|Government Of Wales Bill - continued||House of Commons|
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Accounts and Audit - Clauses 130 - 144
440. Provision is made in the Bill for the preparation of accounts in respect of the Welsh Ministers' use of resources; payments into and out of the WCF; the use of resources by the Assembly Commission; and for the preparation by the Welsh Ministers of "Whole of Government of Wales accounts", a concept deriving from the Government Resources and Accounts Act 2000. The Bill defines who are to be the Accounting Officers for the Welsh Ministers and the Assembly Commission. The Auditor General for Wales has responsibility for examining and certifying these accounts, and for carrying out examinations into the economy, efficiency and effectiveness with which the Welsh Ministers and the Assembly Commission have used their respective resources in discharging their functions. The AGW must lay before the Assembly any report made by the AGW in the exercise of these responsibilities. The Audit Committee can give views on what examinations the AGW should carry out and can also under clause 142 consider and report itself on the reports and the accounts laid before the Assembly by the AGW. The Comptroller and Auditor General may carry out examinations into the payments into and out of the WCF, and report the results of such an examination to the House of Commons and the Assembly.
441. Clause 144 and Schedule 8 to the Act make revised provision for the office of AGW. In particular, it is for Her Majesty to make appointments to the office of AGW, on the nomination of the Assembly; but the AGW is not in the exercise of any functions to be subject to the direction or control of either the Assembly or the Welsh Assembly Government. The AGW obtains funding by submitting an estimate of the expenses of carrying out the functions of that office to the Audit Committee. This is then laid before the Assembly, with any modifications the Committee considers appropriate; but if modifications are to be proposed, that may only be done following consultation with the AGW. The Assembly will vote on the resources to be allocated to the AGW as part of the Budget resolution process, referred to above.
DETAILED COMMENTARY ON CLAUSES IN PART 5
Welsh Consolidated Fund
Clause 116: Welsh Consolidated Fund
442. This clause establishes the Welsh Consolidated Fund (WCF), and stipulates that it is to be held with the Paymaster General. The norm is that sums may only be paid out of the WCF on the authority of a Budget resolution passed by the Assembly. Thus, the creation of the WCF provides the mechanism whereby the Assembly will control the use of resources by the Welsh Ministers and other bodies and offices funded directly from the WCF.
Payments into Welsh Consolidated Fund
Clause 117: Grants
443. Subsection (1) provides that payments from the Secretary of State, deriving from the moneys voted to him or her by Parliament, must be paid into the WCF.
444. Subsection (2) empowers any Minister of the Crown, and any government department, to make payments to the Welsh Ministers, the First Minister or the Counsel General. This may happen where, for example, the Welsh Ministers agree to carry out, in Wales, a function of a UK Minister of the Crown. By virtue of Clause 119(1), such sums will normally fall to be paid into the WCF. However, this requirement may be overridden by the Assembly passing a resolution under Clause 119(2).
Clause 118: Statement of Estimated Payments
445. In order to assist the Welsh Ministers in formulating a Budget motion under clause 124 and to assist the Assembly in scrutinising that Budget motion, clause 118 requires the Secretary of State to lay a written statement before the Assembly at least four months before the beginning of each financial year. The statement must contain an estimate of the total payments that the Secretary of State will pay into the WCF in that financial year. It must also contain an estimate of how much will be paid to the Welsh Ministers, the First Minister or the Counsel General in that financial year (whether by Ministers of the Crown, government departments or other persons), together with any other information that the Secretary of State considers appropriate (see subsections (1), (2), (4) and (5)).
446. Under subsection (3), the statement must also show how much of the Welsh Block Grant voted to the Secretary of State for Wales by Parliament the Secretary of State proposes to deduct to meet the expenses of the Secretary of State's own department, the Wales Office, before paying the remainder into the WCF.
Clause 119: Destination of Receipts
447. This clause deals with which sums need to be paid into the WCF, and which do not. The normal position is that sums received by the Welsh Ministers, the First Minister, the Counsel General, the Assembly Commission, the AGW or the Public Services Ombudsman for Wales are to be paid into the WCF (because all those bodies and office-holders are funded out of that Fund) (subsection (1))
448. However, there are a number of exceptions to this, namely:
449. In addition, HM Treasury can effectively override a requirement that sums be paid into the WCF. The Treasury can make an Order under subsection (3) designating certain categories of receipt. The consequence of this is that the Welsh Ministers have to pay an amount equivalent to those receipts into the UK Consolidated Fund, via the Secretary of State for Wales. This power of HM Treasury is outside the Assembly Budget process (for which see below), because the sums involved are charged on the WCF by virtue of subsection (6). This means that they are paid automatically out of the WCF, without the need for Assembly approval in a Budget resolution. Subsection (7) provides that these Treasury Orders are to be made by negative resolution procedure in the House of Commons (in accordance with the convention that the Commons alone controls matters relating to the supply of finance to the executive).
450. Clauses 120-122 make provision for the Welsh Ministers to borrow from the Secretary of State, either to cover a short term deficit in the WCF, or to provide a working balance within that Fund (clause 120(1)). The total assets borrowed may not exceed £500 million at any given time (clause 121(2)). This overall limit includes loans made by the Secretary of State to the National Assembly for Wales as constituted by the Government of Wales Act 1998, and any other loans issued out of the National Loans Fund which the Assembly is liable to repay, to the extent that these are still outstanding when the Welsh Ministers come into existence (Schedule 11, paragraph 49). The £500 million ceiling can be increased by the Secretary of State by order, provided that HM Treasury consent (subsection (3)). Such an Order is subject to affirmative procedure in the House of Commons (subsection (4)), thus preserving the principle that that House should control the supply of money to the executive.
451. The Assembly will not be able to control, by means of its Budget process, the rate at which such loans are repaid to the Secretary of State, as HM Treasury determines the timing and interest rate of those repayments (clause 120(2)), and sums required for the repayments are "charged on" the WCF (clause 1203)) (for which see the note on clause 123 below). Sums received by the Secretary of State by way of repayment will be paid into the National Loans Fund, from which they were originally provided (clause 121(1) and (5)).
452. Under clause 122, the Secretary of State is required to prepare, each financial year, accounts in respect of loans issued under these provisions. These accounts are to include any outstanding loans or advances made by the Secretary of State to the Assembly as constituted by the Government of Wales Act 1998. The accounts are to be sent to the Comptroller and Auditor General for examination (clause 122(2)). The Comptroller and Auditor General must lay copies of those accounts, and the Comptroller and Auditor General's report on them, before each House of Parliament (clause 122(3)).
Clauses 123, 124, 125, 126, 127, 128 and 129
453. Clauses 123-129 deal with the processes which must be complied with for expenditure out of the WCF to be regular. The normal process is that sums will only be paid out of the WCF on the authority of a Budget resolution passed by the Assembly (clause 123(1)(b) and clause 124). There are three sets of exceptions to this norm.
454. The first is that, in a small number of cases, sums will have been "charged on" the Fund by legislation (for an example in this Bill, see clause 20(5)). Sums so charged are paid out of the Fund automatically, without the need to be approved in a Budget resolution (although the AGW still has to approve the issue of the sum, having been satisfied that it is indeed charged on the WCF (clause 128 and the final words of clause 123(1)).
455. The second set of exceptions is where the payment out is deemed to have been authorised by a Budget resolution of the Assembly, by virtue of clauses 126 or 127 (for more on which, see below).
456. The third exception to the norm applies to sums which were paid into the WCF by mistake - see clauses 123(5) and 129.
457. Payments out of the WCF which have been authorised (or deemed authorised) by a Budget resolution of the Assembly, still cannot be made except to meet expenditure of a "relevant person", or expenditure payable out of the WCF by virtue of legislation (clause 123(2)). A "relevant person" for these purposes is defined, in subsection (3), as any of:
458. Clauses 124 and 125 set out the process of Budget resolutions. For each financial year, the First Minister or another Welsh Minister must move a Budget motion in the Assembly (clause 124(1) and (2)). Normally, the Budget resolution for each financial year will be approved by the Assembly in the previous financial year (see clause 126(1)). The Budget motion must seek the Assembly's approval for:
459. The "use of resources", in accepted accounting terminology, means their expenditure, consumption or reduction in value (clause 124(4)). Accruing resources means income, including income from the disposal of capital assets (the latter being known as "non-operating income").
460. There are thus two aspects to a Budget motion. First, it seeks approval for the maximum amount of resources which a relevant person can plan to use on services and purposes approved in the motion. At that point, the income constituting accruing resources may not have materialised in the form of a cash receipt.
461. Secondly, the motion seeks approval for the maximum amount of cash that can be issued out of the WCF to be spent on the services and purposes referred to.
462. The Bill provides that as a minimum, there must be one Budget motion per year, known as the "annual Budget motion" (clause 124(1)). As stated above, this will normally be moved and passed before the beginning of the financial year to which it relates (clause 126(1)). However, supplementary Budget motions may be moved in relation to a financial year (clause 125). These may be moved before the beginning of the financial year to which they relate, in the financial year to which they relate, or in a subsequent financial year. They may authorise additional resources to be made available for the services and purposes specified in the annual Budget resolution or they may specify new services and purposes, and allocate resources to those. They can also authorise any of the relevant persons (see above) to retain further amounts of resources, on top of those which the annual Budget resolution allowed them to retain, rather than paying these into the WCF. And finally, as with annual Budget motions, supplementary Budget motions can seek authority for the issue of cash out of the WCF.
463. Like annual Budget motions, supplementary Budget motions may be moved only by the First Minister or another Welsh Minister.
464. As referred to above, two of the exceptions to the norm that a Budget resolution of the Assembly is required before sums can be paid out of the WCF are contained in clauses 126 and 127. Clause 126 deals with the situation where no Budget resolution has been adopted by the Assembly by the beginning of the relevant financial year. In the absence of such a resolution, clause 126 provides that resources for services and purposes may be used, and money issued out of the WCF accordingly, up to a specified level. This level is determined as a fixed percentage of the preceding financial year's provision for that service or purpose. Likewise, any of the relevant persons (for which see above) can retain resources (rather than paying them into the WCF), up to the same percentage of the amount of resources that they were authorised to retain in the preceding financial year. The percentage in question is 75% up to the end of July in a financial year. Furthermore, if a Budget resolution for the financial year has still not been passed by the end of July, then resources can be used, amounts retained, and cash issued out of the WCF, up to a further 20% of the previous year's authorised amounts; that is, up to 95% overall.
465. Clause 127 (Contingencies) is aimed at emergency situations in which Welsh Ministers:
466. In that situation, clause 127 allows resources to be used and cash to be paid out to the WCF, up to a ceiling of 0.5% of the total amount authorised for use or paying out, respectively, for the financial year in question. On current figures, this would equate to approximately £50 million. Where the Welsh Ministers use this power, they must, as soon as possible, lay a report before the Assembly, setting out the amount of resources and cash involved, and explaining why they considered the action they took to be necessary (subsection (7)).
467. Once payments out of the WCF have been authorised (whether by Budget resolution, by legislative provision "charging" them on the WCF, or under clauses 126, 127 or 129), they still cannot be made unless the AGW has granted an approval to draw (clause 128). Before doing so, the AGW will need to be satisfied that the conditions laid down in clause 123 have been met (clause 128(2)). Once an approval to draw has been granted, the Paymaster General, who holds the WCF, must make the funds available to the person entitled to them (clause 128(4)).
468. The clause makes provision for daily information on payments out of the WCF to be available to the AGW and the principal accounting officer for the Welsh Ministers (subsection (5)).
469. Subsections (6) - (8) make provision concerning the principal accounting officer for the Welsh Ministers. By subsection (6), this is to be the Permanent Secretary to the Welsh Assembly Government - i.e. the most senior civil servant serving the Welsh Assembly Government (see subsection (8)). If there is a temporary vacancy in the post of Permanent Secretary, or the Permanent Secretary is incapable of acting as principal accounting officer to the Welsh Ministers - e.g. because of illness - HM Treasury can appoint a temporary replacement.
Clause 130: Welsh Ministers' Accounts
470. Subsection (1) imposes an obligation on the Welsh Ministers to prepare accounts for each financial year in accordance with directions given to them by HM Treasury. By virtue of subsection (2), the Treasury may direct the Welsh Ministers to include accounts of financial affairs and transactions of persons other than themselves.
471. The Treasury's powers to direct the form of the Welsh Minister's accounts is based on provisions in the Government of Wales Act 1998. The Treasury does not have an equivalent power under the Scotland Act 1998, because the Scottish Parliament has primary legislative powers which it can use to dictate the form and content of the accounts of the Scottish Ministers. The National Assembly for Wales will not have similar powers on enactment of the Bill.
472. The Welsh Ministers must submit their accounts to the AGW, who must report on them to the Assembly (subsections (4) and (5), which also lay down the time-scales within which these actions must be performed).
473. Subsection (7) permits the Treasury to avoid duplication of effort, by relieving the Welsh Ministers of an obligation to prepare accounts under this clause, if they would have to deal with the same matters in other statutory accounts.
Clause 131: Account Relating to Welsh Consolidated Fund
474. As well as accounts of their own transactions, the Welsh Ministers must prepare an account of all receipts into and payments out of the Welsh Consolidated Fund in any financial year (subsection (1)). The account must be prepared in accordance with directions given to the Welsh Ministers by the Treasury (subsection (2)). The account must be submitted to the AGW, who must report on it to the Assembly (subsections (4) and (5), which also lay down the time-scale within which these actions must be performed). In examining the account, the AGW must be satisfied that any payments out of the Welsh Consolidated Fund, referred to in the account, complied with the conditions laid down in clauses 123 or 129, and that any monies received by the Welsh Ministers were paid into the Welsh Consolidated Fund, unless they did not have to be by law (subsection (6)).
Clause 132: Accounting Officers for Welsh Ministers
475. This clause deals with the functions of the principal accounting officer for the Welsh Ministers, as designated by clause 128(6).
476. Essentially, principal accounting officers are responsible for the propriety and regularity of the finances of the body in which they hold that office, and for ensuring that that body uses its resources with economy, efficiency and effectiveness.
477. The principal accounting officer may designate other members of the staff of the Welsh Assembly Government as additional accounting officers, to assist in the principal accounting officer's role.
Clause 133: Accounts of Subsidiaries of Welsh Ministers
478. This clause ensures that the AGW, when examining any accounts of the Welsh Ministers, has a right of access to documents and information relating to the accounts of any subsidiary of the Welsh Ministers. The AGW also has the right to any assistance or explanation, which the AGW reasonably thinks is necessary in that connection, from any person holding or accountable for any such document (subsection (1)).
479. In this context, a "subsidiary of the Welsh Ministers" means (subsection (4)):
480. Subsection (2) gives the Treasury a power to direct a subsidiary of the Welsh Ministers to include additional information in its accounts. Such a direction would override any prohibition on the inclusion of that information in accounts of that type (subsection (3)). There are, for instance, legislative rules, which might be relevant here, on the contents of company and charity accounts.
Clause 134: Examinations into Welsh Ministers' Use of Resources
481. This clause gives the AGW power to carry out examinations into the economy, efficiency and effectiveness with which the Welsh Ministers have used their resources in discharging their functions. These are commonly known as "value for money", or "VFM" examinations. In doing so, the AGW is not entitled to question the merits of the policy objectives being pursued by the Welsh Ministers (subsection (2)).
482. Before carrying out any such examinations, the AGW must take into account the views of the Audit Committee of the Assembly as to what examinations the AGW should carry out under this provision (subsection (3)). The AGW may, but does not have to, lay a report of the results of any such examination before the Assembly (subsection (4)).
Clause 135: Examinations by Comptroller and Auditor General
483. In addition to the AGW's scrutiny of accounts of payments into and out of the Welsh Consolidated Fund, the Comptroller and Auditor General may carry out examinations into such payments, and report the results to the House of Commons (subsections (1) and (2)). This is because the Welsh Consolidated Fund will be largely made up of monies voted by Parliament to the Secretary of State for Wales, and, in Parliament, the House of Commons controls the supply of finance to the executive.
484. If the Comptroller and Auditor General makes a report to the House of Commons under subsection (2) it must at the same time be laid before the Assembly (subsection (3)).
485. Subsections (4) and (5) deal with the Comptroller and Auditor General's rights of access to documents, and to assistance, information or explanations, for the purpose of carrying out examinations under this clause. These rights extend, not only to the Welsh Ministers and the Assembly Commission, but to the AGW and to any other person audited by the AGW, other than a Welsh NHS body within the meaning given in section 60 of the Public Audit (Wales) Act 2004 (c.23). The reason for the exclusion of these Welsh NHS bodies is because the Comptroller and Auditor General is not the statutory auditor of the equivalent bodies in England.
486. Subsection (6) seeks to avoid unnecessary duplication of effort, by providing that, before carrying out an examination under this clause, the Comptroller and Auditor General must consult the AGW and take into account any relevant work done or being done by the AGW.
Clause 136: Assembly Commission's Accounts
487. This clause obliges the Assembly Commission to prepare accounts for each financial year. As in the case of the Welsh Ministers, the accounts are to be in a form directed by HM Treasury, which can direct the Assembly Commission to include accounts of financial affairs and transactions of other persons (subsections (1) and (2)).
488. The Assembly Commission must submit the accounts to the AGW, who must report on them to the Assembly (subsections (4) and (5), which also lay down the time-scale within which these actions must be taken). In examining the accounts, the AGW must be satisfied that the Assembly Commission's expenditure, recorded in the accounts, was incurred in accordance with the law and with the particular authority which governs it (for instance, in accordance with the provisions of a Budget resolution of the Assembly, in so far as it relates to the Assembly Commission). The AGW must also be satisfied that monies received by the Assembly Commission for a particular purpose or purposes have been used only on that purpose or purposes.
Clause 137: Accounting Officers for Assembly Commission
489. This clause designates the Clerk of the Assembly (see clause 26) as the principal accounting officer for the Assembly Commission (subsection (1)). Accounting officers are essentially responsible for the propriety and regularity of the finances within their remit, and for ensuring that the body of which they are the principal accounting officer uses its resources with economy, efficiency and effectiveness.
490. If there is a temporary vacancy in the office of Clerk, or if the Clerk is incapable as acting as principal accounting officer for the Assembly Commission - e.g. because of illness - HM Treasury can appoint a temporary replacement (subsection (2)).
491. The principal accounting officer may designate other members of the staff of the Assembly as additional accounting officers, to assist in the principle accounting officer's role.
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