Oral evidence: Scrutiny of the Government’s Supply Estimates, HC 190Wednesday 5 July 2016

Oral evidence, 5 July 2016.

Witness

John Pugh MP, gave evidence.

Chair

Another esteemed colleague. John, thank you for coming to talk to us. Shall we leap straight in? In 2010 the Chancellor of the Exchequer asked you and Sir Edward to produce a report into how we can improve the whole debate on the budgetary process. The two of you did a diligent piece of work and came up with a number of ideas in relation to having a parliamentary Budget officer and associated mechanisms for improving the way we handle the Budget in this place and following the Budget through. Why do you think, having asked you to do this, the Chancellor never did anything with your recommendations?

John Pugh

I must admit it was tempting at first to see the project as occupational therapy for awkward Back Benchers but Sir Edward and I took it very seriously, as indeed did Treasury officials, who I think generally speaking welcomed the idea. Part of the reason why we made such limited progress, if any, after the report was that we were aware in the context of some suggestions there were fiefdoms that were a little bit worried about what may or may not happen. One of the more contentious recommendations of our report was the creation of a new Committee called the Budget Committee and we were aware that a Treasury Committee and a Public Accounts Committee already exist. Sir Edward and myself had had extensive experience of the Public Accounts Committee and, with the best will in the world, we knew that this could not provide a really rigorous analysis of what was happening in the day-to-day expenditure of Government. We tended very often to respond to NAO reports, which were largely on contentious issues, high profile issues, which is why the Public Accounts Committee has a high profile. A lot of day-to-day expenditure and a lot of the things that were not complete and utter disasters or attracted the public eye simply did not seem to be dealt with adequately in any place. The Treasury Select Committee seemed to be predominantly preoccupied with issues of macroeconomic policy. The only environment in which we thought there was progress or there was the possibility of doing this was through the process called estimates day, which we examined in detail. I have to say I have the distinction of having tried to talk in the Chamber about estimates at estimates day and having been ruled out of order by the Deputy Speaker Nigel Evans. It is in Hansard somewhere, but I started to talk about the numbers on the order paper that day and I was ruled out of order. It was a bit like in “Fight Club” you are not supposed to speak about Fight Club and on estimates day you are definitely not to speak about the estimates. That was the ruling from the Chair anyway and I thought that was a wholly inadequate way of dealing with Government finances and unsatisfactory from a range of different views. The Chancellor did receive our report positively and I think he was concerned about the disruption to other parliamentary Committees, or the knock-on consequences for other parliamentary Committees, and clearly knew there were battles to be fought at the Liaison Committee over this. Indeed, the subject was raised at the Liaison Committee and then I think promptly buried at that particular point. What we learned in the process, though, is the kind of scrutiny that we would ideally want parliamentarians to have is only really possessed in this place by one organisation and that is the Treasury. The Treasury does have a good idea of what individual Departments do and MPs simply don’t. When I say “do”, I mean the way in which money is spent and distributed around that department. I am familiar, through being on another Select Committee, Communities and Local Government, of Select Committees’ treatment of estimates day and it is precisely as bad as the parliamentary process. Permanent secretaries, in my experience, do not come prepared to talk about the estimates at all and the entire time is usually consumed in talking about whatever happens to be the most contentious policy of the time. This contrasts markedly with what you get in the United States, where they rigorously go through the budget line by line and discover things that maybe Governments do not want them to find out. Sometimes they discover all sorts of dull things that are just worth knowing but not necessarily politically controversial. I genuinely think there is a huge gap here in Parliament, a gap that does not actually exist even on the local council at the moment. We have a huge budget with huge amounts of money being spent, via’d, altered, modified, not being spent well and so on, and we do not look at it in a sufficiently rigorous or systematic way. Public Accounts does some very valiant and important work, but our general conclusion was that neither the Public Accounts Committee nor the Treasury Committee were capable of doing the task of proper proportional, regular scrutiny of Government expenditure by Parliament.

Chair

Can I play the devil’s advocate quickly? Surely the Government would say the role of Back-Bench Members of Parliament is to busy themselves with casework and why would they want to trouble themselves with the worry of looking into Government budgets and expenditure? How would you respond to that?

John Pugh

Ultimately Governments themselves are creatures of Parliament and Parliament needs to know what it is doing, even if many Members of Parliament have little control over what it actually does do. There is not necessarily in every Member of Parliament an appetite to sit day after day crunching their way through numbers—I think there is a special kind of beast who will volunteer for such activity—but it is a worthwhile activity. Our view was that instead of creating a completely new Committee, it would be better to take an individual who had that bent from each Select Committee and form the Budget Committee out of those Members so that we co-ordinated the analysis of the budget with general policy issues.

Patrick Grady

That is a very helpful set of comments. This is very timely evidence because we are literally in the middle of the estimates procedure. Yesterday both Deputy Speakers allowed considerable leeway in this adage that estimates day shall not be used to discuss estimates. Both Patricia and myself were able to reflect in some detail about the concerns that this Committee has identified and especially this context of the EVEL procedures and our opportunities or lack thereof to amend Government spending or to vote on Barnett consequentials. Today we had the Appropriations Bill. As you suggest, in the United States that is the moment where Government shutdowns occur and are used for dramatic purposes in American political TV dramas and in real life and yet here it just gets nodded through and the Standing Orders provide that there should be no debate. I suppose it is back to this question about EVEL and Barnett consequentials. Where do you see, given your knowledge of the system, that any opportunity currently exists or how could the current system or an amended system provide that opportunity for us, as Scottish Members, to amend the Barnett consequentials, to amend spending in a Government Department and the knock-on effect that would have on the Scottish Budget?

John Pugh

I am not in a position to tell you what the appropriate moment is at which you could alter the parliamentary outcome. The fact that you have succeeded, through special indulgence shown to Scottish Members, to talk about estimates during estimates day I think is a breakthrough, but it has by no means been common practice for people to talk about the very large numbers that are on the Order Paper that day.

Nic Dakin

How would a House of Commons Budget Committee benefit the Treasury?

John Pugh

I don’t think they would ever discover things that the Treasury didn’t know for itself but they might discover things that the Treasury would prefer not to be known and that would be a plus. If I can give one particular example, which I think you will be familiar with, Nic: we have at the moment an education budget that has been qualified. It has been qualified for all sorts of very dull reasons that are never going to command the Floor of the House. Quite clearly, it is a budget that has been slightly—let’s put it like this—astray over recent years with large sums of money via’d internally, which are not in objective discussion necessarily but certainly seem to be a worthwhile topic for examination. Exactly what is going on there? That is one area where you are going to find out things that other Committees will not stumble across simply by examining numbers. The way I would see the Budget Committee in contrast to the Public Accounts Committee, as Sir Edward will agree, is that a lot of the Public Accounts reports we get are lots of prose with a few numbers scattered in the middle and the odd graph. I would see a Budget Committee being very much—a bit like the Appropriations Committee—driven by the numbers. I think it is somebody’s job in Parliament, as opposed to in the Treasury, to find out how well Governments are spending the money that they have been allotted by Parliament and how well the individual Departments are spending their budgets. To be fair to the Government, they have made considerable strides in putting data out there through COINS, OSCAR and all the various other versions, but it is put out in a way that I don’t think Members find particularly accessible. One of the documents put before parliamentary scrutiny is the annual budget of each individual department. This is sufficiently an uphill struggle for most Members that even the Public Accounts Committee is only halfway through a training session on how to crack the documents that are put out there. I think having a Committee dedicated to getting to the bottom, experienced in doing that and composed of Members who actually like doing that would be a genuine service to Parliament.

Nic Dakin

When you and Sir Edward were doing this piece of work that you were asked to do by the Chancellor, did you get any feedback at any time that there was a positive sense of what you were coming up with?

John Pugh

I think speaking to Treasury officials—and we had full access to many of them—the ones who were involved with us were very enthusiastic on the project and quite disappointed that the outcome was so limited. They essentially accepted the case that we made, that there was a gap to be filled here and it was not going to be filled. In other words, I think up to the point we got to the Liaison Committee there was a fair wind from the Treasury and the Chancellor and we felt we were not going to do anything earthshattering but we were going to produce a result. When we got to the Liaison Committee and they looked at it, we came across political obstacles, if I can put it like that. I think you have very hard working Chairs of the Treasury Committee and the Public Accounts Committee traditionally, very dedicated to their task. I don’t think they can bite off as much as they currently do and do this job as well without significantly alienating the members. If you look at what is happening on the Treasury Select Committee and on the Public Accounts Committee at the moment you will find the members are groaning under the work they are already doing, and this big vacuum in the middle exists to be done.

Nic Dakin

You appear to be saying that the work that you and Sir Edward did was being welcomed by the commissioner of that work, the Treasury and the Chancellor.

John Pugh

Yes. We had no reason to think otherwise.

Nic Dakin

It was when it came to the concerns of other Select Committee areas of influence that it ran aground.

John Pugh

That was unquestionably the case. We had discussions with the then Chair of the Liaison Committee about how we could negotiate our way through these political rapids and we could not find a clear way of doing so. I think that is more an accident of personnel and so on. Frankly, with less assiduous Chairmen I think the Treasury Committee in particular would be happy to forsake any role and hand it to a new Budget Committee, but of course a new Budget Committee would itself have powers and be an alternative voice within the hierarchy of Westminster.

Patricia Gibson

I would like to touch on something that has already been mentioned. My colleague Patrick mentioned that in the estimates day debate yesterday we were given quite a bit of latitude by the Speaker when we spent some time lamenting the fact that estimates days were not really about estimates and wasn’t this a terrible shame. In fact, surprisingly the Deputy Speaker said to me that there was no need for me to crave her indulgence because it was perfectly in order on estimates day to discuss estimates and I think that caused quite a sharp intake of breath around the Chamber. Do you think that perhaps because of the EVEL agenda and your work over the years and this Committee there might be a softening on this in terms of what you can raise in the Chamber on estimates day debates? Do you think the way has been cleared for progress in this area or am I being wildly and naively optimistic?

John Pugh

I think you can be optimistic without being naively or wildly optimistic. The fact that you are looking at it now means that the problem has not really gone away, as defined back in 2010, the inadequate financial scrutiny by Parliament of Government expenditure. It clearly still is disempowering for Members. Whatever walk of life you are in, following the money is quite a good thing to do if you want to find out why decisions are made and why things have changed and so on. It is good that there is latitude in the Chamber and it may be a recognition of the fact that people can now see the problem a little bit better, but I think there is some way to go before we have an adequate mechanism to do anything like the task that we ought to be doing here.

Patrick Grady

I was going to say for the record that the Labour spokesperson in the debate on the Energy Select Committee reports yesterday strayed into a bit of detail about specific budget lines of the Department of Energy and Climate Change and again was not called to order. But what was noticeable, sitting in the Chamber, was that the Secretary of State and the officials in the box seemed utterly unprepared for the fact that people might come and start asking questions about lines. The same thing happened when we did the supplementary estimates. We started asking about individual lines in the budget and they had no answers.

Chair

It is very important to keep people on their toes, which is why Ministers are here, isn’t it, to respond to the concerns of Parliament? John, the issue I think this Committee has is that we could come up with a very dramatic set of proposals, wide ranging and far reaching, knowing full well they would never get anywhere, to be honest, that the Government would deploy the dark forces of obstinacy to bury them under tons of earth and rubble. Do you think it would be sensible of this Committee to come up with a first stage set of suggestions on the format and timing of the publication of estimates and on the official handling of the three estimates days that are currently apportioned by the Liaison Committee for the debate in the main of Select Committee reports, so they are actually used, through a process of bidding, perhaps overseen by the Backbench Business Committee, for the purpose on the tin?

John Pugh

In our own recommendations—and presumably the Committee has a copy of our recommendations—we made a series of stage recommendations, some of them modest, some of them more portentous, and we knew that getting some of them through was some sort of a win. But I want to emphasise that it is not the Government and their dark arts that would seek to kill a more dramatic proposal. It is the institutional pressures that exist within the Committee structures of the House of Commons. The suggestion we made of a Budget Committee does have some resource implications for the Government. They would have to back it up with staff who have the skills to provide the adequate tools for scrutiny. But I think I am faithfully recalling our final conversation with the Chancellor about this. He was receptive, appreciative, aware that this was a job that needed to be done, but I think was not personally going to go into battle to disturb the other Committee fiefdoms in this place or to reorganise them, and in a sense it was not his job. Whatever recommendations you come out with, I can see few of them being resisted by the Treasury, who I think would welcome some more sophisticated engagement with the finances of the country. I think you are going to find more difficulty, as we found more difficulty, in dealing with Committees who believe that they can do far more than they can ever possibly do.

Chair

Could you suggest some Committees that did have difficulty with your suggestions? Treasury?

John Pugh

Our main obstacle was with the Treasury Select Committee, I think. Both of us had been on the Public Accounts Committee and we knew the limitations of that. I have to say that the Public Accounts Committee has in part responded to what we have done by trying to do more contemporary and more thematic type of examinations but, frankly, given the timetable that is currently set—and I speak as a current member of the Public Accounts Committee—it can’t do any more than it currently does without reducing the quorum of the meetings to below the level. I am sure if you met as frequently as the Public Accounts Committee does now, you might all struggle to get here.

Chair

John, thank you very much. That was very helpful.

John Pugh

Thank you for inviting me. Oral evidence: Scrutiny of the Government’s Supply Estimates, HC 190 16