Finance: New kid on the block

The Public Accounts Committee chairman David Davis talks to Paul Gosling
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The Independent Culture
"I am like a kid in a toy shop," says David Davis MP, the former Foreign Office minister and the new chairman of the House of Commons finance watchdog, the Public Accounts Committee. "I have been let loose from the shackles of government, but I have got all the interesting aspects of helping to make things work."

If Conservative MPs have been depressed by the election loss, it seems to have had the reverse effect on Mr Davis. By convention, the PAC must be chaired by a member of the Opposition, and Mr Davis is excited by his new role. Frustrated by the constraints imposed on a minister restricted to his own responsibilities, he now has a free rein over government spending, and is determined to make the most of it.

Initiatives are pouring out of Mr Davis. For all his generous praise for his predecessor, Robert Sheldon, he wants to do things differently - and, he says, more effectively. His top priority is to take action quicker; to look at the early stages of implementing new policy. A prime example of this is the Private Finance Initiative (PFI), into which the committee has held hearings and is to report on in the near future.

Mr Davis says he leaves to the accountancy profession the technical questions, such as whether PFI deals should be off the balance sheet or on, but he wants to ensure that Treasury guidance to departments is effective, and leads to the best value-for-money outcomes.

He says it is already clear that Treasury advice on the PFI is flawed, and the outcome of the building of the Skye Bridge could have been better. What is essential, he says, is that all departments learn quickly from that experience.

He similarly questions some of the Treasury's advice on privatisation contracts. "When we interviewed the people who privatised Belfast International Airport, it was clear that the people who had bought it out had put in a smallish amount of money, and got a very large return in three years. The Treasury guideline is that you don't go for claw-back arrangements, and it seemed to me that in environments like this, that is exactly what you do."

The second priority for Mr Davis is to enable the National Audit Office - which is autonomous, but reports to the PAC - to follow public money, wherever it goes. The Royal household, housing associations, legal aid and the lottery operator Camelot are all in his sights, having escaped the NAO's rigorous auditing.

"Camelot is a private company, in every sense, but it deals with money which is almost indistinguishable from taxpayers' money. When the PAC did its review of Oflot [the lottery regulator], a rather contentious one which fed into the events of the last few weeks, one of the things it pointed out was that 11 out of 20 of the measures that Oflot was supposed to be measuring were not being measured." In future, if Mr Davis has his way, other government contractors will find themselves audited to a tougher standard.

While he has no wish for the NAO to take over commercial audits from the accountancy firms, he is clear that it must be able to ensure that all public money is being properly spent and accounted for, and that maximum value is extracted from it. This means that the NAO must have right of access to companies owned by public bodies, and must be able to instruct firms conducting audits there.

Another priority is to support the NAO doing more value-for-money work, rather than concentrating on issues of probity. "Historically, it has always been thought to be pretty bloody hard to measure the effectiveness of delivery accurately," Mr Davis says. "I think if we try a little harder we can get a lot better. We need to look more at where the rubber meets the road for the citizen. There will be a change of emphasis towards that, which is with the grain of politics. It is a new political technology, the measurement of performance. It is the way the accountancy profession is going; having more computer power helps, and it is with the grain of [public and politicians'] expectations."

One of the immediate priorities for the PAC and the NAO is to oversee the implementation of resource accounting into government departments, ensuring that Treasury rules are interpreted consistently. The committee will also make extensive use of the recently published inventory of public assets.

The great thrill to Mr Davis is that the PAC operates across a wide spectrum. One day it examines privatisation contracts, the next it examines the inefficiency of the court system.

But he stresses that its work is possible only because of the high calibre of the 750 staff employed by Sir John Bourn, the Auditor and Comptroller General who heads the NAO. It is the quality of NAO reports that enables the PAC to conduct hearings that, says Mr Davis with some relish, are feared by even the most senior civil servants, and are prepared for days, even weeks, in advance.

For Mr Davis, losing an election has its compensations.