Budget Responsibility and National Audit Bill [HL]

House of Commons

Session 2010 - 11
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Budget Responsibility and National Audit Bill [HL]

Budget Responsibility and National Audit Bill [HL]
Part 1 — Budget responsibility
1

[NOTE: The words marked in bold type were inserted by the Lords to avoid
questions of privilege.]
A
Bill
To
Make provision for a Charter for Budget Responsibility and for the
publication of Financial Statements and Budget Reports; to establish the Office
for Budget Responsibility; to make provision about the Comptroller and
Auditor General and to establish a body corporate called the National Audit
Office; to amend Schedules 5 and 7 to the Government of Wales Act 2006 in
relation to the Auditor General for Wales; and for connected purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Part 1
Budget responsibility
1
Charter for Budget Responsibility
(1)
The Treasury must prepare a document, to be known as the Charter for Budget
Responsibility, relating to the formulation and implementation of fiscal policy
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and policy for the management of the National Debt.
(2)
The Charter must in particular set out—
(a)
the Treasury’s objectives in relation to fiscal policy and policy for the
management of the National Debt,
(b)
the means by which the Treasury’s objectives in relation to fiscal policy
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will be attained (“the fiscal mandate”), and
(c)
matters to be included in a Financial Statement and Budget Report
prepared under section 2.
(3)
The Charter may contain such other material as the Treasury considers
appropriate (and see also section 6).
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(4)
The Treasury must lay the Charter before Parliament.
(5)
The Treasury may from time to time modify the Charter.

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Budget Responsibility and National Audit Bill [HL]
Part 1 — Budget responsibility
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(6)
When the Charter is modified the Treasury must lay the modified Charter
before Parliament.
(7)
The Charter (or the modified Charter) does not come into force until it has been
approved by a resolution of the House of Commons.
(8)
The Treasury must publish the Charter and any modified Charter once
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approved by the House of Commons.
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Annual Budget documents
(1)
The Treasury must prepare a Financial Statement and Budget Report for each
financial year.
(2)
The contents of a Financial Statement and Budget Report must conform to any
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provision set out in the Charter.
(3)
The Treasury must lay each Financial Statement and Budget Report before
Parliament.
(4)
The Treasury must publish each Financial Statement and Budget Report.
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Office for Budget Responsibility
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(1)
There is to be a body corporate called the Office for Budget Responsibility.
(2)
Schedule 1 contains provision about the Office.
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Main duty of Office
(1)
It is the duty of the Office to examine and report on the sustainability of the
public finances.
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(2)
The duty imposed by this section includes, in particular, the duties imposed by
subsections (3) and (4).
(3)
The Office must, on at least two occasions for each financial year, prepare—
(a)
fiscal and economic forecasts, and
(b)
an assessment of the extent to which the fiscal mandate has been, or is
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likely to be, achieved.
(4)
It must also, on at least one occasion for each financial year, prepare—
(a)
an assessment of the accuracy of fiscal and economic forecasts
previously prepared by it, and
(b)
an analysis of the sustainability of the public finances.
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(5)
Any forecast, assessment or analysis prepared by the Office under subsection
(3) or (4) must be included in a report.
(6)
Any report which the Office makes in pursuance of its duty under this section
must include an explanation of the factors which the Office took into account
when preparing the report, including (in particular)—
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(a)
the main assumptions made by the Office, and
(b)
the main risks which the Office considered to be relevant.

Budget Responsibility and National Audit Bill [HL]
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How main duty is to be performed
(1)
The Office has complete discretion in the performance of its duty under section
4 (but subject to subsections (2) and (3) of this section and sections 6 and 7).
(2)
The Office must perform that duty objectively, transparently and impartially.
(3)
Where any Government policies are relevant to the performance of that duty,
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the Office—
(a)
must have regard to those policies, but
(b)
may not consider what the effect of any alternative policies would be.
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Guidance as to how main duty is to be performed
(1)
The Charter for Budget Responsibility may include guidance to the Office
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about how it should perform its duty under section 4, including (in particular)
guidance about the time at which it is to prepare any forecast, assessment or
analysis required to be prepared under subsection (3) or (4) of that section.
(2)
But the Charter must not make provision about the methods by which the
Office is to make any such forecast, assessment or analysis.
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(3)
The Office must, in the performance of its duty under section 4, act consistently
with any guidance included in the Charter by virtue of this section.
(4)
If the Treasury proposes to modify the guidance included in the Charter by
virtue of this section, a draft of the modified guidance must be published at
least 28 days before the modified Charter is laid before Parliament under
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section 1(6).
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Efficiency etc
The Office must aim to carry out its functions efficiently and cost-effectively.
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Reports
(1)
This section applies to any report which the Office makes in pursuance of its
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duty under section 4.
(2)
The Office must—
(a)
publish the report,
(b)
lay it before Parliament, and
(c)
send a copy of it to the Treasury.
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Right to information
(1)
The Office has a right of access (at any reasonable time) to all Government
information which it may reasonably require for the purpose of the
performance of its duty under section 4.
(2)
The Office is entitled to require from any person holding or accountable for any
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Government information any assistance or explanation which the Office
reasonably thinks necessary for that purpose.
(3)
“Government information” means information held by any Minister of the
Crown or Government department.

Budget Responsibility and National Audit Bill [HL]
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(4)
This section is subject to any enactment or rule of law which operates to
prohibit or restrict the disclosure of information or the giving of any assistance
or explanation.
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Superseded statutory provisions
The following are repealed in consequence of the preceding provisions of this
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Part—
(a)
section 27 of, and Schedule 5 to, the Industry Act 1975 (economic model
and forecasting);
(b)
sections 155 to 157 of the Finance Act 1998 (fiscal stability);
(c)
the Fiscal Responsibility Act 2010.
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Part 2
National audit
Comptroller and Auditor General
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Office of Comptroller and Auditor General
(1)
The office of Comptroller and Auditor General (or, in Welsh, Rheolwr ac
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Archwilydd Cyffredinol) is to continue.
(2)
It is for Her Majesty by Letters Patent to appoint a person to be Comptroller
and Auditor General.
(3)
Her Majesty’s power is exercisable on an address of the House of Commons.
(4)
It is for the Prime Minister to move the motion for the address.
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(5)
To do so the Prime Minister must have the agreement of the person who chairs
the Committee of Public Accounts.
(6)
The person appointed holds office for 10 years.
(7)
The person may not be appointed again.
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Status etc
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(1)
The Comptroller and Auditor General continues by that name to be a
corporation sole.
(2)
The Comptroller and Auditor General continues to be an officer of the House
of Commons.

But section 4(4) of the House of Commons (Administration) Act 1978 (which
30
provides for the application of provisions of that Act to staff employed in or for
the purposes of the House of Commons) does not apply in relation to the office
of Comptroller and Auditor General.
(3)
The person who is Comptroller and Auditor General may not be a member of
the House of Lords.
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(4)
The Comptroller and Auditor General is not to be regarded—
(a)
as the servant or agent of the Crown, or
(b)
as enjoying any status, immunity or privilege of the Crown.

Budget Responsibility and National Audit Bill [HL]
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(5)
The person who is Comptroller and Auditor General may not hold any other
office or position to which a person may be appointed, or recommended for
appointment, by or on behalf of the Crown.
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Remuneration arrangements
(1)
Before a person is appointed as Comptroller and Auditor General,
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remuneration arrangements are to be made in relation to the person jointly by
the Prime Minister and the person who chairs the Committee of Public
Accounts.
(2)
The remuneration arrangements—
(a)
may make provision for a salary, allowances, arrangements for a
10
pension and other benefits, and
(b)
may include a formula or other mechanism for adjusting one or more
of those elements from time to time.
(3)
But no element is to be performance-based.
(4)
The arrangements may in particular make provision for the principal civil
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service pension scheme (as defined in section 2(10) of the Superannuation Act
1972) to apply to service as Comptroller and Auditor General as if it were
service in employment in the civil service of the State.
(5)
Amounts payable by virtue of this section are to be charged on, and paid out
of, the Consolidated Fund.
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(6)
The Treasury may by statutory instrument make regulations for purposes
supplementary to this section so far as it relates to arrangements for pensions.
(7)
Regulations under subsection (6) may provide for a statutory provision not to
apply, or to apply with modifications, in relation to arrangements for a pension
payable to the Comptroller and Auditor General, including, in a case where
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provision within subsection (4) has been made, for the principal civil service
pension scheme to apply with modifications.
(8)
A statutory instrument containing regulations under subsection (6) is subject
to annulment in pursuance of a resolution of the House of Commons.
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Resignation or removal
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(1)
The Comptroller and Auditor General may resign from office by giving written
notice to the Prime Minister.
(2)
Her Majesty may remove the Comptroller and Auditor General from office on
an address of both Houses of Parliament.
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Employment etc of former Comptroller and Auditor General
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(1)
This section applies to a person who was appointed as Comptroller and
Auditor General under this Part but who no longer holds that office.
(2)
Before—
(a)
taking up an office or position of a description specified by the Public
Accounts Commission, or
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(b)
entering into an agreement or other arrangements of such a description,

the person must consult such person as is specified by the Commission.

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(3)
Subsections (4) and (5) apply for the period of 2 years starting with the day
after that on which the person ceased to be Comptroller and Auditor General.
(4)
The person must not—
(a)
hold an office or position to which a person may be appointed, or
recommended for appointment, by or on behalf of the Crown, or
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(b)
be a member, director, officer or employee of a body or other person
whose accounts are required by a statutory provision to be audited or
examined by, or to be open to the inspection of, the Comptroller and
Auditor General.
(5)
The person must not, in any capacity, provide services to—
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(a)
the Crown or any body or other person acting on behalf of the Crown,
or
(b)
a body or other person whose accounts are required by a statutory
provision to be audited or examined by, or to be open to the inspection
of, the Comptroller and Auditor General.
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(6)
But subsections (4) and (5) do not prevent a person from holding any of the
following offices—
(a)
Auditor General for Scotland;
(b)
Auditor General for Wales;
(c)
Comptroller and Auditor General for Northern Ireland.
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Provision of services
The Comptroller and Auditor General may provide services to any person in
any place within or outside the United Kingdom under agreements or other
arrangements entered into by the Comptroller and Auditor General.
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How functions are to be exercised
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(1)
The Comptroller and Auditor General has complete discretion in the carrying
out of the functions of that office, including in determining whether to carry
out an examination under Part 2 of the National Audit Act 1983 and as to the
manner in which any such examination is carried out.
(2)
Subsection (1) is subject to—
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(a)
subsections (3) and (4), and
(b)
any other statutory provision.
(3)
The Comptroller and Auditor General must aim to carry out functions
efficiently and cost-effectively.
(4)
The Comptroller and Auditor General must, as the Comptroller and Auditor
35
General considers appropriate, have regard to the standards and principles
that an expert professional provider of accounting or auditing services would
be expected to follow.
(5)
For further provision that affects the carrying out of the Comptroller and
Auditor General’s functions, see (in particular)—
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(a)
section 7A of the National Audit Act 1983 (inserted by section 18 of this
Act), which requires the Comptroller and Auditor General to have
regard to certain proposals made by the Committee of Public Accounts;

Budget Responsibility and National Audit Bill [HL]
Part 2 — National audit
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(b)
section 20 and Schedule 2, which provide for the establishment of a
body corporate called the National Audit Office and for the
Comptroller and Auditor General to be one of the body’s nine members
and its chief executive;
(c)
Schedule 3, which makes provision about the relationship between the
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National Audit Office and the Comptroller and Auditor General.
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Economy, efficiency and effectiveness examinations
In Part 2 of the National Audit Act 1983 (economy, efficiency and effectiveness
examinations), after section 7 insert—
“7A
Proposals made by Committee of Public Accounts
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In determining whether to carry out any examination under this Part,
the Comptroller and Auditor General must have regard to any
proposals made by the Committee of Public Accounts.”
19
Auditing of companies
In section 25 of the Government Resources and Accounts Act 2000
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(examinations by Comptroller and Auditor General), after subsection (10)
insert—
“(11)
Subsection (10)(c) does not apply to an order under subsection (6) if the
only bodies to which the order relates are bodies which are companies
as defined in section 1(1) of the Companies Act 2006.
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See sections 475 and 482 of that Act for provision about the interaction
between Part 16 of that Act (audit) and orders under subsection (6).
(12)
An order to which subsection (10)(c) does not apply by virtue of
subsection (11) is subject to annulment in pursuance of a resolution of
either House of Parliament.”
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National Audit Office
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Incorporation of NAO
(1)
There is to be a body corporate called the National Audit Office (or, in Welsh,
Y Swyddfa Archwilio Genedlaethol).
(2)
In this Part “NAO” means the National Audit Office.
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(3)
Schedule 2 contains provision about NAO.
21
Efficiency etc
NAO must aim to carry out its functions efficiently and cost-effectively.
22
Relationship with Comptroller and Auditor General
Schedule 3 contains provision about the relationship between NAO and the
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Comptroller and Auditor General.