereby adding to the burden of the Scottish and the British taxpayer.

6.58 p.m.

The single-mindedness of the hon. Member for West Lothian (Mr. Dalyell) is one of the phenomena of this House and, on balance, provided he does not overdo it, it does him credit. We like him the better for it, although the Minister of State, Privy Council Office, as he entered the Chamber, must have wondered whether we had got round to tomorrow by mistake.

I am grateful for the opportunity to intervene in this most important debate. It is not one of our most electrifying debates, but it is far more important—and pretty well everybody who has spoken so far recognises this—than some of those debates which seem a little more electrifying.

Nobody who reads through the 10 reports of the Public Accounts Committee for the last Session and the minutes of evidence which accompany them can fail to be impressed by the immense amount of work which the Committee does. It is invaluable work, seeking out waste and extravagance over a wide range of Government spending, of which we have already heard, particularly from my right hon. Friend the Member for Taunton (Mr. du Cann), a number of most telling examples. I therefore gladly join him in paying a tribute to the Comptroller and Auditor General and his staff for the vital contribution that they make to the Committee's work

The PAC is not simply our senior Select Committee; it also has the good fortune to be the only one which is adequately staffed. There is not time to discuss the Select Committee system in general this evening, but I must say that I believe that we could do better if we were to have fewer Select Committees altogether and to staff those few that we have rather better than we do at present.

It is also right that a tribute should be paid to those hon. Members who devote quite a considerable slice of their time to serving on the PAC and, above all to their Chairman, my right hon. Friend the Member for Taunton. He combines, as I well know in another context, a mastery of the art of chairmanship—and it is an art—with a passionate and relentless devotion to the cause of establishing a proper control of public expenditure in general and the enhancement of Parliament's rôle in particular. If any hon. Members have not yet read my right hon. Friend's pamphlet "Parliament and the Purse Strings", which he was too modest to give a plug but which I name and which was published last May, I warmly commend it to them.

The debate today is, of course, an annual event, but it is, I think, of rather special and unusual importance because we have before us, in addition to the usual batch of PAC reports on specific items of Government spending, both in Britain and in Northern Ireland—I in no way seek to belittle those specific reports, if I may call them thus—the Committee's appraisal, in its Third Report, of the relatively new system of cash limits, and its proposals for bringing this crucially important innovation in public expenditure control within the ambit of Parliament.

This is certainly a subject on which the Expenditure Committee, through its General Sub-Committee, of which I had the honour to be a member at the time, has also expressed a deep interest and, indeed, has evinced a broadly similar approach in a number of reports in recent years. It is also something to which the Opposition have repeatedly attached a special importance. Therefore, I hope that I may be forgiven if I devote most of my remarks to the Third Report of the PAC.

There is, however, just one question which I should like to put to the Financial Secretary arising from the Committee's Tenth Report. Can the Minister give me an assurance, when he winds up the debate, that among the options at present being incorporated into the computerisation of PAYE that is at long last under way within the Inland Revenue there will be included the tax credit system? We in the Opposition would regard it as a grave and irresponsible omission were this not so. I trust, therefore, that the Financial Secretary will be able to give me the assurance that I seek.

On specific points, too, it is impossible to overlook the curious contribution made by the right hon. Member for Blackburn (Mrs. Castle), who appeared to blow a fuse. She seemed to think that public expenditure was something so sacred that it should not be attacked or criticised or have any fault found with any part of it in any way, least of all if it happened to take place in her own constituency. I am glad to say that no other hon. Member, from either side of the House, has sought to turn this into a debate in which to make a small constituency point. It is a matter for some shame that it should be a Privy Councillor who did that.

Extraordinary it was, too, since, as the right hon. Lady's hon. Friend, the Member for Oldham, East (Mr. Lamond) pointed out, the offending section came not in a report of the PAC at all but in part of the cross-examination which is appended to it. Whether what the right hon. Lady said was right or wrong—it was a matter of very fine detail—is something on which I do not think that any of us present is qualified to comment, and certainly not those of us who are not members of the PAC and did not attend those particular sessions of evidence. But it was undoubtedly an astonishing contribution to the debate.

In contrast to that, there were some very worthwhile contributions. My right hon. Friend the Member for Bournemouth, West (Sir J. Eden) demonstrated—if it needed to be demonstrated—that the PAC operates in no sense in a party-political manner by complaining about the criticisms made by the PAC of the system of additional payments by independent television programme contractors. If I may say so to my right hon. Friend, this certainly did not seem to me to be a Left-wing complaint, so I think that that alone put paid to the proposition that the Committee takes a party political stance—although there was one other hon. Member who suggested that it did, the hon. Member for Fife Central (Mr. Hamilton). He suggested in that context that the Committee ought to look into the question of tax evasion.

The hon. Gentleman says "Quite right". However, if the PAC were to look into the question of tax evasion in the widest sense, I very much doubt that it would bring the party political dividends to the Labour Party that the hon. Member for Fife, Central obviously thought it would.

I return to the more serious and considered contributions to the debate. My hon. Friend the Member for Richmond, Yorks (Sir T. Kitson), in a very thoughtful speech, was probably right—although it is not for me to say so—to suggest that there might well be a good case for the PAC sitting and taking evidence in public, where that can be done. It cannot always be done. Certainly my experience on the Expenditure Committee bears out that there is a value in doing this.

My hon. Friend alarmed me slightly by his suggestion that it was not within the terms of reference of the Committee to look into something like the Polish shipbuilding deal at present. If that is so—I am not at all sure that it is so—it is a very grave defect in the terms of reference. I hear my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) saying that it is not so; in other words, that it is within the remit of the Committee. I suggest that it is something which would certainly merit investigation. In general, the tendency to look into things very much sooner and very much earlier in the day might well be a great benefit and improvement in the valuable work that the PAC already does.

I do not wish to create any discord between myself and my hon. Friend the Member for Horsham and Crawley (Mr. Hordern), but the PAC looks only at money which has been spent, and I think that it is the Expenditure Committee that should look at money that it is intended to be spent.

I hope that my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) and I will join together in explaining the Polish shipbuilding proposals when the Department of Industry comes before us for its examination in the next few months.

As I understand the matter, the PAC can look into something as soon as one penny of public money has been spent, and it does not have to be the whole lot for a particular project. Therefore, as soon as one penny of public money has been spent, the issue concerned can be looked into. But, at any rate, I am sure that if it cannot be looked into, then, as my hon. Friend rightly says, this is something that the Expenditure Committee might want to look into.

My hon. Friend the Member for Ludlow (Mr. More) also mentioned the Polish shipbuilding contract, and he echoed what the Chairman of the PAC said about the very curious state of the National Enterprise Board and its lack of accountability to the House of Commons, and similarly with the British National Oil Corporation. These are matters which should concern us all as Members of Parliament because we are not, as Members of Parliament who ask the PAC to act on our behalf, acting in any party-political sense. We are acting as the legislature seeking to check and scrutinise the Executive. It is a job of the most fundamental importance.

My hon. Friend the Member for Ludlow spoke also about the importance of the cash limits report. I wholly agree with him and I intend to devote most of my remarks to that report. However, before I do so, it must be said that we have read in the Press that the public expenditure White Paper will be published later this week. Perhaps the Financial Secretary will be good enough to confirm that that is so. It would have been more courteous to the House if a statement had been made in the normal way today.

I see on the front page of today's edition of The Times an apparently well-informed prediction that the White Paper will show a planned growth of public expenditure over the quinquennium of 2 per cent. a year. I assume that that is in volume terms. If that is so, and because of the well-established tendency of public sector costs to rise faster than prices as a whole—the notorious relative price effect—it means a real rate of growth of public spending of well over 2 per cent. a year. If that is to leave any significant scope for tax cuts, the economy as a whole will need to grow at between 4 per cent. and 5 per cent. a year, and nearer to 5 per cent. The economy will have to grow at that rate for the same period.

What has been the average annual rate of growth over the past decade? It has been well under 2 per cent. a year. That is less than the projected rate of growth, so we are told, of public expenditure over the next quinquennium. On both sides of the House we all hope that we can do better in the future than in the past, and certainly better than in the past four years of Socialism when the rate of growth has been precisely zero.

But Governments of both parties should have learnt from the experience of the past 10 years the disastrous folly of assuming a marked improvement in economic growth and of then basing spending decisions on that pious assumption. If the Government wish to have any hope of introducing worthwhile tax cuts in the years ahead, I must tell them that there is no room for any planned growth of total public expenditure in real terms. It will have to be at least held steady at the present level for some years to come.

When the White Paper is published in a few days we shall know more and we shall be able to comment. However, whatever emerges from the White Paper, it is clear that, the more necessary it is to curb the total of public expenditure, the more important it is that the taxpayer should receive value for money within that total. As my right hon. Friend the Member for Taunton said, value for money is the motto on the shield of the Public Accounts Committee.

In that context I turn to cash limits. There can be no doubt that the introduction of cash limits in 1976 has so far proved successful. They have introduced a long overdue measure of financial discipline in the areas where they apply. I know that there are those who argue that the degree of under-shooting proves that the system has failed. I reject that inter- pretation whether it comes from hon. Members or from the economics correspondent of the Financial Times.

The amount by which central Government cash-limited spending fell below the cash limits in 1976–77 was only 2½ per cent. That is not too bad. For the first half of the current year the margin of under-shooting seems to be slightly larger—about 3¼ per cent. However, much of that increase is likely to be made good in the second half of the year. In any effective system of financial control—for that is what we are talking when speaking of cash limits—there is bound to be a margin of safety. That is precisely what has emerged. It may be that the margin is slightly larger at present because the system is still relatively new.