House of Commons Hansard Debates for 22 Mar 1991

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I take one subject more as an example of one of the activities that the Audit Commission is proposing to study, and that is housing benefit and rent arrears. Local government is the conduit for a substantial tranche of central Government's income support in the form of housing benefit. Very large sums are involved.

The efficiency with which councils manage the housing benefit system has implications for the relationship between local and central Government, for the costs borne by councils and for the consequential costs borne by applicants if the system is inefficient. The study will examine how councils deliver this service and will illuminate best practice, but it will also examine the experience of benefit applicants and will track the effect of the benefit system on rent arrears, particularly on the part of council tenants. Once studies have been produced, auditors will examine the extent to which authorities are taking note of advice. Where authorities have not taken note of the potential for greater value for money identified in such studies, they may consider the matter to be of sufficient importance to merit making a report in the public interest. If the auditor considers such a report should be an immediate report, the Bill would ensure that the auditor's findings immediately reached the public domain.

Mr. Arbuthnot : I am concerned about the fact that the Bill makes provision for immediate reports which it does not make for less immediate reports. Will the Minister explain the distinction between the two and say why publicity should apply to one but not to the other?

Mr. Key : I shall be dealing with that important issue. First, I wish to deal with a study that is proposed and which will interest my hon. Friend. I refer to client role management. The need for a client-contractor split has been well rehearsed in commission study work, but the precise details of the contractual relationships have not been set out. Moreover, the character of client structures would bear further analysis. The study will explore the alternative arrangements made by councils to administer contracts and examine the impact of such arrangements on central services, such as the introduction of service level agreements. It will also examine the variety of contractual arrangements, procedures and quality assurance criteria. Although it will be focused on services, the study will endeavour to explore the extent to which ideas, such as quality assurance, have permeated other council services.

The management of education provision for young people aged between 16 and 19 has had to adapt to a number of significant changes in recent years. Those changes include work-related further education funding, the local management of schools and colleges and the fall in the population of that age group. There are likely to be further initiatives nationally in an endeavour to raise participation levels.

It is important to realise the importance of participation levels. Only yesterday, I visited Walworth school, in south London, which has tackled the problem head on and has introduced, with the help of the Government's urban programme and the private sector, an important "world of work" unit into the school. One of the many achievements of that initiative at Walworth school has been to increase participation rates substantially among that crucial age group, and I congratulate the school on that.

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The Audit Commission will be studying and exploring the steps that LEAs are taking to cope with present pressures and prepare for new initiatives of that type. It will examine the arrangements made to assess need, to identify the wide range of potential providers locally, and to position authorities' own supply. The study will also explore whether it is possible to construct a "value-added" methodology which could be used to compare the performance of different suppliers.

In addition to those major studies, three smaller-scale projects proposed by the commission include a study into development control. Hon. Members in all parts of the House will be aware of the passions that are aroused by development control in their constituencies. In 1983, the commission published a report, researched by the pre-existing audit inspectorate, on efficiency in development control. There have been some significant changes since then. Moreover, development pressures have been acute at times since that report. The study will re-examine the process. If possible, those authorities studied in 1983 will be revisited so that longitudinal considerations can be taken into account. The study will also explore the trade-off between the efficient processing of applications and the quality of decisions taken.

There is, of course, great public interest in the police and their efficiency. The theme currently being considered by the Audit Commission is aspects of traffic policing. Traffic policing absorbs 12 per cent. of overall police resources and has a significant effect on the average citizen. The management of traffic movements, pedestrian flows and car parking grows ever more difficult as car ownership increases. The study would examine the criteria of value for money in traffic-related policing functions and take into account the contribution which police activity can make to wider environmental and urban management issues.

Mr. John Greenway : The Minister's reference to the police calls to mind two other important issues. First, does he agree that Audit Commission reports into the police force, eight or nine of which have been published, have been effective in showing how the management of the police force and the effectiveness, efficiency and economy criteria can be better delivered?

Secondly, does he agree that if, at some future date, we change the overall structure of the police force--many hon. Members feel that there are too many police forces and that some change in structure may be inevitable--the role of auditors can be an effective way of ensuring that the management of the police force, whatever its structure, is more effective?

Mr. Key : I acknowledge the professional experience and expertise of my hon. Friend in police work. It would be inappropriate for me to comment on responsibilities that come within the purview of the Home Secretary, but I acknowledge the importance of the work done by the Audit Commission and the speedy way in which police forces have reacted, in the interest of their officers and the public whom they serve, in seeking to improve the standard of service they offer, which, by almost any standard, is extremely high.

Mr. Arbuthnot : Following yesterday's statement by the Secretary of State for the Environment, a structural

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change that could be considered for local government is the removal of the precepting power of the police and the possibility of taking the police into central control, a matter which arouses strong passions. The precepting power of local authorities causes difficulties for local authorities which have no power over how much the police, fire authorities and other bodies spend.

Mr. Key : My hon. Friend is right ; the role of joint authorities for police, fire and civil defence is a matter of some concern, and I have met a number of such authorities to discuss their funding position. We do not intend in the review to make any commitments on that type of arrangement for the police, not least because it is a matter of grave constitutional concern that we take great care before considering any changes that might upset the important balance that currently exists between county constabularies, the grouped police authorities and the role of central Government. Perhaps I had better say no more about that relationship at this stage, because it is delicate and, as my hon. Friend said, passions run high.

I should like to deal with special education needs. Local education authorities radically revised their management of special education to match the requirements of the 1981 Act. The study will be concerned with the identification of best practice as it has emerged. One particular focus will be the problems of LEA-wide financial management, given that resource demands emerge on a pupil-by-pupil basis.

My hon. Friend asked why the Bill was concerned only with immediate reports. The choice between making an immediate report and making a report at the conclusion of the audit is a decision for the auditor. Any report can be made an immediate report, but the auditor may decide that the objective of improving value for money--or whatever purpose the report is intended to achieve--is better accomplished by making his report later. However, immediate reports will be the general rule.

It may be helpful to my hon. Friends and other hon. Members if I explain just why it is that, when an auditor makes a report, it is not there and then made available for comment at large. The reason lies in section 30 of the Local Government Finance Act 1982, which prohibits either the appointed auditor or the commission from disclosing information relating to a particular body or person and obtained pursuant to the Act except with the consent of the body or person ; for the purposes of the auditor's or commission's functions ; or for the purposes of criminal proceedings.

Contravention is punishable by a fine and/or up to two years' imprisonment. That is a severe sanction, and naturally it is taken very seriously. The prohibition applies to all aspects of an auditor's work, including reports, whether they be immediate public interest reports or reports made at the conclusion of audit. Given the severity of the sanctions my hon. Friends and other hon. Members may perhaps be puzzled as to how reports ever become public knowledge if the body or person concerned does not consent to disclosure of information. The answer lies in section 18(5) of the Local Government Finance Act 1982. When a body meets formally to consider an auditor's report, the agenda supplied to the members of the meeting must be accompanied by the report and--this is the crucial provision--the report must not be excluded from the matter supplied for the benefit of any newspaper or from the documents open to inspection by the public.

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It is of course at this point that we see the significance of the Bill. It parallels a similar provision that already applies in Scotland. The provisions that apply in Scotland were enacted under section 185 of the Local Government and Housing Act 1989. In Scotland, under section 102 of the Local Government (Scotland) Act 1973, the Controller of Audit makes reports to the Commission for Local Authority Accounts on matters arising out of or in connection with the accounts of a local authority, so that such matters may be considered by the local authority concerned or brought to the attention of the public. The 1973 Act states that a copy of the report shall be sent to the local authority named in the report. Under the amendments made by the 1989 Act, the Controller of Audit may now also send a copy of the report to any other person he thinks fit. In addition, the local authority concerned is required to send a copy of the report to each member of the authority and make additional copies available for public inspection. The Bill mirrors those provisions and introduces similar arrangements in England and Wales.

The Bill would ensure that an auditor's intention that a report should be brought immediately to the attention of the public could not be thwarted by procedural devices of the body subject to the report. Let me say at once that the great majority of bodies have behaved perfectly properly. However, on some occasions reports have been delayed when, in the public interest, they should have been seen immediately. The Bill seeks to prevent such delays.

The Bill has four principal features, all of which take effect as soon as an immediate report is received by the body. First, it entitles the public to see an auditor's immediate public interest report, to copy it and be supplied with a copy at reasonable cost. Secondly, it requires the body concerned to advertise the report. Thirdly, it provides for sanctions comparable to those of the current provisions of the 1982 Act. Fourthly, it gives the auditor fallback powers to ensure that the report is made known.

The Government are committed to making local government more accountable. This Bill, introduced by my hon. Friend the Member for East Hampshire is a helpful measure towards that desirable end, and it has the Government's strong support.

10.46 am

Mr. James Arbuthnot (Wanstead and Woodford) : I begin by congratulating my hon. Friend the Member for East Hampshire (Mr. Mates) on his good fortune in coming relatively high in the ballot, although he did not come high enough to be able to choose a controversial Bill. I also congratulate him on his success in choosing such a sensible Bill and thank him for the clarity with which he explained its provisions and set out its terms and purposes.

I regret that during the speech of my hon. Friend the Member for Ryedale (Mr. Greenway) which I was enjoying so much, I had to nip out of the Chamber to collect some further briefing material which had not arrived by the time the House sat this morning. Therefore, I was unable to catch your eye, Mr. Deputy Speaker, to ask the detailed questions that I had hoped to ask the Minister. He may be able to answer them during my speech, so I shall be generous in giving way to him if he feels able, at any stage, to answer them. I confess that some of the points that I wish to raise are rather detailed and

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technical, so I should be happy for my hon. Friend to write to me rather than to answer them off the cuff, if he thought that that was preferable.

I am grateful to my hon. Friend for answering one of the important questions that I had wanted to raise--the position of Scotland. Scotland has always been an anomaly compared with England and Wales. Often Bills-- including this Bill--do not apply to Scotland, but only to England and Wales. Indeed, the final sentence of the Bill states : "This Act extends to England and Wales only."

One always wonders why on earth that should be the case. What is it about the Scots that makes their legislative powers so different? In trying to answer that question for myself, I turned to the Government's response to the report of the Widdicombe committee of inquiry. Paragraph 6.17 of the response states :

"The proposed legislative changes referred to in paragraph 6.6" they detail what is set out in the Bill--

"would apply equally to reports of the Controller of Audit." So I examined the Bill and discovered that they did not seem to apply and I wondered why not. My hon. Friend answered my query by saying that not only has Scotland been dealt with but that it has been dealt with earlier than England. I wonder why Scotland appears to be dealt with more expeditiously than England and Wales. I have no doubt that the provisions of the Bill would have been appreciated if they had been introduced earlier in England and Wales as they have no doubt been valuable in Scotland.

I have been trying to find out what the Bill is all about. I read the commendably brief report of the Committee that considered the Bill--the sitting of which lasted for no more than two minutes. That report was not as illuminating as one would normally expect, so I am little wiser or better informed about the details of the Bill. What was the motive behind the Bill? Did it arise because of the debt swaps for which many local councils went in and which, eventually, the House of Lords decided to be ultra vires? If the Bill was in some way prompted by those debt swaps, I certainly believe that the auditors should have been involved, or should get involved in such transactions.

One of the powers available to the auditors is the ability to apply to the courts if they consider that a local authority is doing something that it has no right to do. Can the auditors therefore apply to the courts if a council is not doing something that it has a moral, if not legal, duty to do? My hon. Friend the Minister has already dwelt at some length on the failure of local authorities to collect rents, rates or the community charge--I should be grateful if he could give me further evidence of that. In fact there are many examples of such failure and one of the most glaring is what is happening in Lambeth now. The structure of local authorities seems to be relatively secure throughout most of the country, but in Lambeth services are breaking down, perhaps because the authority simply does not have the money, or perhaps because it is not collecting rents and the community charge. I should be grateful to hear what the hon. Member for Lewisham, Deptford (Ms. Ruddock) has to say about that because I know that it concerns her greatly and that, in the past, she has spoken out courageously about it.

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Ms. Ruddock : I am not sure whether it is in order for me to be drawn into this, but I am sure that you will keep me right, Mr. Deputy Speaker. I believe that the greatest disservice to local government, the collection of taxes and the provision of services has been the Government's poll tax legislation and they have just learnt the lesson of that.

Mr. Arbuthnot : If the hon. Lady was correct her argument would apply to every council in the country, but other councils manage to provide a reasonable level of service and to collect the vast majority of their rents, rates and community charge.

The hon. Lady is correct that we are changing the community charge. I was absolutely delighted at yesterday's statement because I was never enthusiastic about the community charge, to the extent that I did not vote for it. I am therefore naturally delighted that we are to change the community charge, but that does not excuse or explain the total chaos into which the borough of Lambeth has fallen. As a matter of urgency an investigation into the extent of the outstanding arrears in rents and community charge in the borough of Lambeth should be carried out. In the borough of Lambeth, perhaps alone of all councils, local government is breaking down. That is not as a result of the community charge, but because the Labour party has been in control of that borough for too long.

Auditors can apply to a court if they consider that a local authority is doing something that it has no legal right to do, but can they also apply to the court if they consider that a local authority is not doing something that it has a legal duty to do--to collect rents and the community charge on behalf of the other electors and community charge payers of that authority? I should be happy to give way to my hon. Friend the Minister at any time should he wish to put me right or help me with further information. About a month ago I sponsored the Public Safety Information Bill, which placed a requirement on certain local authorities and bodies to publicise reports of interest to the public. Those reports related to safety. If a safety defect was discovered at a football stadium there would have been an obligation to post a notice at the entrances to warn spectators that there was a danger of combustible rubbish somewhere in that stadium. Is there a difference in philosophy between the publicity applied to public interest reports for local authorities and the publicity to be given to public safety that would have applied under the Public Safety Information Bill? I regret to say that that Bill's Second Reading took place on the day that the country was brought to a complete halt by the falling of white fluffy stuff from the sky. Unfortunately there was an insufficient number of Members in the House to enable the Bill to receive its Second Reading. That Bill, however, raised issues of relevance to today's Bill.

What concerns me most about the details of the Bill is whether the sanctions to be imposed are enforceable. Clause 1(4) states : "Any person who fails to comply with any requirement of subsection (2) above shall be liable on summary conviction to a fine". Subsection (2) states

"When such a report is so received by a body the body shall in addition forthwith supply a copy of the report to every member of the body"

Subsection (4) deals with

"any person who fails to comply with"

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the requirements of subsection (2), but under subsection (2) there is no duty put on any person. The duty is put on a body, leaving aside the chairman of a parish meeting--for the purposes of this argument he is less important.

Subsection (2) puts a duty on a body to publicise a report, but subsection (4) provides that sanctions should be imposed on "any person who fails to comply with any requirement of subsection (2)".

If a body, perhaps a local authority, has the duty to publicise a report that is a matter of immediate public interest, surely the members of the body have the duty to comply with that publicity requirement. It therefore seems rather curious that, under the Bill, the members of a body might be liable if they have not been given information about that very report.

Mr. Mates : Perhaps I can help my hon. Friend. Clause 1(2) requires the "body or chairman"--the person to whom the ultimate sanction applies-- to provide the publicity.

Mr. Arbuthnot : I am grateful for that helpful information, but I am not entirely sure that it covers my argument. I suspect that the "body or chairman" refers to the public body--perhaps the district or county council --or the chairman of a parish meeting. If the "chairman" refers to the chairman of a parish meeting, I suspect that the chairman is not considered relevant for the purposes of a local authority.

Mr. Key : I hesitate to intervene in this interesting debate, but I believe that I can help. The word "person", as a legal term, includes a body.

Mr. Arbuthnot : I am grateful to my hon. Friend for that clarification. Although the word "person" includes a body, the word "body", curiously enough, does not include a person. Therefore, the body may still, ultimately, be liable for failing to provide the members of the body with the reports to which the publicity is meant to apply.

Mr. Roger Knapman (Stroud) : My hon. Friend makes some good points about bodies. To some extent, those reports will be looking for heads. What is my hon. Friend's view on the publication of notices that may criticise the very people who are supposed to publish them?

Mr. Arbuthnot : I shall cover that question in a few moments. Similarly, one could ask what would happen if a report were published by a chief executive of a council who, instead of arranging for publication himself, said that he told Mrs. Snooks, the chief clerk, to publish it, but that she did not seem to have done so. If Mrs. Snooks then says that she was not told to do so, the securing of a conviction under clause 1(4) would be difficult to achieve. It would be difficult to decide, under that clause, precisely who should be convicted and on which person in the local authority the duty to secure the publicity should be laid.

My hon. Friend the Member for Stroud (Mr. Knapman) raised an important issue about reports criticising the people who might be under a duty to disclose them. My hon. Friend the Member for East Hampshire said that one purpose of the Bill is not to put a duty on a chief finance officer to publish a report because he might be the subject of a critical report. That may be so, but the council may also be the subject of a critical report and would be rather reluctant to publicise it. That is why the Bill places a duty on councils to publicise reports.

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Is the council the right "person" on whom to place that duty? Would not it be more correct to put the duty on the auditor? If the council has an overall duty to publicise a report of public interest, it will be in a difficult position, because it may have to publicise a report that criticises it. That may affect the publicity that it gives to the immediate report. The advertisement that the council must place in local newspapers may never be read because it will be couched, intentionally, in such obscure terms. Everyone knows that criteria exist for making some advertisements more eye-catching than others. For example, one reads more assiduously an advertisement with much white space than a block of close-printed verbiage. Therefore, the council will ensure that advertisements for reports will be as obscure, unreadable and unattractive as possible. A school of people will try to make advertisements as attractive and noticeable and possible while, as a result of the Bill, another school will try to make them as unattractive and unproductive as possible. We have all seen planning notices at the back of newspapers which do not stand out at all. We may see them, but we do not read them. They exist simply to be avoided.

We could avert such a problem if the Bill did not place the duty of publicity on the council, which may be the subject of a critical report, any more than it does on the chief finance officer. The Bill has clearly moved away from that, but further progress in that direction is still to be made. There may be an opportunity in another place to make such progress.

Mr. Knapman : My hon. Friend is making some excellent points. Clause 1(2) refers to one or more local newspapers. In my district council area, I could name seven or eight local newspapers. Although, together, they cover the whole district, no single newspaper does so. Has my hon. Friend any thoughts on that?

Mr. Arbuthnot : My hon. Friend raises a helpful issue which leads me to the corollary of what he says : some local newspapers have low circulations. Local councillors who are criticised in an immediate report by an auditor will choose to advertise in a newspaper with the lowest circulation possible, covering the smallest area. Necessarily, those newspapers will have the lowest cost of advertising because they will want to attract more advertising to boost sales. Local councils face stringent financial limits and will naturally choose the cheapest rates if they can get away with doing so.

Although the important publicity that is to be given to those immediate reports is a valuable move, I wonder whether the duty to provide such publicity is placed on the right person. In an intervention in the speech of my hon. Friend the Minister, I said that the Bill does not include health service bodies. I referred to the sensible work carried out by my hon. Friend the Member for Gedling (Mr. Mitchell) in trying to ensure that there was outside scrutiny of health service bodies. It is a pity, in some respects, that the publicity provided by the Bill should not apply to local authorities. After all, the publicity relates to matters of immediate public interest. Local authorities are concerned about such matters, as are the public. The public write to me far more frequently about my local health authorities than about my local authority, because health is a matter which affects us all. I wonder whether the

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publicity available under the Bill should also be available to immediate reports of a public interest relating to a health authority.

The Bill rightly gives the opportunity for increased publicity for immediate reports by the auditors of local authorities, but it does not appear to give the opportunity for similar publicity for reports praising local authorities. Local councillors are the subject of a constant barrage of criticism, sometimes from central Government and sometimes from the electors. When they hear the words "local government", most people feel that it is a subject in which they should not be interested and that it is a subject on which their eyes should glaze over--and they usually do.

My right hon. Friend the Secretary of State for the Environment said yesterday that it is increasingly difficult to find people of the proper quality to play the role of local councillors. I detect a slight change in the atmosphere in that respect, which I welcome. Local councillors and local authorities do an essential job and they should be encouraged in the same way as teachers, who do an essential job, should be encouraged. From time to time, councillors should be the subject of praise as well as of criticism. My concern about the atmosphere that used to exist--and which may no longer exist--is that auditors' reports are more likely to be immediate reports if they are critical of local authorities than if they praise local authorities for a job well done.

A report praising, for example, the city of Westminster for its efficient and effective litter collection service could be the subject of an immediate auditors' report if my proposals were taken into account. A report praising the royal borough of Kensington and Chelsea for its most effective and early privatisation of the refuse collection service in Kensington could be the subject of publicity, insisted on by the auditors.

Local authority employment and local authority service are becoming increasingly difficult. It is interesting that, as a result of the Bill, it is probably only in local authority employment that a person who slips up on the job would face not simply a reprimand from the employer, but a criminal record. It is not surprising that recruitment to local authorities is lower than would be helpful. As a Member of Parliament, if I do not deal with my letters quickly, I may get rude letters of complaint from my constituents. I may even get rude letters of complaint in the local newspapers, which would receive far more publicity than the advertisements suggested in the Bill. I might even be thrown out by my electorate, but I would be most unlikely to face, as I understand the current legislation, a criminal record.

As a result of the Bill, if local authority employees failed to deal with their post quickly and if they failed to post or to distribute reports to the councillors who should receive them, they would face not only a reprimand, rude letters or a possible sacking, but a knock on the door and the possibility of a criminal record. That may discourage some people from going into local government service and it may be one reason why there has been some difficulty in providing effective and efficient local government service in recent years.

Despite my perhaps over-detailed and over-zealous questions on the Bill, I welcome it. I welcome the publicity that will be given to matters of great and immediate public interest and I wish the Bill well in the House and in the other place.

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11.14 am

Mr. Roger Knapman (Stroud) : I am grateful to you, Mr. Deputy Speaker, for calling me, because you know how keen the competition has been this week to speak in debates on local government. I am tempted in the matter by a one-clause Bill, which I am more likely to understand. I congratulate my hon. Friend the Member for East Hampshire (Mr. Mates) on introducing it so well. I also congratulate my hon. Friend the Member for Ryedale (Mr. Greenway) on his point that scrutiny and accountability are important in these matters. I second one among the many good points made by my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot), who asked whether the auditors can apply to the courts. That is critical in this matter, as I shall explain later.

The central point must be the role of the auditor. In carrying out the audit, he must satisfy himself of the propriety and regularity of the accounts, and that the body concerned has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. I am sure, because I believe that I am repeating the views of my hon. Friend the Minister, that Ministers have always respected the independence of auditors in carrying out their duties. To do otherwise could be construed as political interference, and I am sure that there is no wish for that. What is the point of making recommendations if there is no follow-up? I propose to detail the experience in my area of an auditor's report and what has happened since it was published. I have here a detailed pamphlet entitled "District Auditor's Report". I am sure that my hon. Friend the Member for Wanstead and Woodford will agree that that is its title. It goes into considerable detail about a local council. On the ninth page of tightly packed print, we come to point 38, entitled "Previous Audit Reports". The pamphlet says : "I am concerned about the time it takes for the Council to implement recommendations agreed with my staff."

There is little point in having such a detailed report if nothing comes of it, which is the point that my hon. Friend the Member for Wanstead and Woodford has made.

The pamphlet makes further serious points. It refers to "a lack of co- ordination between departments, which was leading to a loss of rent income the fragmentation of ownership and the lack of objectives".

That is a reasonable generality. The pamphlet also refers to "a lack of accurate information."

I am heartened to think that it is not merely Government Back Benchers who suffer from those points. The points are made in an auditor's report, which reveals a serious state of affairs. I was under the impression that the report was a district auditor's report. I read it with care at the time, and I understood it to be a report. It was because there was no action on the report that I decided to write to the Audit Commission a little later to ask what would become of the report. The commission replied :

"Dear Mr. Knapman In fact there has been no Audit Commission report"--

on the council.

"The District Auditor of the Council issued a public interest report in May of this year but that was part of fulfilment of his audit responsibilities and not a central directed Audit Commission study. Lest you think that this is a distinction without a difference, I should explain that the Commission has two functions, first to undertake studies into economy, efficiency and effectiveness in local government

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and, second, to appoint auditors to all local authorities. We link these two duties together closely and local work usually follows central research. But the individual auditor of an authority is responsible for all reports issued on a particular council and those reports may cover Audit Commission work or, as in this case, other issues particular to that authority."

So the individual auditor is responsible for all the reports. What had happened to the individual auditor in this case? He had retired immediately after the preparation of the report. Immense expense had been gone to and some devastating remarks had been made in the report. I have read three such remarks from 10 or so tightly packed pages--the allegations of a lack of accurate information, fragmentation of ownership and a lack of co- ordination between departments. Those are wide-ranging criticisms. But apparently it is up to the local auditor whether anything comes of the report and in this case he had retired.

At that stage, several of my constituents, who were not exactly thrilled by the level of community charge in my constituency, started writing to me. I shall read two or three extracts. One constituent wrote :

"The public interest report would have had more impact if it had covered the events of the past in more detail and if the public meeting had been more sensitive to the views of the public the District Auditor's representative has told me that the Council is not a poor performer compared with other local Councils"--

given the contents of the report, I finding that surprising "it is not difficult to imagine the contents of the next report." The criticisms in the report are devastating, and if such performance is thought to be average, I dread to think how reports on other councils read. No wonder that my constituent summarised the position thus :

"Our complaint and concern will have been swept under the carpet to remain part of history. Such is my confidence in the Audit Commission."

Having received a large number of letters on the subject, I took an interest and wrote to my hon. Friend the Minister for Local Government and Inner Cities, enclosing two or three of my constituents' letters as examples, which I said were self-explanatory :

"the activities of the direct labour organisation and the scale of the financial losses that they have incurred"--

just one subject of the report--

"are matters which have been considered by the District Auditor. I believe that the District Auditor can act as an Ombudsman"-- I am now not sure that that is so--

"I think it is now time for him to detail what action he is going to take following the publication of the various Reports mentioned in the letter."

I had a useful reply from my hon. Friend.

The House can no doubt imagine that I have been under considerable pressure from a large number of my constituents who had high hopes that an auditor's report would provide something useful--perhaps an indication of what the council had achieved by way of improvements following earlier reports. My hon. Friend the Minister wrote to me : "Although the District Auditor will be concerned about the losses incurred by the Council's DLO and will, no doubt consider whether it would be appropriate to take action under the powers available to him, the Secretary of State has his own ... powers to invoke sanctions where a DLO fails to achieve the rate of return prescribed by legislation. The ultimate sanction is to order the closure of the direct labour organisation."

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Can my hon. Friend the Minister say how often the Secretary of State has exercised such powers and under what circumstances? I suspect that the answer is no, in which case the Bill is doubly welcome.

My hon. Friend the Minister for Local Government and Inner Cities continued :

"My Department was already aware that the DLO expected to incur a loss"--

I am surprised about that--

"but from the information in the letter, this loss now seems likely to be far worse than anticipated".

It was. The auditor's report suggested that it would be a £800,000 loss but, within a fortnight of the publication of the report, we knew that the loss was £1.6 million, which took some doing considering that there were only 150 people working for the direct labour organisation. It might have been cheaper to send them on a permanent holiday in the Seychelles--but I shall let that pass. My hon. Friend's letter said that, when the new report arrived, the Department would

"look at it closely before deciding whether it would be appropriate to initiate formal action with a view to imposing sanctions as referred to above. In the meantime, I have asked the officials to seek the Council's confirmation of the deficit likely to be reported and that the accounts will be submitted within the statutory timescale."

The statutory time scale is something of a mystery to me, because this matter has now been going on for some years. Auditors' reports have regularly been produced and we have then been told that the report to which I have referred is not a district auditor's report even though it is headed as such. I am not sure what the statutory time scale is, and I should be grateful if my hon. Friend could say whether he expects any improvement to be made under the Bill and if he could provide some detail.

That was not the end of the saga. Finally, I received a further letter from the Audit Commission. I must say that by then the activities of the Audit Commission and its assurances that its principal interest was that its reports should be of benefit to the public at large, were wearing a little thin.

Mr. Arbuthnot : Will my hon. Friend give way?

Mr. Knapman : I suspect that they were wearing thin with my hon. Friend the Member for Wanstead and Woodford too.

Mr. Arbuthnot : Not at all. I am merely concerned that my hon. Friend started his penultimate sentence with the word "finally". I am following his remarks with interest, as are other hon. Members. Has my hon. Friend noticed the sad--indeed, appalling--absence of the Liberal Democrats throughout our debate? Perhaps that shows the extent of their interest in local government matters.

Mr. Knapman : It is no wonder that the Liberal Democrats are called the "salads". The green Benches are there but there is nobody to sit on them. I certainly hope that Opposition Members--particularly the official Opposition--

Mr. Ron Davies (Caerphilly) : Will the hon. Gentleman give way?

Mr. Knapman : I will give way in a moment.

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