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Baroness Hamwee: My Amendment No. 60 is grouped with these amendments. It seeks to provide in Clause 10 that the Audit Commission shall have regard to recommendations under Clause 7(4) and the Secretary of State's guidance and shall have regard to any conducted by the best value authority and its own performance plan. By tabling this amendment, I make the point that the starting point for an inspection should be the authority's own best value review and its own

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performance plan. In particular, it should not be an opportunity for the Audit Commission to challenge the authority's policies, made properly, openly and on a democratic basis.

The Bill quite properly starts the best value process by having the authority examine itself. Those documents and that work should have a very significant place in the commission's own inspection.

Lord Whitty: I am grateful to the noble Lord, Lord Dixon-Smith, for trying to tidy up the drafting for me. I had not completely understood the motivation behind this clause and, if he will bear with me, I shall need to take account of what he has said about Amendments Nos. 58 and 64. As I read the amendment, it seems slightly to misunderstand the situation because the Audit Commission will obviously secure a supply of inspectors. It will employ them in the same way as it employs auditors and they will therefore already be employees of the Audit Commission or agents of it. There will not therefore be an appointment. I shall, however, consider the points that the noble Lord has made.

Amendment No. 59 is undesirable in particular circumstances as it would place constraints upon the ability of the Secretary of State to act swiftly to investigate poorly performing authorities. For routine inspections, it would be sensible for the authority about to be inspected to be consulted, and that is understood. There will be cases where there has been serious failure or possible fraudulent or criminal activity, where it is clear that inspectors may need to act quickly. That would be constrained by Amendment No. 59 as drafted. I therefore wish to resist that amendment.

I understand the objective of Amendment No. 60 and I am sympathetic to it, but I do not consider it necessary. The clause already provides for inspectorates to have regard to guidance and that guidance already provides us with a mechanism to ensure that the audit will take on all relevant considerations, including the provision of the local authority's own pre-existing plan. Indeed, the notion of building on an authority's own review and on other relevant work by the authority will be reflected in a document to be published later this week by the Audit Commission. In view of that practice, Amendment No. 60 would achieve very little and, in certain respects, could be counter-productive in that it would set the local authority's review against requirements set by the Secretary of State or the National Assembly.

I hope that, with the assurance that the normal course of events would take into account existing reviews from the local authority, the noble Baroness will feel that she does not need to press her amendment.

Baroness Hamwee: Before the noble Lord, Lord Dixon-Smith, responds on his amendments, am I right in understanding that guidance issued under Clause 10(4)(b) will include the requirement to have appropriate regard to the best value review and the

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performance plan? The Minister said that it would give the opportunity for it. Is it intended that the guidance will do that?

Lord Whitty: Yes.

Lord Dixon-Smith: I heard what the Minister said about my amendments and I shall await his consideration on Amendments Nos. 58 and 64 with some interest and, possibly, trepidation. On Amendment No. 59, his response might prompt me to table a slightly different amendment next time because it seems to me that if this is going on, the authority concerned at the very least should be informed.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 59 and 60 not moved.]

Clause 10 agreed to.

Clause 11 [Inspectors' powers and duties]:

Baroness Hamwee moved Amendment No. 61:

Page 9, line 7, leave out ("three clear") and insert ("ten clear working")

The noble Baroness said: In moving this amendment, I wish to speak to Amendments Nos. 62 and 63. With these amendments we move to the subject of inspectors' powers.

The first amendment relates to Clause 11(4) and seeks to understand why it is necessary for the minimum notice given by an inspector to be as little as three clear days. My amendment proposes 10 clear working days.

This is not a criminal investigation to be undertaken by the inspector. If there is a concern that an authority which is to be inspected might destroy the evidence, there should be stronger powers to allow an inspector to walk straight in. I am not proposing 10 days to allow the authority to do such things as shredding its documents, but I seek to make the point that the authority will have to continue to work while it prepares for the inspection. I have no doubt that I shall be told that three days is the minimum notice, and I make the point in anticipation of that.

I am sure that many Members of the Committee will have witnessed what happens when an Ofsted inspection is due in a school. I do not put that forward as a model, but it is very clear that most schools make huge efforts and put in considerable time in preparing for that inspection. That is an issue which needs to be dealt with, but the fact is that the prospect of an inspection tends to provoke such a reaction. I am concerned that an authority shall not be distracted from its day-to-day work in serving the public by having too short notice.

Amendments Nos. 61 and 62 seek to amplify 10 clear working days by defining the working day in the same way as in Clause 9(7). I tabled that, noting that the three clear days in Clause ll(4) may not be three clear working days since working days are not referred to. A few times a year could mean that the three days are Saturday, Sunday and a Bank Holiday Monday. That would clearly be absurd, but we should not even allow for the absurd.

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Amendment No. 63 seeks to leave out Clause l l(5). That clause makes it a criminal offence for someone without reasonable excuse to fail to comply with the requirement of an inspector, and to make that person liable to a fine on conviction.

If an employee fails to comply with an inspector's requirement, I dare say that failure will follow him or her throughout their careers. At a time when the Neill Committee has recommended the end of surcharge and so on, is it really appropriate to import a criminal offence into the Bill? I feel this is particularly heavy-handed. I beg to move Amendment No. 61.

7.45 p.m.

Baroness Farrington of Ribbleton: Clause 11 is intended to give statutory weight to requests for information and assistance where an authority being inspected is not co-operating fully with the inspector. We know from existing statutory inspectorates that most inspections take place in a spirit of co-operation. We therefore expect that the clause will be used only as a last resort where that co-operation is not forthcoming.

In the vast majority of programmed inspections, notice will be given to authorities well in advance in order that documents can be made available and arrangements made so that key personnel are on hand. This will merely confirm and extend current practice. Best value authorities will be given advance notice of inspection and the requirements thereof, and it is anticipated that the period of such notice will normally be greater not only than the three days set out in Clause 11 but also than the 10 days proposed by Amendment No. 61.

However, where there is a cause for concern there may well be a need for an urgent ad hoc inspection. For example, evidence of fraud may have come to light. In such an eventuality three days is adequate notice for an authority to arrange access to a building, document or person. These provisions mirror the conditions for extraordinary audit found in Section 25(4) of the Audit Commission Act 1998.

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I note that the amendment proposes that "clear days" should be replaced by "clear working days". The phrase "clear days" is also found in the Audit Commission Act 1998 and has presented no difficulties in that context. We therefore do not consider it necessary to change the requirement here.

Clause 11(5) creates a criminal offence in cases where a person without reasonable excuse fails to co-operate. This specification is entirely consistent with the approach outlined in Section 6(6) of the Audit Commission Act in respect of non-co-operation with auditors. Amendment No. 63 would remove that provision.

As I have explained to the Committee, we regard this kind of provision as very much a last resort measure. Such an assumption reflects the current experience of inspectorates. However, the threat of prosecution resulting in a fine is a vital element in the enforcement of an effective inspection regime where authorities or individuals are not co-operative. The inspectors must have the powers to do their job effectively. Clause 11 achieves that as drafted.

I hope that the noble Baroness will be reassured by my explanation and will thus be content not to press the amendment.

Baroness Hamwee: I recognise that the criminal provision must be a matter of last resort. Otherwise there is the awful prospect of magistrates' courts being clogged up. However, I would have hoped that it would have been a matter of no resort at all. I note what the Minister has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 62 to 64 not moved.]

Clause 11 agreed to.

Clauses 12 and 13 agreed to.

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