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Mr. Ian Liddell-Grainger (Bridgwater) (Con): As a Scotsman hiding in Somerset, I claim even less reason than my hon. Friend the Member for Blaby (Mr. Robathan) to speak in the debate. Someone once asked me what my view of Wales was from my seat, and I said, "Overlooking it." I apologise to all Welsh Members for that faux pas.

I agree with other hon. Members that this is not a bad Bill, but I should like to speak about a part of the Bill that I do not like. In a wonderful bit of double speak, clause 6 refers to the provision:

"The Auditor General for Wales may borrow sums in sterling by way of overdraft or otherwise for the purpose of meeting a temporary excess of expenditure over sums otherwise available to meet that expenditure."

That is my problem with this generally good Bill.

The whole point of having an Audit Commission is to be able to follow an audit thread. I am worried that the Auditor General can borrow money, even on a temporary overdraft basis, in order to follow an audit thread for one simple reason. If he cannot follow the thread through private or public accountability—in other words, if it has been delegated to a private auditor—it means that either the National Assembly for Wales or the British taxpayer will have to be pick up the tab. There is no other way round it. In respect of Wales, of course, it means the Welsh taxpayer.

That is my main difficulty with the Bill. The audit trail has to be examined, but not through the eyes of the Welsh, the Scots, the Irish or anyone else. It must be possible to follow a thread where public money is involved. Too often in this country, audit trails have left the taxpayer out of pocket by millions of pounds with absolutely no benefit—and certainly no prosecution—at the end of the day. It worries me that we are allowing the Auditor General to run an overdraft. Why should he need to run an overdraft? Do we not have enough money in the country? Is the Chancellor not telling us something? Are we running all this on Barclay cards? That is not the way to do an audit trail.

The fees are another problem. New section 93A in clause 7 states:

"The Auditor General for Wales may charge a fee for auditing a person's accounts."

If he is delegating that responsibility to a well-known firm of accountants—it does not matter which—and that firm is unable to retrieve the money from the person because of a dispute, what happens? Does the Auditor General for Wales sue the company to get the money back or does the delegated auditor, a private individual, sue for it? If the company goes into liquidation in the meantime, what do we do? Do we pursue the company directors, or does the Welsh Assembly have to pick up the tab? Exactly what would happen in those circumstances has not been clearly explained.

Much has been said about clause 5. It is a crucial provision, dealing with auditing of registered social landlords. I doubt whether many Members would be
 
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unable to recall occasions—I have spent only three years in the House—on which such landlords were brought into question and people were anxious to follow them up. The noble Baroness Noakes said:

"The criminal law is a blunt instrument for a public audit regime . . . I am reinforced in this by the absence of criminal sanctions".—[Official Report, House of Lords, 1 April 2004; Vol. 659, c. 1461.]

That just about sums it up. The Minister said that we audit social landlords correctly by our ability to follow the audit trail and secure what information we want. However, at the end of the day, we do not have a criminal sanction. Social landlords can be very good at disappearing. A company may have a problem, the social landlords may leave, the company goes down the pan and once again the taxpayer is left to pick up the bill. Will the Minister reflect on Baroness Noakes' view of the criminal law as a blunt instrument and ensure that people realise that it is unacceptable to walk away from a company because the Audit Commission of Wales is in pursuit.

There are nine subsections to clause 5, which gives the Auditor General the ability to pursue reasonable costs, but when he delegates the responsibility for investigating a company, who takes the decision? Is there a time limit and a budget? Is there a narrow or broad brief, or is the delegated body asked to write its own brief? I ask those questions because we all know what happens—I am a capitalist and do not disapprove of commercialism—when something is given to a private company. It will obviously try to keep it all going and there is a tendency—dare I say it to any lawyers or accountants in the Chamber—to egg up the costs. What powers will the Auditor General for Wales have to rein in costs at all levels? Clause 5 does not make that clear, so we may have to amend later clauses to tighten it up.

I want to move on to the enormous amount that the Audit Commission has achieved in the last year. It has dealt with late payments to farmers in Wales, the National Council for Education and Training for Wales, compensating farmers for tuberculosis—I had to get that in somewhere—in Wales, the renewal of private sector housing, the management of the delivery of hospital cleaning services, the procurement of primary care medicine and the management of further education and estates in Wales.

I have two questions for the Minister. First, has the Audit Commission done everything that it wanted? At the moment it has a very large staff—about 4,000 people—because it covers England and Wales. Are there further objectives that have been prevented because of stepping on the toes of the Welsh Assembly? When the Bill is enacted and the Audit Commission for Wales is established, it will want to do its job to the best of its ability. As my hon. Friend asked a few moments ago, will there be sufficient numbers of staff seconded into Wales to carry out the role properly? What it did last year certainly amounts to an ambitious programme, never mind what it might be asked to do in the future. Currently, there 2,300 staff dealing with England and Wales, including 1,500 commissioners and 450 inspectors. I believe that the number of staff taken on specifically for Wales is way below even a third of that. It is important to look further into that problem.
 
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Costs are also important. The fifth report of the Welsh Affairs Committee supplies the figure of £500,000. The report states:

"We have to express some concern that there is as yet no realistic published estimate of set-up costs . . . or savings, arising from"

the new office. It continues by stating that that is

"exactly the sort of failing for which auditors are rightly swift to criticise other organisations. We hope that . . . a clearer idea of costs"

will emerge. Does the Minister have any idea of the costs that will accrue? I see that the Chairman of the Welsh Affairs Committee is in his place. It is surely crucial to know what sort of budget the Auditor General for Wales will have on day one. Presumably, he will want to make progress as quickly as possible when the Bill is enacted. Can the Minister give us an assurance about the total costs?

In conclusion, this is a good Bill, but it does need tweaking. Some glaring provisions stand out and need to be amended. I have already mentioned the point about the criminal law. The provisions need tightening up. Cross-border co-operation is important—I do not mean that Wales is not part of Great Britain—so the provisions must be sensible. If we cannot follow up the trails properly, every one that the Auditor General wants to pursue will fail. In the eyes of the law, the job will not be deemed to have been done sufficiently, which cannot be acceptable to the Minister. If we need retrospective information, the Minister must ensure that the law gives us the ability to use it. It is all very well for the Bill to say that it can be done, but when there is no tie-up between England and Wales, following the split, there is the possibility that many things that desperately need to be pursued will fall through the lines.

2.59 pm

Mr. Hugo Swire (East Devon) (Con): The Opposition broadly welcome the Bill, as has been heard this afternoon. It must make sense to consolidate the audit arrangements for public bodies in Wales by replacing the Auditor General for Wales and the Audit Commission in Wales with the Wales Audit Office or, as it is called—this might be one of my few attempts at Welsh this afternoon—y Swyddfa Archwilio Cymru. I think that my hon. Friend the Member for Leominster (Mr. Wiggin) will squirm in his seat at that when he reads the Welsh press tomorrow. He, of course, is a man who started off by learning the Welsh national anthem and I am told that he is progressing well in that language. I have to say that my credentials are somewhat more challenged, in that I took a lot of convincing that the hon. Member for Alyn and Deeside (Mark Tami), who was in his place earlier and who serves with me on the Northern Ireland Affairs Committee, was not in fact a Member of Parliament for Scotland—a mistake that I made early on in my parliamentary career.

We will nevertheless put that behind us and move on to the substance of the matter before us this afternoon. The Minister was, in his usual manner, reasoned, conciliatory and generous to many this afternoon, including the Select Committee on Welsh Affairs, and we thank him for that. I thank him, too, for the tribute
 
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that he paid to our Conservative colleagues in the other place. We all agree that their diligence has ensured that this Bill has been greatly improved. It has to be said, however, that some inconsistencies and genuine concerns remain.

It is worth reiterating that the Opposition are disappointed that this is the only piece of Wales-specific legislation, in spite of the fact that the National Assembly for Wales has proposed five Bills. Welsh Conservatives, Liberal peers, Plaid Cymru and Labour, in the shape of Lord Morris of Aberavon, have all, as we have heard, shared that sense of disappointment.

In his opening remarks, the Minister referred to the cross-border reviews and the co-operation between England and Wales. That part of the Bill is no doubt to be welcomed. However, what is perhaps less welcome is the Government's failure to introduce something new and radical—something Wales-specific. By mirroring the Audit Commission Act 1998, the Government have missed a trick and, as my hon. Friend the Member for Leominster has said, we shall seek to remedy that in Committee.

The hon. Member for Blaenau Gwent (Llew Smith) and the right hon. Member for Swansea, West (Mr. Williams) both mentioned the bonfire of quangos—or perhaps we should say the "bonfire of the vanities"—and commented that there has not been so much as a spark, let alone a bonfire. Perhaps that should now be looked at as a priority. The Government's financial record on matters Welsh is, I have to say, a little questionable. I asked the Secretary of State for Wales back in May what the cost of the Welsh Assembly to the public purse was estimated to be at the commencement of that project, and the answer was that the additional running costs of the Assembly would be £15 to £20 million more than the cost of running the Wales Office. That is in addition to the £55 million or so that we are now facing for the establishment of the Welsh Assembly. Those costs in no way mirror those of the Scottish Parliament, but we can see how the costs of such projects can escalate very quickly.

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