Taking Accountability Forward

Thank you, and thank you to CIPFA for holding this important seminar today. CIPFA remains a vital part of the scene in public finance, always relevant, always innovative, always respected.

My committee is sometimes described as a bear-pit, but I never thought I'd be speaking so close to an actual bear-pit.

I'm told that it was during a visit to London Zoo that AA Milne saw the Canadian bear which provided the inspiration for Winnie-the-Pooh, so perhaps, if we don't fancy the public sector anymore, being here will inspire us to write children's literature.

The Public Accounts Committee (PAC) was founded in 1861 by William Gladstone in order to scrutinise the 'economy, efficiency and effectiveness' of public expenditure.

It's worth reflecting the size and scale of public expenditure in the 1860s was small compared to today.

1861 was the year Victoria Station opened; the railway boom was funded by private speculators, not government investment.

There was no universal pension, no unemployment benefits, no National Health Service.

In 1918 there were just 28 civil servants in the Home Office. Now there are 32,797.

But back in Gladstone's day, the bulk of social services were supplied, not by the central state, but by municipal government.

This was the golden age of municipalism, shaping the lives of the growing numbers of citizens of Birmingham, Leeds, Glasgow, Manchester and the rest.

One historian writes '‘the extent of local self-government during the nineteenth century appears stupefying. As a matter of principle Whitehall thrust every type of administration on to elected local bodies.'

Schools, hospitals, sanitation, parks, libraries, housing, urban development, street lighting, public transport, museums - all supplied by councils, with the great and the good queuing up to serve on their boards and committees.

In the twentieth century, and into our own century, the central state grew, and the amount it did grew, to the point where in the post-war era the Public Accounts Committee oversaw most of public expenditure, delivered from the centre.

Municipalism entered a cold climate.

On my office wall, I have the portraits of my predecessors as chair of the Public Accounts Committee. All men, until we get the picture of my friend and mentor Margaret Hodge up.

Some fine facial hair. It looks a bit like Shoreditch on a Saturday night.

One or two famous faces, like Harold Wilson and Joel Barnett (of formula fame).

Yet for so many of them, throughout the past 70 or 80 years, the job of scrutinising public accounts and holding officials and ministers to account would have been a relatively straight-forward job.

The central state raised most of the taxes, and the central state spent the bulk of them, or gave them directly to local authorities to spend. It was clear who was in charge and who was accountable.

Today, things are not so simple.

We live in a complex, interconnected web of organisations, companies and layers of governance.

Things are changing so fast, it takes our breath away.

It's not so long since you couldn't use the phone if the internet was on, now you can't use the internet unless your phone is on. PAUSE Think about it.

A company like Facebook, which has only been trading on Wall Street since 2012, is worth $245 billion, more than construction, engineering and vehicle manufacturers which have been around for 100 years.

And yet it apparently makes so little profit in the UK it barely pays any tax.

This is something that concerns my committee.

In this complex environment, the need and demand for accountability has never been greater. We demand rights as consumers, patients, passengers, parents, residents and citizens. We want to know to whom to complain, who to praise and how to seek redress.

We want the answers to the famous five questions posed by Tony Benn to those in power:

What power do you have?

Where did you get it?

In whose interests do you exercise it?

To whom are you accountable?

and, how can we get rid of you?

But in the absence of clear lines of accountability, that task is harder than ever.

As Chair of the Committee for Public Accounts I am privileged to have a unique position from which to examine the impact on taxpayers of a constantly changing public sector landscape.

In the few months since I became Chair, we have examined subjects ranging from the financial sustainability of police forces, to the sell-off of public land to build new homes; from the extent of fraud and error in the benefits and tax system, to the way that care leavers are supported once they reach adulthood

We recognise that the public sector landscape has changed significantly. Public services are increasingly moving away from traditional spending lines - today service delivery is at its most fragmented, presenting us with the problem of devolved responsibility and disaggregated delivery.

This constant evolution rightly challenges Parliament to up its game to ensure the rigour of our accountability remains as strong as ever.

The traditional role of Parliament to hold Governments to account remains paramount. And it relies on a system of scrutiny, expressed through the select committee system and committees such as mine, which use every means to prise information from a bureaucracy which historically has been somewhat reluctant.

And at times positively reticent.

Within the broader public realm, accountability has become an increasingly nebulous concept, when the topography of public service deliverers is so undulating, and so many public services are outsourced and delivered by external bodies.

The vast amounts of money committed to devolving responsibilities to local areas tells us that accountability for public money is only going to become more complex.

£2.3 billion for City Deals in Wave 1, involving 8 cities and 51 local authorities. Up to £1.5 billion for Wave 2, involving a further 18 cities and an even greater number of local authorities.

Add to this the £2 billion allocated to Growth Deals with 39 Local Enterprise Partnerships, and it becomes clear how important getting to grips with devolved responsibilities for public money really is.

Contracting out of public services began in the late 1970s, but began in earnest with the introduction of Compulsory Competitive Tendering in local government through the Local Government Acts of 1988 and 1992.

Successive governments continued in this trajectory until by 2007 -08 the market in public service contracts was worth an estimated £79bn.

Government now spends almost £200 billion a year with private sector and voluntary providers.

And as we know, the market is dominated by a small number of huge players like Serco, Capita and G4S.

I know as a constituency MP in Hackney how hard it often is for a constituent to get redress when services fail, because of the lack of transparency and accountability within services.

Increasingly, it is hard to work out who is directly responsible.

'Who's in charge?' is the cry I hear most often and often the answer is not immediately obvious.

My Committee is clear that it is our job to follow the public pound wherever it is spent.

We are frustrated by the attitude of government that complicated delivery models or the contracting services out to private companies means that it can wash its hands of responsibility for the money being spent and the services provided to the public.

For too long, government did not think it could hold contractors to account for their poor performance and government became a prisoner of its own making.

Under Margaret Hodge, the Public Accounts Committee shone a light on new challenges to value for money and accountability that have arisen in recent years, including its trailblazing work looking at the use of private providers to deliver services and tackling tax avoidance.

Cases such as G4S and Serco overcharging the Ministry of Justice for years on electronic tagging contracts were a stark illustration of both contractors' failure to work in the public interest and government's failure to safeguard taxpayers' money. And how we now earn of Serco's £1.1m for running an empty prison.

Weak governance, a lack of capability, perverse incentives and poor performance management and understanding of risk led to taxpayers being overcharged by some £180 million.

Cases such as these served as a belated wake up call, but they are by no means isolated cases. The problems with contracting are widespread, long standing and deep-rooted.

Information on how much it really costs for outsourced suppliers to run taxpayer funded public services is currently available for less than a third of public sector contracts.

The fact that in most cases government does not know how much profit is being made by outsourced companies from public services suggests that government needs to move forward in its thinking on this.

We cannot allow departments to take their eye off the ball when it comes to private providers.

We have, and will continue, to hold to account all those responsible for spending taxpayers' money, be it one department, multiple departments, local delivery bodies, private companies, or charities.

I recognise that this good work is being done to try to address these issues, but what I and the Committee really look for are signs that this is happening in practice.

Let's be clear, the role of the PAC is not to question the wisdom of government decisions. It is to ensure that there is proper scrutiny, accountability and transparency over every penny of taxpayers money spent by the government.

With the abolition of the Audit Commission (a mistake in my view) the National Audit Office becomes the main professional body that will examine public expenditure to ensure value for money. The new audit arrangements make it harder to spot trends in local Government and there is a huge accountability gap across the NHS.

As I always remind my committee members, it's not the government's money, it's taxpayers' money, hard-earned and reluctantly surrendered.

Public waste and inefficiency are a form of theft from the hard-working citizen.

This is especially true when the Government is seeking to make major reductions in public expenditure over this Parliament.

Aside from health and international development, government departments are expected to find 40% savings over this Parliament, which will be extremely challenging and change the levels of service and support the citizen can expect from their government.

So I am keen in this Parliament to hold to account all the people responsible for spending other people's money, and that doesn't just mean the officials within departments.

We must regard deliberate cost shunting as a crime against the taxpayer. We know we've got there when every public service think slike a user but acts like a taxpayer.

We have shifted from traditional single points of accountability, to devolved accountability, shared accountability and delegated accountability - and it is right that my Committee reflects that.

Whatever the policy, the amount of money spent on a project or programme, or the way it is delivered, taxpayers' money must be spent as efficiently as possible, and it is our role to hold those that are responsible to account.

Getting to the heart of who is responsible, putting them in front of my committee, and holding them directly responsible for their actions is what we aim to do. That certainly applies to people who took decisions, and have then moved on to new jobs. Being in a different post doesn't provide a blanket of immunity from scrutiny.

In the future, this is as likely to be someone from Capita as it is the directors of the Department for Education.

Margaret Hodge gained a fearsome reputation in her period as chair of the PAC. Especially on issues like tax avoidance, she held bankers' and business execs' feet to the fire. In many ways, she changed the narrative on tax avoidance, and shifted public awareness and opinion. As a member of the committee under her chairmanship, I can tell you it was sometimes quite a show. Once, we even used our powers as a committee to put a senior civil servant on oath, although it took about 20 minutes for someone to find a Bible!

I am no less keen to expose injustice and promote fair-play, but I am also keen to use all the talents of the committee. We are appointing three new members after we lost three to Jeremy Corbyn's shadow team. I want the committee to work as a team, perform in a collegiate way, and to steer and guide as chair.

We've already organised visits by the PAC to different parts of the country to see how public money is spent on-the-ground. I consider this a vital part of our work, to get out from the Westminster bubble, and see how things are changing in the real world.

I am the MP for a part of London which is the epicentre of the technological revolution. My part of London has the most tech start-ups outside of San Francisco and New York. There are hundreds of tech companies delivering digital products and services.

This is the real world, not the wood-panelled corridors of Westminster.

This digital revolution is changing everything. You'll know it is changing service-delivery in local authorities. But it is also changing public attitudes towards institutions, and that includes the institutions of the state - government, parliament, police, NHS, universities, councils and so on.

People are no longer deferential. People ask questions. People are experts. People demand proper treatment and redress when things go wrong.

Above all, people demand freedom of information. Freedom of Information is a powerful tool in the hands of the citizen when it comes to accountability and transparency.

I believe that Freedom of Information legislation should be extended to those private organisations delivering public contracts.

The reality is that public officials and those spending the public's money, as Matthew Taylor at the RSA has said, 'should behave as though they were in a glass box.'

This is the era of 'open data' when ultimately the non-personal data government holds will be freely, and routinely, available to citizens. I welcome the Governments data.gov.uk initiative which has already released 19,000 data sets into the public domain. I know the Mayor of London has been doing something similar for the past five years.

When I was an Islington councillor 20 years ago there was a resident, I think he was a market trader, who would go through the published receipts of every department's spending, and come to Town Hall meetings and query anything he didn't like the look of.

He may not have known it, but he was a trailblazer in the information revolution.

Today, every citizen can be an auditor, holding public officials to account for their expenditure. It won't be long before there's an app which puts the information directly in our hands.

Nothing is secret. Citizen journalism is challenging the mainstream media. Perhaps citizen auditing will present a similar challenge to the audit profession.

It is against this backcloth that the work of the Public Accounts Committee continues apace.

As part of the open data revolution, every taxpayer now has access to details of every payment made by local councils to external suppliers over £500 - how much, to who and when.

Easy access to this data encourages greater transparency, greater engagement and greater efficiency by allowing local residents to tell what their local councils are spending taxpayers' money on and hold those responsible to account.

Yet the same cannot be said for national data or central government spending.

It is almost impossible for an individual to be able to tell, with any degree or accuracy or certainly, how much has been spent on a particular service, or on themselves.

Missed hospital appointments reportedly cost the NHS £750 million each year, and missed GP appointments a further £162 million.

This is a huge amount of money, but it is difficult for the everyday individual to understand how they contribute or fit into it.

If the citizen auditor was able to properly get to grips with the costs of the services they receive, they would be better able to make informed decisions about, for example, whether they go to their GP or local A&E, or understand the impact and cost of not turning up for an appointment or picking up a prescription.

They would, and should, be able to identify how much of their tax money is spent on them.

We would be better able to identify efficiency savings and direct precious resources to where they are needed most.

Over the next few months, we will be holding inquiries into the full range of government activity and spending.

Looking at specific projects and programmes, such as Network Rail's investment programme, the sale of Eurostar and the E-Borders and Border Systems Programme.

Looking into services that have a visible and direct impact on the daily lives of taxpayers, such as those with neurological conditions, diabetes or cancer.

Reviewing the way in which key services are regulated and sustained, including the water sector and fire and rescue services.

And continuing our work to hold private providers to account for their involvement in delivering public services.

As you can see, we intend to be fearless in our questioning, clear in our purpose, and be unafraid to ruffle feathers. If ministers are complaining about us, then I shall feel we are doing a good job.

ENDS