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Baroness Noakes moved Amendment No. 6:
- Page 4, leave out lines 29 and 30.
The noble Baroness said: In moving Amendment No. 6, I shall speak also to Amendment No. 15, which is similar. Amendment No. 6 amends the new Section 145A of the Government of Wales Act inserted by Clause 3 of the Bill. It deletes subsection (3), which disbars the Auditor General from questioning the merits of the policy objectives of a body when he carries out a value-for-money study. Amendment No. 15 deals with similar value-for-money audits of registered social landlords in Clause 5.
I may be mistaken, but I could find no similar reference in Clause 41 in relation to the Auditor General's value-for-money studies in local government. Perhaps the Minister could explain that when he replies.
Let me be clear that, from a governmental standpoint, we understand why the Auditor General should not be entitled to question the merits of policy objectives. Nevertheless, in practice, it is difficult to see how he can avoid a comment, possibly oblique, if in the course of his study he discovers that a body's objectives are contributing to inefficiency or ineffectiveness. It is the ineffectiveness or inefficiency that he is reporting which he thinks should be removed.
A good example, although perhaps controversial, is the way in which targets in the NHS have led to problems of effectiveness and probably also problems of efficiency and economy. Not questioning the targets policy would be inconceivable.
The phrasing of subsection (3) discourages but does not totally prohibit the Auditor General from making such comments. That is my reading of it and I hope that the Minister will confirm that my understanding is correct. If not, the removal of the subsection would be desirable not only in Clause 3 but also in Clauses 4 and 5. I mention that as we have not tabled an amendment to Clause 4, but I hope that the Minister will take the amendment in spirit if not in fact.
My noble friend Lord Roberts tells me that a number of service areas in Wales would benefit greatly from studies to improve their value for money. I am sorry he is not here to give us his private hit list. We are anxious that the Auditor General is not handicapped in doing his work and is not unduly constrained by policy considerations. Our view is that if the implementation of a policy leads to defects being
picked up in a value-for-money audit, the policy may itself be faulty and if that is the case, the sooner it is realised the better. I beg to move.
Lord Livsey of Talgarth: I shall comment briefly on the amendment. There is a clear balancing line between two separate objectives. Surely, one would not wish to see the Auditor General having an onslaught on policy objectives. His objectives must be those of financial propriety. That may impinge or not on the outcome of policy objectives. It is important that he is objective about that and he should look at the financial issues involved.
Subsection (4) could be misinterpreted. However, if the Minister can convince me that there is a sharp differential between the two, and that there is no free-for-all in the policy objectives resulting in enormous financial liabilities, the consequences of which the Auditor General must pick up, that is an important distinction. It ought to be a situation in which the Auditor General acts from a financial objective in controlling the excesses of policy objectives. He does not have to question them outright, but nevertheless he picks up the bill at the end and perhaps charges a bill, too.
Lord Elis-Thomas: I declare an interest as Presiding Officer of the National Assembly for Wales. I assure the Committee that I do not intend to intervene frequently in Committee; I apologise for not having been present for Second Reading. However, an aspect of the amendment concerns me. That is the relationship that has developed—in my view, very successfully—between the Office of the Auditor General for Wales and the Audit Committee of the National Assembly. The Audit Committee is itself precluded by standing order—of course, we could amend our standing orders by two-thirds majority—from scrutinising policy implications in its reports. That fits with the role of Auditor General.
There have been several cases, into which I shall not go this afternoon, where various criticism of government or Assembly-sponsored public bodies has been made. I have been impressed by the way in which both the Audit Committee and the Auditor General and his staff in Wales in their reports and Ministers, their advisers and other political actors have been able to skate along that thin ice or thin line to which the noble Lord, Lord Livsey, referred. I would not want us to do anything at this stage of the transition of responsibilities to create any difficulty for the Audit Committee of the Assembly in its relationship with the Auditor General. I therefore wish the amendment to be withdrawn.
Lord Davies of Oldham: One thing that I shall not try to do is to skate along a thin line—thin ice is difficult enough, but a thin line would be well beyond my capacity. However, I agree that the issue of where the line is drawn between issues of policy and proper supervisory control is crucial. Of course the Auditor General can question the effects of a policy objective—I cannot see how he could carry out his job of scrutiny unless that did not occur from time to time. What he
cannot do is question the merits of the policy objective, because that would be to stray from his proper role into that which we would all jealously guard of those who are accountable in another sense to the public for the merits of policy as it is developed and designed.The amendment would delete the prohibition on being able to question the merits of the policy objectives of any relevant body through the course of undertaking or promoting comparative cross-sectoral studies on economy, efficiency and effectiveness. It is a long-standing principle that the Auditor General, and, similarly, the Comptroller and Auditor General in respect of England, cannot question the policy objectives of a body for which he has audit responsibility. He may express a view on how a body sets about achieving its objectives and whether its approach represents value for money. He may also inform future strategic policy development, but he is not there to comment on the merits of policy—the point zealously guarded by the noble Lord, Lord Elis-Thomas, from his entirely neutral position as Presiding Officer of the Assembly. To question the merits of policy could compromise his independence if, for instance, he were to undertake audit work relating to a policy area on the merits of which he had previously expressed a view. That would not be conducive to the exercise of his functions.
The amendment would raise an inconsistency between the Auditor General's powers in respect of cross-sectoral studies provided for under the clause and studies in respect of the Assembly and Assembly-funded bodies undertaken under the Government of Wales Act 1998, where the prohibition on questioning policy merits would still apply. For those reasons, it would be inappropriate for the Auditor General to be put in the position of having the capacity—perhaps, the obligation—to question the merits of policy objectives while exercising his functions.
The noble Baroness asked about audits of local authorities, where a similar inhibition apparently does not apply. The Auditor General would not be the statutory auditor of local government bodies; he would appoint auditors. Therefore, in respect of local government, he would not have the direct responsibility of being a statutory auditor, questioning the policy. That is the difference in the position for local government.
On the noble Baroness's more general point, I recognise that we are debating an area where there is what is rightly defined as a narrow line. We can envisage where it would be entirely appropriate for the Auditor General to comment on policy to inform future strategic developments. However, we seek to protect the position that he does not cross the line to become a participant in the debate about the merits of policy. I fear that the amendment would open that possibility; that is why I ask the noble Baroness to withdraw it.
4.45 p.m.
Baroness Noakes: I thank those Members of the Committee who have taken part in this small debate
and the Minister for his reply. I put two specific questions to him. The first related to local authority value for money studies. In his response, he seemed to say that the Auditor General would not carry out such studies, although Clause 41 is drafted in terms to state:
- "The Auditor General for Wales must for each financial year undertake or promote studies designed to enable him to make recommendations"—
The other thing that mystifies me is whether he is debarred from commenting on the merits of policy. Clause 3(3) states:
- "do not entitle the Auditor General for Wales to question the merits",
I leave those two questions with the Minister. He may want his officials to consider them and write to me outwith the Committee, but they are puzzling aspects. I tabled the amendments so that we could have that debate on what is inevitably a difficult area, but those two points are worthy of consideration. With those words, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 [Studies at request of educational bodies]:
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