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Lord Livsey of Talgarth: I want briefly to comment on this, but before doing so I declare an interest in that one of my sons is a construction engineer working mainly in Wales on quite large public projects. The noble Baroness has made the point that a private company could be involved in works of a public nature. I am not absolutely certain that that would necessarily be the case and I wonder whether the Minister can give us a more precise definition of what is meant by,

"exercising functions of a public nature".

He may be in a position to promise us in due course a list of such bodies, although perhaps he may not wish to be so prescriptive.

Lord Davies of Oldham: I am always willing to be helpful, but I shall certainly not produce a list in this instance. If it will help the Committee, I may look at the possibility of producing a list, although I think that it would be rather extensive. I shall seek to explain why the definition has certain wide-ranging implications and why we think that it meets the requirements, thus satisfying the anxieties expressed by the noble Baroness in moving her amendment.

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It may be helpful if I deal first with Amendment No. 27, not least because the purpose of the definition in the context of Clause 12 is to maximise scrutiny and safeguards over the use of public money. I am sure, therefore, that both sides of the Committee are as one in terms of the broad objectives. However, Amendment No. 27 would undermine that intention. The amendment deals with the definition of "public body" in the context of enabling the National Assembly for Wales to amend by order the categories of bodies defined as local government bodies in Wales to take account of future circumstances.

As the noble Baroness indicated, the definition in Clause 12 is consistent with that used in Clause 1 and with the Government Resources and Accounts Act 2000. In this case, the amendment to the definition would mean that a category of local government body wholly funded by public money could be added to Clause 12(1), but a category of a body with anything less than 100 per cent of its funding from the public purse would not. That cannot be the intention behind the amendment. It certainly is not one that we would be prepared to countenance. For example, a body that provides specialist services to local government in Wales for a fee would be in that category.

We are anxious about the amendments as restricting the proper scrutiny of public money. Amendment No. 2 would limit the Assembly's ability to transfer supervisory functions to the Auditor General or to have him exercise such functions on the Assembly's behalf. The effect would be that the Assembly could not exercise the power in respect of a body that exercises functions of a public nature but is not entirely or substantially funded from public money. I am sure that all Members of the Committee recognise that the scope needs to extend wider than those bodies that receive 100 per cent of their funding from the public purse.

A body exercising functions of a public nature may not be entirely funded from public money; nor need it necessarily be construed as being substantially funded from public money. It may earn income from fees and charges. If it is a regulatory body, it may derive a substantial proportion of its income from inspection or from registration fees. I cannot give a list, but I can give an example. The General Teaching Council for Wales potentially is an example of such a body that receives a great deal of resources. It is definitively a public body exercising functions on behalf of the public good, yet it does not earn its income directly from public money.

The reasons for the Assembly wishing to transfer its supervisory functions may be valid irrespective of the level of public funding that a body receives. The definition of a "public body" in the clause—on which I was questioned closely—is consistent with the Government Resource and Accounts Act 2000. If there is any doubt whether such a body fell within the second part of the definition of "public body" in Clause 1(2) because of the level of public funding that it receives, it still would be covered by the first head of the definition.

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I am making the obvious presumption that we all seek proper public scrutiny of public resources, while recognising that the bodies that may fall within the remit could fall considerably short of 100 per cent public funding. On that basis, I hope that the noble Baroness will feel able to withdraw her amendment.

3.45 p.m.

Baroness Noakes: I thank the Minister for his reply. I thank the noble Lord, Lord Livsey, for his contribution. I am particularly grateful for the explanation in relation to exercising functions of a public nature. That certainly explains why that should be included, despite not meeting the requirement set out in paragraph (b), which relates to,

"a body entirely or substantially funded from public money".

I confess that I am still concerned about what private-sector bodies might be drawn into the net under paragraph (b) as being substantially funded from public money. Small organisations that contract with the public sector could be funded substantially through commercial contracts. There is no exemption for commercial contracts. If bodies are substantially funded, they could fall within those public audit arrangements.

I share the noble Lord's desire to ensure that there is proper audit of public money. But there does not appear to be any concept that there could be a commercial relationship which could intervene. Most probably, small and medium sized enterprises—the very bodies most burdened by regulation in our economy—could be dragged within the provision. Has the Minister any thoughts on that aspect?

Lord Davies of Oldham: I have probably covered as much ground as I can at this stage. I understand the point that the noble Baroness makes. We shall look closely at all the points made today, against the background that this is a preliminary stage of the Bill. The important question is whether the National Assembly for Wales has supervisory functions in respect of such bodies. If it has not, the clause would not bite. Where the Assembly has a supervisory function, even if the body in question does not receive a massive percentage of its resources through public funding, the clause would be relevant. That is the basis of our provision.

Baroness Noakes: I shall not press the point much further as the Minister has said that he will think about it. The definition of "supervisory functions" in Clause 1 is very wide and includes,

"functions of examining, inspecting, reviewing or studying the financial or other management of the public body".

Under the wording, it is still possible that there would be some concerns.

One of the questions that I put to the Minister—I forgive him for not being able to answer it—is whether there had been definitional difficulties or issues arising under the Government Resource and Accounts Act 2000. I would be interested to know whether the

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Minister's officials could look into the matter and write to Members of the Committee to see how the definition works in practice.

Lord Davies of Oldham: I am grateful to the noble Baroness and accept her intervention. If we can throw light on the issue as being the result of an Act that, as she has identified, has been on the statute book for only four short years, we will write to her and to the noble Lord.

Lord Livsey of Talgarth: I am perfectly satisfied with the Minister's explanation of a supervisory function. I am obviously interested in knowing whether previous Acts of Parliament are complied with. We will be interested to hear the Minister's reply on that. I can think of many instances in Wales where bodies use public money and should be the subject of supervision and I am therefore happy with the Minister's remarks.

Baroness Noakes: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Clause 2 [Additional functions of Auditor General]:

Baroness Noakes moved Amendment No. 3:

Page 2, line 41, leave out ", if so required by a relevant body,"

The noble Baroness said: The amendment would delete the words,

"if so required by a relevant body"

from subsection (1) of new Section 96B of the Government of Wales Act 1998, inserted by Clause 2.

We are dealing here with the certifying of grant claims, accounts and returns either by bodies audited by the Auditor General for Wales or local authorities in Wales. Most of the time, those claims will result in money being paid by the Assembly to various bodies. The question is whether certification should in any sense be optional, as the current drafting implies. Certification is a very important process and should be an integral part of the Auditor General's duty. It should not be left to a relevant body to request the Auditor General to certify. He should have a positive and proactive role.

If the Auditor General does not certify, who else will do it? Are bodies to be left to shop around for certification of their claims? That represents a lax approach and could easily lead to duplication of effort and perhaps anomalies.

I would be grateful if the Minister could tell us what happens with the certification of grant claims currently under the Audit Commission regime. I concede that the Audit Commission Act 1998 is drafted in the same terms as the Bill, but how does that work in practice? Is there any optionality over certification? I beg to move.

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