Mandarins can complain to MPs

Nolan committee hears that public finance watchdog now told if advice t o ministers overruled

Senior Whitehall mandarins who formally dissent against a decision of their minister can now notify MPs, it was disclosed yesterday. In a major opening up of the secretive Government decision-making process, Robert Sheldon, chairman of the Commons Public Accounts Committee, said a senior Treasury official had made the offer in a letter to him three days ago. Although the letter did not say so, the change will be widely interpreted as having been prompted by the Pergau dam affair.

Describing the reform as "enormously important", Mr Sheldon said he had secured the Government's agreement that when a permanent secretary writes a note disagreeing with a decision, the accounts committee will be told.

Mr Sheldon was giving evidence to the Nolan committee looking into standards in public life. He said the Treasury letter came "out of the blue". Asked what lay behind the timing, Mr Sheldon said his impending appearance before Nolan "may well have had something to do with it".

The only substantiated recent case of a permanent secretary protesting and being overruled was Pergau. There, Sir Tim Lankester, permanent secretary at the Overseas Development Administration, objected to the granting of aid to the Malaysian dam. His stance gave the subsequent inquiries by the public finance watchdogs, the National Audit Office and the Public Accounts Committee, much greater impetus.

Sir Tim's opposition, however, only became known because he was brave enough to say so. Other instances, which in their own way could have been as controversial as Pergau, have remained buried.

In future, though, that will not be the case. Mr Sheldon said the accounts committee - permanent secretaries fulfil a dual role as head of the department and accounting officer responsible for its finances, hence the committee's interest - "will be notified of all notes of dissent". The Treasury letter, he said, took effect immediately.

While Mr Sheldon and Sir John Bourn, the National Audit Office chief sitting alongside him, had obtained one concession, they complained to Nolan that it was still not enough.

Lord Nolan, the head of the inquiry, was particularly receptive to their argument that they should be allowed to examine the books of all quangos.

At present, one-third of the myriad non-departmental bodies have their accounts privately audited.

Sir John promised to supply the committee with a list of those quangos, covering an "enormous range" of activities, to which, mainly for reasons that often defied logic, he was denied access.

Sir John also made a plea - which again appeared to meet with committee approval - that he be allowed to pursue public money once it has been paid into private hands. Unlike his equivalents in the EC and US, he observed, he did not have that power.

The most obvious anomaly was with the EC itself, where the European Court of Auditors could follow suspected corruption right to the end. The National Audit Office is unable to explore whether, for example, a private company has any relationship with anofficial.

Sir John said he had taken up the European Court of Auditors example at a recent meeting with Kenneth Clarke, the Chancellor of the Exchequer. "To see another body as having access when we don't is unfortunate," he said. It was too early to comment on the outcome of his meeting with Mr Clarke.

Mr Sheldon added further weight to the argument that outsiders should be brought into help police MPs.

The Privileges Committee, he said, was the right body for the task but, in the same way that non-executive directors served on the boards of companies, it needed reinforcing.