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Lord Barnett: I have been reluctant to participate in the debates to lengthen the time that the noble Lord, Lord Saatchi, wishes to take on amendments. However, I have a good deal of sympathy with all that he says--he was extremely brief--about the Comptroller and Auditor General. I declare a past interest, in the sense that I have been chairman of the Public Accounts Select Committee of another place, where I had quite considerable experience with Comptrollers and Auditors General. All of them, without exception, were excellent people. I do not know the current Comptroller and Auditor General, Sir John Bourn, as well as the others, but I gather that he is excellent. I note that the noble Lord could not help but refer to the following grouping of amendments, because once one says "must" instead of "may" one must mention to whom one is referring. He rightly talked about the Comptroller and Auditor General. I have a great deal of sympathy with his view.

On the other hand, I am bound to say that to lay down categorically that the Government, or the authority, must appoint a particular individual, no matter how good, is not sensible. (It sounds as though someone agrees with me--or disagrees, as the case may be. I hope that they will not be ejected too forcibly, whoever it may be.) It sounds rather like my noble friend Lord McIntosh to say, "I have a great deal of sympathy, but--", but I have great sympathy with the amendment because if, by any chance, the authority were to appoint the comptroller, in certain instances I should be extremely pleased to see that happen. I do not know whether this does in fact sound like my noble friend. He may in fact be about to disagree with me and to say that he will accept the noble Lord's amendment. It would be foolish to do so. Therefore, I hope that my noble friend will not accept the amendment. If we are pressed to a vote, I am bound to say that I shall oppose the noble Lord, Lord Saatchi, much as I should regret to do so. He knows how fond of him I am and that I

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know how much he cares about his public service which demands that he should move such amendments.

Baroness O'Cathain: I wonder whether the noble Lord, Lord Barnett, realised what he actually said. He said that he believed that there was some merit in the Comptroller and Auditor General being involved, but that he would object to that being put on the face of the Bill. There is a case for limiting the powers of the Treasury. Everyone seems to go terribly tippy-toed every time the word "Treasury" is mentioned, as though its Ministers are somehow on a completely different planet from the rest of us. Of course they are, I suppose, but should they be? After all, they are servants of the state and they probably still have to do what is right for the general populace. We are kow- towing too much to the Treasury. I should like to see the amendment carried--or, at least, agreed to. I hope that the Minister will feel that way too.

8.45 p.m.

Lord Boardman: For an awful moment I believed I was going to find myself in complete agreement with the noble Lord, Lord Barnett. I have agreed with him from time to time, when he has been sensible. Tonight he began with support for the appointment of the Comptroller and Auditor General, which I entirely endorse. He is absolutely right. That appointment should be made. The Bill describes the post as "an independent person". No one has the hallmark of an independent person better than the Comptroller and Auditor General. Where I disagree was that in the endorsement of the noble Lord, Lord Barnett, it was left open as to whether or not "may" should be used. In my view, "must" is correct. The independent person must be the Comptroller and Auditor General. For that reason I support the amendment.

Lord Newby: I shall deal with the two groups of amendments separately. The first amendment seeks a two-year review covering the economy, efficiency and effectiveness of the FSA. I can see why that provision is needed in the Bill, but having had some discussion on Thursday about the annual report which the FSA will be required to provide on the assumption that our extremely sensible amendment proposing a joint committee of both Houses were acted on, I wonder whether such a wide-ranging report--a kind of "Ofsted for the FSA" every two years--is absolutely necessary, in particular, during the first period of operation of the body when it is setting itself up. The first set of amendments is probably rather too prescriptive.

On these Benches we see a logic in the Comptroller and Auditor General being specified, in that he is the servant of Parliament. We are relying on Parliament in our concept of the operation of the FSA to be the body which exercises effective control. There is a strong prima facie case for that. However, there are many other bodies which could carry out the role which the Comptroller and Auditor General might perform.

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They may do so more effectively and there is an argument for having some proper competition. Perhaps we should have a look to see who else might be able to do the job most effectively and most cost-effectively. Equally, even if it is not the Comptroller and Auditor General, a body appointed to look into the effectiveness of the FSA could report to Parliament just as well as the Comptroller and Auditor General.

Lord Jenkin of Roding: I wonder whether the noble Lord might give way. Was he about to suggest that perhaps a leading firm of chartered accounts might be invited to do the job?

Lord Newby: There is a range of possible bodies which could do the job.

Lord Elton: One of the great anxieties which the Bill stirs in my heart is the impenetrability of the actions of the new body to parliamentary inspection. The great advantage of my noble friend Lord Saatchi's proposal in the second group of amendments is that the FSA shall be made open to inspection by the Comptroller and Auditor General who, under the 1983 Act is, I understand, an officer of the House of Commons, thus bringing parliamentary inspection back into the circuit, which is so missing. It is a neat and sensible solution which I warmly endorse.

Lord Faulkner of Worcester: I do not disagree with the sentiments expressed in this debate. However, I want to ask the noble Lord, Lord Saatchi, and his colleagues on the Opposition Front Bench why they have changed tack from the line that their colleagues adopted in another place. On Report they proposed that the FSA should be subject to independent scrutiny in 2002 but did not specify who should be responsible, and said that the review should be conducted, not at two-year intervals, but at five-year intervals. In another place there was no reference made to the Comptroller and Auditor General.

Is it the case that if the Comptroller and Auditor General is involved in such a process, the only body that exercises scrutiny is the Public Accounts Committee in another place? Along with the noble Lord, Lord Newby, I would welcome the continuation of the Joint Committee approach which examined the Bill in its pre-legislative mode. I would not have thought that the Public Accounts Committee was the most appropriate body to exercise that function. Indeed, it is interesting to see that the plan and the budget of the FSA was considered as recently as last Tuesday, not by the Public Accounts Committee, but by the Treasury Select Committee in another place. It strikes me that we are in danger of establishing rather too much parliamentary scrutiny in another place and denying ourselves the opportunity of carrying out the role in this House.

Another point is that the non-executive board members of the FSA are given the specific responsibility of controlling the budget under Schedule 1 to the Bill. I am fearful that if we go too far

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down that road we shall find that the role of the non-executive board members will be greatly diminished. I hope that that is something that can be addressed as we consider the issue further.

Lord Jenkin of Roding: The noble Lord, Lord Faulkner of Worcester, chides my noble friends because they have not put forward the same amendment in this place as was tabled by my right honourable and honourable friends in another place. As the Government rejected the amendment tabled in another place, surely we are entitled to try another one. Ministers may say the same in both Houses, but happily Oppositions do not. When the noble Lord has been in this House a little longer and sits on this side of the House--that may happen sooner than he believes--he will realise that that is one of the advantages.

Having had some experience of such matters, I am impressed by the amount of support for the idea that the Comptroller and Auditor General should have responsibility. As a former Financial Secretary at the Treasury, I was an ex-officio member of the Public Accounts Committee in another place. I believe that proposal is right. The alternative, which may be considered, is the Audit Commission.

However, I believe there may be room for doubt on whether the period of two years is correct. That is a short period. Conducting a review will be a long process. It will be like painting the Forth Bridge. As soon as the procedure is started for one term, it will need to be started again. I shall listen to what the Minister has to say, but I believe the idea of the linkage mentioned by the noble Lord, Lord Newby, between the Comptroller and Auditor General and, as I hope it will be, a Joint Committee of both Houses, is a good one. I do not believe that the Comptroller and Auditor General has to report to the Public Accounts Committee. If that turns out to be the law, we can amend that law in this case.

Has the Minister yet had time to hold discussions with his noble friend the Deputy Chief Whip to find out whether there may be a possibility of a Joint Committee being appointed to undertake the parliamentary scrutiny? If the Comptroller and Auditor General conducts reviews, not necessarily every two years, and reports to a Joint Committee, I believe that that would provide a pretty good chain of command whereby this uniquely powerful institution can be subject to proper professional and parliamentary scrutiny.

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