Commons Hansard
29 Jan 2003

Public Accounts Debate

3.56 p.m.

Mr. Gerry Steinberg (City of Durham): I am delighted to follow the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). It was a pleasure to listen to his wise and considered speech - there was a lot of sense in it. I only hope that mine matches his.

I want to place on record my thanks to the staff of both the Public Accounts Committee and the National Audit Office for the excellent work that they carry out in a highly professional manner. I feel especially sorry for the PAC staff, who have to put up with my constant requests for assistance. Perhaps it is because I am getting old and forgetful that I am always searching for my papers - they are never in the right place at the right time - but the staff are always very obliging and make sure that I get them. My thanks go to them and to the NAO staff, who are always ready to give members of the PAC expert advice and the information that we want.

Serving on the PAC is one of the most worthwhile and enjoyable duties that I have as a Member of Parliament, especially here at Westminster. It is easy for a Back-Bench Member in a Government party that has a substantial majority to become very bored and to have to go looking for something to do, but I assure the House that that is not often necessary when one is a member of the PAC with two thick reports a week to digest; there is plenty to do if one can get through those reports.

The beauty of the Committee is twofold: first, we keep it non-political and out of the realms of policy, although members of the Committee occasionally try it on - especially Opposition Members -

Mr. Bacon: Surely not.

Mr. Steinberg: Yes, they do, but the excellent Chairman of the Committee makes sure that the Opposition do not get away with it and are soon brought back into line. We all share the same aims: to root out inefficiency and waste, and to seek value for money - and to embarrass the accounting officer, some more than others. The second aspect of the PAC that I like is that it covers so many topics, as we can see from today's Order Paper. When I was a member of the Select Committee looking at education, education was the subject of report after report, week after week, year after year. To be frank, it was extremely boring. With the PAC, we have a different report twice a week and the topics are varied; from defence and social security to smuggling and the royal family. I did not put those two together on purpose. I do not intend to speak about those subjects today, and I am sure that the hon. Member for Bognor Regis and Littlehampton will be delighted to hear that.

For the first two or three years that I was on the Committee, we produced reports on the previous Government, so it was easy to criticise. It is becoming a bit more difficult now that it is the present Government's policies that are being examined and we can see the mistakes that they are making. However, that does not deter us; it is a pleasure to do it.

Another topic on which I do not wish to dwell is PFI, an issue that will be a constant source of discussion over the next few years. We need more time to have a look at PFI and deliberate before we come to any firm conclusions, although I accept that each PFI scheme will be looked at individually. I was very sceptical about PFI, particularly at the beginning, but I must admit that I am beginning to warm to it a bit more. It will be interesting to see the reports on the present PFI schemes.

On the Order Paper today, we see reference to two reports on PFI schemes; on the Royal Armouries museum in Leeds, which was a bit of a cock-up - if one is allowed to use that expression in the Chamber - and the other on the Treasury building. There will be many more in the future and we will be able to see the success, or otherwise, of such schemes.

Before I refer to the reports, I want to place on record my thanks to the Chairman of the Committee, the hon. Member for Gainsborough (Mr. Leigh), who does an excellent job.

Today I want to concentrate on three different, but worrying, reports, each of which deals with how taxpayers have to pick up the bill when things go wrong. When a mistake is made, it is our constituents who pick up the bill, which can add up to billions of pounds. We talk about "billions of pounds", but we do not realise how much that is; at least, I do not. It is a huge amount of money and our taxpayers have to pick up the bill when things go wrong.

The first report to which I shall refer was entitled "Tackling Obesity." It seems like an age since we did it, but it still seems to be hitting the headlines now. Although the hearing had its humorous moments, the topic is of immense importance because of the problems of obesity. Most adults in England are now overweight; that includes myself, although I would not go so far as to say that I was obese. One in five adults is obese, which results in about 18 million working days lost because of sickness and about 30,000 premature deaths a year. Those 30,000 deaths are probably not the ones to which the hon. Member for Bognor Regis and Littlehampton referred; obesity cuts people's lives considerably.

Obesity is costing the NHS about £0.5 billion a year and additional costs mean that the total comes to something like £2 billion. The situation is getting worse year by year. The National Audit Office estimated that, by the year 2010, the cost to the NHS would be something in the region of £3 billion a year.

When I read the report and listened to the evidence, I was - to say the least - a little cynical. There are, of course, people who are obese because of a medical condition but, frankly, most of them are obese because they over-indulge. They eat and drink too much and do not do enough exercise. Were it not for the fact that the taxpayer had to pick up the bill, I would probably say, "Let them get on with it. It is up to them." Unfortunately, the consequences for the rest of us are serious, so we should not allow them to get on with it. We should do something about it.

The vast majority of those who are obese or overweight, including myself - I do not deny that - eat too much, drink too much, eat the wrong food and do not do enough exercise. I am a lot more careful since I was told that I had high cholesterol. I went to see my doctor, who told me that I was too fat. I lost about a stone and a half and I do quite vigorous exercise now, so I feel rather proud of myself. I hope that people will take notice of what I am saying.

Should not every GP automatically advise their patients, as my doctor did? They do not, I am afraid. That does not happen. We found that doctors' attitude towards patients who are very fat or obese is pathetic. Only 40 per cent. of GPs identified those patients as being at greatest risk, and 2 per cent. of GPs did nothing. If they saw a great big fat lump sitting in front of them, they did not even mention it. They just allowed the patient to get up and walk out, without mentioning their weight. That is wrong. Seventy-five per cent. of GPs sent overweight patients somewhere else to do something about it. All they needed to say was, "Look, you're too fat. You need to take some exercise and you have to eat less." but they did not do that. They simply sent the patients somewhere else and brushed over the matter.

I concluded from the report that GPs were failing to tackle the problem, either because they did not take it seriously enough or because they did not have time. It is correct that they do not have time. The report is accurate about that and about the diseases associated with obesity. Doctors are contributing to their own work load, because if they fail to treat obesity, more patients will come back to them with the associated illnesses, so the doctors' attitude is counterproductive.

Targeting schoolchildren and influencing them is the most important way to combat the problem. It is probably impossible to change most adults' way of life. There was an article recently in one of the daily newspapers about a head teacher who, for the benefit of the pupil, had informed the parents that their child was obese, and rightly so. If I were a head teacher, I would have done the same thing. What did the parents do? Far from saying, "Thank you very much. We'll do something about it", they blew their top and went to the press, complaining about the disgraceful way in which the head teacher had picked on their child. If the parents had had any sense, they would not have reacted with outrage; they would have taken notice of the head teacher and done something about the problem.

We must educate children so that they can educate their parents. Parents must learn that a trip to McDonald's is not so much a treat as a health hazard. I asked questions such as why, for example, the Food Standards Agency does not target the unhealthy fast-food outlets or pressurise the food manufacturers to produce cheap, tasty, low-fat, low-salt, healthy food. The FSA does not do that and I did not get the impression in the hearing that it intended to do so.

Geraint Davies: I am listening carefully to what my hon. Friend is saying. Does he agree that schools should reduce the amount of salt and fat-impregnated food on offer and should not have coca-cola machines, and that the Government should think seriously about the possibility of not allowing advertising in the middle of children's programming to induce children to get hooked on salt and fat-impregnated processed food?

Mr. Steinberg: I am always delighted to give way to my hon. Friend. I wondered whether he had written my speech for me, as I shall come on to those topics in a few moments. If he will bide with me, he will get the answer.

The increase in fast-food intake, coupled with the huge decline in physical activity, is the main reason why children are becoming fatter. Sport England recently produced some statistics showing that the proportion of young people who spend two or more hours a week in curricular sport decreased from about 46 per cent. in 1994 to 33 per cent. in 1999. In the same period, the number of 17-year-olds walking to school fell from 59 per cent. to 49 per cent. Senior pupils have no excuse for not walking to school. They cannot be worried about what will happen on the way there. The reason is simply pure laziness, which means that they get lifts instead. Indeed, car journeys have doubled over the same period. One of the most frightening increases, however, has occurred in the number of hours spent watching television. The figure rose from about 13 hours a week in the 1960s to 26 hours a week in the 1990s. I suspect that any new research would find that much more time is spent in front of a screen, bearing in mind the development of computer games and so on.

Those very powerful statistics demonstrate a reduction in physical activity, but investment in sport and other physical activity has not declined. In the past 15 years, five sports centres have been built in my constituency. People cannot blame a lack of facilities for doing less exercise. I suspect that the problem is that we make too many excuses and that the population is merely becoming lazy. We are lazy in our eating habits - it is very easy to buy something from McDonald's or to fry our food - and our exercise.

Mr. Alan Williams: My hon. Friend is making some very interesting comments. I was lucky enough to attend a conference in the United States, which has an even worse child obesity problem than ours, where child psychologists said that children as young as two were now developing brand preference. That is why there are so many jolly little jingles and plastic give-away toys. Children who do not even know what they are telling their mums and dads that they want are being indoctrinated into brand preference and their parents will unthinkingly give them what they want.

Mr. Steinberg: My right hon. Friend is absolutely right. I visited America a number of years ago. The amount of food served there - especially meat - was, frankly, disgusting. One could not eat it all. If people eat in that way, it is not surprising that they are getting fat. He is right that television and advertisements are dictating the way in which people lead their lives.

The Government need to take some tough decisions to ensure that lifestyles change. On the points made by my hon. Friend the Member for Croydon, Central (Geraint Davies), I believe that every schoolchild should have at least two hours a week of timetabled and compulsory physical education. On his specific question, schools should be allowed to serve only healthy meals. There should be no chips or crisps. Manufacturers of unhealthy food should be banned from having any involvement with schools. Companies such as McDonald's, Walkers, Pepsi and Coca-Cola should not be allowed to give sponsorship to schools. We should not allow them to have any involvement with schools, let alone through sponsorship.

We could also ban cars from towns, which would make people walk a little more. Car parking should be banned outside schools and moved to, say, a quarter of a mile away. We should make kids walk to school if they have people who can accompany them. I know that those proposals are radical, but there is a reason why: our kids are eating the wrong foods, getting no exercise and suffering the consequences. Such measures need to be taken very seriously, because we are, frankly, killing ourselves.

The second issue that I want to raise is completely different, although it again relates to waste, value for money and even fraud in some cases. The operation and winding up of the Teesside development corporation relates to my area in the north of England. I know that this issue has been mentioned already, but I want to go into it in a little more detail. The TDC, which was the largest corporation of its kind, was set up in 1987 and wound up in 1998. It received some £354 million-worth of grants and generated income of about £116 million.

The usefulness of Members of Parliament is shown by the fact that this particular investigation was initiated by local MPs, who complained to the National Audit Office. They had worries about the corporation's operations, but they had gained little satisfaction from the then Department of the Environment, Transport and the Regions. As it proved, their worries were fully justified. The NAO's report clearly showed that, from an early date, the DETR and the regional government office in the north had had severe doubts about the TDC's financial probity and working, but had done very little about it. The report was highly critical of the lack of control and involvement of board members. They existed but were not used, and they appeared to take no interest in the running of the corporation. They sat back while some horrendous things went on.

The chief executive managed the TDC as a one-man band and was a complete law unto himself. On numerous occasions, he personally handled controversial property deals without the board's approval or even its knowledge. In the main, his financial director was not invited to board meetings, even when financial items were being discussed. How on earth that could happen God only knows, but it did. The chief executive ignored and overrode DETR cautions and warnings. The NAO investigated many cases. In two of them, the corporation had re-acquired sites from prospective developers for the original sum paid plus £1.6 million, even though none of the developments had actually taken place. In other words, £1.6 million of taxpayers' money was just given away to developers, in return for nothing other than getting the sites back.

The chief executive totally flouted the TDC's guidebook and his responsibilities as an accounting officer, and he ignored Treasury guidelines for accounting officers. That led to financial losses on transactions of some £11 million. He believed that his actions were justified because his primary role was to foster regeneration, by entrepreneurial means, with the private sector. However, he went far beyond what could be regarded as acceptable, and in doing so he abused his position, knowing full well that, at the end of the day, the taxpayer or the Government would bail him out if anything went wrong. He spent money that had not been approved by Parliament, and in the process he lost the taxpayer millions of pounds.

To make matters worse, when the NAO investigated the TDC, it was unable to find key information such as marketing and disposal files and contract files with developers, which, as we learned, had been shredded. In my view and that of many other Members, the very fact that those documents were missing and had been deliberately shredded shows that the NAO had discovered only the tip of the iceberg.

The worrying aspect of this case was that the then DETR clearly knew that something was not right about that corporation. For more than two years, the Member for Middlesbrough, South and Cleveland, East (Dr. Kumar) had tabled parliamentary questions that made specific and general allegations. The same Member met the relevant Minister, and an internal investigation took place. However, it concluded that limited evidence had been found, and that there was little point in investigating what was possibly maladminstration. In my view, nothing was done simply because the DETR knew that it would otherwise disturb a can of worms, and all hell would break loose. The NAO's later investigation did indeed discover a can of worms.

Thus I am very critical of what was, in essence, a failure on the part of the then DETR. In failing, it also failed the taxpayer.

Mr. Bacon: I am enjoying the hon. Gentleman's speech. Does the fact that the permanent secretary who was in charge at the time is now in charge of social security give the hon. Gentleman any cause for concern?

Mr. Steinberg: I am sure that the hon. Gentleman would not expect me to comment on that, except to say that I hope that that permanent secretary's record is a little better in social security than it was in dealing with the fraud that I mention. I had better not go down that line because I seem to remember that that permanent secretary said - what was it again? Perhaps I should not go into that any further. I am sure that, if I did, you would be very cross, Mr. Deputy Speaker, and I do not want that to happen.

When the corporation was wound up in 1998, it estimated that it had left a surplus of about £14.5 million. Again, after investigation, it became clear that there was no surplus at all. In fact, there was a deficit of about £23 million, but that could rise even further to as much as £40 million - a sorry state of affairs and, again, the taxpayer has had to pick up the bill.

The final report that I want to comment on is about the handling of medical negligence claims in England. The costs to the taxpayer are entirely different from those of obesity or the Teesside development corporation. I am trying to show that public money can be wasted in a number of different ways. By March 2000, provision to meet likely settlements for medical negligence was £2.6 billion and claims expected to arise from incidents that had occurred but had not been reported were estimated at a further £1.3 billion. Thus a total of £3.9 billion in medical negligence claims is expected. That is staggering. How many hospitals could be built with £3.9 billion, making such claims unnecessary because the hospitals would be in better condition?

Mr. Howard Flight (Arundel and South Downs): As has been mentioned, that report goes on to make the point that the legal costs are likely to be just as great as the claims, thus implying that the ultimate costs arising from that source may amount to about £7 billion.

Mr. Steinberg: Not being a mathematician, I will not go into the exact figure, but I intend to deal with that issue almost immediately.

On average, such claims take a long time to settle - about five and a half years. The point is that almost half the claims settled the year before last cost more in legal and other costs than the settlements themselves. For example, the cost of reaching settlements up to £50,000 was greater than the damages awarded in more than 65 per cent. of those cases. That report and the evidence itself make it clear that the whole system is totally chaotic and desperately needs an overhaul.

I think that all PAC members received a letter from Dr. Anthony Barton, who is apparently a solicitor and medical practitioner. In the letter that he wrote to me, he said:

"Victims of clinical negligence are rightly entitled to compensation; there must be affordable access to justice. Most cases are legally aided and most cases fail. The legal aid system (available only to a minority) is fundamentally flawed:
Funding is granted on the advice of the applicant's lawyer; the system is inherently biased, creating perverse incentives for unmeritorious cases to be pursued. This is amply borne out by the low success rates of these cases."

"The usual 'loser pays' rule of litigation does not apply to the legally aided claimant who enjoys costs protection; the claimant is in a no lose position and the health service defendant is in a no win position. Cases may be settled irrespective of merit in order to avoid irrecoverable legal costs (especially in low value claims). The system is inherently unfair.
The problems of clinical negligence litigation are inextricably linked to the flaws of the legal aid system."

He is absolutely right, as it became clear when we undertook that report.

The report made it clear that because of the difficulty of pursuing claims, few people were able to do so unless they were getting legal aid. If the legal aid was not available, they were excluded from the legal aid process, exactly as has been described. Steps were taken to address the problem by bringing in a no-win no-pay scheme, and claimants' solicitors have been able to add to their charges a success fee of up to 100 per cent. of their costs if the claimant wins - a bonus that is claimed from the loser. That worries me greatly, as I am sure that it will encourage the development of a litigation culture - as we have seen in the United States of America - in which solicitors chase ambulances and patients sue for the flimsiest of reasons.

A short while ago, I visited the hospital that is being built in my area under the private finance initiative, with which I am very pleased. When I came out of the gate, I saw pasted on nearby bus shelters posters advertising a firm of solicitors in Newcastle called Samuel Phillips and Co. The huge headline on the poster encouraged people to contact the firm "If the nurse has made it worse". I do not know what other Members of Parliament think of that, but I found it very distasteful. I accept that solicitors must advertise for business, but stooping to that kind of campaign is unacceptable.

I do not believe that the new conditional fee arrangements have improved patient access to justice. Indeed, they could have a detrimental effect, because solicitors will not want to take risks and claimants may not be able to get insurance. Between 1990 and 1998, claims rose by about 72 per cent. Is there more negligence, or are the public more aware of the litigation culture? In five years, the cost of claims has risen from about £200 million to £1.5 billion. The report says that the total value of outstanding claims - with only a 50 per cent. chance of success - in 2000 was about £4.3 billion. Those are staggering figures, which seem to indicate that we should concentrate on the apparent clinical incompetence throughout the national health service.

Obviously, claims are successful only if there has been negligence, and the report indicated that there had been £4.3 billion of incompetence in the NHS. I shall refer to some of the 94 negligence claims examined in a recent report, "Clinical Negligence in the National Health Service in Wales" - I presume that the situation is similar in England; there is no reason why it should not be. The Auditor General for Wales produced the report, so it is very reliable. One of the aspects examined was the frequency of alleged or admitted causes of clinical negligence. Of the 94 claims, more than 30 per cent. were for misdiagnosis by a doctor, 20 per cent. were for technical mistakes during an operation, 18 per cent. were for surgical mistakes during an operation, and less than 10 per cent. were for drug complications. To me, that was unbelievable.

The report also notes some of the main alleged or admitted causes of negligence; for example, under misdiagnosis, it lists:

"Doctor fails to take an x-ray. Doctor underestimates patient's concerns. Failure to recognise signs of illness."

"Failure to listen to the patient's requests. Failure to perform pre-operative checks. Failure to provide pre- or post-operative explanations. Inadequate supervision of instruments - dislodged or not removed."

"Damage to organs, muscles or nerves. Failure to administer appropriate drugs during operation. Incomplete operation."

We need to take drastic action to eradicate that incompetence. The arrogance of many medical professionals needs to be tackled, otherwise we shall continue to pay out millions of pounds in compensation. I have no faith at all in the British Medical Association as a regulator; we need an independent body to look into cases of alleged incompetence.

A pilot study in two London hospitals concluded that about 10 per cent. of patients admitted to acute hospitals experienced an adverse event, but that half those events were preventable. That is appalling and does not give us much confidence about going into hospital.

Patients should be able to check on whether a doctor has a record of negligence. Almost every constituent who comes to me with a complaint about a hospital has experienced a negative attitude from the hospital. Patients must have clear guidelines on the options open to them, whether for a complaint or a claim. If that occurred, most cases would never reach the stage where solicitors were involved. If trusts were more open and honest, the number of cases resulting in litigation would be considerably reduced and so would the bill to the taxpayer.

The House will be delighted to know that I have almost reached the end of my speech. The examples that I have highlighted from our investigations in 2001-02 show both the importance of the PAC in the fight against waste, inefficiency and incompetence and the need for all Departments to achieve value for money. Government spending needs constant scrutiny if there are to be real improvements. Scrutiny by the PAC has clearly led to improvements. By virtue of the excellent reports that we receive from the NAO and the vigorous way in which my colleagues on the PAC carry out their work, all expenditure is made accountable to Parliament.

4.33 p.m.

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Mr. Steinberg: I am sure that my hon. Friend remembers that the regulator objected to the increase of 1p in the price of a stamp. The Post Office suggested that that increase, which it was not allowed to make for many years, would have solved many of its problems. Does my hon. Friend agree that the regulator therefore put the Post Office in a worse position?

Geraint Davies: That is an important point. We found that, in the past five years, although the Post Office's turnover had increased from £6 billion to £8 billion, it had moved into negative profitability. The reason for that was that the real cost of a first class stamp had gone down by 8 per cent., because the Post Office was not allowed to raise the price of stamps. Yet when the British public were asked "What do you think about value for money?" nine out of 10 would reply, "It's very good value". The cost of a stamp here was about 30 per cent. less than in Germany and elsewhere.

We were finding that, in essence, the regulator was working against the public interest. The withdrawal of benefit income is causing the widespread destruction of postal services in the rural community. The amount involved is £400 million, which is a penny on stamps, and I believe that the public would agree to pay the extra penny for those extra services. But the public are not given that choice, because of the way in which the Post Office is set up and is commercially run, without factoring in social value as well.

Mr. Steinberg: When I asked the regulator about an increase of a penny on a stamp, he said that it was his ambition to see the price of a stamp decreased. That being the case, I think that the regulator was working against the Post Office rather than for it.

Geraint Davies: It was my experience that the regulator was completely out of touch with the public interest and was acting in a very narrow way. He clearly did not like Consignia or the people in it, and wanted to move forward irrespective of the outcome to the Royal Mail. Luckily, the public mood and the sterling work of our Committee managed to stop that and delay liberalisation.