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Session 2009 - 10
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Delegated Legislation Committee Debates



The Committee consisted of the following Members:

Chairman: John Cummings
David, Mr. Wayne (Parliamentary Under-Secretary of State for Wales)
Dunne, Mr. Philip (Ludlow) (Con)
Fisher, Mark (Stoke-on-Trent, Central) (Lab)
Gummer, Mr. John (Suffolk, Coastal) (Con)
Harris, Mr. Tom (Glasgow, South) (Lab)
Heyes, David (Ashton-under-Lyne) (Lab)
James, Mrs. Siân C. (Swansea, East) (Lab)
Jones, Mr. David (Clwyd, West) (Con)
Joyce, Mr. Eric (Falkirk) (Lab)
Leigh, Mr. Edward (Gainsborough) (Con)
Price, Adam (Carmarthen, East and Dinefwr) (PC)
Ruane, Chris (Vale of Clwyd) (Lab)
Shepherd, Mr. Richard (Aldridge-Brownhills) (Con)
Simpson, Alan (Nottingham, South) (Lab)
Tami, Mark (Alyn and Deeside) (Lab)
Williams, Mark (Ceredigion) (LD)
Simon Patrick, Committee Clerk
† attended the Committee

Fifth Delegated Legislation Committee

Tuesday 12 January 2010

[John Cummings in the Chair]

Draft Local Government (Wales) Measure 2009 (Consequential Modifications) Order 2009
10.30 am
The Parliamentary Under-Secretary of State for Wales (Mr. Wayne David): I beg to move,
That the Committee has considered the draft Local Government (Wales) Measure 2009 (Consequential Modifications) Order 2009.
It is a pleasure to serve under your chairmanship, Mr. Cummings.
We have laid the order at the request of the Welsh Assembly Government to make a few minor, technical amendments to the Government of Wales Act 2006. The amendments relate to inspection and audit fees charged by the Auditor General for Wales and are consequential on the Local Government (Wales) Measure passed by the National Assembly for Wales last year. The amendments are needed to ensure that the Measure operates as intended and that fees charged under the Measure are treated in the same way as the current fees charged under existing legislation.
The Local Government (Wales) Measure has several broad purposes. First, it replaces the system of best value in local government with a new local government improvement regime, which introduces a broader set of duties and powers for service improvement by local authorities. Secondly, it reforms the process for producing community strategies and requires local authorities and other local service providers to collaborate in developing and implementing a long-term strategy for enhancing local well-being. Thirdly, it joins those two processes together, requiring local authorities to reflect strategic objectives in service improvement. Local government in Wales has long been devolved and the changes are all within the legislative competence of the National Assembly, but one small element of the package of changes is outside the Assembly's legislative competence: that element is addressed by the draft order.
As well as replacing the best value regime created by the Local Government Act 1999, the Measure replaced the inspection and audit regime under that Act. Independent audit is, of course, vital to public accountability, and it can also stimulate improvement. The Measure reflects that principle. It also streamlined and simplified the role of the Auditor General for Wales and the Wales Audit Office in inspecting and auditing local authority performance. In particular, it gave the Auditor General greater flexibility to support performance improvement and to report clear findings, which enhance local and national accountability.
The Measure also sought to preserve the principle that public audit and inspection takes place on a quasi-contractual basis between auditors and the bodies they audit and is funded by fees levied on audited bodies, rather than from central Government funds. That practice is widely accepted across the UK for two reasons: first, it maintains audited bodies' responsibility for and ownership of the audits to which they are subjected, and avoids a general charge on the public purse; secondly, the extent and thus the cost of an audit generally reflects the level of risk within an organisation, so funding it via fees provides a further incentive to public bodies to improve their standards of corporate governance and performance management, leaving them liable to a lower fee.
Although the Measure empowered the Auditor General to levy fees for audits and inspections as before, it could not deal with the accounting treatment of those fees. Under section 120(1)(c) of the Government of Wales Act 2006, the default position is that the Auditor General must surrender any income he or she receives to the Welsh Consolidated Fund. The Act made exceptions to that rule to allow the Auditor General to retain income from specified sources, including fees charged under the Local Government Act 1999. That means that best value audit and inspection is funded from fees, and preserves the general principles that I have described.
The Measure made no equivalent provision for fees charged under the new improvement regime because it could not. In general, the Assembly is prohibited from passing a Measure that amends the 2006 Act. There are obvious constitutional reasons for that general rule, but in the present case it creates a problem that only an instrument such as the draft order can solve. The Auditor General would have to surrender fee income to the Welsh Consolidated Fund and audit and inspection work under the Measure would have to be financed centrally from that fund. That would be contrary to established practice across the UK and would diminish the local ownership and effectiveness of such work.
The draft order will correct the problem and allow the Auditor General to retain fees charged under the Measure. It will also ensure that the Assembly's Audit Committee cannot examine estimates of the Auditor General's fee income under the Measure, just as it cannot now examine fee income under the Local Government Act 1999. That reflects the fact that the Committee's remit does not extend to the Auditor General's work in relation to local government performance. In making those changes, the draft order will maintain long-established principles and practices, which exist for sound reasons of public management and accountability. The Wales Audit Office strongly supports the order—indeed, it believes that it is vital to make the order before the start of the 2010-11 financial year, when audit work under the Measure will begin. I therefore commend the draft order to the Committee.
10.36 am
Mr. David Jones (Clwyd, West) (Con): It is a pleasure for me, too, to serve under your chairmanship, Mr. Cummings. I am sure that it will be an equal pleasure to you to hear that it is likely to be a very short period of service.
The draft order makes necessary amendments to the Government of Wales Act 2006, consequential on the Local Government (Wales) Measure, and we do not propose to oppose it.
Question put and agreed to.
10.36 am
Committee rose.
 
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