Government Resources and Accounts Bill

House of Commons, 24 July 2000.

PAYMENTS OUT

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That this House agrees with the Lords in the said amendment.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss Lords amendments Nos. 2 and 3. I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 3 to 15, 17 to 23 and 26. If the House agrees to any of these Lords amendments, I shall ensure that the appropriate entry is made in the Journal.

Melanie Johnson (Labour, Welwyn Hatfield)

The amendments provide for a new clause to replace clause 4 and minor consequential amendments to clause 3. The amendments have been agreed by the National Audit Office. They would permit the Treasury to repay, with the agreement of the Comptroller and Auditor General, money that should not or need not have been paid into the Fund and "the Fund" is now defined to include the National Loans Fund as well as the Consolidated Fund. A specific statutory power is needed to make any payment out of the Consolidated Fund or the National Loans Fund. In addition, all such payments, except transfers between the two funds, require the prior approval of the Comptroller and Auditor General, technically known as "credit" or authority to pay. That presents a problem when sums are credited to either fund in error and should be repaid. As the law stands, there is no power to repay any sums that are paid into either the Consolidated Fund or the National Loans Fund, but should not have been. Any such sums are effectively imprisoned inside the fund concerned. That has occasionally caused problems, so the Government believe that it would be sensible to provide a power to refund such sums from the National Loans Fund and the Consolidated Fund. As our original intention was simply to modernise the Exchequer and Audit Departments Act 1866 relating to the Consolidated Fund, we originally sought only a power to repay sums credited in error to the Consolidated Fund. The main example that we had in mind was where Departments surrender receipts which they believe are surplus to their needs, but which they subsequently find they need to avoid incurring excess votes. However, other payments could be credited to the Consolidated Fund in error, so we sought a general power to repay sums credited in error to the Consolidated Fund. That is what clause 4 provided for prior to the amendments being made. We decided to amend the clause for two reasons: first, a similar power was needed for the National Loans Fund; and, secondly, discussions with the National Audit Office and our lawyers have led us to conclude that the term as the result of an error would not have provided the desired degree of flexibility; hence the new formulation should not or need not have been paid into the Fund.

Oliver Letwin (Conservative, West Dorset)

I can give our response in one word: agreed.

RESOURCE ACCOUNTS: PREPARATION

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That this House agrees with the Lords in the said amendment.

Melanie Johnson (Labour, Welwyn Hatfield)

I shall deal first with amendments Nos. 4, 9 and 10. When it went to the Lords, the Bill already provided that resource accounts and whole of Government accounts would be prepared in accordance with generally accepted accounting practice and, in the case of resource accounts, would need to show a true and fair view. It was the Government's view that those rigorous conditions were sufficient to ensure that the accounts would be produced in accordance with best professional practice and to the highest standard. However, following further discussions in the Lords, the Government brought forward further amendments to clarify the basis on which the accounts would be prepared. Amendment No. 9 extended the requirement to show a true and fair view to whole of Government accounts. Amendment No. 4, in relation to resource accounts, and amendment No. 10, in relation to whole of Government accounts, lay down in more detail than we have hitherto provided the financial statements that must be prepared for resource accounts. Rather than doing that by reference to current accounting requirements, it refers to the fundamental financial statements as defined by the Accounting Standards Board in its statement of principles for financial reporting. We believe that that will satisfy the concerns that the Opposition have expressed in that regard at various stages of the Bill, while being sufficiently "future proof' to enable resource accounts to adapt to changes in the financial reporting requirements as and when necessary. The amendments also make it clear that the Treasury will have regard to the guidance issued by the Accounting Standards Board or any of its successors when ensuring that the resource accounts show a true and fair view and comply with generally accepted accounting practice. I shall now deal with amendment No. 15. The existing provisions of the Bill, further reinforced by the amendments that we have just discussed, will ensure that resource accounts will be prepared in accordance with best practice and the guidance issued by the Accounting Standards Board. However, as we have always made clear, because of the particular requirements of central Government accounts, it will sometimes be necessary to adapt standard accounting practice. The Financial Reporting Advisory Board was set up in 1996 to provide advice on accounting matters generally, but in particular to advise on appropriate accounting treatments in areas where some adaptation of standard practice was required. We believe that the current arrangements for the FRAB are working well and that the FRAB is recognised to be independent. However, to address some of the concerns that have been expressed about how the board works and to reinforce the independence of the process, the Government brought forward a new clause on Report in the Lords—amendment No. 15—which would place the following duties on the Treasury. First, before determining the accounting practices for resource accounts and whole of Government accounts, the Treasury would be required to consult with a group of persons—that is, of course, currently the FRAB—who appear to it appropriate to advise on financial reporting principles and standards. Secondly, the Treasury must consult with the Comptroller and Auditor General in determining the composition of the group. In practice, however, the Treasury would also consult with a wider range of other interested parties. Thirdly, the group will be required to prepare an annual report of its activities, which must be laid before the House of Commons. Those requirements ensure that the Treasury seeks independent expert advice on accounting matters. Furthermore, by requiring that the group report to the House of Commons, we shall also ensure that, in any case where the Treasury does not accept that advice, the disagreement will be brought to the attention of the House. We believe that the explicit requirements introduced by the Government's amendments to have regard to Accounting Standards Board guidance, combined with a requirement for the Treasury to obtain expert advice on financial reporting principles and standards, will ensure that the Government's accounts meet the highest standards of accounting practice. The requirement for the FRAB to report to the House of Commons on its work will give complete transparency to the Government's accounting guidance process.

Oliver Letwin (Conservative, West Dorset)

We very much regret that their lordships, although they have done some good work, have by no means gone as far as we would have liked, or as far as we pressed the Government to go during various stages of the Bill. I wish to ask a specific question, to which it would be helpful to have the Economic Secretary's answer on record, not least because it may influence judicial review proceedings or other such proceedings. What was meant by the phrase that the Government used in amendment No. 10 in another place, have regard to any relevant guidance issued by the Accounting Standards Board Limited or any other body prescribed for the purposes of section 256 of the Companies Act? The interpretation of the phrase "have regard to" is clearly important. If it means that the Treasury can look at the guidance produced by the ASB and, having perhaps framed it in some suitable office, nonchalantly ignore it, that is a very different matter from having regard to the guidance in the sense of paying attention to, applying and living by it. If the meaning is that second possibility, their lordships have done us a great service. We seek clarification from the Economic Secretary on that point. The deficiency in the Lords amendment is that, even if "have regard to" has a strong connotation, it is none the less quite different from giving the task of identifying appropriate definitions for Government accounts either to a specifically created body—a national accounts commission—as we originally pressed for, or to an existing body, as we later agreed on with the Liberal Democrats. The amendment contains merely a hope and a prayer that the ASB will produce relevant guidance. Does the Economic Secretary envisage the Government positively asking the board for such guidance? If so, the difference between what we pressed for and what the Lords have given us would diminish. When the board produces relevant guidance, it must concern itself with a wide range of issues, many of which were dealt with in detail in Committee and at other stages. I certainly do not want to bore the House by going through them in equivalent detail now but, to recap briefly, we will need to know how the great obligations of the basic state pension and SERPS, of the unfunded pension liabilities and of the considerable and, under the comprehensive spending review, rapidly growing public-private partnership and private finance initiative liabilities will be accounted on the liabilities side of the balance sheet. We hope for real guidance from the board on that, and we will look to the Treasury to seek that guidance. On the FRAB, which is the subject of Lords amendment No. 15, I hope that the Economic Secretary will be able to put some statements on record that will help the House and the Treasury to move forward after the Bill has been enacted. Under the amendment, the Treasury shall consult a group of persons who appear to the Treasury to be appropriate to advise on financial reporting principles and standards. I hope that the Economic Secretary will tell us that she will so arrange matters that those who "appear…to be appropriate" are renowned for their independence as well as their skill, and that she will seek, over time, to adjust the composition of the FRAB so that its independence is enhanced, in the same admirable way as, we hope, the Monetary Policy Committee of the Bank of England will become increasingly and evidently independent. That is obviously important and coheres with the aspirations that the Economic Secretary has just enunciated. I hope that she can make it difficult for this Government and successive Governments to do anything other than choose people who are known for their independence, by putting it on the record that that is her interpretation of the intention of Parliament in Lords amendment No. 15. In summary, this is good work, and we congratulate the Lords on improving a part of the Bill that, although it received a great deal of attention in this House, was lamentably deficient when it left it—but, alas, the Lords did not go the whole way. We hope that, following clarification from the Economic Secretary, it will be possible for a future Government to introduce a much tougher regime, bringing the setting of standards and definitions for Government accounts to the high level of rigour and independence that is prevalent in the private sector and ought to be observed in the public sector above all.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

As usual on this Bill, I find myself in almost total agreement with the hon. Member for West Dorset (Mr. Letwin). Our parties fought side by side in Committee to try to get an independent body to set the standards for Government accounts. The Government did not give way. I agree that the Lords have done a good job in moving them some way down that path. I agree with much that the hon. Gentleman said about the wording of the Lords amendments, and especially the phrase "have regard to"—I hope that the Minister will give a clear and frank response—but I think that they are rather stronger than he suggested. The amendments do not allow only the Government to ask the ASB for guidance. Other parties, such as the National Audit Office, will be free to write to the board and express worries about what is going on. Indeed, the Opposition parties could do so. That is an important safeguard.

Oliver Letwin (Conservative, West Dorset)

I may have paid insufficient attention to that, and I agree wholeheartedly that perhaps our very first action—it could be a joint action—should be to seek guidance from the ASB on a range of contentious issues in the accounts.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am grateful for that contribution. In Committee, we expressed a concern that a future Government might fiddle around with the accounting standards in a way that is not transparent or immediately obvious and could go undetected by parliamentarians and even the NAO. When, at the start of this process, we examined the resource accounting manual, which lays down the principles, guidelines and definitions, it became immediately clear that this is a complex area with huge detail, so it will be very difficult, when a future Chancellor makes, say, the fourth or fifth comprehensive spending review statement—which may contain millions of different figures for the House to come to terms with rather quickly—for us to notice slight changes in the underlying accounting definitions.

Howard Flight (Conservative, Arundel and South Downs)

I seek confirmation that the hon. Gentleman intends that the ASB's investigation should be public and transparent.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I can confirm that. I am only surprised that the hon. Gentleman had to ask. The benefit that the amendments bring to our scrutiny of the accounts is that, now that the ASB has a remit to issue guidance, to which the Treasury must at least "have regard"—whatever that phrase means—there will be an independent body with a statutory duty to consider these matters and to have a watching brief for them. I hope that the board will take that new statutory function very seriously. It should note that hon. Members of all parties want that. It should see itself as the watchdog patrolling this complex area, which generally receives far too little attention from the House. 7.30 pm This is a major step forward. I look forward to the ASB pulling up future Governments of whatever colour on any tricks that they might seek to play. However, I agree with the hon. Member for West Dorset that it is not the best solution—it is not the perfect solution. We would have liked the ASB or a similar independent body to be the initiator in the process of defining what the public sector's accounting standards should be. If I may answer his query as to what "have regard to" means, to me, it is the last-ditch defence by the mandarins to give the Treasury a last attempt at flexibility. That is why I am not totally happy with it and why I would like the ASB or a similar body to be the initiator. The Liberal Democrats would seek to empower an independent body to be the guardian of the public sector's accounting standards. That is the best solution—we debated the matter at length in Committee—but, because we see the measure going a long way to meeting that aim, at this stage, we will not seek to disagree with the Lords on the amendments.

Melanie Johnson (Labour, Welwyn Hatfield)

To answer the hon. Member for West Dorset (Mr. Letwin), it is perhaps important to rehearse where we are coming from. I remind him that the Bill requires resource accounts and the whole of Government accounts to show a true and fair view and to conform to generally accepted accounting practice—GAAP—subject only to such adaptations as are necessary in the context of departmental accounts. The Government's new amendments further strengthen that by requiring the Treasury to have particular regard to guidance issued by the ASB. The hon. Gentleman asked what the words have regard to any relevant guidance issued by the Accounting Standards Board mean. They mean that the Government will apply the ASB's guidance, where it is appropriate, to the accounts of Government Departments. Compliance with the relevant accounting standards is usually necessary to ensure a true and fair view. Resource accounts will be required to meet that particular standard. It is important to recognise—I reiterate what I said before—that any variations from the guidance will have to go through the FRAB, too, so it is not possible for such variations, as it were, to go by without some attention being drawn to them. Any proposal to depart from GAAP is discussed with the FRAB. If it disagrees with the Treasury's proposed accounting treatment, it can report to Parliament, so there is a chain of events. Were there to be any need to vary things, for whatever reason—good in our view, or otherwise in the view of the Opposition—it would require that process to be gone through. I hope that that is reassuring to Opposition Members.

Oliver Letwin (Conservative, West Dorset)

That is very helpful. I wonder whether the Economic Secretary could complete the loop by telling us whether she will ensure that, where there is a departure from the ASB's guidance and the matter is referred to the FRAB, she will make that plain to Parliament in some appropriate way.

Melanie Johnson (Labour, Welwyn Hatfield)

I am not quite sure what the hon. Gentleman is suggesting. I have said that, where there is a disagreement in some way, obviously, it must go to the FRAB, and the FRAB is in a position to report that to Parliament. I would have thought, if that disagreement were not resolved in some way, it was highly likely—it will be entirely up to the FRAB to take a view—that it would be reported. That is my understanding of the arrangements. Therefore, that disagreement will be drawn to the attention of hon. Members, including those on any Committee that might consider such matters. As for persons with particular expertise on accounting matters, the Government are planning to consult with the Comptroller and Auditor General on the membership of the FRAB to help to ensure independence. We regard it as important that the independence, skill and expertise of such individuals be clearly established. We will seek to achieve the same objective as that of the hon. Member for West Dorset. The hon. Member for Kingston and Surbiton (Mr. Davey) referred to ASB guidance. As I know that he is aware, the ASB does not generally provide specific guidance for particular sectors or individual bodies, but it issues standards that are of general applicability across all bodies that produce accounts. It is on that basis that we will be tied in with its guidance. It is important to recognise that what I said earlier builds into the process a number of safeguards. I hope that that meets his concerns.

COMPTROLLER AND AUDITOR GENERAL: ACCESS TO INFORMATION

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That this House disagrees with the Lords in the said amendment.

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this it will be convenient to take Lords amendments Nos. 6 and 7 and the Government motions to disagree thereto, Government amendments (a) and (b) in lieu, Lords amendment No. 8 and the Government motion to disagree thereto.

Melanie Johnson (Labour, Welwyn Hatfield)

The Government fully recognise the arguments that led to the amendments that were passed in another place. However, the amendments go far wider than is justified and contain drafting defects that need correction. The Government therefore propose instead two amendments that provide a more balanced approach to the issues. Our approach also paves the way for the Sharman review of audit and accountability, which is about to start; it will have its first meeting on Wednesday, I believe. The main subject of the Bill is departmental accounts. Clause 8 and the preceding clauses contain provisions relating to the audit of accounts by the CAG. Amendments Nos. 5 and 6 would divorce clause 8 from that subject and instead turn the clause into a general power of access for the CAG. By referring to "examinations" without any qualification, the amendments would extend way beyond the audit of accounts to all other examinations by the CAG, including his value for money examinations carried out under the National Audit Act 1983. The 1983 Act contains its own provisions for access for the CAG. It has never been the intention that this Bill should extend into that Act's territory. To do so opens up entirely new issues that have not been the subject of debate or consultation at any stage so far. The Government expect that, in his forthcoming review, Lord Sharman will look at issues relating to the 1983 Act, as well as audit issues.

Robert Sheldon (Labour, Ashton-under-Lyne)

Those matters were debated extensively in 1983. The Standing Committee that considered the National Audit Bill spent days and days on the matter because it felt that it was an opportunity for Parliament to reassert itself. That was important, so it looked at the nationalised industries. Unfortunately, the Chief Secretary of the day was persuaded by one or two of the more prominent nationalised industries and he gave in. That was very sad, but, as a result, the debates ranged widely. We are only now re-examining some of the major issues that were looked at then. It is right that we should.

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful to my right hon. Friend for expressing his views on that matter, but to some degree I disagree about the 1983 Act because, as I have said, it is not the Government's view that that is the right territory to discuss in the context of the present Bill. Although I am sure that he knows how well it was discussed in 1983 better than I do, it is the case that that opens up an entirely different issue. I am sure that we will have some discussion of these matters. I will perhaps come back, when some right hon. and hon. Members have had a chance to contribute to the debate, to some of the reasons why we believe strongly that it is inappropriate to open up the 1983 Act as well as the audit issues; but, as I have said, the Government expect that, in the review, Lord Sharman will be able to look at the issues relating to the 1983 Act, as well as the audit issues. They are not off territory, but discussion of them is not appropriate in the context of the Bill. I urge the House to accept the Government motion to disagree with Lords amendments Nos. 5 and 6. Lords amendment No. 7 would give the Comptroller and Auditor General access to all bodies to which Departments or non-departmental public bodies have or can obtain access. The amendment would, in practice, give the CAG unrestricted access to all taxpayers—including, of course, businesses—to social security recipients and other recipients of Government grants, to many Government contractors and suppliers, and to virtually anyone who has financial dealings with a Department or an NDPB. That means most businesses and many other organisations, and, of course, many individuals. The amendment is therefore potentially intrusive and burdensome. Moreover, the formula "can obtain access" is unclear, and could be a source of dispute between the CAG and individuals, businesses and other organisations. Lords amendment No. 7, especially in conjunction with Lords amendments Nos. 5 and 6, would give the CAG extensive rights of access, unrelated to the audit of Departments' accounts, to anyone who has financial dealings with Government. It would confer a right to roam at will—Opposition Front Benchers nod in agreement.

Oliver Letwin (Conservative, West Dorset)

In case those reading the record cannot grasp what has been happening, let me say that I entirely subscribe to the Economic Secretary's description. The only difference relates to value: we consider that right to roam to be invaluable, accurate and proper.

Melanie Johnson (Labour, Welwyn Hatfield)

We have already supported changes that give the CAG more rights, but we propose to give further help. Such matters can best be discussed through the independent inquiry headed by Lord Sharman, on which the right hon. Member for Haltemprice and Howden (Mr. Davis) is to sit. The prospect of a right to roam at will is not welcomed by the British Chambers of Commerce or the Federation of Small Businesses, which said earlier this year that additional powers for the CAG could result in additional burdens on business, over-regulation and an overlap of functions. I shall explain the Government's alternative approach to the concerns that gave rise to the amendment; first, however, let me say a little about Lords amendment No. 8. Lords amendment No. 8 attempts to give a statutory definition of a non-departmental public body. To date, there has been no such definition.

David Davis (Conservative, Haltemprice and Howden)

I wonder why.

Melanie Johnson (Labour, Welwyn Hatfield)

NDPBs are a wide and disparate group, and are not at all easy to define. The amendment defines an NDPB as a body which exercises public functions of a governmental nature which might otherwise fall to be exercised by central government. That definition is descriptive rather than legally prescriptive, and is very wide ranging—wide ranging enough, in fact, for us to envisage the mounting of legal challenges to decisions to include or exclude certain bodies from the operation of clause 8. The problem appears to be partially recognised in the amendment, which adds a further criterion to the first two—namely, that NDPBs are bodies with accounting officers who have been appointed by a Department. Accounting officers for bodies other than Departments, however, must be appointed under administrative arrangements that may, of course, change over time. The definition therefore rests on an administrative decision made by an individual Department with no central or parliamentary oversight. I do not consider that to be a satisfactory way of defining bodies that are subject to statutory provisions.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

This is not intended to be a trivial intervention. Does it not worry the Minister that the Government are unable to define their own activities?

Melanie Johnson (Labour, Welwyn Hatfield)

We have lived for many years without a definition of NDPBs, although we have no difficulty in defining our own activities in this context. The Lords amendment could lead to a definition that, for the reasons I have given, would be unworkably wide and subject to dispute, and would introduce aspects of administrative decision making. Such a definition is clearly unacceptable. The technical deficiencies that I have mentioned illustrate the difficulties involved in devising an acceptable legal definition of NDPBs. To overcome the problems, the Government have in clause 23 taken the power to designate bodies on a case-by-case basis, and to enable the CAG to be appointed auditor of NDPBs where current statute prevents it. I hope that that will satisfy those who propose an alternative. I invite the House to reject Lords amendment No. 8. Before I say something about the Government's position in the wider sphere, let me remind the House of some key facts. In clause 8, the Government have already given the CAG new rights of access beyond his existing statutory rights. Subsection (2)(b) gives him access to documents, wherever they are held, relating to a Department's financial records. The paragraph deals with one of the major concerns expressed by the CAG and, I believe, by the Public Accounts Committee—namely, the fact that because over the past few years many Departments have contracted out the operation of their accounting and other financial operations, the CAG needs a statutory right of access in such cases to perform his audit of departmental accounts. Subsection (2)(b), added to the Bill on Report, recognises that concern and gives the CAG that new statutory right of access. Clause 23 gives the CAG the same access for the purpose of his audit of NDPB accounts as is provided by clause 8 for the purpose of his audited departmental accounts. Clause 23 also gives him a new power to be made auditor of NDPBs where current statute prevents that. The Government accept that the whole issue of audit and accountability needs careful investigation. We recognise that the CAG must have the powers that he needs to do his job on behalf of Parliament, but we think that that must be balanced against equally legitimate fears that additional powers for the CAG could result in additional burdens on business in the form of over-regulation and an overlap of functions, or disincentives to initiative and risk taking. These are wide-ranging and complex issues, and the Government have therefore tabled an amendment on access to replace those made in another place. Our amendment will enable the CAG's access to documents to be extended, in a considered way, when that is necessary. The procedure would be by draft order, subject to affirmative resolution by both Houses. The Treasury would be required to consult the CAG before making an order. That approach would allow a balance to be struck between the CAG's desire for additional access, and the need to respond to legitimate concerns about burdens on business. The extent to which the CAG needs additional access rights for audit purposes will be one of the issues considered in Lord Sharman's review, and our amendment would provide an opportunity for the implementation of its conclusions. Our amendment is a reasonable and practical response to concerns expressed about the CAG's access rights, and I urge the House to accept it in place of the Lords amendment.

David Davis (Conservative, Haltemprice and Howden)

The Minister started by saying that the Lords amendment involved drafting problems. I believe that this is the third form in which the two Houses have seen it.

Peter Brooke (Conservative, Cities of London and Westminster)

The fourth.

David Davis (Conservative, Haltemprice and Howden)

I am told that it is the fourth, but let me deal with the first three. The first version that the House saw was tabled in Committee and was intended to serve precisely the same purpose as this group of Lords amendments. Subsequently, similar amendments were tabled on Report. Then—this is what my hon. Friend the Member for West Dorset (Mr. Letwin) was referring to—a version was presented in the Moses Room debates. We now have the version that we are debating. Additionally, however, before the Bill was published, the Treasury was provided with a version of this group of Lords amendments, so that it could take the point on board. The Treasury has, however, made no attempt to do that. The Minister also made a point about the Bill's purpose. She made the same point in Committee. The point that I made to her then was that more than one third of the Bill—seven of 27 clauses—is about audit. The Bill repeals 15 or 16 out of 17 of the key clauses in the Exchequer and audit departments' legislation from 1866 to 1983. If the Bill were intended simply to enable resource accounting, all it would have to do is amend elements of the control and estimates procedures operated by the House. That could have been done in a three-clause Bill. As all of the Bill's audit content is unnecessary to resource accounting, I am a little suspicious about why it has been included. The Minister also mentioned the Sharman review. Like the right hon. Member for Swansea, West (Mr. Williams), who is one of my colleagues on the Public Accounts Committee, I am a member of the Sharman review. That review was not presented to either of us as an alternative to amendments to the Bill. If it had been, I do not think that either of us would have become a member of the review. The key reason for that is that the Sharman review cannot deliver the necessary statutory vehicle to entrench the House's rights. This Bill is about the House's rights. It is not about technical accounting matters or methods of measurement, but about the rights of this House. This group of Lords amendments is certainly about the rights of this House. The purpose of the Lords proposed amendment to clause 8 was quite straightforward. It provided: 8.—(1) For the purposes of an examination by the Comptroller and Auditor General— (a) he shall have a right of access at all reasonable times to any relevant documents, and (b) person who holds or has control of any of those documents shall give the Comptroller and Auditor General any assistance, information or explanation which he requires in relation to any of those documents— so far, so good. We were told about a right to roam. That right would apply to documents that are held or controlled by a government department or a relevant non-departmental public body, or (b) which are documents to which a government department or a relevant non-departmental public body has, or can obtain, access. That is the limitation—it is not an unfettered right to roam. The National Audit Office and the Comptroller and Auditor General cannot go to every paperclip supplier to the Government and ask to see the accounts or performance records. They will have to follow the access guidelines that the Government themselves follow. I shall deal with that matter at the end of my speech, when I address the issue of burden. As our consideration of the Bill will be examined in some detail in the other place, I should like to put on record the Comptroller and Auditor General's views on the issue. The Minister has represented the proposals as a Government concession. However, from the Comptroller and Auditor General's point of view, the order-making power that the Minister described is not only an unsuitable alternative, but a retrograde step. There are four reasons for that. First, the power provides the Treasury with the right to decide to which bodies the Comptroller and Auditor General can or cannot have access. The Public Accounts Committee—under my chairmanship, and under that of my predecessor—has consistently argued that the CAG's access should never be at the discretion of the Executive. Allowing such a discretion would negate the purpose of the CAG and the original purpose of the PAC. We should not forget that Ministers are accountable to Parliament; it is not the other way round. Secondly, the proposal does nothing to overcome the problem of the time-consuming negotiations that are currently necessary to secure access. The PAC has commented that such negotiations are administratively burdensome and diminish the CAG's independence in many ways. The Government amendments would make that worse and add additional hoops for the CAG to go through in negotiating access. In a moment, I shall give the House an example of how that process operates. Thirdly, the provision would also place the CAG's access powers in secondary legislation, rather than in primary legislation. Hon. Members know how easy it is for the Government to amend secondary legislation in a relatively unscrutinised manner. Such an arrangement would in itself be a bad thing. Finally, the effect of the order-making power is to add to the hotch-potch of arrangements referred to in the Committee's ninth report. It is not a global solution and will allow current anomalies to be handled only on a piecemeal basis. That is in contrast to the Lords amendments in this group, which establish the clear principle that the CAG should have equal access rights to the Government. Those are the views of the CAG. I have put them on the record because I think that they will be very important to considerations in the other place if, as we expect, the Government press their amendments in this group and the matter returns to the other place. The purpose of those Lords amendments, and of their House of Commons predecessors, was not to create anything new, but to reinstate Parliament's rights of oversight, which were established in the Exchequer and Audit Departments Act of 1866, 1921 and 1957. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), my predecessor on the PAC, is in the Chamber. I suspect that he will correct me if I am wrong in my suspicion that, had consideration of the National Audit Act 1983 not been foreshortened by the 1983 general election, the powers would have been dealt with and corrected in that legislation. There was certainly an intention to do so. Therefore, we are talking about reinstating Parliament's rights. To do that, we shall have to deal with the erosion of those powers that has occurred over many decades. I am not making a political point, as the erosion occurred under Governments of all persuasions, from the Wilson Government onwards. Indeed, it began with the creation of those very bodies that the Minister had such trouble defining—non-departmental public bodies. Subsequently, the erosion continued with companies wholly owned by the Government, with contractors and with other bodies outside the usual purview of the CAG. All those bodies were created to allow the Government to do their business more efficiently, and there is nothing wrong with that. The side effects, however, have suited Whitehall. I do not think that the erosion has necessarily suited Ministers, and I doubt that most Ministers, in whatever Government, have even thought about it. Over the years, the erosion has suited Whitehall and the Sir Humphreys. It is certainly more a sin of the Sir Humphreys than of Ministers. As I said, the Lords amendments in this group will not cause public money to be followed wherever it goes, and they do not provide a complete right to roam. The amendments are limited to the issue of governmental access. Therefore, both in the Lords and in this place, we have been trying to stop and reverse the process that started with the creation of companies and agencies and allowed them to escape oversight. The process is more important now than ever before. The Government themselves have said that they are proposing to use the private finance initiative to provide £75 billion worth of value. Therefore, the process affects a huge tranche of public expenditure. If we are to make those PFIs work, as both sides of the House wish, it is vital that Parliament maintains oversight. The set of modifications in the amendments would not necessarily allow that to happen. They would leave Parliament's ability to maintain oversight entirely at the discretion of the Government of the day. 8 pm We should not assume that the Treasury would permit these rights automatically. Time and again, even in the course of the Bill's passage through Parliament, the Treasury has argued that the Comptroller and Auditor General should not have access to private bodies. That happened in connection with housing associations, which now are known as registered social landlords. It will happen again in connection with the PFI companies that will deliver public services in coming years.

Oliver Letwin (Conservative, West Dorset)

Does my right hon. Friend agree that the Minister's argument about intrusion, which she said was not welcomed by the British Chambers of Commerce and other bodies, has force only if the Treasury intends not to apply the Government's amendment on a general scale?

David Davis (Conservative, Haltemprice and Howden)

I can see my hon. Friend's point, but to talk about intrusion, regulatory burdens and inspection overload is to misunderstand how the CAG and the National Audit Office work. It costs about £10 million a year to run the NAO. That is good value for money. The NAO is a minnow when compared with the regulatory arm of Government. Inspections by the CAG and the NAO probably amount to less than one tenth—perhaps only one hundredth—of 1 per cent. of the regulatory burden of any Government. Moreover, such inspections would be necessary only when a problem arose. As a result, the regulatory burden would be very well directed, as I shall show. In essence, my argument is that, where public money is paid out to achieve major public policy gains, Parliament always has the right to know what is happening. The House is a tax-raising legislature, and its first job is to raise the money. It also approves policies, so on both counts we need to know what is happening. That knowledge should not be at the behest of the Executive.

Bill Cash (Conservative, Stone)

Does the same argument not apply to the BBC? Although it does not raise money by way of taxation through this House, it does raise money through the licence. Should there not be a degree of public audit of the corporation's activities? I understand that there is no access to the BBC's accounts. Can my right hon. Friend confirm that? If true, is that not astonishing?

David Davis (Conservative, Haltemprice and Howden)

I agree with my hon. Friend. He reflects the views of the Select Committee on Culture, Media and Sport on the matter, and of the report compiled by the Gavyn Davies commission. It is one of my rules of thumb that organisations that protest most about audit almost certainly are those that need it the most. I suspect that that will be true of the BBC in the coming years. To prove that this is not a dry, theoretical matter, I shall give the House a topical example. Today, the NAO published a report entitled "Overseeing the Focus Housing Association". I remind the House that housing associations can only be accessed by the NAO after negotiation with the Housing Corporation. The report tells the story of a housing association that lost about £1.5 million of public money over four or more years at the beginning of the 1990s. The Housing Corporation was warned about the problem, but it largely ignored the warnings. The matter was raised by the hon. Member for Birmingham, Erdington (Mr. Corbett), after which the NAO approached the association and began a study. The fraud that was taking place involved bribes and the other apparatus of fraud. As soon as the NAO study was under way, the details of the fraud surfaced in an unavoidable manner, and the Serious Fraud Office became involved. Three of the people involved have now gone to jail. In September 1997, the SFO told the NAO that it could resume work on the study. For six months, the Housing Corporation resisted attempts by the NAO to gain access to Focus. In explanation, it tried to maintain that the NAO had not asked before. Then it said that the NAO should tell the corporation what it wanted, and that the corporation would approach Focus and copy any relevant documents to the NAO. When that tactic failed, the corporation suggested that the NAO should talk to the Department of the Environment, Transport and the Regions. After that, the corporation said that it would sound out the chief executive of Focus, and then asked about the exact nature of the files to be examined. Eventually, it said that the NAO could go to Focus as long as the corporation went as well. After six months, the NAO was allowed access to Focus, and today's report is the result. So for six months the Housing Corporation resisted the NAO which, as Parliament's auditor, looks into the misuse and misappropriation of public funds. All sorts of things can happen during such a long delay, and all sorts of things can disappear. The NAO report refers to at least one meeting that was not minuted and for which no documents exist. The Housing Corporation was irresponsible, but its behaviour is not unique. Similar incidents have taken place with regard to whistleblowers. For example, the NAO could not gain access to contractors to a technical college in the north of England. The same thing happened with contractors for what was then known as the Overseas Development Administration. For several years, because of Treasury obstruction, the NAO could not gain access to training and enterprise councils. Until the Secretary of State for Culture, Media and Sport agreed to amend a recent Bill, the NAO could not gain access to Camelot. That demonstrates why it is ridiculous in practical terms to propose that the House should be beholden to any arm of the Executive before it can examine closely what that arm has been up to. The proposal would be crippling: it would undermine the standing of the Comptroller and Auditor General and, as a result, the standing of the House. The proposal does not help democracy, and it does not even advance the Government's objective of getting value for money for their public policy aims. As a result, the amendment falls far short of what is needed, which is to reinstate the rights of the House as they applied half a century ago. Those same rights should apply today.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I begin by associating my party with what the right hon. Member for Haltemprice and Howden (Mr. Davis) said. He has spoken powerfully at all stages of the Bill's progress through Parliament and, in his role as Chairman of the Public Accounts Committee, he has spoken for the whole House. He made a compelling case. I have had many discussions with Liberal Democrat peers in the House of Lords. They have been persuaded that extending the institutional jurisdiction of the NAO is the right approach. They are convinced that this is a constitutional issue, involving the relationship between the legislature and the Executive. Interestingly, they also consider that, given that this is a financial matter, they need to listen to the House of Commons. After all, the House of Commons is supposed to be superior in financial matters. The Government would do well to heed those remarks. They should be aware that people from all parties—certainly from the Liberal Democrat party and, I believe, from the Conservative party in the other place—take this matter seriously and will continue their opposition when this place and the other place start playing ping-pong with the amendments. The Government should not be surprised at this. When we debated similar amendments in Committee, I warned them that they were getting into danger. I made particular reference to the fact that many Labour Members are extremely sympathetic to such a change. I warned the Government that it would be rather odd for the House of Commons to play ping-pong with the House of Lords over the issue when the majority of right hon. and hon. Members from all sides agreed with the proposals. I hope that the Government are leaving room for a gracious backdown in due course, although the amendments do not seem to suggest it. Such a back-down may be forced upon them. I do not believe that the Government really want to invoke the Parliament Acts to get their way. By that time, the broadsheet editors—perhaps even the tabloid editors—would be asking what the Government had to hide. Right hon. and hon. Members should realise the significance of the Lords amendments and of the Bill. It is very unusual for the House of Commons to debate these matters. That point was made time and again in Committee and on Report. The House of Commons does not often focus on Government accounts—we worked out that it happened about every 60 years. Therefore, this is a unique opportunity—we cannot wait another 60 years before putting this matter right. How many other non-departmental public bodies will have been dreamed up in the mean time, and how much more public money will not be open to scrutiny by the NAO? We have to move now. The Minister has said that the Sharman review is under way and that it will consider this. There is no guarantee that the Sharman review will result in any statutory proposals. The Government have not gone on record as saying that. Even if they did, how could we believe that?

David Davis (Conservative, Haltemprice and Howden)

I specifically asked the Chief Secretary whether there was a guarantee, or even a likelihood, of further legislation to carry forward any Sharman proposals, and the answer was no.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think that the whole House is grateful for that intervention, which emphasises the importance of what we are debating. If the House does not grasp the chance before it tonight, we will not get another one for many years. Accepting the Lords amendment would in no way jeopardise the role and significance of the Sharman review. In many ways, the review would be very timely, coming on the back of such an amendment. It could assist the NAO in discussions with the NDPBs involved, to work out how the NAO could usefully introduce the new powers. It could give guidance to the NDPBs about how the powers might be used. So the Sharman review would still play an important role in this regard and in many other aspects of the remit given to it by the Chief Secretary. In no way would accepting the amendment undermine the Sharman review—I believe that it would strengthen its relevance and purpose to those bodies which benefit from public money. 8.15 pm I do not want to leave this matter to a taskforce or review. This is a parliamentary matter which this place should decide. We should not be leaving it to reviews led by the great and the good, even though there is distinguished parliamentary representation on the Sharman review. [Interruption.] The right hon. Member for Haltemprice and Howden says from a sedentary position that Lord Sharman is a Liberal Democrat peer. When the right hon. Gentleman was talking about other Members of this House on the review, I am sure it was just an oversight that he forgot to mention my hon. Friend the Member for Newbury (Mr. Rendel), who will, I am sure, give the review distinguished service. However, that is not the point. This House, not reviews, should be deciding these issues of parliamentary scrutiny. The Sharman review will have many other wider issues of public audit to consider. I do not want to rehash the arguments that have already been made at some length, but the Treasury sometimes seems inconsistent in its attitude to fraud. We hear the Government announcing that they want to clamp down on fraud—to be tough on benefit cheats and those who exploit tax loopholes. The Government have accepted Lord Grabiner's report; we have seen amendments giving the tax authorities huge additional powers to tackle the fraudsters. However, when Parliament is asking the Government to give the NAO—Parliament's watchdog—powers to investigate public fraud, the Government seem to be stepping back. They want to be tough on tax and benefit cheats, but they are not so keen to clamp down on Government cheating. What sort of message does that send out? The Government's position is absurd as well as inconsistent. They should not, and will not, be taken seriously on fraud if they step back from this. They will have a real difficulty in winning the issue, and when it appears in the newspaper editorials, they will not stand a chance. They certainly do not deserve to.

Alan Williams (Labour, Swansea West)

I will be brief and, I hope, not too repetitive. It is rather amusing for those of us who served on the Committee considering the Bill to think back to our early sittings, right at the beginning of the parliamentary Session, when we were suggesting amendments. We were told by the Economic Secretary and her colleagues that we must not amend the Bill because the Government needed it in a hurry. However, once it left the House of Commons, they seemed to mislay it in the House of Lords. Recently, it resurfaced, and the Bill that was so urgent that it could not be amended is being brought before the House in the week before the summer recess. This is typical of the rather inadequate reasons that the Government have given for not accepting sensible amendments to the Bill. We have heard those reasons repeated tonight I do not know how often. I despair of the ability of some Ministers to understand anything outside their brief. It is perfectly obvious to most people that the purpose of the Bill is as defined in the long title. Yet the mantra has been repeated again today, "It is not in the purpose of the Bill." I am surprised that you did not descend on the Minister from a great height when she said that, Mr. Deputy Speaker, because she was taking over from you the power to decide what is permissible in the House of Commons. Perhaps she is after Madam Speaker's job—I had not thought of that before. Despite what you may say, Mr. Deputy Speaker, the Minister says that we cannot do it. It does not matter what you say, Mr. Deputy Speaker—the Minister has spoken. The Minister's complaint is that we are dealing with audit. But as my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) asked, who brought audit into the Bill, who incorporated it into the long title and who incorporated it into clause after clause but the Government? The arguments that have been made on certain aspects of the Bill are, to my mind, fraudulent. Now, there is Sharman. Like the right hon. Member for Haltemprice and Howden (Mr. Davis), I am participating in the review—although with no great hope or expectation—simply because we cannot afford to be accused of not participating. However, I do not believe that anyone outside this House should have the right to determine what powers it needs. It is effrontery for the Executive to tell Parliament that we should not have the right to inspect them. For those who are being monitored to say what can be monitored would be mildly comical if we saw it in a Whitehall farce—yet that is what is being proposed. If the Minister wants to establish confidence in the Sharman exercise, will she undertake that, as it will be a House of Commons matter, it will be decided, like other such matters, on a free vote of the House? I have no doubt that, in the spirit of good will that she professes, she will be eager to give us that reassurance. If she would like to do so in an intervention, it would shorten my speech because I would sit down immediately. She should not feel inhibited or restrained. I ask her to save the House from the rest of my speech by giving us that assurance. The Minister's silence reinforces my worst suspicions and fears, although I am sure that, ultimately, they will be unjustified. However, I am twitching slightly about the Government's intentions. At the heart of the matter—and we must constantly return to it—is whether we have a parliamentary democracy and parliamentary accountability. Access is fundamental to that—on all Government expenditure and income. If Parliament does not have that access, it cannot exercise proper control over the Executive. Parliament cannot carry out those duties without the work of the NAO—as the present Chairman of the PAC, its previous Chairman. my right hon. Friend the Member for Ashton-under-Lyne and other members of the Committee confirm. However, the Treasury denies the NAO the rights that it needs. Those rights will be determined by the Treasury. My right hon. Friend and I suggested to Ministers that, as a halfway house solution, such matters could be dealt with on an ad hoc basis in the short term. As the Minister is aware, I listen carefully to everything that she says. The Treasury now tells us that we must proceed case by case, but in Committee the Minister dismissed that idea. She said that we could not deal with such matters piecemeal. However, she covered her back by saying that we could not deal with them as a whole either. That left us somewhat bemused as to whether we would find a resolution in that impasse. Such negotiation for access is inadequate for us—for Parliament; we have to go begging to a pathetic little quango that represents no one. For six months, someone's appointee had the right to hold our auditor to account. I would have sacked the chairman and the chief executive of the Housing Corporation. They kept the NAO away from the Focus housing association. They knew that a £1.5 million fraud had been perpetrated against Focus, yet they would not let the parliamentary watchdog in.

Bill Cash (Conservative, Stone)

The right hon. Gentleman makes a powerful case, as indeed did the Chairman of the PAC, my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). The matter is the essence of parliamentary democracy and parliamentary accountability. Does the right hon. Gentleman agree that, if the Treasury is obdurate and stubborn, the remedy is to mount an organised campaign on both sides of the House? Against the Whip, the House should decide that it will insist on those measures. There should be sufficient publicity that the newspapers can add their comments.

Alan Williams (Labour, Swansea West)

The hon. Gentleman has been a Member of the House for a considerable time. My right hon. Friend the Member for Ashton-under-Lyne and I have been Members for even longer. It is a long time since I believed that Back Benchers were likely to stage an uprising against the power of the Whips. That happens on few occasions. The patronage and power of the Whips is so great that Back Benchers live in dread of them.

David Davis (Conservative, Haltemprice and Howden)

I intervene again on the right hon. Gentleman—I am tempted to refer to him as my right hon. Friend—to prevent him from travelling further into error. Before the previous intervention, he mentioned the prospect of sacking the chairman of the Housing Corporation. He could not, of course, have sacked the permanent secretary at the then Department of the Environment—Mr. Andrew Turnbull, who is now a permanent secretary at the Treasury.

Alan Williams (Labour, Swansea West)

We all know of the right hon. Gentleman's devotion to the cause of the PAC. I will not venture further on the point because we should not comment on civil servants who cannot speak in this place. There is so much nonsense behind the defences that have been made. I do not know whether Lord McIntosh of Haringey, the Minister who replied to the debate in the House of Lords, was badly briefed or whether he does not understand this place. He has never been a Member of this place, so he may not understand the processes of democratic accountability. He said: The C&AG has inspection rights in respect of all non-departmental public bodies…the access needed to investigate and to report to Parliament on irregularity or impropriety…Most importantly— this point was touched on by the Chairman of the PAC— he has the right to carry out value-for-money studies at all of these bodies…the most important form of parliamentary control.—[Official Report, House of Lords, 12 July 2000; Vol. 615, c. 240-41.] I have never heard such a constitutional absurdity. It must have been in my noble Friend's brief because he could not have been daft enough to think it up himself. As he pointed out in another part of his speech, there are more than 200 executive NDPBs and they are only a third of all NDPBs. The NAO produces 50 reports a year. Does anyone seriously suggest that the most important control by Parliament is a value-for-money study? The NAO deals with individual aspects of the actions of individual organisations. If the NAO does not have the fundamental right of access where required, we neuter its role. I do not want to delay hon. Members, because I realise that we shall not receive a reasonable response to our arguments. I merely want to record that this is far more than a debate about auditing, it is about the power of Parliament against the Executive. In this Bill, the Executive are winning.

Peter Brooke (Conservative, Cities of London and Westminster)

I shall be extremely brief in this, my first contribution to the entire proceedings on the Bill. My only qualification for making a contribution at this late stage is that I hold a masters degree in business administration. During Parliament's 735 years, only two MBAs have sat in a Cabinet. After the speech of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), I am confident—as I have been before, but it is confirmed this evening—that he will unquestionably be the third. This debate is part of a great roll of parliamentary history, a fact that has been alluded to by several speakers in the debate. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) referred to the National Audit Act 1983, and that falls into the roll-call of legislation from 1866, 1921 and 1957. Another event occurred in 1983. It was on the Monday of holy week when the then Prime Minister dined out the then permanent secretary to the Treasury and asked him over dinner whether he had any regrets. He said, "Prime Minister, if you had not asked me, I would not have dreamed of referring to any regret at all. But I do have a single regret. In all my time in the Treasury, the Board of the Treasury has never met." The Prime Minister asked for further information and learned that the board's own roll-call had been in 1677, 1827, 1856 and 1919. By the end of the meal she said, "I agree that the Board of the Treasury has not met since 1919, but it will meet before you cease to be permanent secretary." Before the election, on Maundy Thursday of holy week in 1983, the board met. This is a great event. The fact that only 20 of us have gathered in the Chamber to take part in this debate makes the point, in a sense. If this were a lesser event in this great Parliament's history, no doubt the place would be crowded. There are only a limited number of people who take the closest possible interest in this issue, and I shall not go over all the points that my right hon. Friend the Member for Haltemprice and Howden made so admirably. Those who were not in the Chamber when he made them missed a considerable parliamentary contribution. I listened closely to the Economic Secretary defending the Government's position on the ground that it was fundamentally founded on the Sharman review, and I heard my right hon. Friend say that if he had believed that the review was going to be used in that way, he would not have been prepared to serve on it. It is an absolute Exocet to the Government's position if the Chairman of the Public Accounts Committee was put on the review body under what must be regarded as a slightly false premise. My judgment is that of a visitor to the debate who has taken part only at its end. The London business school has been in existence for 36 years, and it is regarded as the best business school in the world outside the United States; many American business schools go back 100 years. At all stages of the Bill's proceedings, it has been worth making the case for the London business school to examine this issue. It is a classic instance showing where the role of Government should be played out in terms of the relationship between the Executive and Parliament. Many in the House will have listened to people reading out football results, and there is a particular tone of voice in which a result is read out, to suggest in advance that it was a draw. On the basis of what I have heard this evening, it is Haltemprice and Howden 4, Welwyn Hatfield 0. I appreciate that there will be a return match, but at the moment the Government are a long way behind.

Robert Sheldon (Labour, Ashton-under-Lyne)

As always, I was much entertained by the right hon. Member for Cities of London and Westminster (Mr. Brooke). He is right to draw attention to the House's original intention to have some control over the expenditure of public money. The right to audit Government effectively was supposed to have been settled a long time ago—back in 1861 when Gladstone set up the Public Accounts Committee. The Exchequer" and Audit Departments Act 1866, which established the Comptroller and Auditor General, followed on from that. The purpose of that legislation was to audit, through the CAG, all the money examined by the Parliament. The long title of the 1886 Act noted that its purpose was to regulate the Receipt, Custody and Issue of Public Moneys and to provide for the audit thereof. There were no exceptions to that; it covered the lot. As my great friend John Garrett has shown in his great work, over the years the Treasury hijacked the rights of the House of Commons. Therefore the return match, as the right hon. Gentleman called it, was brought back into focus, and the result was the National Audit Act 1983. That was essential, to re-establish control by the House. Access by the CAG should be the result of a right, and should not involve permission. He should not have to seek the permission of the people whom he is auditing; he should have an unqualified right of access—and I should not have to ask for that. In 1983, the argument for the need to follow public money wherever it went was put strongly. However, I understand the anxieties expressed by some people at that time, because the National Audit Office was untried and did not have a record of achievement; it had only just been set up. However, it now has 17 years' experience, and we have seen its work and that of the CAG. The NAO constantly produces splendid reports, and 50 value-for-money reports have been published, so its reputation has never been higher. Given that fact, one might have expected the Treasury to be a little more relaxed about such matters and accept the next stage in the process, which would have been to re-establish what had been decided 140 years ago. It is sad that the Treasury reacted in such a fashion. The opportunity to consider this issue is not likely to recur for another 20 or 30 years, or even more—it is only because of the Bill that we have had the opportunity to consider it now. This is the only chance that we have to resolve the problem. I am sure that the Sharman review is splendid and will provide a fair amount of information, but it will not make the decisions. Only the House can make such decisions, and I think that we have missed a great opportunity.

David Rendel (Liberal Democrat, Newbury)

We are debating an unusual issue. I begin where the right hon. Member for Swansea, West (Mr. Williams) left off when, in a powerful speech, he made the point that this is a matter between Parliament and the Executive. It is not the normal type of party political issue that we spend so much time debating in the House, usually fairly uselessly. Parliament is on one side and the Executive are on the other. That is so much so, that before we came into the Chamber, I thought that we might find a string of those whose names have been loosely or closely associated with the forthcoming vacancy for Speaker speaking on behalf of Parliament, so as to demonstrate the strength of their feelings about the need for Parliament to control the Executive. I was therefore somewhat surprised to hear the right hon. Member for Cities of London and Westminster (Mr. Brooke) speak. I thought that it might be a comeback attempt on his behalf, but perhaps that is not the case.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

I am afraid that some of us made the mistake of coming in to listen to the debate. Of course that is always a problem in the House of Commons, because some of us are frequently persuaded that we might have to protect Parliament, even if we do so silently.

David Rendel (Liberal Democrat, Newbury)

I am delighted to hear what is perhaps a hint of what we may see in the Division Lobby shortly. I am the third member of the Public Accounts Committee to speak in the debate, and this is one of the rare issues on which there is, at least in the Committee, complete cross-party agreement on what should be done. I hope that Parliament will pay attention to the fact that the Public Accounts Committee is united and determined on this issue. After all, those of us who are members of the PAC are the watchdogs of Parliament's rights over the Executive. I hope that hon. Members who are not members of the PAC will pay attention to the fact that there are such strong feelings about the issue, which are an important pointer to their best interests, as well as ours. It is extraordinary that the Government are taking the line that they have taken—not least because to quite a large extent they seem to understand the importance of giving the National Audit Office the right of access to areas to which it might not previously have had access. That point has been made before, but the Government deserve to have it made again. The previous Government set up many non-departmental public bodies without giving the NAO proper access. On the whole, the present Government have behaved very properly and provided the NAO with access when a new NDPB is set up. It is therefore a particular surprise that the Government are taking the line that they appear to be taking tonight. A point that has been made already, but which needs to be emphasised, is the fact that it is important for the Government themselves that the NAO should be in a position to look into all Government accounts. There is nothing worse for a Government than discovering a long way down the track how poorly their money has been spent. First, the later they discover that the more embarrassing it is for them, and secondly, by that time that much more money—which the Executive could have spent on a vote-catching idea that might have brought them greater popularity—has been wasted. It must therefore be in the Government's best interests not to take a short-term view, but to consider the longer-term interests that would be served by giving the NAO full access to all accounts. Finally, I wish to make a point about the Economic Secretary's arguments. She seemed to think that the NAO was in danger of acting in grossly irresponsible way and, if given the sort of powers that we are discussing, suddenly wishing to pry into every individual's financial affairs. She seemed to think that it might act as it has not acted so far, just for the hell of it, or just because it was interested in Mr. Bloggs' personal finances. Frankly, I do not think that the NAO has ever acted in that way, and the Economic Secretary's idea that it would act in an overburden some way towards small business means that she apparently thinks that if it were given such powers, its future behaviour would be totally unlike its behaviour in the past. She should not have made that assumption, because it is not realistic, and I hope that she will withdraw it when she winds up.

Bill Cash (Conservative, Stone)

There is no need for me to make a long speech at this stage. The arguments have been presented well by some speakers who are extremely distinguished in this House. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), a former chairman of the PAC, is in alliance with my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), its current chairman, and other PAC members have weighed in as well. As a member of the House's other main Scrutiny Committee—the Select Committee on European Scrutiny—I am conscious of the fact that it is essential that Scrutiny Committees are listened to. If the juggernaut of Government can steamroller over the views of Scrutiny Committees—which is, in effect, what is happening today—one is bound to ask what on earth is going on. I do not need to go into the intricacies of the argument that has already been deployed. I think I am right in saying that the right hon. Member for Swansea, West (Mr. Williams) is the Chairman of the Select Committee on Liaison—[Interruption.] Apparently, he is not. None the less, the Liaison Committee recently produced an important report on the Whips' power, and on whether they should have their present degree of control over Committees.

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. We have an amendment before us. We must address our remarks to it and not go so wide as to discuss other Committees and the powers of the Whips.

Bill Cash (Conservative, Stone)

I accept your guidance with pleasure, Mr. Deputy Speaker. In a nutshell, the matter before us raises a question that is at the heart of our democratic system and the system of accountability. It is easy for people to make grandiose statements and then, somehow or other, for their remarks to float on the wind. The reality is that this matter raises such questions, and it is inconceivable that the amendment should not be accepted. I wait with interest to see how the Economic Secretary will handle herself, because, quite frankly, she is on the rack.

Howard Flight (Conservative, Arundel and South Downs)

I just want to make the point that the Bill sets up Partnerships UK, with the intention of expanding considerably the private finance initiative activities in public-private partnerships. I hope that those partnerships are successful, as they are frequently the most efficient way of delivering to the public services that are now the duty of the Government. If, over the next decade, many areas of public service are to be handled on a mixed public-private basis, it is fundamental that Parliament have the power to follow by audit the money involved. It is a new, changed territory, to which, as matters currently stand, access for audit is strictly limited. Our debate on Lords amendments does not touch on the PFI part of the Bill. However, if the Bill is passed without the National Audit Office having the ability to prod and examine in great depth what happens in public-private partnerships, Parliament will have surrendered a crucially important power.

Oliver Letwin (Conservative, West Dorset)

Our debate comes at the end of a long sequence of debates on this subject. On an earlier occasion, I was teased rather amiably by the right hon. Member for Swansea, West (Mr. Williams) for having contributed at too great a length to a previous debate. However, it is inconceivable that we can make the accusation that tonight's debate is too wordy—at least until I begin. We heard powerful contributions from my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the right hon. Members for Swansea, West and for Ashton-under-Lyne (Mr. Sheldon) and the hon. Member for Newbury (Mr. Rendel)—perhaps the four most notable members, past and present, of the Public Accounts Committee who are still Members of the House. We heard also from my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke), whose absence from our proceedings we regret. We would have liked to have heard from him endlessly on this subject. We even called forth from the depths my hon. Friend the Member for Stone (Mr. Cash), who felt compelled to come to the House, and we had a silent contribution from the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), whom some of us hope to see in another position on another occasion. We find that there is cross-party agreement. Why is all this happening? The Economic Secretary eloquently read out yet another of the splendidly mellifluous briefs that she has been given throughout the proceedings. Why, following that, do we hear a universal chorus echoing the word "no" around the Chamber? It is because, I regret to say, the mellifluous prose read out by the Economic Secretary lacks logic, as it has on previous occasions. It also, alas, contradicts the tradition and spirit of our parliamentary democracy. Those two lacunae give rise to frustration in the House. I shall take head on three arguments at the centre of the Economic Secretary's rhetoric. The first relates to drafting. As other contributors have said, that argument is the last refuge of the Sir Humphrey figure in Whitehall. It is being made after months of investigation in which repeated amendments and offers of redrafting of amendments have been put forward. The hon. Member for Kingston and Surbiton (Mr. Davey), the right hon. Member for Swansea, West and I—and, for all I know, my right hon. Friend the Member for Haltemprice and Howden—have produced four, if not five, variants of these amendments. In addition, the House of Lords has made its own amendments. At each of those stages the combined might of the intellects in the Treasury, including the Treasury Solicitor, and of parliamentary draftsmen could, surely to goodness, have been brought to bear on the deficiencies about which the Economic Secretary waxed lyrical. This is not a drafting problem. Drafting is the not particularly adequate shield behind which the Economic Secretary seeks to hide from the slings and arrows of argument. The Economic Secretary's major argument concerns intrusion. Ministers have been making this argument from the beginning of the debate. I understand the essence of the argument and it is not without merit, until one pursues it to its conclusion. Ministers argue that it would be horribly intrusive for the private sector to have the NAO coming down on it because that would be an unpremeditated additional audit and a huge regulatory burden. The hon. Member for Newbury and my right hon. Friend the Member for Haltemprice and Howden pointed out that it is unlikely that a body as small as the NAO could be highly intrusive in auditing the many thousands of recipients of public funds the length and breadth of Britain. My right hon. Friend also pointed out that at an early stage he and his colleagues on the PAC conceded the principle that the access should reach only as far as the Government themselves seek to reach. I, personally, regret that concession because it may restrict the scope of the NAO's activities. I do not know whether this point has penetrated the ministerial or official mind, and it has never been reflected in any statement that Ministers have made to the House, but this is a killer concession for their argument. It cannot be held by the Government that the Government are too intrusive, because the Government could do something about that; they could restrict their own access. Nor can the Government logically argue that if they have a right and, I suppose, therefore, a duty to inspect the accounts of various bodies, Parliament should not be concerned with them. That is to suggest that the scope of Parliament is intrinsically inferior to, and more reduced than that of the Government, and even in the wildest imaginings of the Leader of the House the Government could not conceivably espouse that constitutional doctrine. The intrusion argument is another shield behind which Ministers seek to hide from the slings and arrows of the House. I turn now to the real point, which is that the Treasury wants to keep the initiative. It wants to continue to be able to decide where the PAC, the NAO and the Comptroller and Auditor General will have access and where they will not. It wants to take advice from Lord Sharman and other quarters, but in the end it wants to decide access. The Executive want to decide which parts of the Executive are open to inspection and which are not. That is the purpose of the Government's amendment in lieu, and it has been their signal purpose throughout these debates. It is not right for the Executive to decide how far the Executive should be open to inspection any more than it would be right for any of us to decide how far we should be open to inspection by the courts or the police. These matters have to be decided by law, and not by administrative Acts of the Treasury. That is a point on which every speaker in the debate is unified, bar the Economic Secretary. I make that point specifically to put it on record for their lordships, to affirm their decision, which I hope they will make in a few days, to send this amendment back to this House. I hope that they will send it back again and again, if necessary, until at last the Government concede the point, or see fit to use the Parliament Acts to defeat Parliament—an irony that will not escape the media or the nation—or the Lords triumph. I hope that we will find that the Lords, ironically, defend Parliament against the Executive.

Bill Cash (Conservative, Stone)

Is my hon. Friend inclined to adopt the view that I expressed in a previous intervention? It is indeed incongruous that we should need to use the appointed Lords to achieve an important principle, namely, the preservation of accountability and democracy. Therefore, in the light of the clear cross-party consensus expressed by extremely distinguished members of the Public Accounts Committee, should not Government Backbenchers be encouraged to defy the whip?

Oliver Letwin (Conservative, West Dorset)

New as I am to Parliament, I share the scepticism that has been expressed by the right hon. Member for Swansea, West. It is a sad state of affairs that, in such an important matter, because of the power of the Whips, the House of Commons has to rely on another body—one that is not so subject to the Executive—to defend its privileges. Does that not prove that we need to be extremely cautious about allowing the Executive to exercise the very powers that they seek to re-obtain through their amendment in lieu?

Melanie Johnson (Labour, Welwyn Hatfield)

I shall start with a couple of general points, the first of which is that I do not seek to reduce the powers of Parliament in any way. In respect of the issues raised in the debate, especially by the right hon. Member for Haltemprice and Howden (Mr. Davis), my desire and that of the Government is to ensure that the right sort of accountability, probity and financial properness is found in the affairs of Government, and that the Public Accounts Committee is able to carry out its job with the full support of the National Audit Office. Many of the hon. Members who have contributed to the debate have emphasised some difference between the Government and the House, but it is important to note that, as often happens, only those who disagree with the Government have spoken. They are entirely within their rights to make their points—

Peter Brooke (Conservative, Cities of London and Westminster)

Will the Economic Secretary give way?

Melanie Johnson (Labour, Welwyn Hatfield)

I am trying to develop a general argument, but I shall give way on this occasion.

Peter Brooke (Conservative, Cities of London and Westminster)

Does the hon. Lady agree that it is a noticeable feature of the debate that nobody other than herself has spoken for the Government's point of view?

Melanie Johnson (Labour, Welwyn Hatfield)

I am sure that I do not have to tell the right hon. Gentleman that the picture painted this evening is not an unusual one: it is often those who want to disagree with the Government who come to the Chamber to express their views, whereas those who agree are silent. The debate has run together three main issues to an extent that the resulting elision is unacceptable. The first issue is access for audit purposes by the Comptroller and Auditor General, which provided the focus of debates during previous stages of the Bill's passage. I draw the attention of the right hon. Member for Haltemprice and Howden to his description of the problems arising from the Bill. Without dwelling on the difficulties that he explored at some length on 1 March on Report, I simply point out that he repeatedly mentioned the CAG's access rights. That was much of the focus of his comments. That issue is different from some of the others that have been raised. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) raised the question of value-for-money audit, which is different. Indeed, I made that point—although not in any way to usurp the rights of the Speaker. The Speaker and Deputy Speakers will always decide, quite rightly, which matters a Bill covers. Issues on access for value-for-money studies were discussed fully during the passage of the National Audit Act 1983, but have not been the subject of debates on this Bill. In fact, it has been agreed until now that the issues surrounding clause 8 concern access needed for audit of departmental accounts alone. Issues concerning access for value-for-money studies will be considered by Lord Sharman during the review. I turn to the points made about inadequate drafting. The scepticism of the hon. Member for West Dorset (Mr. Letwin) about whether something could easily be done was unhelpful. Several attempts—unsuccessful ones—have been made to draft an amendment to define a non-departmental public body, which illustrates just how difficult it is, as I said. NDPBs form a wide and disparate group. The most sensible way in which to deal with the issue would therefore be to designate them by order, as proposed in the Government's amendments to the Lords amendments.

Oliver Letwin (Conservative, West Dorset)

Although I appreciate the Economic Secretary giving way and the delicious irony of her idea that designating by order is justified by the difficulty of defining it in statute, which could have a far wider application, did she allow parliamentary draftsmen and the Government's legal advisers to assist those seeking to achieve this end to improve the drafting of their amendments at any stage during the passage of the Bill?

Melanie Johnson (Labour, Welwyn Hatfield)

I am not aware of the contact between parliamentary draftsmen and any Opposition Member, although such contact does not normally go on. I am not aware of any approaches to the Treasury seeking direct engagement on the point, but I reiterate that the task is and has been difficult, and no one has proposed a workable definition. That is the point at issue.

David Heath (Liberal Democrat, Somerton and Frome)

Will the hon. Lady give way?

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman has only just arrived and has not been present during the debate to make any point or hear any of it. Therefore, I shall give way to other hon. Members, but shall develop my argument a little before I do so. There are three issues. One is access for audit purposes. Secondly and separately, there is value for money. There is a third point about investigation of fraud, which is also entirely different and separate and not directly bound up with the question of access for audit purposes. The matters have been run together in many speeches, which has not helped the clarity of this evening's debate. The Government of course have a role as a regulator and investigator, but, properly, we do not want to give the NAO an automatic right to similar access, thereby duplicating regulation and investigation. There must be a mechanism to achieve balance, as the Government amendment seeks to do. On the relationship between business and regulation, I refer to an article in Accountancy Age on 27 January this year, which was headed: Business backlash over plans to give NAO powers of access. The article states: Business has reacted with deep reservation at proposals to allow the NAO to audit firms and companies handling the working families tax credit. The issue involves red tape and balance. The hon. Member for Newbury (Mr. Rendel) said that in the past, that had caused no difficulty. However, suspicion and concern exist about what might happen if the power to make decisions were given without constraint. In the same way, there may be concern about what access the NAO may have and what it may do in future. At present, the NAO has access to the private sector by agreement. That makes it possible to ensure that the NAO achieves a balance between its access demands and the need to keep burdens to the minimum necessary. The Lords amendment would remove the need for the NAO to agree and thus to balance its demands against the legitimate concerns of business.

Oliver Letwin (Conservative, West Dorset)

I am doubly grateful to the Economic Secretary for giving way. Will she tell us whether the argument applies generally? If the Government were hypothetically to conduct their entire activities through NDPBs and the private sector in PPPs, would she argue that the Comptroller and Auditor General should have access to nothing?

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman forgets, and I was disappointed that in their contributions other hon. Members did not mention, that we have given much wider access than existed before, through the changes that we have made, not only by dealing with issues such as Camelot, which was not dealt with by the previous Government, but in clause 8(2)(b), which was added to the Bill on Report—[Interruption.]

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. There are so many conversations going on in the Chamber that it is unfair to the hon. Lady who is replying to the debate.

Melanie Johnson (Labour, Welwyn Hatfield)

Thank you, Mr. Deputy Speaker. Clause 8(2)(b) provides the Comptroller and Auditor General with a new statutory right of access in the cases covered by the clause. In some ways that access goes beyond the Government's right of access. That answers the hon. Member for West Dorset, who asked why the Comptroller and Auditor General should not have access, if the Government have access. I have given an example in which the CAG's right of access goes beyond that of Government Departments, a point that is not generally recognised.

David Rendel (Liberal Democrat, Newbury)

I am grateful to the hon. Lady for giving way. She mentioned an argument that I made a few moments ago, and claimed that there would be some concern, presumably on the part of business, if the Comptroller and Auditor General were given the increased powers that the amendment seeks. Is she saying that she would be worried that those powers might be abused, or is she saying that businesses may be worried, but that in practice that worry would be unnecessary because, in her view, the Auditor General would not abuse those powers?

Melanie Johnson (Labour, Welwyn Hatfield)

I wish I had a crystal ball. I am sure that all right hon. and hon. Members would agree that a crystal ball would be very handy. I do not have one, nor does anyone else in the Chamber. Therefore none of us can say for certain how an unfettered power could be used by a future body. I am not saying that the power would be used in the way suggested, or that it would necessarily cause difficulties, but none of us can say how it would be used. Clause 23 provides the same access to the Comptroller and Auditor General's audits of the accounts of non-departmental public bodies as clause 8 provides for his audit of departmental accounts. Clause 23 therefore provides a new power for him to be made auditor of those non-departmental public bodies, which he is prevented from auditing by current statute. That was done to tackle the many points that hon. Members made in their discussions on access. It is relevant to the debates that we have held over a long period about making right of access easier. The right hon. Member for Haltemprice and Howden mentioned today's National Audit Office report on Focus housing association. His comments go to the heart of the third aspect that I want to consider: the investigation of fraud. The Comptroller and Auditor General will not normally be the identifier because the external auditor of accounts would not be the usual, prime means of identifying fraud, which is primarily identified—

David Davis (Conservative, Haltemprice and Howden)

rose—

Melanie Johnson (Labour, Welwyn Hatfield)

I shall finish my sentence before giving way to the right hon. Gentleman. Fraud is primarily identified by internal audit, whistleblowing, police serious fraud office activity as well as ordinary management controls, regulation and regulators' activities. All those matters are not the responsibility of the Comptroller and Auditor General.

David Davis (Conservative, Haltemprice and Howden)

Many of the Economic Secretary's comments have been wrong. However, her current remarks are the most outrageous. First, the Government's whistleblowers' measure names the Comptroller and Auditor General as an appropriate recipient of whistleblowers' information. Secondly, she is currently considering a case in which the information came from a whistleblower and the regulatory body failed to follow it up. Thirdly, she should read some National Audit Office reports. Fraud has featured in at least three in the past year. I refer her specifically to the report on further education colleges and the weaknesses of the external and internal auditors.

Melanie Johnson (Labour, Welwyn Hatfield)

It is for all internal and external auditors to identify fraud. I agree with the right hon. Gentleman's comments about the failure of the regulator; I was about to make the same point. It is the reason for the conclusions to today's National Audit Office report, which states that regulators should be concerned not only with the existence of internal controls in the bodies that they regulate, but with their continued operation. The report condemns the Housing Corporation for the laxity of its regulatory grip. That is right and proper. However, it is not the Comptroller and Auditor General's role to be the regulator. The regulator is the Housing Corporation. It has apparently done its job badly. That is a valid point, but it does not relate to the extension of the powers of the Comptroller and Auditor General.

Alan Williams (Labour, Swansea West)

Does my hon. Friend acknowledge that when the regulator, as she calls it—in this case, the Housing Corporation—fails to do its duty, it is absurd that the auditor for this House has to ask permission of that regulator before, as the report states, it has the right to examine "impropriety or irregularity"? It must negotiate with the failed regulator to do the regulator's job.

Melanie Johnson (Labour, Welwyn Hatfield)

I do not believe that my right hon. Friend made an accurate summary of what happened. As I understand it, the relevant fraud took place between 1991 and 1995. The NAO undertook an initial study in the autumn of 1996 on the basis of documents held by the Housing Corporation. It did not identify the fraud because, as the right hon. Member for Haltemprice and Howden said, it had already been identified. The NAO undertook the study in autumn 1996 on the basis of documents held by the Housing Corporation, which regulates the housing associations, and had taken action against Focus. At no point in the initial study did the NAO request access directly to Focus housing association. Indeed, it specifically stated that it would not seek such access. The NAO only requested access to Focus in September 1997, and access was agreed by February 1998. In a sense, not too much should hang on a particular example, and that is but one example, and the point is that it is about the identification of fraud, not about the prime role of the Comptroller and Auditor General—[Interruption.]

Michael Martin (Deputy Speaker, Glasgow Springburn)

Once again, there are too many conversations in the Chamber. That is unfair; the Economic Secretary is responding to the debate and she should be heard.

Melanie Johnson (Labour, Welwyn Hatfield)

Thank you, Mr. Deputy Speaker. The CAG's prime role is not to seek out and identify fraud, even where the CAG carries out the audit. For example, there was extensive fraud in the Metropolitan police and the CAG was the auditor, but the fraud was not identified as a result of that activity. In no way do I criticise the NAO or the CAG for that failure because the prime role of external auditors is not to identify fraud. As have I said, such matters are dealt with in many ways. In that case, one of the prime roles, which has clearly failed, is that of the regulator. That involves a different set of issues from those before this evening. To summarise—[Interruption.] The right hon. and hon. Gentlemen who have just cheered clearly did not hear their hon. Friends argue that the primacy of Parliament over the Executive is at stake. Clearly, they are in a great hurry to reach a conclusion. We have done much to meet the future needs of access required by the CAG. The Sharman review will provide a further opportunity fully to consider such matters. It must be remembered that the order-making power will be exercised only after consulting the CAG and that it will be subject to the affirmative procedure in both Houses of Parliament. The order-making power that we propose represents a pragmatic response to extending the CAG's rights in the knowledge of the setting up of the Sharman review. For the reasons that I have given, the issues that have been raised about value for money are new to the Bill's consideration, which has been extensive and taken place on many evenings in Committee and in another place as well as in the Chamber. The question of fraud is outwith that consideration. We are keen that fraud should be tackled and dealt with. No Government could have any other interest than ensuring that fraud is reduced to an absolute minimum and discovered as quickly as possible, but that is not the issue here. Business must find the power workable; the CAG must be given appropriate access; and the Sharman review must have an input into what the House does in future under the order-making power that we propose.

Nigel Waterson (Conservative, Eastbourne)

On a point of order, Mr. Deputy Speaker. As you may be aware, the Government were heavily defeated yet again in the Lords this evening on section 28. Has a Minister requested permission to make an urgent statement to the House this evening, as would be entirely right and proper, on whether the Government intend to abandon this ill-thought-out provision so that the rest of the Bill can have a fair passage?

Michael Martin (Deputy Speaker, Glasgow Springburn)

That has nothing to do with the Chair.

OBTAINING INFORMATION

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That this House agrees with the Lords in the said amendment.

Melanie Johnson (Labour, Welwyn Hatfield)

The amendments all relate to provisions regarding the devolved Administrations. Lords amendments Nos. 11, 12, 13, 18, 23 and 26 all relate to the Welsh Assembly. Nos. 11, 12 and 18 introduce requirements for consultation in areas where the Assembly has an interest. No. 13 will allow the Assembly to amend the Government of Wales Act 1998 to introduce resource budgeting. Nos. 23 and 26 amend the Act to bring its accounting provisions in line with the provisions of the Bill. In particular, the amendments will enable the Assembly to prepare whole of government of Wales accounts. Lords amendment No. 14 is a new clause, providing for the devolved Administrations to invest in Partnerships UK, and No. 17 is a minor change consequent on the new clause.

Oliver Letwin (Conservative, West Dorset)

The Economic Secretary has passed fairly rapidly over the amendments. We do not intend to press the matter to a vote, but the House needs some explanation of the considerable changes that the amendments introduce, the largest and most important of which is the Henry VIII power given to the Secretary of State under Lords amendment No. 13. The amendment says: If it appears to the Secretary of State to be expedient in consequence of any of the matters specified in subsection (2), he may by order amend, repeal or make provision similar to any of the following provisions of the Government of Wales Act. Time was when Henry VIII provisions allowing the repeal or alteration of Government-inspired primary legislation were unheard of. Then, sadly—I admit the joint responsibility of Governments of all parties—the phenomenon became known. Then we descended to the level at which it was so much known that it was almost frequent. Then, under the aegis of the present Government, with their overwhelming control of the House, that which was frequent began to become regular. Many of us inveighed against that and made a practice of drawing the attention of the House to each and every Henry VIII provision that was introduced. At least even then, until tonight, when such provisions were made, a careful explanation was given. Here, I fear that we face the final nadir, with Parliament being superseded by what is virtually Executive action—an order—and the Economic Secretary not even making a nod towards the fact. I do not accuse her of any especial malfeasance, as she is merely following the trend of her ministerial colleagues in getting to the point at which the making and unmaking of primary legislation by administrative order is regarded as a matter of such course that it hardly need be mentioned. That should never be a matter of course, however, and it cannot be regarded as such, especially on a night when the Government have used their overwhelming majority to attempt to overturn the Lords in their defence of Parliament. What an irony that, on such a night, following such a vote, the Economic Secretary should not even bother to bring to the attention of those few hon. Members remaining in the House that what they are about to accept—may the Lord make us truly thankful—is a Lords amendment under which Parliament is to be superseded by an administrative order. I hope at least that I have said enough to taunt the Economic Secretary into giving some explanation of why it needs to be done in that way. I return to the other elements of the amendments. Amendment No. 12 is interesting, not least because it says that (a) the Treasury shall consult the National Assembly for Wales and the Auditor General for Wales before making an order in respect of the body. We see another example of the Treasury acting after mere consultation. I wonder whether the Economic Secretary could tell the House why it is that the Treasury is left with the discretion in the amendment in the first place. I assume she believes devolution to be an important step, so why does not the National Assembly for Wales and the Auditor General for Wales have the right or the power positively to prevent the Treasury from making an order if they do not regard that order as in any way appropriate? We are dealing with the intersection of complex UK legislation, which is designed primarily for England and Wales, with the devolution process. Many people in the House of Commons and in the other place have a great interest in that intersection. We would like some explanation of whether the Economic Secretary believes that we have now reached the end of the road and finally clarified the relationship between the Treasury and the Assembly and its organs, or whether we will see a further chain of needed amendments and changes to capture that relationship in its proper form. The Auditor General for Wales is after all a new creature, who was created by a Bill in which it was discovered inter alia that, in its original draft, the National Assembly for Wales (Transfer of Functions) Order 1999, under which the Secretary of State transferred his powers to the National Assembly for Wales, transferred power over the Brompton cemetery in London to the National Assembly. That was the care with which that order was originally designed. That is no reflection on the extraordinary labours of those who put together—[Interruption.] I do not jest. My hon. Friends question my sanity in raising that issue, but I am not jesting. I am telling the literal truth. A reference to Hansard for the debates that concerned the Government of Wales Bill will show that. The fact is that the officials who laboured mightily to produce the relevant legislation, the devolution legislation, were operating under time constraints which made even the time constraints under which those who produced the Government Resources and Accounts Bill worked seem leisurely. Therefore, it was no surprise that grave mistakes were made. [Interruption.] My hon. Friend the Member for Arundel and South Downs (Mr. Flight) regards my categorisation of the Brompton cemetery as a grave mistake in itself, but I assure him that it was an entirely unintentional pun, which until his lightning eye ascended on it had escaped me. The mistakes that were made were graver than the grave. They concerned the whole structure of that lamentable piece of legislation. The serious point in the context of this Bill is that we do not know what the real position of the Auditor General for Wales will be and how that Auditor General will relate to the CAG and to the NAO, and hence to this Parliament and to that Parliament. I trust that the Economic Secretary will give us a full explanation of how she sees those relationships being articulated following the undoubted acceptance of the Lords amendment and whether, as I say, having accepted the amendment, we have genuinely reached the end of a rather tortuous road in constructing that financial relationship.

Dafydd Wigley (Plaid Cymru, Caernarfon)

I am not quite sure whether I should declare an interest as a member of the Audit Committee in the National Assembly. In case I need to, I do so. I am glad on this occasion to rise in support of the Government, although obviously the measure does not go as far as I would want to in this matter, as in so many others. I assure those on the Conservative Front Bench that it is a process, not an event. The process no doubt will go on. I point out to them only that, in the context of these amendments, I have no doubt that their colleagues, the Conservative party of Wales, as it now calls itself, will support the provisions. I am sure that that will be an indicator of the growing divergence between the two parties.

Oliver Letwin (Conservative, West Dorset)

The right hon. Gentleman's presence on the Audit Committee gives us some cause for confidence. Let me add that one reason why we shall not oppose the amendment is that we understand that our colleagues in the Welsh Assembly support it.

Dafydd Wigley (Plaid Cymru, Caernarfon)

I am glad to hear it. I believe that the hon. Gentleman's colleagues in the Assembly no longer regard the father Act as lamentable either; but perhaps we should not pursue that. The hon. Gentleman said that the Auditor General for Wales was a new creature. Sir John Bourne is not a new creature, although he may be experiencing a new incarnation—an incarnation that he is rather enjoying. To his surprise, he secured not a fraction of the budget for which he had asked, not almost the whole of it, but the entirety. I do not think that he has ever received such a welcome as the welcome he received when he took his role in the Assembly. The audit function in the Assembly has got off to a very good start, which I think justifies the transfer of powers that we are discussing.

Oliver Letwin (Conservative, West Dorset)

Does the right hon. Gentleman agree that the relationship between a person in one incarnation and a person in another, whether or not they are two creatures, has proved problematic in a number of instances—not least in the case of the utility regulators? Does he also agree that it may well prove difficult for the CAG to reoccur, so to speak, as the Auditor General for Wales without some conflict arising between the two roles?

Dafydd Wigley (Plaid Cymru, Caernarfon)

Theoretically that is a possibility, but I think that the advantages of having Sir John Bourne in the job for an initial period far outweigh the disadvantages, and that we have got off to a good start—largely through drawing on Sir John's experience and that of his staff. People who have appeared before the Audit Committee—for example, to give evidence about the National Museum for Wales—have said that they never want to be put in the same position again. That is a good omen, because it means that people will sort things out themselves rather than having to be whistled up. Whatever may have happened in Wales in the past, there are indications that we shall run a tight ship in future. The hon. Member for West Dorset (Mr. Letwin) mentioned the Henry VIII aspects of Lords amendment No. 13. In fact, the Henry VIII powers—for which the Government of Wales Act 1998 provides precedents—are not given to the Welsh Assembly. The orders would come from the Secretary of State, and the powers can be used only when a draft has been laid before, and approved by resolution of, each House of Parliament. It is clear that the slippery slope to devolution is not severely compromised by this small concession. Orders relating to sections 85 and 86 of the 1998 Act must be approved by the Assembly. That is right and proper, because such orders would concern devolved matters. There has been all-party agreement in the Assembly and with Edwina Hart, the Finance Secretary, on the programme that we are to follow. That, too, is right and proper. I want to ask the Minister one or two questions. The first relates to the change in the timetable, and the establishment of a 30 November deadline. Although that allows for another couple of months, it may still be a tight deadline. What would happen if accounts relating to the government of Wales turned out to be qualified accounts? I assume that such qualification is an option; if it is, what consequences would there be? I wonder whether the proposed new provision is flexible enough. New bodies are coming into existence in Wales as a consequence of devolution. I hope we would not need to resort to primary legislation if we needed to amend them along the lines of what is suggested in proposed new section 18C of the 1998 Act. As I said, the audit function is vital to the National Assembly, and it needs to be open, transparent and respected across Wales. I believe that the powers that are being transferred will be helpful in achieving that end. For that reason, I shall support Lords amendment No. 11.

Melanie Johnson (Labour, Welwyn Hatfield)

Lords amendment No. 13 substitutes a new clause 15 and, as the right hon. Member for Caernarfon (Mr. Wigley) has just said, empowers the Secretary of State—in practice, my right hon. Friend the Secretary of State for Wales—to make changes to sections 81, 85 and 86 of the Government of Wales Act 1998 in consequence of the United Kingdom Government's budget and accounts changing from a cash basis to a resource basis. The intention is that the National Assembly's budget and accounts will move at the same time to a resource basis. The power will enable the Secretary of State to make appropriate changes to those provisions in the 1998 Act to ensure that the National Assembly's budgetary processes can be changed to a resource basis. As the right hon. Member for Caernarfon said, the power is exercisable by order and will be made by a statutory instrument. Before the Secretary of State can exercise that power, he will have to consult the National Assembly in so far as he is changing section 81, which provides for the Secretary of State to make to the Assembly a statement of his estimated payments for each financial year. As the right hon. Member for Caernarfon also said, the Secretary of State will then be required to obtain the Assembly's agreement before he can change sections 85 and 86. Those sections deal retrospectively with expenditure by the National Assembly and its statement of proposed expenditure for each financial year. Additionally, and to ensure that proper parliamentary scrutiny of that power is maintained, the Secretary of State will be required to lay a draft of any order before both Houses of Parliament for their approval. In our view, it is a necessary power. Its limits have been clearly defined, and it is subject to a high degree of parliamentary scrutiny and National Assembly involvement, as is right and proper.

Oliver Letwin (Conservative, West Dorset)

The Economic Secretary said that the process will be subject to a high degree of parliamentary scrutiny. Will she therefore guarantee to the House that time will be found by the Leader of the House for a proper debate—shall we say three hours—of resolutions of that variety, so that there is a genuine high degree of parliamentary scrutiny on the Floor of the House? Or does the Economic Secretary simply mean that such resolutions will go through the normal process, on the nod, with 90 minutes in Committee?

Melanie Johnson (Labour, Welwyn Hatfield)

They will go through the normal processes. As I understand normal processes, they occur mostly in Committee. I am distressed to hear that the hon. Gentleman thinks that that is such a trivial form of scrutiny, particularly as he spends so much time in Committee scrutinising various matters. I cannot believe that he really subscribes to the view that such scrutiny is a meaningless part of the parliamentary process.

Oliver Letwin (Conservative, West Dorset)

The Economic Secretary is being very courteous in giving way. Is she seriously seeking to persuade the House that the phrase "a high degree of parliamentary scrutiny" is satisfied by cursory examination of such matters, very often with barely anyone present who understands the history of the matter or cares much about the outcome? Does she realise that, whatever the high-flown phrases, that is the reality? Cannot she recognise that some of us are concerned about changing primary legislation by those means when we have so carefully established the system that we have used with this Bill, which goes from Second Reading to consideration of Lords Amendments? Is not that system worth replicating when we are changing the law?

Melanie Johnson (Labour, Welwyn Hatfield)

I have never found the hon. Gentleman taking any of these matters trivially when he deals with them in Committee. In the past year, I have attended and participated in various debates on similar matters. I have always found that, when it was a matter of some significance, hon. Members took their responsibilities very seriously and pursued their interests very vigorously, albeit the process occurred in Committee rather than on the Floor of the House. I am sure that they will do so in connection with this provision. I have already set out the safeguards that exist, which involve discussions with the National Assembly. The agreement of the Assembly at key points is an additional factor, as it clearly has a direct interest in these matters. The amendment on consultation was tabled with the agreement of the National Assembly of Wales and the Auditor General. They were satisfied with it, and the Bill sets out the relationship between the Treasury and the Assembly on accounting matters only. The hon. Member for West Dorset asked about the role of the Auditor General for Wales. The right hon. Member for Caernarfon gave a thorough answer to that question in his speech. The role of the Auditor General for Wales is set out in the Government of Wales Act 1998. I was delighted to hear about the support that the Welsh Assembly has given to the work of the Auditor General for Wales, and about the way in which it is conducting its affairs. The right hon. Member for Caernarfon asked about the revised timetable for the accounts, which is agreed by the National Assembly and the Auditor General for Wales. I can tell the right hon. Gentleman that the Assembly's accounts could be qualified by the Auditor General for Wales, and it would be for the Assembly to decide what consequences should flow from the qualification. The right hon. Member for Caernarfon asked whether the new bodies would also be covered. I do not have an answer to hand, but I shall certainly write to the right hon. Gentleman.

AMENDMENTS AND REPEALS

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move, That this House agrees with the Lords in the said amendment.

Melanie Johnson (Labour, Welwyn Hatfield)

These are technical and drafting amendments. Unless an hon. Member has a question, I shall say no more about them.

Oliver Letwin (Conservative, West Dorset)

I regret to say that I have a question. Amendment No. 19 in this group mentions "unstamped vouchers" in connection with section 37 of the Exchequer and Audit Departments Act 1866, and states that they shall cease to have effect. I do not understand. A brief look at the relevant statute did not clarify matters. Will the Minister explain?

Melanie Johnson (Labour, Welwyn Hatfield)

Amendments Nos. 16 and 19 belong together. Section 37 of the 1866 Act is utterly obsolete. It has been included in the list of repeals in schedule 2 since the first draft of the Bill. However, uniquely among the provisions repealed by the Bill, the repeal of this provision was not, prior to the amendments, formally set out elsewhere in the Bill. Instead, reliance was placed on a phrase in clause 27 that the repeals included enactments that are no longer of practical utility. It was decided that for the sake of consistency, section 37 of the 1866 Act should be repealed explicitly, and that is done by amendment No. 19. That means that the phrase in clause 27 about enactments that are no longer of practical utility becomes redundant, as no repeals in the Bill are now dependent on it. It can therefore be deleted, which is done by amendment No. 16.

BUSINESS OF THE HOUSE

Edward Garnier (Conservative, Harborough)

On a point of order, Mr. Deputy Speaker. It has just come to the attention of some of us that the Government have snuck on to the Order Book for tomorrow a guillotine motion for the Criminal Justice (Mode of Trial) (No. 2) Bill. This is the 36th time in the course of the Prime Minister's premiership that the Government have sought to curtail debate—and not just on any old Bill, but on a Bill of huge constitutional importance. The Government business managers have clearly become alarmed by the return of their out-of-touch Prime Minister from his £500 million jaunt to Japan. The motion demonstrates the arrogance and ineptitude of this appalling Government. Where is the Minister prepared to stand up for the interests of the British citizen rather than the ill- considered meanderings of this exhausted Administration? When a Government overreach themselves, they attempt to suborn Parliament. Tyranny begins when they attempt to suborn the jury system. Can it be right that this appalling bunch of inept politicians seeks to destroy the rights of the British citizen and to do so by a suppressed and curtailed debate tomorrow? Five hours for a Bill of huge constitutional importance—

Alan Haselhurst (Deputy Speaker, Saffron Walden)

Order. What I am hearing so far from the hon. and learned Gentleman sounds suspiciously like a speech on a guillotine motion. What is the point of order for the Chair?

Edward Garnier (Conservative, Harborough)

The point of order ought to be clear not only to you, Mr. Deputy Speaker, but to all the Labour Members here. Is it in order for this appalling bunch of constitutional hooligans to demonstrate its total disregard for the rights of this House and the rights of citizens by, for the 36th time, curtailing debate on a Bill of huge constitutional importance? The first attempt at this Bill was defeated in another place, after it was mauled in this House. Is it right that the Government should attempt to have another go by curtailing debate in this House? I urge you to stand up for the rights of the House, Mr. Deputy Speaker, and the citizens whom we represent.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I think that the hon. and learned Gentleman must know that the Chair has no responsibility whatsoever for the business that is put before the House, and it is not anything on which the Chair can rule. The hon. and learned Gentleman has had his say and, no doubt, what he has said will be on the record and heard by members of the Government.

Paul Tyler (Liberal Democrat, North Cornwall)

Further to that point of order, Mr. Deputy Speaker. We share the concerns that have been expressed, but in far more temperate terms. Of course, I accept your ruling that you have no responsibility for the business put before the House, Mr. Deputy Speaker. However, may I put it to you that it is the Chair's function to protect the rights of Back Bench Members and all parties in the House? I am sure, Mr. Deputy Speaker, that you appreciate fully that the way in which the Government are handling the business this week is not in the interests of good scrutiny of legislation. In particular, the lack of proper consultation on the timetable motion for tomorrow is an affront to an extremely important piece of legislation that requires careful scrutiny. Even if you cannot rule on the business of the House, Mr. Deputy Speaker, you can at least ensure that proper representations are made to the Government on the way in which they have handled this week's business.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I hope that I can reply in equally moderate terms to the hon. Gentleman. I have allowed the point of order to be somewhat extended so that concerns expressed by both Opposition parties can be fully heard, as they have been. However, the fact remains that what is put on the Order Paper is a matter for the Government. not the Chair.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

Order. I cannot rule on anything further. The plain fact is that the business of the House is not determined by the Chair, and I cannot go on entertaining extended points of order on the same point.

Sir Nicholas Lyell (Conservative, North East Bedfordshire)

Further to that point of order, Mr. Deputy Speaker.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I have ruled on the point of order, and I cannot take any more points on the narrow matter before me. Unless there is an entirely fresh point of order, I cannot rule upon it—[Interruption.] Order. We must conduct ourselves in an orderly manner and I must at least hear what is being put to me by the right hon. and learned Gentleman.

Sir Nicholas Lyell (Conservative, North East Bedfordshire)

The Bill has to move on to another place. It came out of its Committee as long ago as 6 June, which was more than six weeks ago. In the meantime, there have been many evenings when the House could have conducted proper debate on the matter. However, the Bill was not brought before the House and is now to be guillotined. It is rumoured that when it is pushed through the other place the Parliament Acts are to be used, which would be tyranny. Is not keeping these matters under control within the House's rules of order?

Alan Haselhurst (Deputy Speaker, Saffron Walden)

Order. It may be a matter for right hon. and hon. Members to argue these matters in an orderly way before the House. However, it cannot be taken further on a point of order this evening. There is nothing on which the Chair can rule, and I cannot hear more on that particular matter. I have allowed considerable rein for argument to intrude on a point of order so that both Opposition parties have had an opportunity to have their say on the matter, so I cannot take any more points of order on it.

Peter Bottomley (Conservative, Worthing West)

rose—

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I hope that this is genuinely a different point of order.

Peter Bottomley (Conservative, Worthing West)

On a different point of order, Mr. Deputy Speaker. I will not mention the Bill that has been discussed. Is it the convention of the House that the Leader of the House makes a business statement in advance so that those Members who are not here now may know what tomorrow's business is? Could the Leader be called to the House to make that statement now? She had notice of her action; she should be here now making a statement about tomorrow's business.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

It is always helpful if the Leader of the House is able to make such a statement, but that rule is certainly not observed on every occasion. We must move on.

Edward Leigh (Conservative, Gainsborough)

On a point of order, Mr. Deputy Speaker.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I hope that this is a different point of order.

Edward Leigh (Conservative, Gainsborough)

This point is completely within your responsibility, Mr. Deputy Speaker, because it regards the choice of speakers in tomorrow's debate. If, as we presume, the debate on the guillotine motion lasts for three hours, we will be left with an hour and three quarters to discuss the Bill. We will have an hour and three quarters to discuss legislation that will end a practice that has been prevalent in our country for seven centuries—I make that 15 minutes per century. [HON. MEMBERS: "That is new Labour."] That sums up new Labour. How will you divide up the time, Mr. Deputy Speaker, so that we get adequate debate with only 15 minutes for each century of tradition?

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I am sure that the hon. Gentleman knows that the Chair cannot speculate on who will be called when at this stage the Chair does not even know who will apply to speak in the debate.

Government Resources and Accounts Bill

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Member for West Dorset (Mr. Letwin) is no longer in his place, but he asked me a question about section 37 of the 1866 Act. The original meaning of that section is so obscure that neither the Treasury nor National Audit Office officials who have examined it have been able to decipher it. The main point is that it concerns an old-fashioned practice that is no longer used by the NAO, which has not objected to the repeal of the provision. I hope that the amendment will be agreed to. Lords amendment agreed to. Remaining Lords amendments agreed to [Some with Special Entry]. Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendments to the Bill; Mr. Graham Allen, Mr. John Healey, Miss Melanie Johnson, Mr. Oliver Letwin and Mr. Keith Simpson; Miss Melanie Johnson to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Mr. Allen.]

Brand Names

Austin Mitchell (Labour, Great Grimsby)

I must express my pleasure at being able to address this enthusiastic and crowded House on the important issue of brands. That subject is much neglected, but brands are very important to the British economy. They account for £50 billion of gross production, and 400, 000 jobs depend on them. Brands are even more important to Grimsby, which is now designated Europe's food town. It has the biggest concentration of food production and cold storage in Europe, and we are home to household names such as Captain Birds Eye, Bluecrest, Youngs Seafood—masters of the sea—and Baxters soups, with all their wonderful and delicious brands. We are the home of Lean Cuisine, Linda McCartney's menu and Harry Ramsden's batter on Ross Seafood. What is more, we have branded Grimsby fish, because fish sold in Grimsby traditionally has a quality that is very different from that of fish sold in other ports across the estuary, which shall remain nameless. Brands are extremely important, especially in the food industry. Other local brands include McCain oven-ready chips further up the coast and KitKat in York. Brands are important to a range of consumer products and, therefore, to business competitiveness and competition. They encourage and sustain innovation, because companies are willing to invest if that investment will be protected by a brand name. Brands allow continuous improvement of products, because businesses want to maintain their bond with the consumer. Brands are about trust: the consumer comes to trust a brand that is advertised and promoted and an identity builds up between the two. Brands both protect innovation and act as a catalyst for it. A 1998 study showed that branded businesses in the consumer products sector innovate twice as much as those that have no brands; they spend more on research and development as a percentage of sales to stimulate and develop the brand; and they extract more value from innovation in branded products. Brands are associated with market growth and profits. As shown by the market strategy report of 1998, brands provide an assurance to the consumer and a guarantee of investment. Brands form an essential part of the modern business practice of reputation management: a business depends on its brands for its reputation. Anything that undermines a brand—for example, copycat products—undermines a company's investment, leeches off the innovation of the brand owner and weakens its competitive position. Brands are crucial to the operation of a modern economy. They are essential to advertising, which encourages demand, which boosts production, which leads to economies of scale, which reduces the price of the product and encourages and protects investment. Brands are an essential element of a competitive economy. However, unlike patents and trademarks, brands confer inadequate protection on the investment and expertise, and on the bond with the consumer that they help to build. That protection is especially inadequate in this country compared with other European countries. To protect itself and to pursue competitors and producers of copycat products, a business has to act under the law of tort, using passing-off law dating from the 18th and 19th centuries. That law is vague and the standards of proof are perversely high. The company attempting to protect its brand has to persuade a consumer to say, "I, the consumer, am daft. In my simple-minded way, I was deceived by product Y, which I took to be brand X, and bought it by mistake." It is difficult to persuade consumers to come forward and criticise themselves. Therefore, to protect brands under the law of tort by attacking the competitor on the grounds that it is passing-off a product as a branded product is an expensive and unsatisfying exercise that offers little prospect of success. That is why so few actions are brought. There have been some conflicts, such as between Ireland's Dunn supermarket with its St. Bernard brand and Marks & Spencer with its St. Michael brand. There was also an argument over Penguin biscuits and Puffin biscuits, which were Asda's competing version. The argument resulted in a very expensive court battle, at the end of which nothing was effectively decided. Both sides claimed victory. The headlines from Asda said, "Puffins Rule the Roost", whereas United Biscuits said "United Biscuits Wins the Battle". All that happened was that the look-alike product was given publicity. It is particularly important that we act now to give brands better protection. We should do so, first, because of the globalisation of brands and trade. Brands are now sold on a world market and their reputation internationally is traded on. Indeed, they are traded as commodities. Secondly, better protection is important because of the increasing emphasis on intellectual property, of which brands are a part. Thirdly, we should act now because of the coming explosion of e-commerce. More and more sales will be made on the internet. Consumers are more at risk when they do not have the opportunity to evaluate the product, and are likely to turn in e-commerce to brands that they know and trust. People want to buy in the established framework of established trust and know what they are getting. For those three reasons, brands are becoming more important and we should act now to protect them. Action is not being taken; indeed, the matter is being shuffled around. I remember when trademark legislation was agreed by the House in 1994 that there was an attempt to include brands, which in fact are a form of trademark. The then Government said, "No, not in this Bill; the question is one of competition legislation." Yet when the Competition Bill came before the House a couple of years ago, the defenders of brands were told, "No, it is a trademark matter." So, it was dismissed on both counts and the Government had it both ways. Now, the consumer White Paper makes no mention of brands even though they are a basic tool of competition for consumer loyalties. We are therefore missing an opportunity to put the matter right, to put brands on a firmer basis and to give companies weapons to enforce brand reputation and loyalty. I emphasise that I am not talking about brands on the balance sheet. There is a difference between the Securities and Exchange Commission recommendation that brands cannot be valued, and our own Accounting Standards Board desire for some balance-sheet evaluation. I am not in favour of lumbering the balance sheet with more and more intangibles. I remember that Captain Bob Maxwell had his brands—The Sporting Life, Daily Mirror and Sunday Mirror—valued by Coopers and Lybrand, which then audited his accounts. It therefore reported on its own figures, which was a deplorable practice. Nor am I talking about supermarkets' own brands. They are a vital part of competition and would not be threatened by any action to protect brands. Supermarket brands are sold on the reputation of the supermarket—Sainsbury's, Asda or whatever. Nor, finally, am I talking about parallel imports. Indeed, in some ways, I am in favour of parallel imports. I do not see why the weight of European Union legislation should be invoked to protect high-priced sales of luxury items on the European market from cheaper imports of the same branded product from other markets. As someone who has something of a sunglasses fetish, I was interested to see how cheaply big-name sunglasses such as Serengeti and Bausch and Lomb can be bought at Wal-Mart for £30, whereas in other shops they are sold for £100 or £80. I look forward to a collapse in the price of the products due to the importing of the same brand. That is a question of the pricing policy of luxury goods manufacturers, but I am not dealing with that. I do not see why in our economy we should be suckered by high-priced products. I am speaking about protecting well-known brands, especially in mass market goods, where look-alike, copycat products can be a form of exploitation which undermines the quality of the brand and investment in the brand. Brands protect innovation, and their role is especially important for competition. We are obsessed with competition, and perhaps a little too obsessed with price competition. We should protect brands by putting brand law into a form in which it can be effectively enforced. The Select Committee on Trade and Industry a couple of years ago recommended a voluntary code, but I do not think that that would work. We have been pressed by various international bodies—for example, the agreement on trade-related aspects of intellectual property rights in 1994. Article 10 bis of the Stockholm convention of 1967 stated that countries are bound to assure…effective protection against unfair competition…The following in particular shall be prohibited: all acts of such a nature as to create confusion by any means whatever… That is what copycat brands do. The World Intellectual Property Organization in Geneva published a model law on brands in 1994, which some countries have already implemented, so brands are better protected in other European countries than in the United Kingdom. We should implement such a law. I hope that in his reply to this brief debate, my hon. Friend the Minister can give us some assurance, first, that the Government recognise the importance of brands, not only in serving the consumer but in stimulating and protecting innovation and competition; secondly, that the Government will act to give firmer protection to brands because of their importance to competitiveness; and thirdly, that the Government will give brand owners a means of redress against the debasement or the copying of their product. That would enhance consumer confidence and, more important, it would give businesses the confidence to develop brands and invest in them, and to build up branded production, with all that that offers the consumer, as a stimulus to greater competitiveness, both nationally and internationally.

Kim Howells (Labour, Pontypridd)

I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on bringing the debate to the House tonight. I did not know, and I am not sure whether anyone else in the Chamber knew, that Great Grimsby was the branding capital of the United Kingdom food industry. That is fascinating, but I am not sure that Great Grimsby will remain so, after my hon. Friend described companies such as Tesco, Sainsbury' s and Safeway, whose own products sometimes look a little like branded products, as leeches.

Austin Mitchell (Labour, Great Grimsby)

I did not express myself very well. Many of the supermarkets' own brands are also produced in Grimsby. They are not leeching on the production of the branded products. It is the copycat products that, like leeches, are exploiting the investment in the branded products.

Kim Howells (Labour, Pontypridd)

I thank my hon. Friend for clarifying that; I am sure that those huge companies will be glad that he did so. The Government recognise that brands are essential to building consumer confidence, act as a guarantee of quality, and prevent consumers from being confused as to who made the goods and where they come from. Brands are a key factor in promoting trade in the marketplace, and brand owners play a key role. Brands are important to consumers because, as my hon. Friend said, they help to identify the origin and quality of goods, and their manufacturer. They also help consumers to identify genuine goods. As my hon. Friend said, fake goods may be of poor quality, defective, or even dangerous or damaging. They offer no guarantees or service agreements. We are greatly involved in educating consumers about the long-term effects of buying fake goods, which affects legitimate industry's ability to invest in the creation and development of new products. I know that the hon. Member for Montgomeryshire (Mr. Öpik) is worried about the effects of counterfeiters and others who try to sell the unsuspecting public products that can be dangerous, especially pharmaceuticals, household goods and associated products.

Kim Howells (Labour, Pontypridd)

The hon. Gentleman put the point well. However, although I have great affection and respect for him, I do not entirely agree with him. Emulating products and their packaging sometimes promotes healthy competition. I am instinctively suspicious of the use of this place to build fortress walls round specific products. I acknowledge that adequate protection must exist and that adequate returns must be made on the original investment. I do not have much time, but I shall try to explain what I mean, and I hope that the hon. Gentleman will bear with me. The Government appreciate the damage that intellectual property crime does to legitimate business. We are committed to working to improve matters. Indeed, our legislative programme, which includes specific improvements to the criminal provisions in intellectual property law, the implementation of the e-commerce and, in due course, copyright directives, will help in the fight against counterfeiting and piracy. Other initiatives, such as raising consumer awareness, improving co-operation, and the co-ordination of enforcement effort, are also important. The Government are currently involved in much activity in that context. My hon. Friend the Member for Great Grimsby and the hon. Member for Montgomeryshire asked why there is insufficient protection against copycat or look-alike products. The Government are not convinced of the need for a change in the law to extend brand owners' rights against those who sell products in so-called look-alike packaging. The Trade Marks Act 1994 introduced several new provisions, which extended trade mark protection to, for example, trade dress, three-dimensional shapes, colours, sounds and smells. The Trade and Industry Committee studied the subject carefully and concluded that brand owners were not using legal remedies such as passing-off. I support those conclusions, and I do not believe that the law is deficient. We believe that United Kingdom law on intellectual property is compatible with all the international conventions to which we are signatories. They include the World Trade Organisation's trade-related aspects of intellectual property rights agreement, which deals with unfair competition, and incorporates, as my hon. Friend pointed out, article 10 bis. However, I believe that that was an article in the Paris convention.

Austin Mitchell (Labour, Great Grimsby)

Although my hon. Friend says that the power of brand owners to protect themselves exists in legislation, manufacturers do not believe that it is worth the effort. Cases are difficult to prove in law; they are long and tortuous, and the verdicts have not been satisfactory. It is difficult to get people to come forward and say, "I was daft enough to buy this product instead of that one. I was deceived." The burden of proof is the problem.

Kim Howells (Labour, Pontypridd)

I have to tell my hon. Friend that, as Minister for Competition and Consumer Affairs, which is one of my little titles, I receive scores of letters of complaint about all sorts of things ranging from new and used cars to sunglasses, which he mentioned. However, no constituent has ever written, or been to see me, to complain about being confused by a look-alike product on a supermarket shelf.

David Taylor (Labour/Co-operative, North West Leicestershire)

rose—

Kim Howells (Labour, Pontypridd)

No, I will not give way because we have gone on for long enough on this one. Indeed, were I to take home an own-brand packet of cornflakes instead of Kellogg's, my kids would throw it out of the window. They are not daft, nor are most consumers daft enough to fall for such a thing. When the British Brands Group lobbied me, as it has done several times, it came up with a ludicrous example: some zappy young executive might charge into a supermarket, mistakenly pull out a bottle of Tesco's look-alike Fairy Liquid instead of the genuine article, and be dreadfully disappointed on arriving home, which would upset her executive evening. I simply do not believe that such things occur. Most consumers are a lot sharper than that; they are capable of making decisions. If companies are not satisfied with the deal that they get from their main retailers—the supermarket chains—let them sue.

Kim Howells (Labour, Pontypridd)

For the last time.

Kim Howells (Labour, Pontypridd)

I agree, but there is a fine line here and a difficult balance to strike. We could talk all night about parallel imports, which my hon. Friend the Member for Great Grimsby mentioned, but would not fencing in the big established brands create hurdles too high for competitors to cross? I acknowledge that I am an unashamed proponent of competition—fierce competition—which brings the best products to the market and provides most benefit to consumers. Having to compete in fierce but fair open markets allows the best companies to evolve. However, as my hon. Friend and the hon. Member for Montgomeryshire said, the rules must be fair. I believe that the rules in this country are fair. I am no more in favour of the balance swinging violently in favour of rights holders than I am of all the controls being removed.

David Taylor (Labour/Co-operative, North West Leicestershire)

Will my hon. Friend give way?

Kim Howells (Labour, Pontypridd)

I will, as my hon. Friend has been present since the start of the debate.

David Taylor (Labour/Co-operative, North West Leicestershire)

Can my hon. Friend confirm whether the Government have a timetable for reviewing the law on branding and the protection that it offers, particularly to firms in my constituency, which contains major distribution warehouses for the goods to which my hon. Friend the Member for Great Grimsby (Mr. Mitchell) referred?

Kim Howells (Labour, Pontypridd)

My hon. Friend will understand that we all have factories, shops and distribution centres that sell—[Interruption.] Yes, including food shops. We grow some food in Wales, and we process it and sell it. I hope that he realises that I cannot undertake to put legislation on the statute book. I am not even convinced that things are so askew in this country as to warrant such a review in the first place. However, I give him, my hon. Friend the Member for Great Grimsby and the hon. Member for Montgomeryshire an undertaking that we will continue to keep a sharp eye on this subject. If we do not, the paradigm of fierce open competition that I described will not occur. A fine balance must be struck. That is the secret of a good economy.