Local Government Bill

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Mr. Davey: I am grateful to the Minister for repeating that assurance. However, I am led to believe that he also told the National Housing Federation that foreseeable future payments for inspections would be made through a transfer of resources between the Housing Corporation and the Audit Commission. Will the Minister confirm that?

Mr. Raynsford: The Housing Corporation currently meets the cost of inspection. There will be a transfer of funds with the transfer of responsibility, so that the Audit Commission can maintain the programme in the transitional period, as I described. A transfer of the funds currently available to the Housing Corporation will ensure that the Audit Commission has the funding to do the work. The subsequent arrangements are entirely a matter for future consideration. We are simply making the provisions available so that a charging regime could be introduced if it was thought to be appropriate, following proper consultation. However, I have made it clear that there is no current intention to introduce such a regime. The transfer will not involve the imposition of charges from April this year.

Mr. Davey: I am grateful to the Minister for confirming that. Is the provision really needed in case the Audit Commission would like to charge for consultancy services as opposed to fees and charges for inspection, or do the Government envisage that this measure could be used for charging fees for inspection?

Mr. Raynsford: As I have made clear, under the current framework the Audit Commission charges local authorities for inspection. There would be a slightly curious position if, when we have a combined inspectorate that inspects both local authority housing departments and registered social landlords, the Audit Commission had the power to charge local authorities but not registered social landlords. As the hon. Gentleman rightly identified, a body that has been inspected may ask the inspectorate to do further work in a purely voluntary capacity to build on certain

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conclusions or findings from the inspection. A local authority can choose to do that and it pays a fee to the Audit Commission.

Without that power, it would not be possible for the Audit Commission to charge a fee to a housing association for the kind of consultancy service that the hon. Gentleman identified. There is an obvious logic in making that power available. It would enable voluntary consultancy to be available immediately. If there were a longer-term change to the arrangements involving a standard scale of fees applicable to all bodies subject to inspection, it would be a matter for full and detailed consultation with all interested parties before there was any question of the appropriate order being made.

Mr. Andrew Turner (Isle of Wight): I am concerned that the Minister talks about voluntary consultancy services rather than additional inspection services. It is important to distinguish between the role of the inspector and that of the consultant. Otherwise, the inspector would be inspecting an authority more to see whether it had implemented his management suggestions than to see whether it had implemented an appropriate set of management arrangements. Can he confirm that he is talking more about extended inspection services than about consultancy?

Mr. Raynsford: The hon. Gentleman should not read too much into the use of the term ''consultancy'' by the hon. Member for Kingston and Surbiton (Mr. Davey). I said that it would be logical in certain cases for a body that had been inspected to request some further work arising from that inspection. I then said that that would be a form of consultancy because it would be a voluntary rather than an obligatory process. It would be commissioned by the individual housing body. I use the term ''consultancy'' in that sense, but the hon. Gentleman is quite right to say that this should essentially be follow-up services after an inspection. We do not envisage the Audit Commission challenging KPMG or other consultancies, although that might attract one or two people in the future. At present there is no such intention.

Subsection (2) of the new clause is needed to enable these arrangements to be applied separately to Wales if the National Assembly so chooses. Subsection (3) requires the Commission to balance over time income and expenditure on inspection of housing associations. Subsection (4) allows the payment of grant by the Secretary of State or the National Assembly to the Commission to cover the costs of such inspection. Amendments Nos. 184 to 186 are consequential amendments to the commencement provisions. I hope that that explains the purpose of the new clause and the amendments. Inspection is an important tool, which is already helping to drive up standards for tenants. Moving to a single inspectorate for all social landlords will improve the effectiveness of that tool and ensure consistency throughout the social housing sector.

The Chairman: Before I call the next speaker, it might be for the convenience of the Committee if we debate the amendments to the new clause as part of the

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general debate on the new clause itself. Otherwise, there might be confusion between Government amendments and Opposition amendments. As they are all related anyway, it seems a neater way of dealing with the clause.

Mr. Geoffrey Clifton-Brown (Cotswold): Good morning, Mr. Conway. That is helpful advice. I will leave my hon. Friend the Member for Isle of Wight (Mr. Turner) to deal with his amendments. I want to concentrate on new clause 10. I suspect that the Government may be rushing into legislation without thinking the matter through properly at the edges. We need to probe a number of aspects of the new clause.

The helpful brief from the National Housing Federation states that when the ODPM announced a single inspectorate, it was intended that the Audit Commission should absorb the inspection functions of the Housing Corporation and the Housing Corporation would retain its regulatory role. The Minister nods; that is most helpful. We must be clear about who does what and check that there is no overlap or double function. The brief also says that it is unclear what housing associations will be inspected on, apart from quality of services and continuous improvement. What is meant by ''continuous''? The only similar point of reference is the continuous improvement for which local authorities with a statutory duty strive. We need to know which regulatory body is doing what.

The matter is further complicated because the National Audit Office has a role. The Government are about to lay before the House two statutory instruments, which have been printed so prematurely that they do not even have numbers. The first is the Government Resources and Accounts Act 2000 (Examinations by Comptroller and Auditor General) Order 2003, and the second is the Government Resources and Accounts 2000 (Rights of Access of Comptroller and Auditor General) Order 2003. The explanatory note to the second order refers to other functions that the National Audit Office has in addition to those of the Audit Commission. Thus three different public bodies are involved in meddling with housing associations—the Housing Corporation, the Audit Commission and the National Audit Office.

The explanatory note to the first order states:

    ''This order implements part of the Government's policy set out in its response, published on 13 March 2002, (Cm 5456), to Lord Sharman's report ''Audit and Accountability in Central Government.'' The order gives the Comptroller and Auditor General access, for the purpose of his financial audit of the account of government Departments and non-departmental public bodies, to documents held or controlled by the following''.

Mr. Davey: The hon. Gentleman has made the bizarre point that he does not want the Comptroller and Auditor General to have powers of audit over bodies that spend public money. That is an extraordinary statement from the Conservative Front Bench. Does the hon. Gentleman want to withdraw his statement before he digs himself into an even deeper hole?

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Mr. Clifton-Brown: That was a pretty fatuous intervention. The hon. Gentleman knows perfectly well the point that I was making. He deliberately misrepresents what I said. I am probing the Government on the functions that each of the public bodies undertakes because I want to find out whether they are duplicated, which would mean rolling up the costs of administration and bureaucracy. It is typical of the Liberals to try to misrepresent our position.

Mr. Desmond Swayne (New Forest, West): Quisling.

Mr. Clifton-Brown: Exactly. Quisling, as my hon. Friend said.

The Chairman: Order. We will not have words like that bandied around.

Mr. Swayne: On a point of order, Mr. Conway. I am in a difficult position, as I have called the hon. Gentleman a number of things. In withdrawing and apologising, may I ask for some similar offences to be taken into account?

The Chairman: Indeed, as long as it is the last of the similar offences.

Mr. Clifton-Brown: Perhaps I, too, had better withdraw the word. The hon. Gentleman's intervention and misrepresentation caused considerable irritation. We need to know what each public body does.

What exactly is a registered social landlord? Is it a private or a public body? Until 1988, housing associations were funded entirely by public funds. Since then, they have had £14 billion of private sector loans, combined with public grants, and that further clouds the issue. They have many of the characteristics of private bodies—they have directors, for example. If they are private bodies, is it right that a huge regulatory regime should be heaped upon them?

The Minister said that the new clause introduced a new power, but I question whether it is new. The new clause refers to the Audit Commission Act 1998, but section 41 of that Act contains the power that is proposed in the new clause when combined with sections 10 and 11 of the Local Government Act 1999.

Section 41 of the 1998 Act states:

    ''The Commission may if authorised to do so . . . require a registered social landlord, or any officer or a member of a registered social landlord, to supply such information as the Commission may require.''

The Act also enables the Commission to require that information be supplied or documents be made available.

Section 10 of the Local Government Act 1999 states:

    ''The Audit Commission may carry out an inspection of a best value authority's compliance with the requirements of this Part.''

Section 11 states:

    ''An inspector has a right of access at all reasonable times . . . to any premises of the best value authority concerned.''

Section 11(6) mentions:

    ''Any expenses incurred by the inspector.''

Those Acts give the inspector the power not only to inspect and to require documents to be produced but to charge. I am therefore not sure what is the purpose

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of the new clause and the new power that Minister seeks to give himself. Perhaps it is just that clarification is needed.

9.15 am

I should like to move on to discussing the charging. Many parish councils have seen their auditing charges increase by several 100 per cent. a year as a result of the Audit Commission's activities. Only this week, I wrote to the Minister about the case of a parish council in my constituency in which the charge has gone up enormously. If the experience of parish councils is typical, we could expect individual housing associations to face hugely increased bills, if they start to be charged for the audit function. The Minister shakes his head, but the precedent is there and plain for all to see. People running housing associations will want reassurance from the Minister on the matter.

I understand that a proposal for a block transfer grant from the Housing Corporation to the Audit Commission is under discussion. However, presumably the Housing Corporation will seek to recover that money from the individual housing associations. The Minister shakes his head, so we learn something.

Will the Minister assure us that the auditing charges will never fall on the individual housing associations?

 
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Prepared 13 February 2003