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3.30 am
Mr. Paterson: My hon. Friend has touched on a larger issue. The problem with the Bill is that large elements of the public accounts are not covered by it. However, what he has picked up is that there are ways and means of hiding information from the Comptroller and Auditor General even in those areas that are specified as being within the Bill's remit.
Mr. O'Brien: To return to rather primitive mathematics, we could paint a series of Venn diagrams in which there are a number of overlapping circles. We might have an audit right in certain respects and a right of access in other respects, but we would be very lucky if the two rights happened to meet. We have tried to identify where some of them do not meet.
However, more importantly, amendment No. 21 contains the phrase
Mr. Fabricant:
Does my hon. Friend agree that his point about Government Departments is especially damaging given that there is a trend in government generally to contract out to private corporations or agencies, such as the Benefits Agency, that would not be regarded directly as Government Departments under the terms of the Bill?
Mr. O'Brien:
My hon. Friend makes a good point. In vain, I sought clarification in the definitions contained in the Bill. It may be a sign of my own shortcomings, but I was unable to find such clarification. I very much hope that we shall receive clarification and that may mean that the Government's amendment requires emendation.
I thought that we were making significant progress on the last group of amendments. I had high hopes that the Government would accept new clause 2 given the reasoned, non-partisan and uncontroversial basis on which it was introduced. That acceptance was not forthcoming, which was a surprise and disappointment. Therefore, I am less optimistic that the Government will be prepared to accept new clause 3 and that is why I focused on amendment No. 21. That will be one of the realities with which we may have to deal. My hon. Friend makes a valid point. I am glad that he intervened when he did, because I was about to conclude my remarks.
Mr. Hayes:
I will not attempt to emulate the erudition of my hon. Friend the Member for Eddisbury (Mr. O'Brien) or the verbosity of my hon. Friend the Member for Lichfield (Mr. Fabricant). However, I wish to shed a little light on the matter.
The Bill will give the Comptroller and Auditor General a new duty to report on whole of Government accounts, so clearly his role must be credible. To be credible, he must have access to good-quality, accurate and thorough information. That is consistent with the description of him
in the debates in 1921 that were referred to earlier. I am mindful of the contribution made by the right hon. Member for Swansea, West (Mr. Williams), because in 1921 a Member, simply referred to as Mr. A. Williams, described the Comptroller and Auditor General as
The Bill's first fundamental inconsistency is with private practice and existing statute. Generally accepted accounting practice among auditors provides substantial powers to auditors of consolidated accounts. The Companies Act 1985 states that where a company has a subsidiary undertaking that is a body corporate incorporated in Great Britain, its auditors
The debate is not, therefore, just about the Bill's failure to extend the CAG's powers in respect of quangos and other outside bodies but about inconsistency with existing practice in the private and public sectors.
The Minister may say that the CAG might rely on information supplied by the primary auditors of those bodies consolidated in the accounts. He can rely on that information only if it is collected. The Bill gives no authority to the CAG to insist that information is collected by primary auditors on aspects of Government affairs for which he does not have responsibility. There is a real chance that the CAG will be obliged, in the absence of that information, to give a qualified opinion on the conduct of Government affairs, Government probity and the accuracy of Government accounts.
Mr. Paterson:
The CAG audits the general accounts of the NHS but not the individual accounts of trusts and authorities, which have their own auditors. Is that relevant to my hon. Friend's point?
Mr. Hayes:
The hour is late, but my hon. Friend is clearly not paying sufficient attention to the detail of my remarks. Perhaps that is because of my lack of clarity rather than his lack of diligence. Although the CAG does not audit the trusts and authorities that make up the NHS, he has a responsibility--a statutory power--for collecting information from those auditors, which allows him to take
Mr. Geoffrey Clifton-Brown (Cotswold):
I am pleased that my hon. Friend has given way because, as a former member of the Public Accounts Committee, I am very aware that the CAG is unable to carry out value for money reports when he does not have proper access for auditing Departments. Is my hon. Friend aware that for every £1 spent those reports recover £8 of public money?
Mr. Hayes:
I am, and that reinforces the importance of my point. The sums involved are substantial and my hon. Friend encourages me to return to the 1921 Act, which will cause some excitement.
Mr. Stephen O'Brien:
It is a relief to us all.
Mr. Hayes:
There is more excitement than relief for Members across the Chamber. When the 1921 Act was introduced to the House, it was noted that the need to reform the 1866 Act was born of the fact that Government expenditure had increased about twentyfold. Heaven knows how today's expenditure compares with that of 1921, but, in my judgment, the multiplication of Government spending necessitates precisely the diligence implied by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown). Given that enormous increase in the nature and breadth of public expenditure, not to extend the scope of the CAG's discretion would be extremely remiss.
Before I digressed, I was saying that the CAG works closely with the Audit Commission in auditing the summarised NHS accounts and has powers to collect summarised accounts from the auditors who work in the individual trusts and authorities, to whom my hon. Friend the Member for North Shropshire (Mr. Paterson) referred. However, he can do that only because he has been given statutory powers by the House. I find it extraordinary that the Government have set aside that example and have not extended the scope for the CAG in other areas of Government affairs.
I said earlier that the CAG was described as a watchdog in 1921, but I shall return briefly to the 1866 Act, which I happen to have to hand. The failure that I have described is not in character and does not follow the spirit of Gladstone's Act, which makes it clear that
Mr. Fabricant:
Open government.
Mr. Hayes:
I was going to say freedom of information, but, in Blairite Britain, those are dirty words. However, that Act certainly aimed, in the interests of probity, to open up the affairs of Government to the CAG as the watchdog of the House.
documents which are held or controlled . . . by a government department.
There is a possibility that the Treasury might decide to keep all documents relating to expenditure by a Government Department in the Treasury itself and would be the judge and jury in the process. Given that we must consider all sorts of possibilities, under amendment No. 21, the Comptroller and Auditor General would not have the access to the information that he needs in those circumstances.
the watch-dog of the House of Commons in all these matters of economy and regularity.--[Official Report, 11 August 1921; Vol. 146, c. 820.]
If he is to be a watchdog in that spirit, the information he collects must be thorough and accurate. That seems to accord with the Government's definition of what is good and right. A White Paper published in July 1998 said that Departments should be capable of withstanding audit and that, to justify an unqualified opinion, they would need to be free of material error as defined by the standards of the auditing profession.
shall give to the auditors of any parent company such information and explanation as they may reasonably require for the purposes of their duties as auditors of the company.
The Bill is inconsistent not only with private practice, private auditors and statute but with the only comparable example of a consolidated audit in the public sector. With the National Health Service, there are already statutory powers for the CAG to collect not only data about bodies for which he has direct responsibility, but relevant information from a range of bodies that he does not directly audit--health authorities and trusts. The CAG's responsibility in that respect is supported by substantial powers that are not repeated in the Bill for the rest of government--which is a much bigger affair than the NHS.
the Comptroller and Auditor General shall have free Access, at all convenient Times, to the Books of Account and other Documents relating to the Accounts of such Departments, and may require the several Departments concerned to furnish him, from Time to Time, or at regular Periods, with Accounts of the Cash Transactions.
The spirit of that Act was one of free access--
3.45 am
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