THE PUBLIC ACCOUNTS COMMITTEE: A SUCCESSFUL SELECT COMMITTEE?

THE PUBLIC ACCOUNTS COMMITTEE: A SUCCESSFUL SELECT COMMITTEE? By Vilma Flegmann In an attempt to redress the balance of power between Parliament and t...
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THE PUBLIC ACCOUNTS COMMITTEE: A SUCCESSFUL SELECT COMMITTEE? By Vilma Flegmann In an attempt to redress the balance of power between Parliament and the Executive, the House of Commons is once again introducing changes in its procedures. Following the recommendation of the Select Committee on Procedure in their first report in 1977/8, twelve new, departmentally related, select committees have been appointed ". . . to examine the expenditure, administration and policy of the principal government departments . . .". The experience of the House with its select committees in the past had been, at best, varied. We need only to recall the fate of the Select Committees on Agriculture and Education in die 1960s or the motley achievements of the Expenditure Committee with its subject sub-committees. Among die parliamentary select committees, the Public Accounts Committee alone has appeared consistendy to carry out its functions widi a measure of success. Its reputation as the most important and effective of parliamentary committees has never been challenged seriously. If, indeed, die PAC can be regarded as a successful parliamentary committee, then its experiences could have somediing to offer to the new committees and die examination of the PAC's work and achievements is more than timely. It is nearly forty years since such examination was last carried out by Basil Chubb in his The Control of Public Expenditure. The PAC, appointed under Standing Order 86 " . . . for the examination of accounts showing the appropriation of sums granted by Parliament to meet the public expenditure .. .", was first appointed by Gladstone in 1861 and represents to date the only channel through which Parliament can direcdy examine the heads of government departments about their management of public funds. This committee of diirteen back-bench MPs, appointed since 1974 for die duration of a Parliament (previously they were newly appointed for each session), sets out to examine subjects raised by die Comptroller and Auditor General in his report on his examination of departmental and other accounts and from time to time certain issues which its members themselves consider important. They take evidence from die heads of the departments concerned, on an average of thirty occasions each year, and on average eight members attend each meeting and take part in die examination of die witnesses. The PAC presents to Parliament annually a number of unanimous reports on the inquiries it has carried out. The majority of diese inquiries now concern the examination of 166

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economy and efficiency in the management of public expenditure projects or programmes to discover "any weakness in judgement, execution or control leading to wasteful, extravagant or unrewarding . .. expenditure or failure to maximise receipts". This examination of whether the country gets "value for money" for its public expenditure, frequently referred to as efficiency audit, provides the PAC with a wide range of subjects for its inquiries, such as government contracts, subsidy schemes or the administration of tax collection. The PAC continues to consider subjects arising from thefinancialaudit of departmental expenditure, like the inadequacy of departmental accounts or delays in submitting statements, but these no longer take up a substantial part of its time as they did in the nineteenth century. During the past thirteen parliamentary sessions (1965/6 to 1977/8). The PAC has examined the departments on nearly four hundred different subjects. Some subjects have been examined several times: e.g. Concorde was the subject of seven inquiries and the administration of VAT appeared four times on the PAC's programme. The table shows the way it has divided its attention between different public expenditure programmes and also how actual public expenditure (averaged between 1966 and 1978) was divided between the same programmes. KPAC % Public Inquiries Expenditure* Defence 17.0 14.5 5.0 2.0 Ovenea5 Services Agriculture 10.5 2.0 Trade, Industry & Employment 27.0 6.4 Roads ffc Transport 5.0 5.8 Housing 2.0 9.3 Law & Order 2.5 S.8 Education 8.0 16.8 14.1 8.5 Health & Personal Social Services 2.5 Social Security 21.4 Other Public Services 6.0 1.8 Common Services 6.0 1.7 •Average percentages from Cmnds 5519. 6393, 7439.

The figures demonstrate that the scrutiny various programmes received from the PAC is not always in line with their share of public expenditure. There are a number of explanations for this divergence. Over 90 per cent of the PAC's inquiries arise from the reports of the Comptroller and Auditor General on his examination of the accounts of government departments and other public bodies. Thfs examination covers approximately 60 per cent of total public expenditure, leaving such major dispensers of public funds as local authorities or the National Enterprise Board outside the scope of PAC examination and thus outside parliamentary scrutiny. Without the benefit of the C and AG's reports presenting the uncontested facts of the case, meaningful examination of parti-

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cular items of public expenditure is unlikely. As a result, the PAC's scrutiny of public expenditure on such programmes as education or housing, where a substantial proportion of expenditure is carried out by local authorities, is considerably restricted. For the same reason, though to a lesser extent, expenditure on law and order and roads and transport also received less attention from the PAC than their share would merit. The scrutiny of demand-related services like health and personal social services or social security is also restricted, mainly to such areas as administrative efficiency or cost increases in new buildings, which represent only a minor proportion of expenditure on these programmes. If some departments appear to get away with less frequent appearances in front of the PAC, odiers seem to receive more than their fair share of such attention: agriculture, trade and industry, other public services such as the Inland Revenue and Customs and Excise and common services, mainly those provided by the Department of Environment. Agriculture came under increasing scrutiny just before and immediately following the UK's joining the European Economic Community even though this period did not coincide with any increase in public expenditure in this field. In fact, it remained steady around 2.5 per cent between 1970 and 1978; die increasing interest the PAC showed must therefore be attributed to some other factors dian the concern over die control of public expenditure. It would appear diat in spite of die PAC's nonpolitical reputation its inquiries reflected die political significance of all aspects of die UK's membership in the Community. The increased attention received by Customs and Excise similarly reflected such interest: seven of the nine inquiries were carried out after 1974 and six of diem were related to VAT. The explanation for the dominance of inquiries into expenditure on trade and industry, must, however, be looked for elsewhere. The two major areas of PAC inquries concerned government contracts and various support schemes for industry. The examination of government contracts has been die most traditional field for PAC inquiries almost from the Committee's inception and dominated its timetable in the nineteendi century; it is not surprising if its interest continued well into die second half of die twentiedi century. This was reinforced in die late '60s, following die Ferranti case, and resulted in an upsurge of inquiries into various aspects of government contracts. The personal interest and expertise of members must also have played a part: die largest single occupational group represented on die Committee was diat of company directors who must have found diemselves very much at home during such inquiries. Various support schemes for industry must also have benefited from diis expertise, but it cannot be regarded as a major factor in directing die PAC's attention to such schemes. Two-thirds of diese inquiries were carried out between 1974 and 1978 when, under a Labour

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Government, die PAC was chaired by a senior Conservative backbencher. The effectiveness of government support for industry under various schemes, unquestionably a politically contentious subject, not surprisingly came under increased scrutiny during this time. PAC attention did appear to follow public expenditure trends in the case of certain programmes. The declining share of defence in total expenditure was accompanied by a decline in the PAC's attention. Overseas services and law and order, representing a more or less constant percentage of public expenditure over the past thirteen years, received a constant share in the PAC's inquiries. Changes in the share of housing in expenditure were accompanied by corresponding changes in scrutiny. Thus while the PAC's scrutiny might not have been evenly distributed between different public expenditure programmes, nonetheless the Permanent Secretaries of most government departments had to face regular, frequently annual, examination in considerable detail, on some of dieir department's expenditure. The contribution of the PAC to the parliamentary control of public expenditure must be examined in the light of what its inquiries achieved. The impact of the PAC's scrutiny on departmental administration must be first considered. Departmental replies to the Committee's Reports and Recommendations provide the most straightforward evaluation of its impact: if diey state diat certain actions are being taken as a result of the PAC's recommendations, they must be accepted as an achievement of the Committee. Forty-five per cent of departmental replies between 1965/6 and 1977/8 contained such statements. In addition, the PAC's scrutiny has a continuous influence on departmental administration, which is none-die-less real for being incapable of precise measurement. The, frequently annual, appearance of the heads of government departments before the PAC implies a criticism of departmental administration, which no Permanent Secretary relishes. Such inquiries, which focus attention on certain departmental activities, and not the most successful ones, involve die department and the Permanent Secretary personally in considerable extra work. Even so, he is often faced widi unexpected questions or is given a rough time. The departments, as a result, make every effort to reduce the number of occasions which make it necessary for the Permanent Secretary to appear in front of die PAC; this, inevitably, must lead to more careful or even cautious handling of public funds. The PAC's scrutiny provides an additional financial discipline for die departments, a deterrent, die value of which must not be under-estimated. From time to time the PAC's reports and recommendations have also influenced government decisions. The inquiry into die Parliamentary Accountability of die Universities in 1966/7 led to die Comptroller and Auditor General being granted access to the books and records of the universities, dius extending parliamentary scrutiny to dieir expenditure. The PAC's report on North Sea Oil and Gas in 1972/3 is generally

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credited for subsequent changes in the taxation of North Sea Oil. Improved financial information for Parliament recently introduced in the Estimates was also the result of the PAC's insistence on the need for such information. Its impact on Parliament itself, on whose behalf it works, seems almost the most difficult to assess. Since 1960 the Reports of the PAC, together with the relevant departmental replies, are debated by the House annually on a "take note" motion. The interest MPs show in these debates can by no stretch of the imagination be called lively. The average number of participants (between 1965/6 and 1977/8) was fourteen, half of them members of the PAC at the time the inquiries were carried out, thus already familiar with the findings of the reports. The House no longer keeps records of Members' attendance, but personal observation soon reveals that the number of those who listen to the debates never reaches more than a dozen at any one time. Although the debates on PAC reports are thus clearly not highlights of the parliamentary year, it would be wrong to dismiss these occasions as useless. The fact that time is annually allocated in the parliamentary timetable is a recognition of the importance of the PAC's work, even if members only take note of its reports, and it is reasonable to suggest that even those MPs who do not participate give some thought to the work of the PAC on these occasions. The references to the PAC's significance in other debates, such as those on the civil service, following the Expenditure Committee's report in 1977 or the Procedure Committee's report in 1978, indicate that this has indeed been the case. Public awareness of the PAC is also increased by press reports on the debates: publication of PAC reports is usually reported at the time of their appearance, but the debates add further publicity. Indeed, if there is any public awareness of parliamentary committees at all, it is mostly with reference to inquiries carried out by the PAC. The role the PAC plays in the control of public expenditure is undoubtedly limited and its achievements are not often spectacular. Within the limitations imposed on it—the post facto nature of its inquiries, th"e substantial areas of public expenditure outside its scrutiny, the fact that it can only comment and recommend certain actioro—it has nonetheless consistently exercised a measure of control over departmental administration of public expenditure programmes. Could its experience therefore provide any lessons to the new select committees? The main factors contributing to the PAC's success have long been accepted as: (i) its clearly defined role in the "circle of control" (nearly all the PAC's inquiries are audit based); (ii) the expert assistance of the Comptroller and Auditor General and his staff; (iii) the Committee's non-political approach to its task. The role of the new committees is obviously less clear cut than that of the PAC. Their task is to examine all activities of their department and this they can interpret more or less as they wish. They themselves will have

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to decide on the issues diey wish to examine as well as the depth and direction of their inquiries. The PAC's experience in the course of its audit-based inquiries appears to have little relevance for the new committees. It must, however, be remembered that some of the PAC's most significant contributions towards the control of public expenditure were the result of inquiries carried out by the PAC on their own initiative and did not directly arise from their examination of departmental accounts. While the PAC's ability to carry out such inquiries successfully was no doubt enhanced by the overall view which it gained of public expenditure during the course of its annual audit-based work, these inquiries might still provide some lessons for the new committees. The PAC, accustomed to work within the framework of an annual timetable, completed these inquiries and presented its reports more speedily than some other parliamentary committees. There are considerable advantages in carrying out inquiries by a select committee within certain time limits. Information obtained at the early stages can become somewhat out of date, or even be superseded by new events, if the inquiry drags on. Members of the committee can lose interest in the subject and attend committee meetings less assiduously. Changes in membership, generally regarded as undesirable for die effective working of a committee, might also become more frequent under such circumstances. Long inquiries inevitably lead to long reports which, for obvious reasons, are read less. The new committees would therefore be well advised to set time limits for dieir inquiries whenever this is feasible. The expert assistance of die C and AG and his staff has long been considered the most important single factor contributing to die PAC's success. Indeed, in recent years such assistance became much coveted as the miraculous remedy for the shortcomings of parliamentary committees in general. Because of the C and AG's role as auditor of public expenditure, his assistance is essential for any committee engaged in die examination of subjects arising from the accounts. But die new select committees will not (or at least are not supposed to), concern themselves widi departmental accounts die examination of which will continue to be die task of die PAC; diey will need expert assistance but of a different kind. The wide range of issues which each committee will wish to consider makes it unlikely that a team of permanent experts could provide the necessary assistance cost-effectively. A larger group of experts, on tap, to be called on as necessary for each inquiry, appears to be a more satisfactory solution, radier similar to the specialist advisers the Expenditure Committee Sub-Committees made use of from time to time. The status of such advisers could be raised and die proceedings of the committees speeded up considerably if they acquired die status of permanent witnesses, similar to diat of the C and AG and the Treasury Officer of Accounts at PAC meetings, and could be called on during the examination of witnesses to answer questions or clarify issues. The

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benefits of specialist advisers who, during the course of the inquiry, can only whisper advice to the chairman are rather restricted. The PAC's non-political reputation would prove to be the most difficult for the new committees to acquire; they might well not even wish to do so. The non-political nature of the PAC's inquiries rests on its subjects, which usually refer to waste, inefficiency or mismanagement of public funds. They are based on certain indisputable facts and few would care to defend waste in any form. As a result, there is little disagreement between committee members of very different political convictions in the course of the inquiries and the PAC's reports are virtually always unanimous. Members who find it difficult to accept such consensus usually do not stay on the committee for long. This reinforces its nonpolitical reputation and the PAC is often regarded as the terrain of middle of the road MPs. The new committees are to examine policy as well as administration, and members are bound to disagree often, sometimes violently. They are to report on theirfindingsfrom time to time and eight days are to be reserved annually for debating such reports. It is essential that the committees do not allow disagreements to prevent their investigations reaching some conclusions and that they are able to present recommendations which can lead to some positive action on the part of the departments concerned. The examination of departmental policy, therefore, must not overdominate their timetable. Departmental administration might appear a less glamorous topic but its examination must not be neglected; committee members are likely to find it easier to agree on their recommendations after such inquiries. Limited though the role and achievements of the PAC in the control of public expenditure are, it has carried out its task conscientiously for over a century. The new committees would be wise to pay attention to its experiences and learn what they can from its methods of working. The reputation the PAC has built up over the years has been well earned by the thirteen MPs who were willing to devote a considerable part of their parliamentary life to what must be regarded, in terms of Members' advancement in their parliamentary careers, as an unrewarding task. Whether the House will find another 120 back-benchers to carry out the work on the new select committees with equal dedication remains to be seen. Note This article is based on research supported by a grant from the Esmee Fairbairn Charitable Trust, whose generosity the author gratefully acknowledges. The findings of the research are to be published by Gower, May 1980 under the title "Called to Account".

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