Draft Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2003 and Draft Government Resources and Accounts Act 2000 (Rights of Access of Comptroller and Auditor General) Order 2003 and Draft Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2003

[back to previous text]

Norman Lamb (North Norfolk): I also welcome you to the Chair of the Committee, Mr. Cummings.

On behalf of the Liberal Democrats, may I say that we support the objective of implementing the Sharman report and therefore welcome the emergence of the statutory instruments? I want to ask the Paymaster General one or two general questions. She referred to assurances given by the Comptroller and Auditor General about how he would exercise his powers, to which the regulatory impact assessment also refers. It states that there are endorsed assurances about the way in which he will use his powers so as to minimise any potential burdens on bodies subject to access.

On the regulatory impacts and costs, it is stated that the CAG does not intend to exercise his new powers in a manner that is likely to add significant burdens in terms of cost and inconvenience to those affected. Should we assume that those assurances will remain forever? I assume that there is no statutory basis for them. Do we simply accept that that is how the powers will be exercised? What will be done to ensure that that remains the case?

Page 48 of the Government's response to Lord Sharman's report, contains a reference to access for the CAG, and particular reference to the fact that the Treasury and the National Audit Office will agree a general protocol on how the rights of access will operate. Paragraph 3.27, IV states:

    ''Once agreement has been reached Treasury would make a Statutory Instrument, noting the existence of the general protocol in the explanatory notes.''

I do not see any reference in the explanatory notes to the protocol and I would be grateful for the Paymaster General's comments on that.

The Government's response also sets out notes on the contents of a protocol, which is important as it concerns how the powers of access will be exercised. The Paymaster General referred to the need for a protocol, but what stage have we reached? Has the protocol been prepared in draft and has there been consultation on it? As I said, the explanatory notes were to refer to it, but do not.

Finally, the regulatory impact assessment refers to the fact that non-departmental public bodies, which are also companies, need to be audited by a Companies Act auditor. It also says that further legislative changes will be needed to enable the CAG

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to carry out Companies Act audits. Will the Paymaster General update us on the likely time scale for implementing that reform? We are happy to support the statutory instruments subject to answers to those questions.

2.53 pm

Dawn Primarolo: I thank the hon. Members for Arundel and South Downs (Mr. Flight) and for North Norfolk (Norman Lamb) for their contributions to the debate and for their support for the orders. I admit that I would have been surprised if they did not welcome the proposals, which significantly increase access to auditing and its accountability.

The hon. Member for Arundel and South Downs asked why the orders were published and then withdrawn. I am sorry for the inconvenience caused by the need to resubmit them, but I am sure that all members of the Committee, especially the hon. Gentleman, will realise that this is a complicated area. We are moving from non-statutory to statutory provision and into areas where there have been no such provisions before. The original drafts were withdrawn in the light of two main concerns from the Joint Committee on Statutory Instruments about the powers: first, that the original draft audit order contained a provision requiring the charities included in the draft order to prepare statements of accounts. We included a provision requiring certain charitable bodies to prepare accounts in the original draft order because under the Charities Act 1993 different accounting requirements are imposed on charities according to their level of income. We thought it would be sensible to standardise the accounting requirement for charities included in the order. However, the JSCI took the view that the Government Resources and Accounts Act 2000 did not provide the power to make such a provision and we had to amend the order accordingly.

The second concern was about the draft access order. The original draft order contained a provision worded so as to give the CAG access to

    ''documents held or controlled by an individual or body''

in certain circumstances. The JCSI took the view that such wording took the order outside the powers of section 25(8) of the Government Resources and Accounts Act.

We could say that in our enthusiasm to respond to the proposals the Government were a tad too enthusiastic and it would appear that we were about to go beyond statutory provision. I am sure that the hon. Gentleman would recognise that while such provision might have been desirable, we have to have the powers to make the changes and we did not have them. I apologise for the inconvenience.

The hon. Gentleman asked about Network Rail. No decision has been taken to consolidate NDPB's accounts in departmental accounts. However, from 2004015005, the Government will be producing a summary of central Government accounts that will include all Departments and NDPB's accounts. Network Rail's accounts are already consolidated in the Strategic Rail Authority's accounts. As the hon. Gentleman knows, the SRA is an NDPB. The

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argument about Network Rail's borrowing is different. It is about the difference within the international rules of classifying bodies to the public sector—which are not changing—and the accounting rules for Departments and for the NDPBs. There is no change.

I know that the hon. Member for Arundel and South Downs covered this ground with my hon. Friend the Financial Secretary in an Adjournment debate in Westminster Hall on 2 April. I have no intention of repeating everything she said because the hon. Gentleman is aware that the joint statement issued in October 2002 by the national statistician and the CAG was clear about their interpretation and discharging of their relevant obligations under international and national standards of accounting. We cannot allow it to continue to be asserted that the Government may be seeking to evade their obligations under those standards, which are set by an independent accounting body.

If the hon. Gentleman needs a clearer understanding, he will surely recognise that the Government have gone much further and are more rigorous in their accounting and following those international and national standards than other previous Governments. They are clearly following on from the spirit of the orders in providing clear audit routes, access to information and accounting of all the matters that should properly be accounted to Parliament.

The hon. Member for North Norfolk asked about the Comptroller and Auditor General's assurances. They are non-statutory, but they were published in the Government's response to the Sharman report, and we are supremely confident that we can rely on the word of the Comptroller and Auditor General. The assurances are on the public record and we are confident that he will follow them.

The hon. Gentleman also asked about the NDPBs that are companies and regulated therefore by the Companies Acts. The new rules will require changes to primary legislation, but I am afraid that I cannot give a timetable for action. Other changes to the Companies Acts have been consulted on, and the Government are working on a wider Bill to deal with the Acts, so we will have a vehicle for making changes to the primary legislation. However, it is slightly more complicated because of the related issue of the European directive, as noted by Lord Sharman in his report. That is under discussion with the European Commission and the National Audit Office and the directive itself may need to be altered. We will act as soon as possible, considering the apparent need to amend both a European directive and primary UK legislation.

The hon. Gentleman's final point was about the protocol and explanatory notes. The main protocol is in part C of the Government's response to the Sharman report. Individual protocols within that framework will be drawn up as they are needed and it would not be sensible to spend forever working on that. The information is provided.

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Norman Lamb: I note that page 49 of the Government's response contains notes on the contents of access protocols, but I am not sure whether the Minister is referring to that. It is not a protocol in itself, but something on which a protocol could be based. Has a protocol been prepared, given that the rules are coming into force on 23 May?

Dawn Primarolo: The hon. Gentleman is right in that part C stands as that in the response to Sharman. It forms the basis on which protocols will be developed, if and when they are needed, rather than detailing the specifics now. We are following the good sense and experience of the Comptroller and Auditor General in how to proceed, and given his stewardship thus far and the active participation of the Public Accounts Committee in much of his deliberations I am sure that that is the correct way to proceed and the way that he wants to proceed.

Norman Lamb: I understand and share the Minister's confidence. However, the Government's response said that there would be a reference in the memorandum, and the understanding was that the protocol would exist when the new rules were implemented. Will the general protocol, which will be the guidelines for how these rights and powers will be exercised, be available and in force by 23 May when these powers come into force?

Dawn Primarolo: It is available in that it is in part C. It will be made specific when it is needed to provide the access for the CAG. It is not something that is written on tablets of stone that is moveable around his work.

Norman Lamb: It must be written somewhere.

Dawn Primarolo: These are detailed matters and this is the way that the CAG wished to handle it, as I understand it. I can see the hon. Gentleman's point. The phrasing of the explanatory memorandum may have given the impression that the protocol contained more than is currently provided. Perhaps when I have looked at this in more detail and consulted with the CAG I will be able to respond to the hon. Gentleman. In view of the discussions that have taken place and the assurances that have been given, I am a little reluctant to give commitments before discussing that with the CAG. I can certainly circulate my response to all members of the Committee.

The orders will be widely welcomed in the House and elsewhere. They finally represent a response to points that hon. Members and the CAG have made consistently for some time. They offer a good foundation to increase the access and audit arrangements to deliver to Parliament the transparency and accountability that we have every right to expect. I commend them to the Committee.

Question put and agreed to.


    That the Committee has considered the draft Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2003.

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Draft Government Resources and Accounts Act 2000 (Rights of Access of Comptroller and Auditor General) Order 2003


    That the Committee has considered the Draft Government Resources and Accounts Act 2000 (Rights of Access of Comptroller and Auditor General) Order 2003.—[Dawn Primarolo.]

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Draft Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2003


    That the Committee has considered the Draft Government Resources and Accounts Act 2000 (Audit of Health Service Bodies) Order 2003.—[Dawn Primarolo.]

Committee rose at eight minutes past Three o'clock.

The following Members attended the Committee:
Cummings, Mr. John (Chairman)
Baron, Mr.
Brown, Mr. Russell
Farrelly, Paul
Flight, Mr.
Hopkins, Mr.
Lamb, Norman
Morris, Estelle
Palmer, Dr.
Pond, Mr.
Primarolo, Dawn
Salter, Mr.
Sutcliffe, Mr.
Wilshire, Mr.

The following also attended, pursuant to Standing Order No. 118(2):
Savidge, Mr. Malcolm (Aberdeen, North)

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