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Session 2004 - 05 Publications on the internet Standing Committee Debates |
Fifth Standing Committee on Delegated Legislation |
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Column Number: 1 Fifth Standing Committee on Delegated LegislationThe Committee consisted of the following Members: Chairman: † Mr. John McWilliam †Battle, Mr. John (Leeds, West) (Lab)†Burnett, Mr. John (Torridge and West Devon) (LD) †Cable, Dr. Vincent (Twickenham) (LD) †Fitzpatrick, Jim (Vice-Chamberlain of Her Majesty’s Household) Gibb, Mr. Nick (Bognor Regis and Littlehampton) (Con) Jack, Mr. Michael (Fylde) (Con) †Jackson, Glenda (Hampstead and Highgate) (Lab) Kidney, Mr. David (Stafford) (Lab) †Lazarowicz, Mr. Mark (Edinburgh, North and Leith) (Lab/Co-op) †Marshall, Mr. David (Glasgow, Shettleston) (Lab) McNamara, Mr. Kevin (Hull, North) (Lab) †Roy, Mr. Frank (Motherwell and Wishaw) (Lab) †Ruffley, Mr. David (Bury St. Edmunds) (Con) †Spring, Mr. Richard (West Suffolk) (Con) †Stewart, Ian (Eccles) (Lab) †Timms, Mr. Stephen (Financial Secretary to the Treasury) (Lab) Mark Etherton, Committee Clerk † attended the Committee Column Number: 3 Tuesday 15 March 2005[Mr. John McWillam in the Chair]Draft Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 20059.55 amThe Financial Secretary to the Treasury (Mr. Stephen Timms): I beg to move,
I bid you a warm welcome to the Chair of our Committee, Mr. McWilliam. You and I have worked closely together on several policy matters, particularly to do with information technology, but, sadly, I do not think any of them will arise this morning. This order was laid before the House on 31 January, and I ask the Committee to agree to it. In 2003, the Government implemented key recommendations made by Lord Sharman on audit and accountability in central Government. In particular, we responded to concerns expressed in Parliament by strengthening the statutory powers of the Comptroller and Auditor General in two ways. First, we made the Comptroller and Auditor General the statutory auditor of certain non-departmental public bodies of which he was not already the statutory auditor. Secondly, we gave him greater powers of access. We continued that policy in 2004 by extending the Comptroller and Auditor General’s statutory powers in respect of two more NDPBs and four special health authorities. This order is intended to continue the process. It is being made under the Government Resources and Accounts Act 2000, and I have been grateful for the assistance of the National Audit Office throughout the preparation of it. The order provides for the Comptroller and Auditor General to be made the statutory auditor for three development corporations—Thurrock, London Thames Gateway and West Northamptonshire—as well as the British Transport police authority. Following a referral of the Hybrid Instruments Committee, the creation of West Northamptonshire Development Corporation was the subject of a special Select Committee under the chairmanship of Lord Boston of Faversham that reported on 17 November last year. Following the Committee’s report, the Corporation has now been established. Urban development corporations are set up under the Local Government, Planning and Land Act 1980. This legislation provides for the auditor to be appointed by the Secretary of State. We therefore need to use powers in the Government Resources and Accounts Act 2000 to give the Comptroller and
The Railways and Transport Safety Act reflected our policy to create an authority closely modelled on local police authorities. Much of the Act was based on the Police Act 1996 that established local police authorities. After the legislation was passed, the British Transport police authority was classified as a non-departmental public body. The need for the Comptroller and Auditor General to have statutory audit responsibility was not considered during the drafting of the Bill. It is therefore necessary to use the Government Resources and Accounts Act to give him that statutory audit responsibility. In the debate on the 2004 orders on 21 June, Members asked a number of questions. In particular, they questioned why we had to go through the process of debating a policy each year that had already been approved by Parliament. They also asked whether an assessment had been made of the impact of Comptroller and Auditor General audit on those bodies covered by the 2003 order. In responding to the first point, my predecessor explained that most NDPBs were set up through new legislation that should, as a matter of policy, appoint the Comptroller and Auditor General as auditor. However, some new NDPBs are set up under existing legislation, which may not provide for the Comptroller and Auditor General to have that role. That is certainly the case with the development corporations listed in the order before us. The power to give the Comptroller and Auditor General statutory audit responsibility, which is in section 25(10) of the Government Resources and Accounts Act 2000, provides that the orders must be laid in draft, and cannot be made without resolutions of both Houses of Parliament. The second concern was whether we had reviewed the regulatory impact assessment published alongside the 2003 orders. The then Financial Secretary, my right hon. Friend the Member for Bolton, West (Ruth Kelly), said that best practice suggested that such reviews should be undertaken at regular intervals, and that the Treasury would revisit the subject in due course. My officials have done that, and a new regulatory impact assessment accompanies this order. To sum it up, there seems to have been little loss in continuity and the impact on the audited bodies has been minimal. In broad terms, audit costs have been comparable to what they were, and in most instances the only adverse impact appears to have been just what one would expect from the friction resulting from a change in auditor. Hon. Members may also recall that the Comptroller and Auditor General planned to increase the amount of audit work under his control that was contracted out to commercial firms. He hoped to increase the level
I should also report that the Cabinet Office has carried out an extensive review of public bodies, and it is quite likely that some will be reclassified as non-departmental public bodies in due course. In a number of cases, we will need to take further orders through the House to make sure that the Comptroller and Auditor General has statutory audit responsibility for them, too. The proposals continue and build on the Government’s commitment to improve the bodies’ accountability to Parliament. I commend the order to the Committee. 10.3 amMr. Richard Spring (West Suffolk) (Con): May I say what a pleasure it is to see you in the Chair, Mr. McWilliam. I thank the Minister for his explanation. He will be disappointed to hear that I shall be brief—as, undoubtedly, will other hon. Members. The reason why is simply that in previous similar debates we supported the principle behind today’s order, which follows on from the Government Resources and Accounts Act 2000 and the Sharman report. In speaking to the equivalent order last year, the then Financial Secretary to the Treasury, the right hon. Member for Bolton, West, told the Committee:
That is effectively what the Minister has said today, and we support that. The urban development corporations are new bodies that were set up under the 2004 instrument to which the right hon. Member for Bolton, West was speaking. I understand and support the need for the order in the case of the UDCs, but I am a little bemused as to why the order should be needed for the British Transport police authority. The BTPA, as the explanatory note tells us, was established in July 2004 under the Railways and Transport Safety Act 2003, which received Royal Assent on 10 July 2003, well after Lord Sharman’s report “Holding to Account” was published, and even after the Comptroller and Auditor General was appointed auditor of the first set of non-departmental public bodies under the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2003, which was considered by
I should also like to raise another point that has been made in similar deliberations before. Two similar orders were introduced in 2003–04. The regulatory impact assessment includes a fairly detailed account of the effectiveness of those orders and notes that some 22 per cent. of audits have been contracted out, so the National Audit Office is on the way, as the Minister observed, to reach its target of 25 per cent. by 2005–06 to ensure that competition is maintained. However, 25 per cent. is a rather low target. Does the Minister plan to extend that? The RIA notes that costs have not altered significantly and that quality has improved in most situations, which is welcome. However, the RIA also notes that a number of non-departmental public bodies thought that one year’s audit was not long enough to take a considered view of the effects of the change. The Minister has implied that that will be kept under review and there will be a further examination of that point, but with that in mind, what commitments can he make to continue to monitor the effectiveness of the Auditor General’s audits? 10.6 amDr. Vincent Cable (Twickenham) (LD): I shall be brief. We welcome any effort to extend public scrutiny and accountability in respect of non-departmental public authorities, or quangos as we more commonly refer to them. The order is welcome and sensible. I have a question about the British Transport Police Authority that is slightly different from the one asked by the Conservative spokesman. The introductory paragraph of the order says that the BTPA
Clearly, it is exercising functions of a public nature, but unless I have hopelessly misunderstood the governance arrangements for the British Transport Police, the BTPA is not publicly funded. A large part of the money comes through a rather complex, mysterious funding formula divided between the private rail companies. Much of our frustration with the British Transport Police, which is under-resourced relative to other parts of the police force, relates to that somewhat opaque private funding arrangement. I should be interested to know to what extent the auditing of the BTPA covers those private funding arrangements and how clearly and explicitly they are dealt with. However, that is a subsidiary point; we fully support the main thrust of the proposals. 10.8 amMr. John Burnett (Torridge and West Devon) (LD): Mr. McWilliam, I too welcome you to the Chair. You have chaired a number of Committees with which I have been involved and you also chaired last year’s Finance Bill, which was a bit of a marathon. I apologise to the Committee, because I missed what the Minister said—I am a little bit deaf. First, who audited the authorities previously? Secondly, with
10.10 amMr. Timms: I am grateful to hon. Members for the support that they have expressed for the order. The question has been raised as to why the British Transport police authority needs to go through this process, given that the legislation is relatively recent. I hinted at the answer in my earlier comments and I will draw it out more fully. The legislation was modelled, in particular, on the basis of our policy to create an authority that was closely modelled on local police authorities. Therefore, much of it was based on the Police Act 1996, which preceded the policy commitment to extend the statutory role of the Comptroller and Auditor General in the way that we have now agreed to do. That is why that was not a feature of that Act. As the hon. Member for Twickenham (Dr. Cable) said, the British Transport police authority is funded by the rail industry. The authority is responsible for setting the annual budget for the British Transport police, but the chair of the authority and its other members, who are a mix of industry and non-industry figures, are appointed directly by the Secretary of State. The authority comes within the ambit of those covered by our commitment. The hon. Member for Torridge and West Devon (Mr. Burnett) asked who audited these things before. The bodies are all new, so we are appointing their auditors for the first time. Mr. Burnett: It is a slightly pedantic point, but presumably the order gives authority to the auditors to audit from day one—not from today. Therefore, the entire life of these authorities will be covered by audit and scrutiny. Column Number: 8 Mr. Timms: That is right. We are appointing the auditors now, but they will, indeed, have the responsibility for the whole life of the organisations. The hon. Member for West Suffolk asked whether we would continue to review the experience. Indeed, we will. We expect to be able to say something about that later on this year and we will draw on the experience of the 2003 and 2004 orders and this order. The hon. Members for Torridge and West Devon, and for West Suffolk asked whether the 25 per cent. target would be reviewed. I understand that there are no proposals to increase the target. The commitment was given by the Comptroller and Auditor General only recently, in 2003. He is not accountable to me or to the Government but to Parliament. So, questions about how he applies that target and the kind of tender lists that he uses are better directed to him rather than to me, as a member of the Government. I am grateful to the Members who have spoken for their support for the principle. Mr. Burnett: I asked about the tender list and the calibre, or the size, of the firms that were on it. I hope that the Minister can answer that question. Will he also tell us about the duration of the tender contracts? I did not ask him that, and I apologise for that. Will those contracts last three years and will a further tender then be issued, to ensure that people are not too snug with the client? Mr. Timms: I asked the hon. Gentleman to take those matters up with the Comptroller and Auditor General, who reports not to me but to Parliament. The arrangements that he makes are not for me or anyone in the Government to approve. Mr. Burnett: I just wondered whether the Minister knew. Mr. Timms: I do not have that information this morning. The Chairman: Order. As a humble representative of Mr. Speaker, I should tell the hon. Member for Torridge and West Devon that he should direct his question to the Commission operating under the authority of Mr. Speaker. Mr. Timms: Thank you, Mr. McWilliam. I am grateful for the support that has been expressed, and I hope that the Committee will agree to the orders. Question put and agreed to. Resolved,
Committee rose at sixteen minutes past Ten o’clock. |
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