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Lord McIntosh of Haringey: To adapt what I said to the noble Lord, Lord Lyell, the noble Baroness, Lady Sharp, has to a considerable extent answered her own argument. She acknowledged that the amendment is nothing to do with resource accounting. It is about provisions for government audit and she is entitled to argue that since we do not often have legislation on government audit, it might be argued that it should be included in the Bill, as has Partnerships UK. But we have, of course, also set up the Sharman review. This is certainly one of the matters into which the noble Lord, Lord Sharman, will be looking and we will have to take his views on it very seriously. I deny, however, that there are any big gaps in public scrutiny because some non-departmental public bodies are audited privately rather than by the National Audit Office. All national non-departmental public bodies are accountable through ministers to Parliament and it does not matter whether the accounts are audited by NAO—they are still laid before Parliament by Ministers. That is their statutory responsibility. It is not a matter of parliamentary scrutiny but whether it is indeed

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appropriate to adopt a "one size fits all" policy for audit of non-departmental public bodies. I assume that the amendment means non-departmental public bodies—the phrase used is "public service agencies", which is not a phrase with which I am familiar.

I do not deny that the Chief Secretary said, in another place, that the present situation is a hotch-potch. Historically, it cannot be justified, although I should point out that it is a hotch-potch that has been inherited from the previous government and this Government, for all new NDPBs set up, has appointed the Comptroller and Auditor General as the auditor of these departments. At least we have been consistent, even if we have not thought it necessary to change what happened in the past.

It is a fairly good conservative principle: "If it ain't broke, don't' fix it". What is actually wrong with what happens at the moment? There is nothing wrong in terms of accountability to Parliament. It is not claimed that there is anything wrong in terms of the quality of audit. The amendment proposes a nationalisation of a considerable part of the accountancy profession and I would be interested to know whether the accountancy profession generally would be sympathetic to that view.

We are not convinced that it would be right in principle to make the Comptroller and Auditor General automatically the auditor of all executive NDPBs. For example, some departments think the competitive tension secured by the periodic tendering of audit appointments can bring better service, or that the NAO may not have the depth of specialist expertise to handle a particular audit. Reference to the list of NDPBs, and at how specialised some of them are, shows that it is not necessarily true that all auditors have the expertise to do it.

The Comptroller and Auditor General may sub-contract commercial auditors in order to deal with particular aspects of an auditing assignment, but this may not provide the best solution for the department, who may find it cost-effective for related services to be carried out during the audit of a particular NDPB for monitoring purposes. It is not the case that private sector auditors are unable to audit for regularity and proper conduct—private sector auditors are quite capable of providing assurance on these matters. Their letters of appointment require them to report every year on regularity and propriety within the audit and the Auditing Practices Board has done a great deal to ensure that they are alert to these issues.

The new clause goes much too far in making the Comptroller and Auditor General automatically the auditor of all NDPBs which are not companies. It would be wrong in principle to rule out the option of appointing private sector auditors, which is why the Bill contains a provision to meet this concern.

I am sorry to give what might seem a rather conservative—with a small "c"—reply but the amendment is looking for consistency at the expense of common sense.

Lord Higgins: My right honourable friend in another place, Mr Hague, has made it clear that we are

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all in favour of common sense. However, it is very often common sense to be consistent. It seems to me that the Minister's reply is not only conservative, but excessively so. I am surprised, therefore, at his reply on this particular amendment.

It was a very strange reply. No one is proposing to nationalise the accountancy profession. The Minister has pointed out that all the new bodies that have been set up under government have been subject to the NAO. It is true, as he rightly says, that the previous Government did not extend the NAO's remit to all such bodies. There is no reason, given that we have Bills like this so rarely, that we should not consider now whether it is appropriate to be consistent in the matter. These are non-departmental but nonetheless public bodies. They are not private plcs or whatever. It seems to be an argument—to use the Minister's phrase—for "one size fits all". As I understand it, basically the auditors report to the Minister and the Minister to Parliament. The NAO is not in the loop so far as concerns a number of these bodies. It would seem important that he should be in that loop.

The other point seems to be that on many individual cases the Comptroller and Auditor General has to become involved in negotiations as to whether or not he will be responsible in a particular case, which does not seem satisfactory. We will not pursue the matter now but a degree of consistency is needed. Otherwise, the control which Parliament exercises in some instances of non-departmental public bodies—I accept the point made by the Minister about the inadequacy of our drafting, which we will try to put right by Report stage—is something which is of importance and where the role of the NAO should be extended to include all such bodies. Subject to those comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 17 not moved.]

Clause 8 [Comptroller and Auditor General: access to information]:

Lord Higgins moved Amendment No. 18:

    Leave out Clause 8, and insert the following new clause—

(" .—(1) This section applies in connection with the examination by the Comptroller and Auditor General of the accounts of any government department or other body under or by virtue of—
(a) any enactment, including this Act, or
(b) in the case of a body other than a government department, any arrangement which provides for the accounts of that body to be subject to examination by the Comptroller and Auditor General.
(2) Subsection (3) applies only to the following records, that is to say—
(a) records which are in the custody or under the control of the department or body to which the examination relates, or to which that department or body has or can obtain access;
(b) records of a receiving body to which any paying body has or can obtain access.

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(3) In connection with such an examination as is mentioned in subsection (1), the Comptroller and Auditor General shall, subject to subsections (2), (4) and (5), have a right to access at all reasonable times to any record relating to—
(a) the accounts of the department or body to which the examination relates,
(b) any money originating in the Consolidated Fund,
(c) any liability or contingent liability that will or may be met out of monies originating in the Consolidated Fund, or
(d) tax credits under the Tax Credits Act 1999.
(4) The right of access conferred by subsection (3) shall not be exercisable in relation to any record relating to accounts which—
(a) are subject to audit by the Auditor General for Scotland or the Auditor General for Wales, and
(b) are not also subject to audit by the Comptroller and Auditor General.
(5) A person who holds or has control of any record to which the Comptroller and Auditor General has a right of access under subsection (3) shall give the Comptroller and Auditor General any assistance, information or explanation which he requires in relation to the matters recorded in it.
(6) In this section "paying body" means any body which pays to a receiving body money originating in the Consolidated Fund, and a "receiving body" means any body which receives from a paying body money originating in the Consolidated Fund, but does not include in either case a body the accounts of which are subject to audit under section 2 of the Audit Commission Act 1998 or section 97 of the Local Government (Scotland) Act 1973 unless it is a body specified in section 98(1) of the National Health Service Act 1977.").

The noble Lord said: This is a question of access. We are concerned with the fact that, at the moment, the NAO does not have the degree of access we feel to be appropriate. The chairman of the Public Accounts Committee in another place stressed the importance of this. The intention of the legislation being amended by Clause 8 was that there should be effective parliamentary scrutiny of all departmental expenditure. If we do not amend Clause 8 in the way suggested, we will not achieve that object. For that reason, we consider that the amendment should be accepted. I beg to move.

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