In 1857, Sir Francis Baring successfully called for a Select Committee on Public Monies to inquire into
"the Receipt, Issue and Audit of Public Monies in the Exchequer, the Pay Office, and the Audit Department".
The Committee recommended that the oversight be extended to all civil departments, with accounts to be compiled annually and considered by a permanent committee in the House of Commons.
This recommendation was not acted on until April 1861, when the Chancellor of the Exchequer William Gladstone moved for a committee and the motion was carried to create the Committee of Public Accounts. The following year, the House of Commons passed a Standing Order, which read:
"That there shall be a Standing Committee of Public Accounts; for the examination of the Accounts showing the appropriation of sums granted by Parliament to meet the Public Expenditure, to consist of nine members, who shall be nominated at the commencement of every Session, and of whom five shall be a quorum."
Comptroller and Auditor General established
In 1866 the 'Exchequer and Audit Departments Act' required all departments to produce annual accounts and established the position of Comptroller and Auditor General (C&AG) and an Exchequer and Audit Department to provide supporting staff from within the civil service in auditing government accounts.
The Committee supported the C&AG as he developed his work to examine the economy and efficiency of government expenditure. This focus on value for money in public spending resulted in more ambitious work, looking, as one Committee member put it, "beyond the formality of the expenditure, to its wisdom, faithfulness and economy."
The role of the Committee and the C&AG in ensuring public funds were well spent became increasingly important in the post-war period with its growth in public expenditure and the creation of the 'welfare state'. As a reflection of the status of the Committee of Public Accounts, between 1959 and 1963 Harold Wilson, later Prime Minister, was Chairman of the Committee. It enabled him to tighten his grip on the parliamentary party's economic and financial policy while also providing him with an office in the Palace of Westminster at a time when such accommodation was not available for the Opposition frontbench. The Chair of the Committee of Public Accounts retains that prestigious room in Upper Committee Corridor in the Palace today.
The National Audit Act 1983 confirmed the C&AG as an Officer of the House of Commons, and head of the National Audit Office, whose staff were no longer civil servants. The Act gave the C&AG statutory power to produce value for money reports and enabled him to report to Parliament in a more timely manner on discrete subjects. Increasingly, the Committee's hearings examined the quality of public services, the effectiveness of policies and programmes, and the consequences for citizens of shortcomings in administration—very like the PAC we know today.
Subsequent legislation in the 2000s strengthened the C&AG's powers, allowing him to audit lower tier bodies spending public money as well as companies. In addition to senior government officials, the PAC has increasingly taken evidence from arm's-length bodies and private sector organisations responsible for delivering services on government's behalf.
How the Committee of Public Accounts works today
Today's Committee consists of fifteen members, one of whom holds the Ministerial post of Financial Secretary to the Treasury and who, by convention, does not usually attend hearings. The Treasury Officer of Accounts (or an alternate) attends all hearings. The C&AG is also a permanent witness at hearings and, along with National Audit Office staff, provides briefings on each Committee inquiry and assists in the preparation of the Committee’s own reports.
Value for money
The PAC does hold hearings on the accounts of central government departments but predominantly takes evidence on the C&AG's value for money reports assessing the economy, efficiency and effectiveness with which public money has been deployed in selected areas of public business. The C&AG seeks to agree the text of its value for money reports with the Accounting Officer(s) in the institution(s) concerned, to ensure there is a clear undisputed evidence base for PAC scrutiny. In the 2010–15 Parliament, the Committee held 276 evidence sessions and published 244 unanimous reports which included 1,338 recommendations. As proof of how seriously government takes the Committee's work, 88% of those recommendations were accepted by departments.
The role of the Committee in ensuring value for money in public spending has become all the more important against the backdrop of austerity. The recent reforms to public services, including private sector and localised delivery models, has enabled the Committee to break the assumption that only Accounting Officers should answer for how public money is spent, additionally calling Senior Responsible Owners and private companies as witnesses on the delivery of various programmes and projects. In addition to public spending, the Committee has taken an interest in revenue collection, most notably tax avoidance. As the collection and spending of public money present new challenges, the work of the Committee of Public Accounts is vital in protecting the interests of the taxpayer.