|Government Resources And Accounts Bill - continued||House of Commons|
|back to previous text|
Clause 14: Welsh Assembly67. This clause amends the Government of Wales Act 1998 to enable the written statements of proposed expenditure required to be made each year by the Secretary of State for Wales to be made on a resource rather than a cash basis.
Clause 15: Public-Private Partnerships - expenditure68. This clause provides statutory authority for the Treasury to incur expenditure in respect of the formation of a new body for the purpose of carrying on public-private partnership business and provision of financial assistance to that body.
69. Subsection (1) provides authority for the Treasury to incur expenditure and provide financial assistance which may be required in order to establish a body for the purpose of carrying on public-private partnership business and to enable it to begin carrying on its business.
70. Subsection (2) precludes the Treasury from providing assistance to more than one body. The intended recipient body is currently known as Partnerships UK.
71. Subsection (3) authorises the Treasury to provide further assistance to the new body should it judge this to be necessary. The assistance must be provided to the same body as received assistance under subsection 1 (subject to the flexibility allowed by the definition for this purpose of "body" in subsection 16(7)). It must also be provided to the body in connection with the carrying on by it of public-private partnership business, so that there must be a link between the assistance and such business.
72. Subsection (4) enables the Treasury to attach terms and conditions to the assistance which they provide. It also gives examples of the form the assistance might take. Subsection 4(c) specifies a wide range of investments by referring to the acquisition of assets, securities and rights; in addition to company shares, it does, for example, include debt securities, options and subscriptions for shares. The particular forms of assistance mentioned are examples and are not exhaustive
Clause 16: Public-Private Partnerships - interpretation73. Under clause 15 the Treasury may only provide financial assistance to a body which is established for the purpose of carrying on public-private partnership business and which does so. Clause 16 describes what is meant by carrying on public private partnership business and defines the term " body" for the purpose of clause 15.
74. Subsection (1) defines "public-private partnership business" as participation in a public-private partnerships as an investor or as a consultant or in any other way. The breadth of this definition reflects the variety of forms which public-private partnerships and private finance initiatives may take and the potentially varied ways in which the body which receives financial assistance may become involved and participate.
75. Subsection (2) gives specific examples of what is meant by the carrying on of public-private partnership business. Such business includes the provision of advisory services (for example, on procurement or project management) or financial services (for example, advice on raising finance or on share capital and corporate structures) and such services may be provided in connection with a specific public-private partnership or in connection with such partnerships generally. Under subsection (2)(a) the services may be provided to the public or private sectors and by virtue of subsection (2)(b) it does not matter whether they are provided on terms or conditions as to payment or consideration or any other matter. This means, for example, that the body may provide services under contract or may act as a joint venture participant. This also makes it clear that financial assistance may be provided by the Treasury under clause 15 even though the body receives payments or other resources from carrying on its public-private partnership business.
76. Subsection (3) together with subsections (4) and (5) defines what is meant by "public-private partnerships". This term also is widely defined to include any projects and undertakings for which the resources are provided by both public bodies and private persons.
77. The meaning of "resources" is explained in subsection (4) and includes financial funding and forms of resources and investment other than money such as assets of any description, professional skills and any other kind of commercial resource. This would for example include other facilities or forms of financial resource which may not be included within the term "funds". The explanation of the term "resources" is non-exhaustive. The reference to projects and undertakings taken with the requirement for resources to be contributed by both public bodies and private persons means that simple purchase contracts, for example, are not envisaged as involving public private partnerships.
78. Subsection (5) provides that the term "public body" means, for the purposes of this particular clause, a government department or other body exercising public functions.
79. The effect of subsection (6) is that the body to which assistance is given may carry on public-private partnership business outside the United Kingdom and receive assistance in connection with such business.
80. Subsection (7) explains the meaning of the references in clause 15 to a "body". This term is defined by subsection (7)(a) to include a group of bodies and so covers a group of companies. Subsection (7)(b) includes a partnership and, for example, a contractual joint venture. Subsection (7)(c) provides for a reference to "body" to include a body which is substantially the same as or, which is a successor to, another body (which may or may not continue to exist). For example, a partnership may be dissolved and a new partnership formed or a company may be incorporated to succeed to the business (including certain rights and liabilities) undertaken by a partnership or contractual joint venture
Clause 17: Public-Private Partnerships - financial assistance: supplementary81. Subsection (1) provides for money required by the Treasury for the provision of assistance under clause 15 to be provided by Parliament, that is to say, by the annual supply procedure.
82. Subsection (2) provides an exception to subsection (1) in the case of guarantees. Money required for the purpose of fulfilling guarantees is to be charged on and issued from the Consolidated Fund without further Parliamentary authority.
Clause 18: Power to alter timetable83. This clause enables the Treasury to alter, subject to Parliamentary approval, the timetable for the production, audit and laying of resource accounts and accounts covered by clause 7 of the Bill.
84. The current statutory timetable gives the Treasury until 31 January in the year after that to which the accounts relate to lay accounts before Parliament. For resource accounts the Treasury intends to operate a tighter administrative timetable which will require accounts to be laid before Parliament by the end of October in the year after that to which the accounts relate. For accounts prepared under the predecessor of clause 7 of this Bill it is already common practice to lay accounts prior to the summer recess in the year after that to which the accounts relate. Therefore, it is possible that in the future the Treasury may wish to shorten the statutory timetable in order to encourage quicker completion of accounts and this clause will enable this to be done.
Clause 19: Treasury directions85. This clause provides that any direction given by the Treasury under either this Act or the Exchequer and Audit Departments Act 1921 can be revoked or amended by the issue of a new direction. This power is necessary to enable new or amended accounts directions to be issued as and when changed accounting requirements make this necessary.
Clause 20: Examinations by the C&AG86. This clause reproduces, in modernised form, the provisions of section 1(2) and 1(4) of the Exchequer and Audit Departments Act 1921. The provisions of the clause extend to all accounts prepared under the Bill.
87. Subsection (2) enables the C&AG to rely on documentation provided by departments as evidence of transactions.
88. Subsection (3) requires the C&AG to report to the House of Commons where he changes the extent or character of any of his audits covered by the clause.
Clause 21: Reports by the C&AG89. This clause provides an additional safeguard for Parliament that the C&AG's reports on accounts provided for in the Bill will be available to it in a timely manner by giving the C&AG an independent power to lay his reports if the Treasury fails to do so within the times set out in the Act. This clause is a modernised and extended re-enactment of section 32 of the Exchequer and Audit Departments Act 1866 which is therefore repealed.
Clause 22: Interpretation of use of resources90. This clause defines a use of resources as covering their expenditure, consumption or reduction in value. This definition encompasses the costs of depreciation of assets and the using up of inventories as well as the expenditure of cash resources.
Clause 23: Interpretation of financial year91. References in the Bill to "financial year" are defined by this clause as being the 12 months ending with 31 March. This is the standard definition of "financial year" and represents no change from previous practice.
Clause 24: Amendments and repeals92. This clause gives effect to the minor and consequential amendments contained in Schedule 1 of the Bill and the repeals contained in Schedule 2 of the Bill. See paragraphs 97-107 for details of these schedules.
Clause 25: Commencement93. It is intended, subject to Parliamentary approval of the move to resource estimates, to move from the present cash based system to RAB at the beginning of the financial year 2001-2002. This clause gives the Treasury powers to bring the preceding provisions of the Bill, except those relating to clauses 15 to 17, into force by order.
94. The clause also enables the Treasury to make transitional provisions to ensure a smooth changeover from the cash system to RAB. For example, under the timetable envisioned, the last departmental appropriation accounts will be laid before Parliament during the winter of 2001-2002 and it will be necessary to ensure that the necessary power to prepare, audit and lay these accounts are still available.
95. Subsection (3) enables the Treasury, by statutory instrument, to require bodies to provide the information required for WGA without formally including the body within the scope of the audited and published accounts. This will enable the Treasury to take the phased approach described in paragraph 46. The plan is to prepare and publish audited accounts for central government as the first stage. The subsection will then enable the Treasury to require public corporations and local authority bodies to prepare "dry-run" information prior to the formal extension of the coverage of audited and published accounts to the whole of the public sector, in order to test the systems and procedures required.
Clause 26: Short title96. This clause gives the short title of the Bill. This is the title by which the Bill will usually be referred to.
Schedule 1: Minor and consequential amendments
Amendments to the Exchequer and Audit Departments Act 186697. There are a substantial number of very minor amendments to this Act (mostly removing obsolete references to the Bank of Ireland). The more substantial changes are:
Paragraph 5 - the number of minor amendments needed to section 13 (procedures for making payments for standing services out of the Consolidated Fund) were such that it was decided to replace the entire section. The only substantive change (as opposed to a modernisation of the wording) is the requirement in sub-section 5 that the Treasury rather than the Bank of England shall send the daily account of issues to the C&AG. This change reflects what has been the actual practice for many years.
Paragraph 7 - the number of minor amendments needed to section 15 (procedures for making payments for sums authorised by Parliament out of the Consolidated Fund) were such that it was decided to replace the entire section. The only substantive change (as opposed to a modernisation of the wording) is the requirement in sub-section 5 that the Treasury rather than the Bank of England shall send the daily account of issues to the C&AG. This change reflects what has been the actual practice for many years.
Paragraph 8 - this amends section 18 to retain the Treasury's power to determine at what banks departments may keep money while repealing obsolete provisions relating to individuals keeping public money in their own personal accounts.
Paragraph 11 - this clarifies the continuing application of section 34. The repeal (in 1921) of section 33 had left it unclear which accounts were covered by section 34. The amendment in paragraph 11 makes clear that the only accounts covered by section 34 are those prepared under section 3 of the Exchequer and Audit Departments Act 1921.
Paragraph 12 - this repeals sections 39 and 41-44 of the Act which are now obsolete. These describe the arrangements for the audit and control of amounts of public money held in officials' private accounts.
Amendments to the Parliamentary Returns Act 186998. Paragraph 13 substitutes a reference to resource accounts for one to appropriation accounts.
Amendments to the Exchequer and Audit Departments Act 192199. Paragraph 14(2) amends section 2 of the 1921 Act (accounts of receipts of revenue prepared by Inland Revenue and Customs and Excise) to enable the Treasury to direct the form of these accounts. This removes an anomaly whereby the Treasury had no statutory powers to determine the form of these accounts (in practice the Treasury has issued non-statutory accounts directions for these accounts for a number of years).
100. Paragraph 14(3) repeals section 4 of the Act (stock and store accounts). Separate stock and store accounts will not be necessary under RAB as stocks and store will automatically be included within the normal audit as they will appear on departmental balance sheets.
Amendments to the Government Trading Funds Act 1973101. This substitutes a reference to clause 7 of the Bill for an existing reference to section 5 of the Exchequer and Audit Departments Act 1921.
Amendments to the House of Commons (Administration) Act 1978102. Paragraph 16 amends section 3 of the 1978 Act to enable the House of Commons to prepare its accounts on a RAB basis. Section 3(4) is entirely new and enables the House of Commons Commission to direct that income received can be applied as appropriations -in-aid in the same manner as applies to departments.
Amendments to the National Audit Act 1983103. Paragraph 17(2) amends section 4 of the 1983 Act to enable the National Audit Office to prepare its own accounts as resource accounts.
104. Paragraph 17(3) substitutes a reference to resource accounts for a reference to appropriation accounts in section 6 of the 1983 Act.
105. Paragraph 17(4) amends paragraph 4(1) of Schedule 3 to the 1983 Act to reflect the move to RAB and requires the auditor of NAO to carry out the audit of NAO in the same manner as the C&AG will carry out his audits of departments.
106. Paragraph 17(5) substitutes a reference to resource accounts for a reference to appropriation accounts in paragraph 4(2) of Schedule 3 to the Act.
Amendments to the Deregulation and Contracting Out Act 1994107. Paragraph 18 changes a reference to section 22 of the Exchequer and Audit Departments Act 1866 to a reference to subsections 5(5) and 5(6) of the Bill.
FINANCIAL EFFECTS OF THE BILL
Resource Accounting and Budgeting108. The requirements in the Bill relating to RAB involve no additional public expenditure. To the extent that the move to RAB has involved additional expenditure then this has already been incurred by departments in setting up the necessary accounting systems.
Whole of Government Accounts109. The Treasury will have to purchase the accounting systems necessary to perform the consolidation and prepare the accounts. It will also require a small team of accountants and administrators to operate the system. Neither of these requirements will involve significant expenditure and will be funded from existing provision.
110. The introduction of WGA will build on the implementation of RAB and other changes in public sector financial reporting already proposed. It should, therefore, not involve significant additional expenditure either by other public bodies in providing the necessary information, because the majority of systems and procedures required will already have been put in place.
Public-Private Partnerships111. Clauses 15 to 17 of the Bill enable the Treasury to incur expenditure in respect of the formation of a new body for the purpose of carrying on public-private partnership business and to provide financial assistance to that body.
112. The Treasury publication "Modern Government Modern Procurement", stated that the Treasury would fund development costs, estimated at £6 million, and would also make available some initial capital and provide an ongoing commitment, possibly in the form of a guarantee. The extent and nature of expenditure or assistance to be provided has not yet been determined but is not expected to exceed £20 million in the case of any initial capital and £170 million in the case of a guarantee. The Government will keep its commitments to the minimum necessary to secure the successful launch of the new body. Cash commitments are to be funded by an allocation to the Treasury from the Capital Modernisation Fund.
EFFECTS OF THE BILL ON PUBLIC SERVICE MANPOWER113. The provisions on RAB in the Bill will not effect public service manpower. To the extent that the move to RAB has resulted in changes in manpower then these have already taken place as departments have set up the necessary accounting systems and strengthened finance functions.
114. In relation to the provisions on WGA there should be no significant manpower implications to these proposals as the majority of the systems and procedures required will already be in place for RAB or other financial reporting purposes.
115. The new body referred to under Clauses 15 and 16 is expected to be classified to the private sector and as such will have no implications for public service manpower.
REGULATORY APPRAISAL116. The RAB and WGA elements of the Bill have no implications in terms of costs to business as they are concerned solely with UK central government and public sector arrangements.
117. It is intended that the new body referred to under Clauses 15 and 16 should contribute to the creation of a better flow of well-structured PFI projects and PPPs. It will not impose any additional costs or regulations on the private sector.
EUROPEAN CONVENTION ON HUMAN RIGHTS118. Section 19 of the Human Rights Act 1998 requires the Minister in Charge of the Bill in either House of Parliament to make a statement, before second reading, about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The Chancellor of the Exchequer has made the following statement:
In my view the provisions of the Government Resources and Accounts Bill are compatible with the Convention rights.
COMMENCEMENT119. Clauses 15 to 17 (and 25 and 26) are to come into effect when the Bill receives the Royal Assent. All other clauses will brought into operation by order made by the Treasury as the move from the current accounting system to RAB and the WGA project progress.
|© Parliamentary copyright 1999||Prepared: 19 November 1999|