House of Commons The Public Accounts Commission

Twenty-third Report: Work of the Commission in 2017

HC 907

House of Commons The Public Accounts Commission

Twenty-third Report: Work of the Commission in 2017

Presented to the House of Commons pursuant to section 2(3) of the National Audit Act 2003

Ordered by the House of Commons to be printed 21 March 2018

HC 907 Published on 26 March 2018 by authority of the House of Commons The Public Accounts Commission The Public Accounts Commission is defined by the National Audit Act 2003 and the Budget Responsibility and National Audit Act 2011. The Commission’s principal duties under the Acts are to review the National Audit Office (NAO) Estimate and lay it before the House of Commons, to appoint the accounting officer for the NAO, to appoint an auditor for the NAO, to appoint non-executive members of the NAO board (other than the chairman), and to report from time to time.

Current membership Sir MP (Conservative, Gainsborough) (Chair) Mr Richard Bacon MP (Conservative, South Norfolk) Jack Brereton MP (Conservative, Stoke-on-Trent South) Mr Nicholas Brown MP (Labour, Newcastle upon Tyne East) Martyn Day MP (Scottish National Party, Linlithgow and East Falkirk) Clive Efford MP (Labour, Eltham) MP (Labour (Co-op), Hackney South and Shoreditch) (ex-officio as Chair of the Public Accounts Committee) Julian Knight MP (Conservative, Solihull) Andrew Leadsom MP (Conservative, South Northamptonshire) (ex-officio as Leader of the House of Commons)

Publications The Reports and evidence of the Commission are published by Order of the House. All publications of the Committee can be found on the publications page of the Committee website.

Committee staff The current staff of the Commission are Dr Michael Everett (Secretary to the Commission) and Ronnie Jefferson (Assistant Secretary).

Contacts All correspondence should be addressed to Dr Michael Everett, Secretary to the Commission, House of Commons, SW1A 0AA; [email protected]. The telephone number for general enquiries is 020 7219 2924. Twenty-third Report: Work of the Commission in 2017 1

Contents

Introduction 3

Statutory Functions 4

Work in 2017 5

Annex A: Formal Minutes of meetings held in 2017 6

Appendix to 21 March 2017 proceedings 8

Appendix to 12 December 2017 proceedings 8

Annex B: Supporting documentation for meetings of the Public Accounts Commission in 2017 10

Twenty-third Report: Work of the Commission in 2017 3

Introduction 1. This is the twenty-third report made to the House of Commons since the establishment of the Public Accounts Commission under the National Audit Act 1983. This report covers the work of the Commission during the calendar year 2017.

2. The Commission has nine members. Two - the Leader of the House of Commons and the Chair of the Public Accounts Committee (PAC) - are members ex-officio. The others are appointed by the House of Commons.

3. The membership of the Commission during 2017 was as follows: Mr Richard Bacon Philip Boswell (until May 2017) Mr Nicholas Brown Jack Brereton James Cartlidge (until May 2017) Martyn Day Clive Efford Meg Hillier Julian Knight Sir Edward Leigh Mr David Lidington (until May 2017) Ian Murray (until May 2017) Mr Andrew Tyrie (until May 2017)

4. Sir Edward Leigh was Chairman of the Commission during 2017.

5. Helen Wood was Secretary of the Commission throughout 2017. The Assistant Secretary throughout 2017 was Ronnie Jefferson. 4 Twenty-third Report: Work of the Commission in 2017

Statutory Functions 6. The Public Accounts Commission was established under section 2 of the National Audit Act 1983. The Budget Responsibility and National Audit Act 2011 put the arrangements for the governance of the NAO on a statutory basis, and, in particular, established the NAO as a body corporate. It also revised the statutory responsibilities of the Commission.

7. Section 23 of the 2011 Act states that the NAO and the Comptroller and Auditor General (C&AG) must jointly prepare an Estimate of the NAO’s resources, including resources necessary for the C&AG’s functions. The Commission must review the Estimate and lay it before the House of Commons – modified where it considers appropriate – and in doing so must have regard to any advice provided by the Public Accounts Committee or the Treasury.

8. Under paragraph 4 of schedule 2 of the 2011 Act, the Commission also appoints non- executive members of the NAO board (other than the chair), on the recommendation of the chair. In the event of the Commission not appointing, the chair of the NAO must make another recommendation.

9. Under paragraph 24 of the same schedule the Commission must appoint the C&AG (or some other appropriate person) as the NAO’s accounting officer. Under paragraph 25 the Commission must approve the appointment of an auditor for the NAO for each year and lay the NAO’s Report and Accounts before the House of Commons.

10. Paragraph 1 of schedule 3 of the 2011 Act requires the NAO and the C&AG to prepare and maintain a strategy for national audit functions, including a plan for the use of resources. This strategy (including any revision) must be submitted for approval to the Public Accounts Commission (which may modify it) having regard to any advice given by the Treasury.

11. Under paragraph 8 of the same schedule, the Commission must approve any revision to the Scheme of Audit Fees and, under paragraph 10, must approve a Code of Practice dealing with the relationship between the NAO and the Comptroller and Auditor General. Twenty-third Report: Work of the Commission in 2017 5

Work in 2017 12. The Commission held two formal meetings during 2017: on 21 March and 12 December. Formal minutes of these meetings are reproduced in Annex A. Annex B lists the supporting documentation that is available from the Parliament website. Oral evidence from witnesses was taken in public at both meetings. Its hearings are also webcast via a link on the Parliament website.

13. Ten Parliamentary Questions were tabled to the Chair of the Public Accounts Commission during 2017. Six of these were answered orally; four in writing.

14. In March the Commission considered the NAO’s Estimate for 2017/18 which sought approval for a net cash requirement of £67, 174, 000. The Commission received observations from HM Treasury. The Treasury suggested the Commission might like to seek assurances on the readiness of the NAO to take on its new audit responsibilities toward the BBC and assurances about the progress of the NAO’s IT transformation, including the implementation of new cloud-based programmes. Oral evidence was taken from the Comptroller and Auditor General (Sir Amyas Morse), the Chairman of the NAO (Lord Bichard) and its Chief Operating Officer (Mr Michael Whitehouse). The Commission agreed to provide the Estimate requested by the NAO.

15. At the meeting on 12 December the Commission considered the NAO’s Strategy for 2018/19 to 2020/21. The Commission also received written observations from HM Treasury. Evidence was again taken from the Comptroller and Auditor General, the Chairman of the NAO and its Chief Operating Officer. The Commission also received written observations from HM Treasury. Areas that were considered in detail during questioning included: concern over the NAO seeking additional contingency funding of 2%; improving staff confidence in the NAO’s new IT systems; the costings for IT security; areas for further efficiency savings and possible alternative locations for the NAO’s headquarters. The Commission approved the Strategy without modification.

16. The Commission also agreed to lay before the House of Commons the annual value for money (VfM) report on the NAO by its auditors, Crowe Clark Whitehill. The 2017 report was entitled Value for Money study - Delivery of benefits from the NAO’s IT-enabled change programme.1

1 Value for Money study - Delivery of benefits from the NAO’s IT-enabled change programme, HC 584 6 Twenty-third Report: Work of the Commission in 2017

Annex A: Formal Minutes of meetings held in 2017

Tuesday 21 March 2017

Members of the Commission present:

Sir Edward Leigh, in the Chair

Mr Richard Bacon Meg Hillier Philip Boswell Mr David Lidington Mr Nicholas Brown

Apologies: Ian Murray, Mr Andrew Tyrie

1. Declaration of interests

Mr David Lidington declared his interests: see Appendix

2. NAO’s Estimate for 2017/18

The Commission approved a 2017/18 net resource Estimate for the National Audit Office of £66.6 million. The Commission approved a 2017/18 capital Estimate for the National Audit Office of £1.3 million.

3. 22nd Report of the Public Accounts Commission

The Commission agreed to publish the report on its activities in 2016.

HELEN WOOD (Secretary to the Public Accounts Commission) Twenty-third Report: Work of the Commission in 2017 7

Tuesday 12 December 2017

Members of the Commission present:

Sir Edward Leigh, in the Chair

Mr Richard Bacon Julian Knight Jack Brereton Andrea Leadsom Clive Efford

Apologies: Mr Nicholas Brown, Meg Hillier

1. Declaration of Members’ Financial Interests

Commissioners declared their interests: see Appendix.

Additional interests were noted: Richard Bacon declared a visit as part of a fact finding delegation to Lebanon in April and a visit to the Islamic Republic of Iran in August to attend the inauguration of the President. Details would be sent to the Registrar of Interests.

2. Election of Chairman

Sir Edward Leigh was confirmed in place as the Chair.

3. Minutes of the last meeting

The minutes of the last meeting held on Tuesday 21 March 2017 were approved.

4. Consideration of the National Audit Office’s Strategy for 2018/19 to 2020/21 (in public)

Evidence was taken from Sir Amyas Morse (Comptroller and Auditor General), Lord Bichard (NAO Chairman) and Daniel Lambauer (Executive Leader, Strategy and Operations).

The Commission approved the National Audit Office’s Strategy for 2018/19 to 2020/21.

5. NAO’s VFM Report: Delivery of benefits from the National Audit Office’s IT- enabled change programme (in public)

The Commission took note of the report and agreed to lay the report before the House.

HELEN WOOD (Secretary to the Public Accounts Commission) 8 Twenty-third Report: Work of the Commission in 2017

Appendix to 21 March 2017 proceedings The Register of Members’ Financial Interests as at 6 March 2017

Lidington, Mr David (Aylesbury)

Nil

Appendix to 12 December 2017 proceedings The Register of Members’ Financial Interests As at 27 November 2017

Leigh, Sir Edward (Gainsborough)

1. Employment and earnings

Non-executive director of Europe Arab Bank, 15 Moorgate, London EC2R 6AD: From 1 October 2016 until 30 September 2017, I received an annual salary of £74,000, paid monthly, for an expected monthly commitment of 20–30 hrs. (Registered 03 November 2017) From 1 October 2017 until further notice, I will receive an annual salary of £74,000, paid monthly, for an expected monthly commitment of 20–30 hrs. (Registered 03 November 2017)

2. Visits outside the UK

Name of donor: (1) Italian IPU Group; (2) All Party Parliamentary Group for Address of donor: (1) Protocol Office, Chamber of Deputies, Piazza del Parlamento, 24 00186 Rome; (2) c/o House of Commons, London SW1A 0AA Estimate of the probable value (or amount of any donation): (1) hotel accommodation and lunch for me (£595) and my wife (additional cost of £135); (2) dinners on two evenings for myself and my wife (£74 each). Destination of visit: Rome, Italy Dates of visit: 19 to 22 September 2016 Purpose of visit: With APPG Italy delegation, to discuss potential implication of with senior Italian parliamentarians, and also to meet with the British Ambassador and to attend a plenary of the chamber of Deputies. (Registered 07 November 2016)

8. Miscellaneous

Barrister, not currently practising. (Registered 22 May 2015)

9. Family members employed and paid from parliamentary expenses

I employ my wife, Mary Leigh, as Office Manager. Twenty-third Report: Work of the Commission in 2017 9

Bacon, Mr Richard (South Norfolk)

4. Visits outside the UK

CMEC Parliamentary fact finding delegation to Lebanon 20–24 April 2017 Name of donor: Conservative Middle East Council Address of donor: 55 Tufton Street, London, SW1P 3QL Amount of donation (or estimate of the probable value): accommodation, food and transport with a total value of £2,248 Destination of visit: Lebanon Date of visit: 20–24 April 2017 Purpose of visit: Parliamentary fact finding (To be added to next update of Register for declaration made on Tuesday 12 December 2017)

Visit to the Islamic Republic of Iran 4 – 10 August 2017 Name of donor: Government of the Islamic Republic of Iran Address of donor: Embassy of Iran, 16 Princes Gate, London SW7 1PT Amount of donation (or estimate of the probable value): accommodation, food and transport with a total value of £867. I stayed in the British Embassy in Tehran apart from hotel accommodation for two nights provided by the Government of the Islamic Republic of Iran. Destination of visit: Iran Date of visit: 4 – 10 August 2017 Purpose of visit: To attend the Inauguration of H.E. Hassan Rouhani as President of the Islamic Republic of Iran and to meet Iranian parliamentarians. (To be added to next update of Register for declaration made on Tuesday 12 December 2017)

8. Miscellaneous

I am a patron of Elizabeth’s Legacy of Hope, a registered charity in England and Wales, No 1141287. During the course of overseas visits I may from time to time undertake engagements on behalf of the charity. (Registered 25 January 2013; updated 26 May 2015)

Brereton, Jack (Stoke-on-Trent South)

1. Employment and earnings

Councillor, Stoke on Trent City Council, Civic Centre, Glebe Street, Stoke-on-Trent ST4 1HH. Until May 2019, I will receive an allowance of £12,000 per annum. Hours: 5–10 hrs per week. This allowance will be donated to local charities. (Registered 05 July 2017)

2.(a) Support linked to an MP but received by a local party organisation or indirectly via a central party organisation

Name of donor: Mr Jeremy Hosking Address of donor: private Amount of donation, or nature and value if donation in kind: £5,000 Donor status: individual (Registered 07 July 2017) 10 Twenty-third Report: Work of the Commission in 2017

Annex B: Supporting documentation for meetings of the Public Accounts Commission in 2017 All publications from the Committee are available on the publications page of the Committee’s website.

Supporting documents relating to the meeting on Tuesday 21 March 2017

TPAC 17/01 Declaration of Members’ Financial Interests – Rt Hon David Lidington TPAC 17/02 Draft NAO Supply Estimate 2017/18 TPAC 17/03 Memorandum on NAO Supply Estimate for 2017/18 TPAC 17/04 Letter from HM Treasury on NAO Supply Estimate for 2017/18 TPAC 17/06 Draft 22nd Report of the Public Accounts Commission TPAC 17/07 Letter from Chair of the PAC on NAO Estimate Minutes of meeting held on 13 December 2016

Supporting documents relating to the meeting on Tuesday 12 December 2017

TPAC 17/08 Register of Members’ Financial Interests – Declaration of interests TPAC 17/09 Letter from HM Treasury re Lord Bichard’s reappointment TPAC 17/10 Reply from Meg Hillier MP to HM Treasury re Lord Bichard’s appointment TPAC 17/12 NAO Strategy 2018–19 to 2020–21 TPAC 17/13 Letter from HM Treasury on Draft NAO Strategy 2018/19 to 2020/21 TPAC 17/14 Letter from NAO Trade Union Side re. NAO’s budget proposal in the strategy for 2018/19 to 2020/21 TPAC 17/15 VFM study: Delivery of benefits from the National Audit Office’s IT- enabled change programme (HC 584) TPAC 17/16 Letter from Chair of the Public Administration and Constitutional Affairs Committee Minutes of meeting held on Tuesday 21 March 2017