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The Deputy Chairman of Committees: Before I call Amendment No. 7, I must inform the Committee that if it were to be agreed, I should not be able to call Amendment No. 8 under the pre-emption rules.
Baroness Noakes moved Amendment No. 7:
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The noble Baroness said: I shall speak also to Amendments Nos. 8 and 11 in this group. The amendments relate to value for money studies of educational bodies under new Section 145B of the Government of Wales Act 1998 inserted by Clause 4.
We certainly welcome the Auditor General carrying out value for money studies in educational bodies, but they can be carried out only at the request of the educational body or of the body responsible for that educational body. The position of educational bodies under Clause 4 is thus totally different from that of the bodies within Clause 3. which the Auditor General can study at will. Consent is the keynote of Clause 4 and we are bound to press the Government on why there is that special treatment for educational institutions. Amendments Nos. 7 and 8 provide different ways of deleting that need for consent.
The other bodies that are dependent on public funds are subject to value for money studies. Our question is: why is the clause drafted in that way? We wondered whether it had something to do with the clause needing to be consistent with other educational legislation as envisaged in subsection (7). That is why Amendment No 7 deletes that subsection on a probing basis. I hope that the Minister will be able to explain that subsection, because we have failed to understand it. We do not believe that studies should be left to the bodies themselves. After all, they are in receipt of significant amounts of public money and the value for money with which they use those funds is clearly important.
Are the requesting bodies listed in the table likely to ask for studies or will they be reluctant to do so for fear of revealing their own past or continuing shortcomings? It is only human nature not to volunteer for challenge and scrutiny, especially if there is any doubt whether all is not well.
My noble friend Lord Roberts spoke at Second Reading about a body called Education Learning Wales (ELWa), which was the subject of a hard-hitting report by the Auditor General. I understand that ELWa is formally known as the National Council for Education and Training for Wales, and appears in both columns of the table in new Section 145B. Do we think that ELWa would have volunteered itself for a value for money study? I think not.
We believe that the Auditor General should have the same power to study educational institutions as he has to study relevant bodies in Clause 3 and that he should not be dependent on requests from bodies to initiate studies. Also, he should not need their consent to report to the Assembly, as is provided in subsection (3) of new Section 145B. Again, perhaps the Minister could treat that as an amendment in spirit, as we have not tabled it for consideration, but that forms part of the relation between the Auditor General and educational institutions.
The entire approach to educational institutions in the clause seems to put them on a protective pedestal and provides an example of an area where the Bill could make better, stronger provision for public audit in Wales but fails to do so. I beg to move.
Lord Livsey of Talgarth: This, again, is problematic as regards the Assembly. The noble Lord, Lord Thomas, mentioned the activities of the Audit Committee of the National Assembly. Reference has been made to ELWa in that context. The Assembly's Audit Committee has discharged much good work in its critique of the operations of ELWa. Given that the committee is comprised of democratic representatives, some of the criticism has resulted in greater efficiency within ELWa.
In principle, we agree with the concept of independence of the auditor in considering educational matters, but—and it is a big but—if we consider the activities of the Higher Education Funding Council for Wales, which is referred to in the
clause, we must remember that the university colleges in Wales that form part of the federal University of Wales do not stand up well in competition for funding with their English counterparts. Unless they have a certain amount of flexibility to make up the gap without, shall we say, undue interference from the auditor, they may be placed at even greater disadvantage.So there is a need for ELWa, in particular, to be considered in its entirety, but if university colleges in the higher education system in Wales have their wings clipped, that may put them at even greater disadvantage. About five years ago, students in Wales were underfunded by about £300 per student. I do not know whether that still applies. However, we need to look at the situation carefully.
We agree that the Auditor General should be able to look independently at a wide number of activities, but I counsel a little caution. If the powers are used excessively and in a non-objective manner, we could be in trouble. So I find the amendment rather difficult. While we want to see independence, we do not want to see innovation in the higher education sector stifled.
Lord Davies of Oldham: I am grateful to those noble Lords who have participated in our short debate on the amendment. I am not surprised that ELWa has emerged quite early in the Committee's deliberations. No doubt I shall be buffeted from time to time by critical remarks about that body. However, I am on secure ground here and I shall make the position clear as regards the amendment. While I hold a robust position I intend to make the most of it.
The Auditor General is the statutory auditor of ELWa and has the power to undertake studies. The burden of our anxiety about the amendment is that Clause 4 will enable ELWa to request a study of an education body which it funds, but which is not within the remit of the Auditor General. So the problems with regard to ELWa are covered effectively and properly. The issue regarding the position of ELWa remains a bone of contention between us and the noble Baroness, Lady Noakes, in moving her amendment; that is, whether individual bodies should be subject to the Auditor General when they have not requested an investigation.
The noble Baroness has indicated that people rarely volunteer for such action if they are in difficulty. Of course that is true in the generality of cases, but it is not true in all circumstances. I am very loath to bring to the Committee experience from the English dimension in education because I recognise the thorny path down which I would have to tread, but I can recall institutions in England which have been in that kind of trouble and where only the request for a proper investigation of what has gone wrong has set them back once again on the path of virtue. That was certainly my experience when I chaired a funding body for further education. We had no reservations about ensuring that audits were carried out. Furthermore, we would call in support at a national level when we
thought that the circumstances were so grievous that we needed full scrutiny. I can confirm that that was done.However, I understand the argument of the noble Baroness. In general people tend to keep their failings and sins as quiet as possible. So the issue is whether it is right that the Auditor General for Wales should be entitled to engage in such studies on individual educational bodies.
The noble Lord, Lord Livsey, has already presented real reservations about why that should be so. With regard to higher education, it is certainly clear that universities—the University of Wales is a particularly complex institution—have a proper and jealously guarded level of independence. That is quite critical, as he indicated, to the development of much of their enterprising research work. One cannot push back the frontiers of knowledge if one is constrained by people with limited knowledge hindering and restricting certain areas of work. Such an institution must have proper freedoms. That is why we have careful relationships in higher education in terms of degrees of freedom.
It is surely appropriate that such studies by the Auditor General should be undertaken only on request. He is not the statutory auditor of the individual educational institutions, and for very good reasons. They are responsible for the appointment of their own auditors. The combined effect of Amendments Nos. 7 and 8 would give the Auditor General complete discretion to undertake such studies, irrespective of whether they were requested and of the fact that he would have no wider statutory audit functions in respect of such bodies.
The Auditor General already has the ability under Section 145 of the Government of Wales Act to undertake economy, efficiency and effectiveness studies in the higher and further education sectors, which can touch on and compare the practice of individual institutions in terms of how resources have been used. That is a very important part of his role in relation to funding organisations. However, that is different from his having the power to investigate and carry out a study of an individual educational institution. It would be incongruous and would lead to confusion over the respective roles of the Auditor General and an educational institution's own auditor if the Auditor General were able to undertake unsolicited economy, efficiency and effectiveness studies in respect of bodies for which he had no wider statutory audit functions.
I shall move on to Amendment No. 11. Clause 14 relates specifically to the appointment of auditors by the Auditor General for local government bodies. Higher and further education simply does not fall within that category. The provision in Clause 4(5) to enable the Auditor General to arrange for one or more members of his staff to audit a corporation's accounts, subject to appointment by a corporation, is consistent with Clause 9 and others.
5 p.m.
Baroness Noakes: That amendment is in the next group.
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