Clause
118
Interaction
of benefits inspectors with the Audit
Commission
Question
proposed, That the clause stand part of the
Bill.
Mr.
Woolas:
We now move on to the interaction of the benefits
inspectorates and the Audit Commission. I should explain that we are
not talking about benefit fraud or the inspectorate that deals with it;
we are talking about the inspectorate that deals with the
administration of benefits. Of course, benefits and revenues—or
“bens and revs”, as they are known in local
councils—are a very important part of the function of
authorities. The interaction between the Audit Commission and benefits
inspectors is what the clause deals with.
The clause
changes the Social Security Administration Act 1992, which some hon.
Members may remember was quite controversial. No takers? Surely I am
not the only person here who was at the demonstration? The clause will
ensure that if the Secretary of State decides to authorise people to
report on benefits administration in local authorities, those people
will have to go through the Audit Commission’s gatekeeper
process before undertaking any inspection of local authorities. That is
a practical example of what my hon. Friend the Member for Leicester,
South referred to. The process will involve authorised people preparing
and sharing with the Audit Commission a document setting out the
proposed programme of
inspection.
Subsection
(4) requires any authorised persons to co-operate with the Audit
Commission and gives them powers to work jointly with the Audit
Commission where co-operation or joint working benefits the efficient
and effective discharge of the authorised person’s functions. In
other words, it will allow the expertise of the benefits inspectorate
to be utilised without creating an unco-ordinated burden on the local
authority.
The
provisions support the strategic forward planning role proposed for all
inspectorates in the Government’s policy across Departments,
which is that they consult and share their proposed inspection
programmes and frameworks with each other to enable them collectively to
reduce duplication and the weight of inspection on local authorities.
As in other public bodies in which the Audit Commission may have a
role, that will be done through the respective gatekeeper, for example
Her Majesty’s inspectorate of constabulary or the National
Offender Management Service.
The provision
will enable the identification of opportunities for integrating
inspection events and provide a way to discuss and alter inspection
programmes to make them more efficient and less disruptive. It will
also have the consequential benefit of allowing personnel and other
resources to be shared to get the best of both worlds. The provision is
sensible and is welcomed by the Audit Commission. I commend it to the
Committee.
Question
put and agreed
to.
Clause 118
ordered to stand part of the
Bill.
Clause
119
Powers
of auditors and inspectors to obtain
information
Question
proposed, That the clause stand part of the
Bill.
Mr.
Woolas:
I wish to use this opportunity to put on record
what the clause is about. It may be a dry subject, but it is important
that local authorities understand the intention behind the
clause.
The clause
refers to the powers of auditors and inspectors to obtain information,
which is central to their raison d’être. It clarifies the
powers of auditors and Audit Commission best value inspectors to obtain
such information. It makes explicit their right to copy and take away
documents and updates the original powers in section 6 of the Audit
Commission Act 1998 and section 11 of the Local Government Act 1999 to
include electronic information and computers to take account of the
fact that information is now routinely held electronically. I remember
debating that clause in 1999. As I recall, Members on both sides of the
House argued that it was not necessary. It seems a long time ago now.
It is important that access to information held electronically is
granted to Audit Commission best value
inspectors.
The power
will ensure that auditors can require such information to be produced
in a form that can be taken away if necessary, in order to help the
Audit Commission to do its job. Importantly, the clause also makes it
clear that it is a criminal offence to obstruct the exercise of the
power. The requirement for auditing information is
important.
11.45
am
Mr.
Syms:
Have there been examples of people in local
authorities trying to obscure information from auditing organisation
inspectors? Presumably this is a reserve power but I would be
interested to know whether there are
examples.
Mr.
Woolas:
I am aware of where the threat of the power has
been used, but I cannot recall the power being used during my period,
although I am sure it has been in past decades. The hon. Gentleman nods
to
recognise my point about the threat and, without that threat and without
it being a criminal offence, shredding—and its electronic
equivalent—may be more prevalent. I strongly believe that there
is a good regime of propriety in local government in this country and
it will be perpetuated by this measure. The regime has been built up
under Governments of all political persuasions.
The clause
confirms the practice employed by auditors and inspectors in obtaining
such information, so the proposed processes are current practice.
Concern may be raised about the potential for unreasonable use of these
powers and it is known that inspectors are sometimes over-zealous for
all sorts of reasons. This clause ensures that auditors and inspectors
must act reasonably. For example, they must not remove original
documents critical to the running of an organisation, without very good
reason. They must also exercise a duty of care over any documents and
information obtained. Therefore, the clause gives inspectors
responsibilities as well as rights. In that respect, I believe it
provides a properly balanced approach. I commend the clause to the
Committee.
Question
put and agreed
to.
Clause 119
ordered to stand part of the
Bill.
Clause
120
Inspection
of best value
authorities
Question
proposed, That the clause stand part of the
Bill.
Mr.
Woolas:
This clause clarifies that the Audit
Commission’s powers of best value inspection under the Local
Government Act 1999 enable it to carry out general inspections of the
performance of best value authorities and not simply inspections of the
arrangements in place to deliver continuous
improvement.
The other
public service inspectorates have more explicit performance inspection
powers. The Audit Commission has expressed concern that its power
could, as a result of the changes to best value in part 8 of the Bill,
be interpreted as simply focusing on the arrangements that authorities
have in place and not about their performance, which is at the heart of
best value. As we say in Lancashire, we have got to see the wood for
the trees—that is probably said elsewhere, but we certainly say
it in Lancashire.
The
clause ensures that the Audit Commission will continue to be able to
inspect a best value authority’s performance. That will keep the
commission in line with other public service inspectorates and
eliminate possible concern about their joint working.
The clause is
important in relation to clause 106 because it gives real power to the
best value duty to inform, involve and consult, by ensuring that that
is a continuous inspection. When citizens, residents, voluntary sector
organisations and others question where the teeth are to that best
value duty, part of the answer, as referred to by my hon. Friend the
Under-Secretary, is here. The clause appears rather obscure, but it is
important in the devolutionary process and the reconnection of the
public to public
services.
Question
put and agreed
to.
Clause 120
ordered to stand part of the Bill.
Clause
121
National
studies
Question
proposed, That the clause stand part of the
Bill.
Mr.
Syms:
I would like more information on this clause.
Presumably, this is important, not only for the commission, but for all
respective local authorities. Will the Minister say more about why
there are changes here, as we have always had a regime with league
tables and various studies published? Are the alterations to bring the
overall change under this clause into line to broaden the powers of the
Audit
Commission?
Mr.
Woolas:
This measure relates to the studies that the Audit
Commission undertakes on a national basis and not to the nationwide
surveys. Formally, the clause amends section 33 of the Audit Commission
Act 1998, and it allows the commission to undertake studies to help to
improve economy, efficiency and effectiveness at the best value
authorities, audited bodies and certain local government bodies in
Wales. The commission has similar powers to section 34 of that Act to
publish reports assessing the impact of, in particular, statutory
provisions or directions or guidance issued by a Minister of the
Crown.
The clause
requires the Audit Commission to consult the Secretary of
State—or, where appropriate, Ministers in Wales—before
carrying out or promoting studies or reports. The commission usually
carries out a public consultation exercise on each national
study’s programme. The clause formalises the inclusion of the
Secretary of State in that consultation and is aimed at minimising
duplication and increasing efficiency. That means that when a national
study is done, it should be done in co-operation. Part of my rationale,
which I have discussed with the Audit Commission, goes back to my
introductory remarks on clause 113, regarding the focus of the
commission and the work that it has undertaken. The clause refers to
those national
studies.
Question
put and agreed to.
Clause 121 ordered to stand
part of the
Bill.
Clause
122
Studies
at request of particular
bodies
Amendments
made: No. 142, in clause 122, page 85, line 32, leave out
‘and’.
No.
143, in
clause 122, page 85, line 34, at
end insert ‘; and
( )
section 42 (consultancy services relating to audit of accounts of
registered social landlords).
(
) In section 43 of that Act (interpretation), for the words from the
beginning to “have” substitute “In this
section and sections 40 to 41B, “registered social
landlord”
has”.’.—[Mr.
Woolas.]
Question
proposed, That the clause, as amended, stand part of the
Bill.
Andrew
Stunell (Hazel Grove) (LD): I am sure that the Minister
will recall that I raised serious concerns about the clause on Second
Reading and I understand that he suggested earlier today that the
Government
might be having second thoughts about it. It, along with several others,
is one of the most perplexing clauses in the
Bill.
The clause takes
away from the Audit Commission the capacity to assist local councils,
or any other body that is subject to audit, in specific inquiries
commissioned by that local authority. That seems quite perverse, and if
the Government are having another look at it, that is
overdue.
I have
received information from the commission because I am interested to
know exactly what the effect of this will be and who will be harmed if
the clause is included in the Bill. It tells me that, in relation to
its overall activities, a very small proportion of its
turnover—about 0.5 per cent., I gather—is involved in
those special studies. The studies are nevertheless quite important
and, for those boroughs and organisations that have commissioned the
commission at very low cost, have been good value.
As I asked a
specific question, I understand that Tameside borough council has
benefited from commissioning such a report. We have a Committee member
who is on that council and he may later get up and say that, in his
role on scrutiny, he has taken advantage of the work done for Tameside
on transport services provided for those with special needs. Similar
studies have been conducted in the London borough of Brent on the
effectiveness of arrangements for management staff. Stockton borough
council undertook a study on performance management in social services
departments. The commission’s briefing to me said
that
“this followed
concern that children’s social services had received only
one-star star rating when the council had clearly believed that things
were better than they
were”.
The council
therefore asked the commission to come in, at a cost of £10,000
to the council. I understand that local Members of Parliament are aware
of that study and believe that it achieved excellent results. The South
Yorkshire police authority asked the commission to undertake a study of
IT services and again a useful report was produced at a very low
cost.
Five Durham
districts— Derwentside, Chester-le-Street, Teesdale, Easington
and Durham City—jointly commissioned a development plan to get
some meaningful performance indicators for regeneration in the Durham
county area, all of which seemed to be high value in terms of results
and low cost in terms of the charge to the public purse. In other
words, they are all of great value. Yet no such studies could go ahead
if this clause is accepted.
It must be a challenge to the
Minister to explain why on earth this step is being taken. Something
that is simple, practical and beneficial to local government and causes
no grief to anybody is being singled out for abolition at a
time when actually, in other parts of the Bill, as we have discussed
earlier, there is an intention to create more multi-body partnerships
than ever before.
When the duty to co-operate is
put into effect, there is no doubt that that will result in more joint
commissioning of services. A number of issues have already been raised
in this Committee about where the buck will stop, who will be
responsible for monitoring and on how tight management control and
value for money will be ensured—something perhaps delivered
more easily by a single organisation than a multiple body. At exactly
the time when we might expect something similar to the five Durham
districts’ joint approach to the Audit Commission and when it
might be very sensible for a new partnership to say that it needs the
commission to run its eye over something, the clause will prevent that
from happening. Will the Minister explain in clear terms what the
rethink consists of and give us his response to my points, which I
understand the commission itself feels should be taken into
account? Depending on
the nature of the Minister’s assurances, or not, my colleagues
and I might want to oppose this clause. It is only a small side issue,
but one on which the Government have made the wrong choice for no
discernable reason. We need to hear from the Minister on
that.
Mr.
Dunne:
I rise to support the hon. Gentleman’s
comments. This is a peculiar clause. Earlier, the Under-Secretary said
that the clause was somehow in conflict with the inspection role of the
Audit Commission and its role in undertaking reports or studies. I fail
to see how that conflict arises. I have more examples from my area of
when the commission had been requested by a local authority to
investigate an aspect of the council’s activity. It was in
relation to a capital project when the overspend was substantial. South
Shropshire district council, the local authority, had procedures in
place for managing the capital project that were clearly inadequate. It
accepted that there was a case for the commission to be asked to review
its policies and procedures so that it could learn for the future how
to avoid the
problem.
The
role was entirely appropriate for an external body to undertake. The
Audit Commission, having the responsibility to audit the authority, was
best placed to do it. Why should that be excluded from its functions
for that apparent but, to my mind, non-existent conflict of
interest?
12
noon
We could
envisage, for example, at some stage in the future the Audit Commission
being invited to undertake a study into the project management role
played by the relevant authorities in looking at the delivery of the
Olympic games in London in 2012. The Under-Secretary may be able to put
me right but, if my understanding is correct, by excluding an
individual study by the Audit Commission of something like this, it
might be excluded from undertaking such a role. That might be a
controversial example and I do not want to sidetrack the hon. Lady into
a debate about responsibilities for the delivery of the Olympic games.
However, it helps to illustrate the point that there are some
individual studies that the Audit Commission ought to be able to
undertake and excluding them through the clause would be
retrograde.
Angela
E. Smith:
I am grateful for those comments. The hon.
Member for Ludlow was here earlier, so I thought that he heard my
remarks about how we planned to proceed. I am sorry if he missed that.
However, I accept that the hon. Member for Hazel Grove did not have the
benefit of my earlier comments.
Mr.
Dunne:
I was certainly was here and I heard what the
Under-Secretary said. She said that the Government were considering
what they would do. She did not say how she would amend the clause,
although she acknowledged that she might wish to amend to
it.
Angela
E. Smith:
I will endeavour to choose my words carefully to
explain fully the Government’s intention. I say to the hon.
Member for Hazel Grove, who said that he did not receive a satisfactory
response to the issues that he raised, that I can give him an answer
with which he will be happy. He considered voting against clause 122,
which repeals sections 35 and 35A of the Audit Commission Act 1998. It
allows the commission to undertake fee-paid improvement studies of
certain bodies at their request or in some cases at the request of the
Mayor of
London.
Even
if we decided to remove the commission’s power to undertake
improvement studies under sections 35 and 35A, we would still need to
repeal those sections as they overlap with the power to provide advice
or assistance under paragraph 9 of new schedule 2A to the 1998 Act,
inserted by schedule 11. I hope that the hon. Gentleman appreciates
that clause 22 must be included in the Bill, regardless of the points
that he makes. He said that he was perplexed at why the Government
reached the view that they did. I can say that they are reconsidering
the matter and hope to bring forward proposals at a later stage to deal
with it.
As for being
perplexed, I am worried about the hon. Gentleman’s comments on
Second Reading. I can explain to the Committee why the Government
thought carefully about the issue. It is finely balanced, and we
concluded that we should rethink matters and change the Bill. However,
the reasoning behind the original proposal was that there is a
potential conflict of interest. The same body is offering improvement,
support and inspection. It is effectively acting both as a critical
friend and external
regulator.
Angela
E. Smith:
I will not give way to the hon. Gentleman
because I am sure that he will be satisfied by my remarks.
Concerns were expressed to the
Government that that might lead some bodies to consider buying
improvement services from the commission to obtain a better result at
inspection. Commission inspectors could be called on to judge
impartially improvement work carried out by their
colleagues.
There is
also a value for money issue. The Government fund the Improvement and
Development Agency. We do not want the commission, which is also a
publicly funded body, competing with the IDeA for such work.
The comments
made on Second Reading and in Committee today resonate with us, and we
take them on board. The Audit Commission has a role to play. When the
commission was first given the powers, no other improvement
organisations existed, so the situation was slightly different and we
were content. We shall reflect on the concerns that have been
expressed, rethink, and introduce proposals later to the Committee or
the House to address it.
Andrew
Stunell:
I thank the Under-Secretary. She is certainly
moving in the right direction, although I should like her to move a
little bit further. Can she confirm that the local authority that
commissions the work will have a free choice—that they will not
have to have the Audit Commission or the IDeA and that they can go to
KPMG or any other adviser or supporter? Will she explain why the Audit
Commission will be prevented from tendering, if that is the right word
for such services, when others are free to do so and it is for the
local authority to decide which will give the best results and return
for the
investment?
Angela
E. Smith:
The hon. Gentleman labours his point a little
bit too much. I can confirm that that choice will be open to local
authorities—he gets a bit hung up on KPMG and others, and I am
not sure why—and that is the very reason why we are rethinking.
I do not know how much clearer I can be, but I say to the Committee
that we intend to return to the matter later to address the points
raised by the hon. Gentleman and
others.
Question
put and agreed
to.
Clause 122,
as amended, ordered to stand part of the
Bill.
Clauses
123 and 124 ordered to stand part of the
Bill.
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