| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Noakes: What more can I say in response other than to thank the Minister? I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 25:
- Page 11, line 17, after "Wales" insert "or by a person appointed by him"
The noble Baroness said: I suspect that my run of success will come to an abrupt end as I move Amendment No. 25 and speak at the same time to Amendment No. 26. These amendments tackle rather different issues in Clause 11.
Amendment No. 25 seeks to add,
- "or by a person appointed by him",
The Minister may well say that this is unnecessary because of Clause 18 in respect of local government accounts. However, my question on that score is why the Minister needs a whole new clause in Clause 18 if my additional seven words would do the trick. This is already an extraordinarily long Bill for a relatively straightforward subject, which itself derives from repetition—usually rather inexact—of the same concepts for local authority aspects of the Auditor General's work and his other work. My amendment offers a form of simplification and streamlining and I hope that the Government will accept it.
Amendment No. 26 is a probing amendment which seeks to knock out the ubiquitous Treasury from subsection (6), taking it out of the process of making an order specifying documents for the purposes of the access rights under the clause. I am puzzled as to why the Treasury should have any say in this. There is no equivalent power for the Treasury or any other government department to interfere in similar order-making powers under Clauses 18 or 52. Will the Minister explain why the Assembly, consulting the Auditor General for Wales, cannot be regarded as sufficiently competent to carry out this relatively minor function under Clause 11? I beg to move.
Lord Davies of Oldham: The noble Baroness presents her amendments so ably that she also anticipates my reply. That may make my presence in Committee relatively otiose because she is right: I am going to say that Clause 18 is the answer to Amendment No. 25. The noble Baroness says that she has produced a neater and shorter form of words for what she has described as a long Bill. However, I think that her experience in Parliament over the years will lead her to regard this legislation as rather average by
comparison with many which we tackle. However, it is always a good thing to keep legislation as short, simple and straightforward as possible. We are one on that.I do not think that the noble Baroness is right, but I have heard her argument. All that is said in Committee will be considered seriously and taken into account before we return to the Bill on Report. But we think that Clause 18 is essential to the Bill and I do not propose to accept the amendment.
I turn to Amendment No. 26. The noble Baroness indicated that it is unfortunate that the Treasury comes into the frame here. Under the Government Resources and Accounts Act 2000 the Treasury is responsible for making access orders for the Comptroller and Auditor General. We believe that the requirement to consult is constructive and should remain. On that basis, I hope that the noble Baroness will not press the amendment.
Baroness Noakes: I thank the Minister for his reply. When I said that this is a long Bill, I did not mean in absolute terms, rather that it is long relative to the subject matter. I, too, have been involved with considerably longer pieces of legislation.
I thank the Minister for saying that the Government will look again at the relationship between Clauses 11 and 18 in the context of my proposed seven words. However, for the moment I shall not pursue the point. When we come to the Treasury and Amendment No. 26, we are up against our old friend—consistency with England—rather than consistency in Wales. I cited the equivalent order-making powers under Clauses 18 and 52 in which the Treasury has no interest whatsoever—a good thing too, we might say.
I leave with the Minister that inconsistency among many inconsistencies in the Bill and I hope that, between Committee and Report, the Government will take the opportunity to reflect on whether more consistency for Wales would be a desirable principle on which to base the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 [Local government bodies in Wales]:
Clause 14 [Appointment of auditors]:
Baroness Noakes moved Amendment No. 28:
- Page 12, line 32, leave out subsection (3).
The noble Baroness said: We come now to the appointment of local authority auditors under Clause 14. I shall move Amendment No. 28 and speak at the same time to Amendment No. 33. The thrust of the amendments is to enable the Auditor General to deal with local authorities as he does with public bodies in Part 1. In other words, he should be able to audit local authorities himself and should certainly not be expressly prohibited from doing so as proposed in
subsection (3). That is why Amendment No. 28 seeks to delete the subsection. The key question is why there is such special treatment for local authorities. After all, they are funded very substantially by central government through the Assembly.The facile answer is that the Bill follows the pattern established by the Audit Commission Act, which still applies to local authorities in England. We have already debated the fact that that is a principle that appears to hold sway with the Government, but will not impress those on our Benches.
We assume that local authorities in Wales wish to continue with the current arrangements. Perhaps the Minister can say whether that is the case. But it would also be good to hear why advantage was not taken of the opportunity presented by the Bill to place all public sector bodies on the same footing so far as concerns the appointment of auditors. The opportunity has been taken to take NHS auditing out of the Audit Commission model and put it into a new model for Wales. It is not simply a question of consistency with England because after the Bill has been passed there will be a new inconsistency between England and Wales in relation to NHS audits. So I would suggest to the Minister that it is not such a strong principle after all.
Furthermore, under subsection (7), before appointing an external auditor, the Auditor General has to consult the local authority concerned. One wonders about the purpose of that, other than for courtesy. I do not believe that a local authority can refuse an auditor recommended by the Auditor General. If it were to object, what impact would that have? Amendment No. 33 seeks to delete subsection (7) in order to find out what is the purpose of the consultation and what would happen if the Auditor General and the local authority held different views.
There is a close relationship between local authorities and the Assembly; partnership between them is provided for in the Government of Wales Act. It could be argued that the unitary authorities in Wales—they are all unitary authorities—are in a very different position from their English counterparts and therefore the Government could easily justify treating them differently in the context of the Bill.
It appears to us that a great opportunity related to local government audit has been missed. The Select Committee on Welsh Affairs in another place and the Assembly, which considered the Bill at the pre-legislative stage, felt the same way. We have not yet heard an argument of principle for the position taken in the Bill, although I shall listen carefully to the Minister's reply to see whether there is such an argument. I beg to move.
Lord Davies of Oldham: The effect of Amendment No. 28 would be to remove the prohibition on the Auditor General from appointing himself as the auditor to a local government body. The difference between local government and the National Health Service is obvious. The constitutional dependence of
local government is different from that of the National Health Service and that is why we seek to tread with care in this area.The Auditor General is the statutory auditor of the National Assembly and receives significant funding from the Assembly to enable him to undertake his work in the non-local government sector. The prohibition on him with regard to local government avoids any perception of a conflict of interest that could arise if the Auditor General were to be the statutory auditor of both the Assembly and a local government body.
There are additional practical difficulties as well as what I think is an issue of very considerable principle. If the Auditor General were able to be appointed as the auditor of a local government body in a personal capacity, it would open up the possibility of operational conflict of interest. For instance, under Clause 16, the Auditor General would have the authority to issue a code of audit practice for local government to which, in his capacity as an appointed auditor, he would have to adhere. Under Clause 20 he would be required to provide a scale or scales of fees from which he may personally benefit as an appointed auditor. Under Clause 37 he could theoretically require himself to undertake an extraordinary audit.
Those are important issues and present real and practical difficulties if the prohibition on the Auditor General acting in respect of local government bodies is removed, as sought in Amendment No. 28.
Amendment No. 33 would have the effect of absolving the Auditor General from consulting a local government body on the appointment of its auditor. It is accepted practice for local government to be consulted on the appointment of auditors and to end the practice would be detrimental. High standards of financial accountability are achieved to a great extent through a positive relationship between auditor and client—withdrawing the right of local government to be consulted on audit appointments would risk alienating local government bodies and undermining the potential for a positive working relationship. It would also provide a stark contrast with the existing consultation arrangements for local government in England. On that basis, I ask the noble Baroness not to press the amendment.
6.45 p.m.
Baroness Noakes: I thank the Minister for setting out the Government's views on and justification of the way the Bill has been constructed in relation to local authority audit. The Minister rested his case on the threat of conflicts of interest between auditing the Assembly and auditing local authority bodies. I have to say that I simply cannot see that, just as I cannot see any conflict of interest between auditing the Assembly and auditing NHS bodies, which is what will happen when the Bill is enacted. If there is a conflict of interest for local authorities, there is also one for the NHS.
The Minister went on to describe the problems with the Bill and at that point I believe he made the case for me. He demonstrated that the Bill is complex because
we have lifted the Audit Commission model. That model has a code of practice because particular named auditors are appointed and they must have something with which to comply. A scale of fees for all auditors is so drafted because of the way in which auditors are appointed. There is no fundamental difficulty in achieving all those aims for local authority audit—as they have been attained, for example, for fees and audit for the other bodies dealt with in Part 1. Part 2 creates its own problems as a consequence of Amendment No. 28 simply because of the model that has been lifted here. With a different mindset about the model, Part 2 would become much simpler.Although I thank the Minister for setting out the Government's rationale, I should report that thus far I am unmoved. However, I shall read his remarks carefully in Hansard.
Turning to Amendment No. 33, I thought that the Minister said that there is no real substance in subsection (7), but that it is like the point we discussed a moment ago—the relationship between the Public Accounts Committee of another place and the Audit Committee for the Welsh Assembly. This drafting has been produced to satisfy sensibilities rather than to meet any other substance.
I shall consider again the implications of Amendment No. 28. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Next Section
Back to Table of Contents
Lords Hansard Home Page