The
Committee consisted of the following
Members:
Chairman:
Mrs.
Janet Dean
Blizzard,
Mr. Bob
(Waveney)
(Lab)
Breed,
Mr. Colin
(South-East Cornwall)
(LD)
Browne,
Mr. Jeremy
(Taunton)
(LD)
Chapman,
Ben
(Wirral, South)
(Lab)
Chaytor,
Mr. David
(Bury, North)
(Lab)
Clarke,
Mr. Kenneth
(Rushcliffe)
(Con)
Coffey,
Ann
(Stockport)
(Lab)
Eagle,
Angela
(Exchequer Secretary to the
Treasury)
Field,
Mr. Frank
(Birkenhead)
(Lab)
Gauke,
Mr. David
(South-West Hertfordshire)
(Con)
Griffiths,
Nigel
(Edinburgh, South)
(Lab)
Heathcoat-Amory,
Mr. David
(Wells)
(Con)
Holloway,
Mr. Adam
(Gravesham)
(Con)
Marshall-Andrews,
Mr. Robert
(Medway)
(Lab)
Newmark,
Mr. Brooks
(Braintree)
(Con)
Sheridan,
Jim
(Paisley and Renfrewshire, North)
(Lab)
Simpson,
Alan
(Nottingham, South)
(Lab)
Mark Etherton, Committee
Clerk
attended the
Committee
Fifth
Delegated Legislation
Committee
Tuesday 18
March
2008
[Mrs.
Janet Dean
in the
Chair]
Draft Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2008
4.30
pm
The
Exchequer Secretary to the Treasury (Angela Eagle):
I beg
to move,
That the
Committee has considered the draft Government Resources and Accounts
Act 2000 (Audit of Public Bodies) Order
2008.
It is a pleasure
to welcome you to the Chair, Mrs. Dean. I hope that the
order will not detain the Committee too long and that it is not
controversial.
The
order is made under the Government Resources and Accounts Act 2000 and
is intended to make the Comptroller and Auditor General the statutory
auditor of the non-departmental public bodies before us and the NHS
Direct NHS Trust. I am grateful for the assistance that we received
from the National Audit Office in preparing the provisions.
This is the fourth time since
2003 that we have taken such an order through Parliament, but it is the
first time that we have used the order-making power in the 2000 Act to
give the Comptroller and Auditor General statutory audit responsibility
for an NHS trust.
In 2003, the
Government implemented key recommendations made by Lord Sharman on
audit and accountability in central Government. In particular, we
responded to concerns that had been expressed in Parliament by
strengthening the Comptroller and Auditor Generals statutory
powers in two ways. First, we made the Comptroller and Auditor General
the statutory auditor of certain non-departmental public bodies.
Secondly, we gave him greater powers to access documents held by bodies
in receipt of grants or in relation to contracts with organisations for
which the Comptroller and Auditor General is the statutory
auditor.
Since the
policy was established, new primary legislation setting up a
non-departmental public body will usually include provision for that
body to be audited by the Comptroller and Auditor General. The four
non-departmental public bodies in the order were either recently
reclassified as such or were established under arrangements or
legislation that included no provision for audit by the Comptroller and
Auditor General.
The
Treasury has worked with the affected bodies to prepare them for the
CAG audit. In line with policy, current audit contracts need to run
their course before the Comptroller and Auditor General begins auditing
the new non-departmental public bodies. The order is intended
to continue the process that Parliament approved in 2003 and in
subsequent orders in 2004 and 2005.
The order
provides for the Comptroller and Auditor General to
be made the statutory auditor of the Royal Ulster Constabulary George
Cross Foundation, the independent living fund 2006, the ombudsman
for the board of the Pension Protection Fund and the pensions
ombudsman. In doing so, the order applies a long-standing policy, which
has been endorsed by both sides of the House, that non-departmental
public bodies are to be audited by the Comptroller and Auditor
General.
The order
also provides for the Comptroller and Auditor General to retain
statutory audit responsibility for NHS Direct, even though it has
become an NHS trust. It would be helpful to explain the reasoning
behind that, given that the body is not specifically a non-departmental
public body.
NHS
Direct was formerly a special health authority. As
such, it was made subject to audits by the Comptroller and Auditor
General under an earlier order under the 2000 Act. However, it became
an NHS trust on 1 April 2007 as part of the implementation of the
review of the Department of Healths arms length bodies.
The National Health Service Act 2006 provides, however, that all NHS
trusts are to be audited by the Audit Commission.
In the
Governments view, however, NHS Direct remains a national body,
unlike all other NHS trusts, which provide services locally. We believe
that it is right that NHS bodies that provide services locally should
remain subject to audit by auditors appointed by the Audit Commission.
However, NHS Direct NHS Trust provides national services and should
therefore continue to be audited by the Comptroller and Auditor
General, like other similar bodies. With those brief comments, I
commend the order to the Committee.
4.34
pm
Mr.
David Gauke (South-West Hertfordshire) (Con): It is a
pleasure to serve under your chairmanship, Mrs. Dean. The
Minister said that the measure was not controversial and should not
detain the Committee long, and I suspect that I will please hon.
Members when I say that I agree. If I may, however, I would like to ask
the Minister some questions about the order.
First, on the five entities
that will be audited by the Comptroller and Auditor General, the
question is Why now? I take the Exchequer
Secretarys point that the non-departmental public bodies that
we are debating have not previously been audited by the Comptroller and
Auditor General because they have only recently been classified as
NDPBs, or they were set up under legislation or other arrangements that
did not provide for such an audit. For example, the pensions ombudsman
has been in place since the Pension Schemes Act 1993, so is there a
particular reason why it is being moved under a different regime
now?
Secondly,
on NHS Direct, as the Exchequer Secretary said, this is the first time
that the Comptroller and Auditor General will have responsibility for
an NHS trust. I appreciate that there are reasons why NHS Direct of all
NHS trusts should be audited by the Comptroller and Auditor General;
namely, it is a national trust, as it were, and its predecessor was a
special health authority. I should like to know whether consideration
was given to any other NHS trusts being audited by the Comptroller and
Auditor General. Why was the issue not picked up when NHS Direct was
originally formed?
I note that there is no impact
assessment on the proposals because there is no policy change or
financial implications of more than £5 million. In 2003, a
number of non-departmental public bodies were moved so that they were
audited by the Comptroller and Auditor General. In the debate on that
order, there was no impact assessment because it was thought that there
would be no financial implications above the relevant threshold. With
the benefit of hindsight, five years on, will the Exchequer Secretary
say whether the consequence of the 25 or 26 NDPBs involved being
audited by the Comptroller and Auditor General has caused concern for
any of the bodies or whether they have incurred any additional costs? I
assume that those things have not happened, but I would be grateful to
know whether recent experience confirms the Treasury position that
there is no need for an impact
assessment.
What
impact will the measure have on the Comptroller and Auditor General? I
know that in the great scheme of things an additional five bodies will
probably not stretch him unnecessarily, but I would be grateful for an
assurance from the Exchequer Secretary that she believes the
Comptroller and the National Audit Office are capable of undertaking
the additional work load and that it will not create any unnecessary
strains.
Are there any
other NDPBs in the pipeline, as it were, to be audited by the
Comptroller? Does the Exchequer Secretary think that any other
organisations should be treated in that way? Under section 25 of the
Government Resources and Accounts Act 2000, the Treasury has the power
to bring in an order to say that the Comptroller and Auditor General
will audit a body. The criteria are that
the body exercises functions of a
public nature or is entirely or substantially funded from public
money.
Given the second
criterion, have the Government given any
consideration to the Comptroller and Auditor General auditing Northern
Rock, for example? I suspect not, but I would be grateful for
confirmation.
We
welcome the order in principle and the fact that the Comptroller and
Auditor General will audit those non-departmental public bodies will
enable Parliament to scrutinise them to a greater extent, which will
involve the Public Accounts Committee. I know that the Chairman of that
Committee welcomes the proposals. We have no intention of standing in
their way, but we would be grateful for clarification on the points
that I have
raised.
4.40
pm
Mr.
Colin Breed (South-East Cornwall) (LD): It is a pleasure
to see you in the Chair, Mrs. Dean. I have only a few
points, because I agree that the order is fairly
non-controversial.
Will
the NDPBs have to change any of their current methods of accounting,
thereby making a comparison of figures rather more difficult? I suspect
not, but it would be interesting to know. I echo the question about how
many NDPBs are not currently being audited by the Comptroller and
Auditor
General.
Finally, the
explanatory memorandum states, under the heading
Extent, that the order affects the whole
of the UK but does not affect the powers of the
Auditor Generals for Scotland or Wales or of the Comptroller and
Auditor General for Northern Ireland. I do not
quite understand that, because one of the orders proposals is to
bring the Royal Ulster Constabulary George Cross Foundation into the
provisions. Will that responsibility be undertaken by the Comptroller
and Auditor General here or in Northern Ireland? If it is not to be
done in Northern Ireland, why
not?
4.41
pm
Angela
Eagle:
I shall endeavour to answer the questions that have
been asked as we have considered this rather modest proposal. The hon.
Member for South-West Hertfordshire asked Why now?, and
then sort of answered his own question: it is simply because the bodies
in question have recently been reclassified as non-departmental public
bodies, or are in a small tranche of bodies for which it was not
specified in law when they were set up that they had to be audited by
the CAG. To that extent, the order is a tidying-up
exercise.
NHS Direct
is unique for a foundation trust, which it has now become,
because it is operates nationally. Considering the fact that all other
NHS trusts are local, it seemed appropriate to us for NHS Direct to be
audited by the CAG, as it has been since it was created, rather than
shifted to the Audit
Commission.
The
hon. Gentleman asked about the Pension Protection Fund. It is now a
grant-in-aid body and has accounts for the first time. That is why it
qualifies for audit. He also mentioned the impact assessment and asked
whether, as a consequence of the 25 previous NDPBs being audited by the
CAG, any additional costs or burdens had emerged. There has been no
evidence that the NAO is more expensive as an auditor than private
audit firms.
In fact,
last year the Treasury carried out a survey of the
NDPBs covered by the previous statutory instrument, which the hon.
Gentleman mentioned. Many were previously audited by private audit
firms, and the survey asked whether they had experienced difficulty. I
am delighted to say to the hon. Gentleman and the Committee that almost
all of them said that they would remain with the CAG and that the NAO
provided good value for money. Many wanted the NAO to audit their
trading subsidiaries as well, as it was more expensive to have two
audits than one. Hopefully that answers the hon. Gentlemans
question to his satisfactionso far, so
good.
I was asked
whether any more non-departmental public bodies are in the pipeline. We
are currently preparing a draft order that will subject between 40 and
50 non-departmental public body companiesor
company subsidiariesto audit, as was requested when we did the
survey. The order will come before the House at some stage in the
future. That is what is in the pipeline from that point of view, and it
will prevent such organisations having to have two audits, which is a
silly duplication of resources for them and for the auditors
themselves.
The hon.
Member for South-East Cornwall asked whether those subject to this
switch need to change their methods of accounting. As he hinted, the
answer is they do not because international accounting standards cover
both private and Comptroller and Auditor General audits. The hon.
Gentleman asked about the Royal Ulster Constabulary George Cross
Foundation not being bound by the Northern Ireland Office. That is
simply because criminal justice and policing are not devolved
to Northern Ireland, so we deal with those matters here. I hope that
answers the questions of Opposition Members satisfactorily. With those
reassurances I hope that the order will be passed by the
Committee.
The
Chairman:
I think that the right hon. Member for
Birkenhead wishes to intervene.
Mr.
Frank Field (Birkenhead) (Lab): I wish to add a point of
thanks and in doing so I shall declare an interest. Until recently, I
was chairman of the Churches Conservation Trust and, in the wonderful
sweep-up in Whitehall to tidy up arrangements, the trust was to be
included in the order.
The trust was set up by both
Parliament and the General Synod to look after
churches that are redundant from normal parish use, but are of
outstanding historical or architectural importance to the country. When
I was chairman, I was concerned that we had not been consulted about
the order. One could perhaps see the rationale in relation to the
operation of other bodies, but that reasoning did not apply to us. It
was not a move that I expected the Prime Minister to have bothered his
mind with, but I wrote to him and asked whether he would consider
dropping us from the order because it was just another tidying-up
movea centralising, little measure. He decided that we should
be dropped from the order, so I rise to support the extension of powers
to other bodies, but wish to record my thanks on behalf of the body
that I used to chair that we will not be covered by it. It is a nice
little story that goes against the general trend of people wishing the
Prime Minister to ever concentrate power to himself. I have given an
example of him refusing to do so and leaving power where it previously
resided.
Angela
Eagle:
Thank you, Mrs. Dean, for pointing
out that my neighbour, my right hon. Friend the
Member for Birkenhead, had come in. I had not noticed that he was there
or that he was seeking to intervene. I am more than happy to have
allowed him to do so because he has shared with the Committee the issue
about the Churches Conservation Trust, which is a body that does a
great deal of good work. In fact, it recently completed an extremely
good restoration of a church in my constituency in Liscard, and my
right hon. Friend and I were happy to attend the opening
ceremony.
Clearly, as
my right hon. Friend has rightly said, the Church Conservation Trust
was originally part of the order, but it was taken out when the Cabinet
Office decided that the trust was not a non-departmental public body. I
hope that the trust will at some stage contact some of the 25 other
non-departmental public bodies that are quite enthusiastic about the
prospect of the CAG auditing them. If it wants a good a deal for any
future audit that it wishes to undertake with the public money with
which it does such good work perhaps it will consider the CAG as a
potential auditor in the futureit will certainly get good value
for money if it does.
Angela
Eagle:
With that little caveat and a bit of local colour,
I hope that the Committee will pass the
order.
Question put
and agreed
to.
Resolved,
That
the Committee has considered the draft Government Resources and
Accounts Act 2000 (Audit of Public Bodies) Order
2008.
Committee
rose at ten minutes to Five
oclock.