Introduction

9. Select committees have been set core tasks, which are intended to encourage a more methodical approach to the business of scrutiny.[13] The core tasks are listed in Table 3 of the Annex. Table 4 of the Annex provides a summary analysis of the extent to which each subject considered by us and the Sub-Committee was relevant to the core tasks. The sections which follow describe those tasks and, with one exception, provide a commentary on selected work relevant to each core task. The exception is core task 3 relating to the scrutiny of draft bills. No draft bills have been published in 2007 relevant to our responsibilities, although we have recommended that the Government publish a draft Bill as part of its consideration of legislative changes to strengthen the role and work of Credit Unions.[14]

Task 1: Examination of policy proposals

10. The first core task is "to examine policy proposals from the UK Government and the European Commission in Green Papers, White Papers, draft Guidance etc, and to inquire further where the Committee considers it appropriate". We examined three significant published policy proposals during 2007:

• In February, we published a Report entitled Are you covered? Travel insurance and its regulation, which responded to a review of travel insurance initiated by the Government in November 2006;[15] our principal recommendation—that regulation of the bundled travel insurance market ought to be the responsibility of the Financial Services Authority—was accepted by the Government;[16]
• In August, we published a Report on Unclaimed assets within the financial system which examined Government proposals for money in dormant bank and building society accounts to be put to good use, without prejudice to the rights and entitlements of legal owners, and identified areas for improvement to the proposals in the legislation to follow;[17]
• In a Report on Financial inclusion follow-up: saving for all and shorter term saving products agreed in September and published in October we examined a Government consultation document on cooperative and credit union legislation, and make detailed comments on the content of possible future legislation.[18]

Task 2: Identification and examination of certain policies

11. The second core task is "to identify and examine areas of emerging policy, or where existing policy is deficient, and make proposals". In March 2007, we announced an inquiry into the Private equity industry, a decision which reflected a growing awareness of the economic importance of Private equity and of the public policy issues surrounding Private equity, most notably relating to transparency and taxation. The inquiry attracted widespread interest, providing an unprecedented opportunity for senior figures in the Private equity industry to explain their activities and enabling a wide variety of views on Private equity to be heard and considered. In July, we published an interim Report identifying a number of the issues that required further exploration.[19] That Report helped to set the context for consideration of the Capital Gains Tax reforms contained in the 2007 Pre-Budget Report and of the proposals for voluntary steps to improve transparency of portfolio companies and Private equity partners contained in a Report for the British Venture Capital Association issued by Sir David Walker in November. Towards the end of the year, we resumed our inquiry into Private equity with evidence from Sir David, and we expect to produce our final Report in 2008.

12. From an early stage in the present Parliament, we have identified Globalisation as a major topic with profound implications for public policy. In October 2007, we published a second Report on that subject,[20] following a Report on Globalisation: the role of the International Monetary Fund which we had published in 2006.[21] In the second, 2007 Report, entitled Globalisation: prospects and policy responses, we argued that an inexorable shift of economic power from West to East was underway, with India as well as China well-placed to act as a powerhouse of the global economy in coming years. We suggested that these developments necessitated a coherent policy response, centred on recognition of the implications of globalisation for highly-skilled jobs in the United Kingdom as well as less skilled jobs.[22] In its response, the Government described the Committee's Report as "timely and informed", and acknowledged that we were "right to emphasise the importance of ensuring public understanding of the impact of globalisation" on the United Kingdom.[23]

13. Since 2001, the Government has been developing a policy known as the Saving Gateway, whereby the Government matches contributions to specified savings schemes by low-income individuals or households with a contribution from public funds. Building on our previous analysis of the topic,[24] we published a Report in October 2007 which highlighted the central role which a national Saving Gateway could play in increasing the level of saving among low-income households and individuals and made detailed recommendations about the form and operation of a national Saving Gateway.[25] The Government is expecting to make an announcement about the roll-out of the Saving Gateway in the 2008 Budget, and welcomed the Committee's strong support for the Saving Gateway.[26]

Task 4: Examination of departmental documents and decisions

14. The fourth core task is "to examine specific output from the department expressed in documents or other decisions". The main documents published each year by the Treasury are the Budget and Pre-Budget Reports, and we examine a range of the decisions announced by the Chancellor of the Exchequer in our ensuing inquiries. In 2007, we published Reports on the 2006 and 2007 Pre-Budget Reports, as well as on that year's Budget.[27] The Committee's inquiries into Budgets and Pre-Budget Reports provide an early opportunity to examine Treasury officials and then the Chancellor of the Exchequer on the information and analysis underpinning individual tax decisions. Thus, for example, in October 2007, we were able to seek information on the assumptions underpinning proposals for new rules for non-domiciled taxpayers.[28] This role of the Committee is of especial value in the context of tax decisions in the Pre-Budget Report, where decisions are not subject to early debate on the floor of the House in same way as is the case with Budget decisions.

15. On two occasions in 2007 we emphasised the importance of the Pre-Budget Report as an opportunity for consultation before tax proposals take their final form.[29] We pursued the issue of Treasury decision-making in this context with particular reference to the changes announced in the 2007 Pre-Budget Report relating to Capital Gains Tax. We were concerned that the Treasury appeared not to have consulted explicitly on the withdrawal of taper relief, and recommended that the Government clarify the points on which it was prepared to consider the representations of affected parties.[30]

Task 5: Examination of expenditure

16. The fifth core task is "to examine the expenditure plans and out-turn of the department, its agencies and principal NDPBs". The Treasury Committee has long accorded a high priority to scrutiny of expenditure, both in relation to the Chancellor's departments own expenditure and the Treasury's overall role in allocating and controlling public expenditure. A significant part of the Sub-Committee's work is devoted to scrutiny of financial matters, most notably in relation to the Treasury's management of its own resources and to the expenditure of HM Revenue & Customs. With our agreement, HM Treasury has participated in a pilot project for combining its Departmental Annual Report with its Departmental Resource Accounts, a combination intended in part to facilitate effective scrutiny of expenditure. We have noted the proposal of the Liaison Committee that all appropriate select committees should report on their scrutiny of Departmental Annual Reports,[31] and we expect to agree a Report arising from the Sub-Committee's scrutiny of the administration and expenditure of the Chancellor's departments in 2006-07 early in 2008.

17. Our examination of the Treasury's wider role in relation to public expenditure was concentrated in 2007 on analysis of the Comprehensive Spending Review. In June 2007, we published a Report on prospects for the Comprehensive Spending Review, which placed the expected decisions in their broad fiscal context and examined proposed changes to the performance management framework with effect from April 2008. We also made a number of recommendations designed to ensure a fuller role for the House of Commons and its select committees in the development of that framework.[32] In December 2007, following the announcement of the final outcome of the Comprehensive Spending Review, we published a further Report, which paid particular attention to the central importance of the efficiency programme for the Government's ambitions for coupling spending restraint with improved public services up to 2010-11, and also highlighted some reporting issues affecting understanding of individual spending settlements.[33]

Task 6: Examination of Public Service Agreements and targets

18. The sixth core task is "to examine the department's Public Service Agreements, the associated targets and the statistical measurements employed, and report if appropriate". The Treasury has hitherto had joint responsibility—and from April 2008 will have lead responsibility—for the Public Service Agreement relating to child poverty. Performance against the targets in that Agreement has been the subject of recurring scrutiny in our Reports on Budgets and Pre-Budget Reports.[34] In December 2007, in our Report on the outcome of the Comprehensive Spending Review, we looked at various aspects of the new Public Service Agreement for child poverty, including the role and relationship of different Government departments in meeting the target, the indicators used for the measurement of material deprivation and the prospects for meeting the next, 2010-11 target to halve child poverty.[35] The Sub-Committee examined Treasury officials in November 2007 on performance in relation to other Public Service Agreements, and we will be reporting further on this matter in our forthcoming Report on the administration and expenditure of the Chancellor's departments in 2006-07.

19. From April 2008, the existing performance management framework with 120 Public Service Agreements is being replacement by a new structure with only 30 Public Service Agreements and separate Departmental Strategic Objectives. We examined the role of the new Departmental Strategic Objectives and their relationship with Public Service Agreements in our Reports in June and December on the Comprehensive Spending Review.[36] Following a suggestion we made in our June Report,[37] the Treasury contacted us to consult on the development of its new Public Service Agreements and Departmental Strategic Objectives. We have published the resulting correspondence,[38] and will be discussing the outcome further when we report on the administration and expenditure of the Chancellor's departments in 2006-07.

20. All of the new Public Service Agreements for Government are intended to be cross-departmental in nature. In view of this, we have recommended that performance against outcome indicators in new Public Service Agreements be reported on in new cross-departmental publications on a bi-annual basis in relation to each such Agreement, separate from departmental annual reports and autumn performance reports. We have argued that such separate publications could encourage more effective cross-cutting scrutiny of Public Service Agreements between select committees concerned.[39] We expect to explore the opportunities for such cross-cutting scrutiny in the coming year.

Task 7: Monitoring of associated public bodies

21. The seventh core task is "to monitor the work of the department's Executive Agencies, NDPBs, regulators and other associated public bodies". Since one such body, the Monetary Policy Committee (MPC) of the Bank of England, was granted operational independence in monetary policy in 1997, the Treasury Committee has attached importance to accountability and scrutiny of interest rate decisions, principally through hearings on inflation reports. In 2007, in addition to hearings on those reports,[40] we conducted a major inquiry into the MPC's role and work, ten years on from its establishment. We concluded that the MPC had made a significant contribution to the goal of maintaining a low inflation environment in the United Kingdom, but also recommended some changes to enhance the MPC's transparency, including immediate publication of a record of the votes of each MPC member after MPC decisions are released, greater transparency of individual MPC members' positions in the minutes of the MPC, and further work on improving the public's understanding of monetary policy.[41]

22. The Sub-Committee takes regular evidence from HM Revenue & Customs (HMRC). Early in 2007, sessions were held with that body and with the responsible Treasury Minister about the experience of, and lessons learned from, the merger of HM Customs & Excise and Inland Revenue.[42] At that time, the Sub-Committee also examined the Debt Management Office (DMO), the Valuation Office Agency and National Savings & Investments on issues arising from their reports and accounts for 2005-06.[43] We will report in due course on the outcome of the Sub-Committee's scrutiny sessions towards the end of 2007 with the Royal Mint, the Office of Government Commerce and HMRC.

Task 8: Scrutiny of major appointments

23. The eighth core task is "to scrutinise major appointments made by the department". Since 1998, the Treasury Committee has been at the forefront of innovation in this area, holding appointment hearings with all new appointees to the MPC. We have maintained this practice,[44] and in 2007 we held hearings with two members re-appointed to the MPC.[45] In early July 2007, alongside the Government's Green Paper on the Governance of Britain,[46] the Chancellor of the Exchequer indicated that he would invite us to hold pre-commencement hearings with all appointees to the MPC, including the Governor of the Bank of England and his Deputies (as well as with the Chairman of the Financial Services Authority).[47] In our Report on the MPC's first ten years, we welcomed this formal acknowledgement of the Committee's role; we recommended that nominations be made at least three months prior to the date on which the vacancy falls to be filled; and proposed that a debate in the House of Commons be held in relation to any nomination on which we came to an adverse opinion.[48]

24. In its Green Paper published on 3 July 2007, as part of its wider proposals for greater parliamentary involvement in key public appointments, the Government proposed that there be a vote in the House of Commons on the Government's nominee for the post of Chair of the new Statistics Board to be established under what is now the Statistics and Registration Service Act 2007.[49] On 17 July, we decided to hold a hearing with the first nominee, Sir Michael Scholar, and make a report in order to inform the House of Commons about the nominee in advance of the debate. We supported Sir Michael's nomination, and made recommendations drawing upon our experience as the first Committee to hold a pre-appointment hearing under the new procedures.[50]

25. In December, the Chairman of the Committee gave oral evidence to the Public Administration Select Committee on parliamentary oversight of public appointments, drawing upon the Treasury Committee's extensive experience in this area.[51] We look forward to continuing to develop our role in relation to senior appointments made by the Treasury in relation to which there is a particular or direct parliamentary interest.

Task 9: Examination of implementation of legislation and policy

26. The ninth core task is "to examine the implementation of legislation and major policy initiatives". The inquiry into the MPC of the Bank of England, to which we referred earlier,[52] provided us with an opportunity to review the legislative framework within which the MPC operated as well as the MPC's own activities. We concluded that the provisions of the Bank of England Act 1998 had contributed to the success of the new monetary policy framework and that amending legislation did not need to be accorded a high priority within the Government's legislative programme.[53] However, we identified some changes that could usefully be made to that Act should an opportunity to arise, changes principally designed to give the MPC greater flexibility in its work.[54]

Task 10: Informing parliamentary debate

27. The tenth core task is "to produce reports which are suitable for debate in the House, including Westminster Hall, or debating committees". There is usually a substantial time lag between the publication of a Report and any ensuing debate on Westminster Hall. We consider it important that such debates are, whenever possible, informed by an up-to-date understanding of the matters under consideration. Accordingly, we undertook additional work before each of the two Westminster Hall debates on our Reports in 2007. On the day before a Westminster Hall debate took place in March on the Report we had produced in June 2006 on the administration of tax credits,[55] the Sub-Committee held a follow-up session with the Minister and Treasury and HMRC officials, thus ensuring an even more informed and topical debate.[56] Similarly, after agreement in principle had been reached to hold a Westminster Hall debate on the three Reports we produced in 2006 on financial inclusion,[57] we published prior to the debate a follow-up Report reflecting subsequent developments,[58] which informed the ensuing debate.[59]

28. The relevance of our Committee's work to proceedings in the House has by no means been restricted to debates specifically on our work. In our Report published in January on the 2006 Pre-Budget Report, we were the first to identify the unusual nature of the Government's decision to bring higher rates of Air Passenger Duty into force before the House of Commons had had an opportunity to come to a formal decision on the proposed increase.[60] This matter was subsequently followed up on several occasions in the House—through questions to Treasury Ministers,[61] points of order,[62] questions to the Leader of the House,[63] a debate in Westminster Hall,[64] and proceedings on the Finance Bill.[65]

29. The Report which the Committee produced in July 2006 arising from the Sub-Committee's inquiry into Independence for Statistics was "tagged" as relevant to proceedings on Second Reading of the Statistics and Registration Service Bill in the House of Commons,[66] and proved highly relevant to debate at all stages on the Bill in both Houses. Amendments made to the Bill in the course of its passage meant that the legislation as enacted made improved provision for the clearer separation of executive and non-executive responsibilities for which we had argued.[67] Our concerns about pre-release of statistics to Ministers and others were also the subject of Ministerial undertakings during proceedings on the Bill, and have been followed by a Government consultation on arrangements for pre-release of statistics.[68] Similarly, our Report on Unclaimed assets within the financial system has already helped to inform and influence debate on the Dormant Bank and Building Society Accounts Bill in the House of Lords,[69] and should assist during proceedings on that Bill in the Commons.

14   HC (2007-08) 504, para 116 Back

15   Treasury Committee, Fourth Report of Session 2006-07, Are you covered? Travel insurance and its regulation, HC 50-I; HM Treasury, Travel insurance review: Call for evidence, November 2006 Back

16   HC (2006-07) 50-I, paras 41-42; Treasury Committee, Sixth Special Report of Session 2006-07, Are you covered? Travel insurance and its regulation: Government Response to the Committee's Fourth Report of Session 2006-07, HC 933, pp 2-3 Back

17   HC (2006-07) 533 Back

18   HC (2006-07) 504, paras 116-121 Back

19   Treasury Committee, Tenth Report of Session 2006-07, Private equity, HC 567-I Back

20   Treasury Committee, Fourteenth Report of Session 2006-07, Globalisation: prospects and policy responses, HC 90 Back

21   Treasury Committee, Ninth Report of Session 2005-06, Globalisation: the role of the IMF, HC 875 Back

22   HC (2006-07) 90, Summary Back

23   Treasury Committee, Fourth Special Report of Session 2007-08, Globalisation: prospects and policy responses: Government Response to the Committee's Fourteenth Report of Session 2006-07, HC 201, pp 1, 3 Back

24   Treasury Committee, Twelfth Report of Session 2005-06, Financial inclusion: credit, savings, advice and insurance, HC 848-I, paras 103-111 Back

25   HC (2007-08) 504, paras 98-112 Back

26   Treasury Committee, Third Special Report of Session 2007-08, Financial inclusion follow-up: saving for all and shorter term saving products, HC 167, p 17 Back

27   Treasury Committee, Second Report of Session 2006-07, The 2006 Pre-Budget Report, HC 115; Treasury Committee, Fifth Report of Session 2006-07, The 2007 Budget, HC 389-I; Treasury Committee, Second Report of Session 2007-08, The 2007 Pre-Budget Report, HC 54-I Back

28   HC (2007-08) 54-I, paras 67-73 Back

29   HC (2006-07) 115, paras 94-95; HC (2007-08) 54-I, paras 74-76 Back

30   HC (2007-08) 54-I, para 41 Back

31   HC (2006-07) 406, para 32 Back

32   Treasury Committee, Sixth Report of Session 2006-07, The 2007 Comprehensive Spending Review: prospects and processes, HC 279 Back

33   Treasury Committee, First Report of Session 2007-08, The 2007 Comprehensive Spending Review, HC 55 Back

34   HC (2006-07) 115, paras 62-74; HC (2006-07) 389-I, paras 46-48 Back

35   HC (2007-08) 55, paras 38-64 Back

36   HC (2006-07) 279, paras 88-95; HC (2007-08) 55, paras 28-37 Back

37   HC (2006-07) 279, para 102 Back

38   HC (2007-08) 55, Ev 21-34 Back

39   Ibid., paras 32, 37 Back

40   Treasury Committee, Oral and written evidence, Bank of England February 2007 Inflation Report, HC (2006-07) 414-i; Treasury Committee, Oral and written evidence, Bank of England May 2007 Inflation Report, HC (2006-07) 568-i; Treasury Committee, Oral and written evidence, The November 2007 Inflation Report, HC (2007-08) 139-i Back

41   Treasury Committee, Twelfth Report of Session 2006-07, The Monetary Policy Committee of the Bank of England: ten years on, HC 299-I Back

42   Treasury Sub-Committee, Oral and written evidence, The merger of HM Customs & Excise and Inland Revenue, HC (2006-07) 192-i Back

43   Treasury Sub-Committee, Oral evidence, Debt Management Office: Report and Accounts for 2005-06, HC (2006-07) 190-I; Treasury Sub-Committee, Oral and written evidence, The Valuation Office Agency: Annual Report 2005-06, HC (2006-07) 236-I; Treasury Sub-Committee, Oral and written evidence, National Savings and Investments: Annual Report and Accounts 2005-06, HC (2006-07) 327-i Back

44   HC (2006-07) 191, para 29 Back

45   Treasury Committee, Seventh Report of Session 2006-07, The Monetary Policy Committee of the Bank of England: re-appointment hearing for Ms Kate Barker and Mr Charlie Bean, HC 569-I and II Back

46   Ministry of Justice, The Governance of Britain, Cm 7171, July 2007 Back

47   HC Deb, 3 July 2007, col 43WS Back

48   HC (2006-07) 299-I Back

49   Cm 7171, para 80 Back

50   Treasury Committee, Ninth Report of Session 2006-07, The appointment of the Chair of the Statistics Board, HC 934 Back

51   See Public Administration Select Committee, Third Report of Session 2007-08, Parliament and public appointments: Pre-appointment hearings by select committees, HC 152 Back

52   See paragraph 21. Back

53   HC (2006-07) 299-I, para 7 Back

54   Ibid., paras 86, 91 Back

55   HC Deb, 15 March 2007, cols 141-184WH; Treasury Committee, Sixth Report of Session 2005-06, The administration of tax credits, HC 811-I Back

56   Treasury Sub-Committee, Oral and written evidence, The administration of tax credits follow-up, HC (2006-07) 382-i Back

57   HC (2005-06) 848-I; Treasury Committee, Thirteenth Report of Session 2005-06, "Banking the unbanked": banking services, the Post Office Card Account and financial inclusion, HC 1717; Treasury Committee, First Report of Session 2006-07, Financial inclusion: the roles of the Government and the FSA, and financial capability, HC 53 Back

58   HC (2006-07) 504 Back

59   HC Deb, 15 November 2007, cols 1-38WH Back

60   HC (2006-07) 115, paras 97-100 Back

61   HC Deb, 25 January 2007, cols 1551-1552 Back

62   HC Deb, 31 January 2007, col 235 Back

63   HC Deb, 1 February 2007, cols 367-368 Back

64   HC Deb, 20 February 2007, cols 49-56WH Back

65   HC Deb, 23 April 2007, cols 685-686; HC Deb, 1 May 2007, cols 1416-1445; HC Deb, 25 June 2007, cols 45-65 Back

66   HC Deb, 8 January 2007, cols 23-111 Back

67   See HC (2006-07) 934-I, paras 10-12 and references given there. Back

68   HM Treasury and Cabinet Office, Limiting pre-release access to statistics: a consultation document, December 2007 Back

69   See HL Deb, 10 December 2007, cols GC9-10 Back