Public Bodies Bill [HL]

Wednesday 1st December 2010 Lords Chamber

Committee (3rd Day) (Continued)

20:40

Amendment 23

Moved by

[Lord Warner]

23: Schedule 1, page 16, line 13, at end insert—
“Audit Commission.”

[Lord Warner]

My Lords, my amendment would add the Audit Commission to Schedule 1. I move it not because I wish to abolish the Audit Commission—quite the reverse—but because I wish to probe the thinking of the Government on why it has been excluded from the Bill while other bodies have been included in Schedule 1.

The utterances of Conservative Ministers in the coalition have been extremely critical of the Audit Commission and there has been a steady trickle of briefing against it from within the CLG so I, in my naivety, had rather assumed that Mr Eric Pickles would have been rather keen to rid himself of this body at the earliest legislative opportunity. Perhaps, let us hope, he has had a damascene conversion against abolition but more probably, as I suspect from my own intelligence, it is proving a bit more difficult than he thought to dismember the Audit Commission. That sort of impetuosity is typical of the way in which much of this Bill has been produced: decide first and think about what the reasons were afterwards.

I should acknowledge that, over the years, my path has crossed several times with the Audit Commission, so I could be said to have an interest to declare. In 1986, the commission produced an excellent report on community care which, to their credit, the Conservative Government acted upon. I was very involved with the reforms that followed that commission report, and again, 10 years later in 1996, when the commission produced a withering critique on the state of the youth justice system under the Conservatives that in its turn led to the establishment of the Youth Justice Board in 1999—an issue that we will debate later under an amendment in my name and that of the noble Lord, Lord Ramsbotham. Then, when I was a Health Minister, the commission helped to sort out some arcane, unworkable NHS accounting rules and provided much technical help on NHS reform, certainly to me. The fact that this commission has been capable for many decades of speaking truth to power has been a continuing feature of its work, but it seems to be a quality that has been little valued by some senior Ministers in the coalition Government. The way that this Bill has been produced rather confirms that.

I will not spend a lot of time today explaining why abolition of the Audit Commission is a thoroughly bad decision and will do much damage to good governance and efficiency in the public sector. There will be plenty of time to do that when, as I suspect, the Government eventually find a way to swing the legislative axe next year. However, I shall mention one issue that affects many public bodies but which, it is clear, has not been adequately thought about before the Government decided to abolish the Audit Commission—how to ensure that all local public bodies have an audit system based on clear principles of independence. We will not go into that tonight but I want to register that point.

There is no doubt that the Audit Commission has curbed the fees of the big accountancy firms for auditing public bodies and that its removal is likely to unleash significant increases in public expenditure thereafter. This is the kind of thing that we would expect to have spelt out in any impact assessment on legislation on the Audit Commission. However, if one looks at this Bill, one actually sees what I can only describe as contempt for Parliament, with the publication of an impact assessment that has no costs and benefits assessment in it about these bodies in Schedule 1. There is nothing there to tell us what the benefits and costs are of doing the things that the Government want done through Schedule 1. That is one reason why many of us are so concerned about the Bill.

20:45

Some of us would say that the impact assessment produced for the Bill is a scandal and is contemptuous of Parliament. That is one reason why the Minister is going to find, as we plod our way through Schedule 1, that we continue on body after body to ask for information—the same thing was asked earlier today—about the costs of deleting and abolishing these bodies and what the benefits are. If the Government had done it properly in the Bill’s impact assessment, they would be making faster progress. I do not want to carry on too far in that vein, but I remember some of the speeches that Mr Francis Maude made before the election about this; getting rid of quangos was all about saving money. I want to ask why, in an exercise that started off being about saving public money, we do not have any figures about the costs and benefits of getting rid of these bodies.

I now turn to the main reason for this amendment. I am afraid that I have a lot of questions for the Minister and let me assure him that they are not rhetorical. Do the Government still intend to abolish the Audit Commission, or have they had a change of heart? If so, how do they propose to do it, given that the commission is not in Schedule 7, so cannot be brought within the scope of the Bill? If the Government are going to use bespoke primary legislation to deal with changes to the Audit Commission, as seems to be the case, why are they not applying the same approach to some of the bodies in Schedule 1? For example, why is there not specific primary legislation amending the Crime and Disorder Act 1998 to make the changes to the Youth Justice Board that they seek? Why are bodies such as the Youth Justice Board being treated differently from the Audit Commission when their functions and membership were all set out in primary legislation after due consideration by Parliament? There is not a scrap of difference between some of the bodies in Schedule 1 and the Audit Commission in that regard.

Can the Minister give the House any coherent explanation of why the Government are picking and choosing between different bodies on the legislative way they make changes to them? If so, what is that explanation? If the Government cannot give those kinds of explanations, why should this House not, as part of its constitutional duty, continue to debate every body in Schedule 1 one by one, to find out what was behind the Government’s thinking and how they propose to change functions and to alter and amend the nature of the affected bodies?

I draw attention, without being too vainglorious, to the fact that as a Health Minister I abolished 20 arm’s-length bodies. However, if you go back over the records, you will see that we plodded our way through, organisation by organisation, bringing primary legislation to both Houses of Parliament, setting out the arguments as to why it was important to make changes and what were the legislative requirements for making those changes. People had a chance to put their views and we had some tussles in this House and in the other place about some of those changes. The Government are not giving Parliament the opportunity to do that on many of the important bodies which they have decided are for the chop in Schedule 1.

I would like answers to the questions I have posed. I understand that the Minister may not be able to answer them all today, but I would like answers well before Report as to why the Government are picking and choosing how they deal with particular bodies. I do not think that it will be too taxing for the Government to answer my questions. We have heard that the Government carefully scrutinised the 900 or so bodies that have been looked at since May before coming to the conclusions that they have reached. As an old Whitehall hand, I am sure that tucked away in the cupboards and computers of Whitehall are umpteen files—in digital or another form—that set out the careful analysis that has no doubt gone into the decisions reflected in Schedule 1. There will have been detailed cost-benefit analyses of each of these bodies before they were put in Schedule 1. No doubt great care was taken with the accounting officers in those departments to make sure that there would be no minutes of their reservations. I look forward to seeing the Minister’s arguments for why they have taken a different approach for the Audit Commission from their approach to many of the bodies in Schedule 1.

I spent some time picking over the disparity between what the Government are doing with the Audit Commission and their approach to the bodies in the Bill. This is because I have grave concerns about giving Secretaries of State—who, historically, may not be all that long in their jobs—powers to sweep away bodies about which they get a bee in their bonnet. All of us who have been Ministers get a bee in our bonnet from time to time about people who may be thwarting us or giving us uncomfortable messages. It does not mean that we reach for the axe or turn the screws on particular bodies to vent our spleen. We are getting nervous messages from many of these bodies about this approach, which makes me think that we need to hold the Government much more to account over the Bill than they might wish.

That is why Schedule 7 is so dangerous. It is a list of 150 bodies over which any number of Secretaries of State can work themselves up into a lather and behave—if I may say so—probably in an extremely British way but, nevertheless, in a way that exerts pressure on the thinking and behaviour of those bodies. We need a more measured approach and we need the Government to come cleaner than they have about the arguments for and against dealing with the bodies in the way they propose in Schedule 1. I beg to move.

[Viscount Eccles]

My Lords, I have not the good fortune to have been in this House for very long. I have had two sessions here. One, in 1999, was rather short, but I have been here from 2004 until today. I do not know a great deal about the procedure of this House, but that sounded extraordinarily like a Second Reading speech. Perhaps I am mistaken, but that is how it sounded to me.

I will briefly offer a little comfort about impact assessments. This is, admittedly, a framework Bill, and there is a long list of bodies in Schedules 1 to 6. Whenever a Secretary of State wishes to put down an order to abolish, to change funding or to merge, he will have to produce an affirmative instrument. Affirmative instruments are subject to 12 weeks’ consultation and the provision of an impact assessment, unless there is a very good reason why there should not be an impact assessment. The idea that there will never be any impact assessments for this House to look at is not right.

How will this House look at them? There is a committee called the Merits Committee, on which I was fortunate enough to serve for four years. That committee, as your Lordships know, looks carefully at every instrument. If it thinks that it is right to draw something to the attention of this House, it does so. If it thinks that the policy in the instrument is inconsistent with the Government’s declared policy, it says so. Then that affirmative instrument is debated.

It has been said—and we shall come back to this—that there should be some enhanced procedure, allowing Parliament to debate the thing in more detail because, it is said, Parliament does not usually turn down affirmative instruments. Nevertheless, we have that power. I believe, if the noble Lord, Lord Warner, will forgive me, that to reiterate that there is no impact assessment is to misunderstand the way in which the Bill has been put together. If you believe that this Bill should not have been put together as it was and that we should do whatever will be done only by primary legislation, what you are saying is that we will do only half a dozen bodies a year, because that is about all we would ever get the parliamentary time for.

[Lord Warner]

The noble Viscount may wish to interpret this as a Second Reading speech, but I thought that I was asking a very serious question about why some of these bodies are in Schedule 1 when they are fundamentally not that much different from the Audit Commission, which is not in Schedule 1. I am trying to understand the Government’s criteria for including some bodies but not others in this Bill. That is the whole purpose of my speech. I say to him, with the greatest respect, that debating the detail of an order some many months after the passing of this Bill will be too late. Those of us who have experience of chairing and being a member of staff of some of these public bodies would say to him that, once you have signed the death warrant—that is what the Bill is—you have no hope of retaining a great deal of talent in some of these bodies. That melts away. It is a perfectly rational, human response to a death warrant being signed on the organisation that you work for. It is a bit late in the day, when we get to the order, to start having the debate about whether it was a good idea in the first place.

[Lord Hunt of Kings Heath]

This has been a very interesting short debate. I am grateful to my noble friend Lord Warner for allowing us to debate the Audit Commission and some of the matters that arise from consideration of it as far as the Bill is concerned. My noble friend has a distinguished record as a quango basher. He led the arm’s-length body review in the Department of Health, which I succeeded him on. That reinforces the view that we, on this side, are not at all opposed to the principle of looking at each of these organisations where it is quite clear that they ought not to continue or that their functions can be done in another way. We have no problem with that. We do have a problem, however, with the architecture of the Bill. There is the general principle of the Henry VIII clauses, a huge and unprecedented power given to Ministers. I have no doubt whatsoever that, if we as a party had brought this Bill before your Lordships’ House in the last Parliament, we would have had no possibility whatsoever of having it passed.

The second point is this. The noble Viscount is right to suggest that, when affirmative orders come before your Lordships’ House, consultation has to take place and impact assessments have to be published. However, we are right, at this stage, to scrutinise those bodies that are under threat in this Bill.

Also, as a distinguished member of the Merits Committee, the noble Viscount may well have observed the correspondence between the committee and the noble Lord, Lord Strathclyde—the Leader of the House—on the question of the use of the conventions as regards secondary legislation. The Cunningham joint select committee report, which was approved by this House, made it clear that there were circumstances in which it was quite appropriate for the House to seek to defeat secondary legislation. My judgment is that that would apply to this Bill, because the kind of skeletal Bill that the Cunningham committee described is exactly what we are debating today.

The noble Lord, Lord Strathclyde, seeks to reinterpret the convention as regards secondary legislation. Essentially, he does not accept that there is a convention that this House can seek to defeat secondary legislation in the circumstances described by the Merits Committee. That increases our nervousness about whether the scrutiny available to the House of Lords will be sufficient to meet the needs of this Bill. We would have had greater comfort if the noble Lord, Lord Taylor, who is leading this Bill through with his usual inestimable charm, had clearly indicated that the Government would not proceed with Clause 11 and Schedule 7 and would agree to use the super-affirmative procedure. If he had acknowledged that at an early stage, the passage of this Bill would be an awful lot easier. I suspect that that will be the end point of our debates in your Lordships’ House. He will know that there is profound unease about this Bill all round the House. We will continually come back to the point about the architecture.

21:00

My noble friend asked important questions about the Audit Commission. First, it is very difficult to know why the Audit Commission is being abolished. Of course, some of its activities may be open to question and questions may be asked about whether it needs the resources that it has, though most of them come from the fees that it levies rather than from central government. My understanding is that the quality of the commission’s work is acknowledged in local government and in the health service and that there is generally felt to have been an improvement in the efficiency of local government and of the NHS as a result of the commission’s activities.

My second question concerns the cost of the commission’s abolition. I should like the noble Lord, Lord Taylor, to hazard a guess at what he thinks the cost of abolition will be. A few weeks ago, we were told by the noble Baroness, Lady Hanham, that the estimate was about £50 million. However, she was not able to be more precise than that. Far from the huge savings that we were promised, it is becoming apparent that in the next spending review period there will be a huge upfront cost as a result of this Bill. I remind noble Lords that an announcement was made from Downing Street at the time of the Queen’s Speech that suggested that £1 billion would be saved. Since then, however, the Government have been rather coy about this; in fact, there is a whiff of suspicion that costs will be greater than savings in the next spending review period. As we all know, the impact assessment is silent on all these matters.

It would be good to know what is expected to replace the commission. I have no doubt that private sector firms will be able to take over individual audit work, but I wonder whether the Minister agrees with the ACCA and CIPFA that there may be more conflicts of interest if all this work goes to the private sector. As my noble friend has said, there is a real fear that the independent voice of the Audit Commission, which was able to criticise government, will be lost.

My other concern relates to the work that the Audit Commission has done in relation to comparative performance and national comparators. Over the years, it has produced invaluable reports on National Health Service finance and related issues and comparative performance studies that have enabled the boards of NHS bodies to compare themselves with similar organisations, which I know board members have found invaluable. It is worth noting that its payment-by-results benchmarker was a winner in the excellence in the use of healthcare information management section of last year’s E-Health Insider Awards. Therefore, there is every indication that the Audit Commission produces quality work.

There is a further question that we are very puzzled about: why is the Audit Commission not in the list of bodies to be abolished? Our assumption is that the Government consider that it should be abolished by primary legislation. However, it is very difficult to establish the criteria under which some bodies are to be dealt with in this Bill while others are to be dealt with in primary legislation. The same is true of a number of health bodies that we know will be abolished under forthcoming health legislation. Again, I should be grateful to the noble Lord if he could explain a little more about the criteria that determine in which Bill these bodies will be dealt with.

[Lord Greaves]

Before the Minister replies, may I ask the noble Lord, Lord Hunt, a question? Earlier in his speech, he waxed lyrically in his normal way about the problem of whether the House of Lords can reasonably reject affirmative orders. As the noble Lord knows, many of us in this part of the House very much agree with him that the ordinary affirmative procedure is not acceptable for this legislation. Indeed, the enhanced super-affirmative procedure being put forward by the Government is still not adequate. Something rather special is needed, given the proposal to close down by ministerial order so many organisations that have been set up by primary legislation. There is a great deal of common ground on this issue around the House.

I wanted to pick up the point that the noble Lord has made several times about the approach that my noble colleague the Leader of the House is taking to affirmative orders, possibly taking a different approach from the view that was taken by the Cunningham committee. Does the noble Lord, Lord Hunt, accept that, as ordinary affirmative orders have to be put to the House after discussion, nobody in this House—not even the Leader of the House—can prevent this House from rejecting an affirmative order if that is what it wants? If there is a division of opinion when the voices are called for, there will be a Division and, if more people vote in the Not Contents Lobby than in the Contents Lobby, the order is rejected. That cannot be prevented by anybody.

[Lord Hunt of Kings Heath]

My Lords, I am sure that that is right. I remind the noble Lord that the Companion recalls the vote taken by your Lordships’ House some years ago that reaffirms its right to defeat secondary legislation. I am sure that that is the position. However, it is important to note the views of the Leader because it is worrying that he should seek to undermine the consensus that I thought we held about the Cunningham convention.

[Lord Taylor of Holbeach]

We had this debate the other evening. If the noble Lord remembers, I corrected what I said from “convention” to “custom”. I think that that more closely fits what happens in this matter. It is for the House to decide how it deals with statutory instruments. It is not a matter of convention; it is purely a matter of custom. If the noble Lord is seeking to develop this argument, which may be connected to this amendment—I understand that it is certainly connected to the purpose of the Bill—I think that it would be important for him to bear that in mind.

[Lord Warner]

Whether it is a custom or a convention makes very little difference to the people working in these organisations. As far as they are concerned, if Schedule 1 goes through, they are for the chop. That is the end of those organisations. People will make their own dispositions. They are not going to sit around waiting for the customs and conventions—or whatever we want to call them—of this House to decide whether this House will or will not defeat an order many months later. Does the noble Lord accept that there is a problem of handling for many of the organisations in Schedule 1?

[Lord Hunt of Kings Heath]

Perhaps I may come in first and respond to the noble Lord, Lord Taylor, before he responds to my noble friend. In my remarks I made no criticism whatsoever of the noble Lord, Lord Taylor. He is quite right that he made the point about custom, but I was referring to the correspondence between the noble Lord, Lord Strathclyde, and the Merits Committee, which has been published in, I think, two reports of the Merits Committee.

Finally, having raised concerns about this Bill, we have been informed that we should be comforted by the fact that each order would be an affirmative order. I do not think that that is sufficient, nor do I think that the amendment that the noble Lord has tabled in relation to enhancing that is sufficient.

The problem is that at the moment we do not find the Government willing to hear the voices around this Chamber or to understand that at some point they will have to make some movement, as it is pretty plain that this Bill will not get through your Lordships’ House in its present form. Therefore, it would be in everyone’s interest for the Government to show willing and to sit down and listen to some of the genuine concerns that are held in the House to see whether we can find a constructive way through. The debate on the Audit Commission allows us to put those matters on the table.

[Lord Taylor of Holbeach]

I thank the noble Lord for that contribution to our discussion on this amendment. The amendment in the name of the noble Lord, Lord Warner, if not a probing amendment, is a teasing amendment. It is a new parliamentary device to tease the Government into enunciating their philosophy behind the Bill. Noble Lords would agree that some of the speeches have resembled Second Reading speeches and have gone over ground that we have discussed before. So that all noble Lords are aware of this, I reaffirm that I am listening and that I am conveying the mood of the House.

Why I must resist the amendment to include the Audit Commission in Schedule 1, which I have no hesitation in doing, and why I forgive him for not producing an impact assessment on his proposal to include it in the schedule is because the noble Lord knows very well that the time for consultation and impact assessments comes later on in the proceedings. It is not part of this legislation to produce those documents for individual bodies.

[Lord Warner]

The Government actually produced an impact assessment and that impact assessment is totally silent on the subject of costs and benefits of the proposals, even in any kind of outline form. Is the Minister saying that the Government can bring a Bill to this House seeking to abolish a very large number of bodies and not produce any numbers whatever about the costs and benefits? Is that his position?

[Lord Taylor of Holbeach]

Indeed, it is. The process that is built into the Bill allows for impact assessments to be presented at the time of change. The Bill does not propose change; it facilitates change. I tease the noble Lord. He is proposing to include a body in Schedule 1 but, quite rightly, he has not come up with an impact assessment because he is not in any position to provide that; nor would I be in a position to provide that. The time to do that is when the department makes a decision to act under the Bill. I know this is a tease on the noble Lord’s part, but it is very important to use the opportunity of this debate to get that message across.

[Lord Warner]

If the Minister looks back to the period between 2004 and 2007 or 2008, he will see that the previous Government came forward with primary legislation for changes to bodies set up by Parliament with an impact assessment which set out the cost of those changes so that Parliament could see the money implications of changes to legislation that it was being asked to make. In effect, the Minister seems to be asking for a constitutional change: to come to Parliament to take primary legislation to abolish bodies which have been set up by Parliament without giving any idea of what the costs and benefits of that decision are. That is what he seems to be saying.

21:15

[Lord Taylor of Holbeach]

I am trying to use the opportunity of this debate to reassure the noble Lord about the process that will exist following the passage of the Bill, that no action can be taken without proper consultation and impact assessments. Noble Lords know that. I have said this many times. However, I have listened to what has been said about the need for information. I appreciate that the Committee and the House would like more information on proposed changes, and I take that matter on board.

[Baroness Royall of Blaisdon]

I am sorry to delay the noble Lord once more. However, in that information, if we are to take real decisions about whether important bodies such as the Agricultural Wages Board, which we were discussing earlier, are to remain in existence, then the information that the noble Lord is very kindly going to provide us with must include an impact assessment on, for example, the costs. Otherwise, we cannot come to a clear and rational decision.

[Lord Taylor of Holbeach]

Indeed, I reassure the noble Baroness that any instrument produced under the Bill to enact any of the powers within it will contain that information. That is the position. This is not primary legislation to abolish the Agricultural Wages Board or the Audit Commission. That is not what the Bill is about; it is intended to empower the executive with the ability to bring forward secondary legislation in order to facilitate change. It is at that stage that the legislation occurs. It is very important to get that message over.

We have produced an impact assessment for the Bill. It talks about changes to particular bodies made under the orders of the Bill, and they will be produced in accordance with its existing rules and guidance on impact assessments at the appropriate time. Perhaps I may continue by addressing the amendment. After all, the noble Lord has proposed that we should include the Audit Commission in Schedule 1, and I wish to tell the Committee why I think that suggestion needs to be resisted and why there may well be a better way of dealing with the policy change which the coalition has announced in order to deal with it.

The Government intend, where appropriate, to use the power in the Public Bodies Bill to make changes to public bodies. However, the changes regarding the Audit Commission require power changes to legislation which is outside the scope of the Public Bodies Bill. Therefore we are setting up an alternative legislative vehicle. I will explain the background to that. On 13 August, the Secretary of State for Communities and Local Government announced plans to disband the Audit Commission and refocus audits on helping local people to hold local bodies to account for local spending, as well as on saving the taxpayer some £50 million a year. This figure reinforces the one given by my noble friend Lady Hanham.

The commission’s responsibility for overseeing and delivering local audits will stop, its research activities will end and its in-house audit practice will be moved to the private sector. We are considering a range of options for doing this. Councils will be free to appoint their own independent external auditors from a more competitive and open market, and there will be new audit arrangements for local health bodies. All local audits will be regulated within a statutory framework, with oversight roles for the National Audit Office and the profession. As a result, the Audit Commission’s in-house practice will be transferred out of public ownership. A range of options are being considered and evaluated for moving the audit practice into the private sector. The department is now working closely with the commission, the accountancy profession, local government and the health sector to develop the detailed design of the new systems, and to take forward, in the most effective way, the transfer of the commission’s in-house audit practice into the private sector. This work is ongoing. We are aiming for the new regime to begin to come into effect during 2012-13. That regime will require primary legislation and as such, this timetable is dependent on parliamentary time. If the noble Lord’s amendment were to succeed, it would mean that the Government could use the power in Clause 1 to abolish the Audit Commission. However, the Government would not be able to ensure that a robust statutory framework for local audit is put into place.

This is the statutory regime for the audit of local authorities and local health bodies, including foundation trusts and other NHS trusts. For example, the powers in the Public Bodies Bill would not allow the Government to provide these bodies with the powers they need to appoint their own independent external auditors. Likewise this Bill would not enable provision to be made for the arrangements through which the quality of local audit will be maintained. The Government intend to bring forward separate primary legislation, subject to parliamentary time, which deals with the disbanding of the Audit Commission, the transfer of the in-house practice into the private sector and the setting up of the new local audit regime in a comprehensive and integrated way. As such, I hope that the noble Lord will withdraw his amendment.

[Lord Warner]

My Lords, I was fascinated to hear that elegant explanation of how the Government will deal with the Audit Commission. If only I felt they would use that same elegant approach to some of the other bodies in Schedule 1, I would go home happy. I shall continue to reflect on what the noble Lord has said, and look forward to having answers to my questions, which I do not feel that I have had. In the mean time, I beg leave to withdraw the amendment.

Amendment 23 withdrawn.

Amendment 23A

Moved by

[Lord Fowler]

23A: Schedule 1, page 16, line 13, at end insert—
“BBC Trust.”

[Lord Fowler]

I think that I can bring the Committee into calmer waters by proposing something that the government Front Bench will have no difficulty whatever in accepting. The Marshalled List is littered with amendments to preserve bodies that the Government propose to abolish. I am not doing that in any way; I am adding a body that should be abolished and which would have beneficial financial consequences for the Government. I hope to have a very helpful reply from the government Front Bench but I fear an unhelpful intervention from my old pal on the Select Committee.

[Lord Maxton]

I have a lot of sympathy with the amendment but if I were a Clerk in the other place I do not think that this amendment would be in order. The trustees of the BBC and the BBC itself are not established or controlled by an Act of Parliament. Therefore, I do not see how we can have an amendment that would abolish something in an Act of Parliament that in itself was not established by an Act of Parliament. That may be a little legalistic but I wonder whether the noble Lord would like to comment on that.

[Lord Fowler]

I knew that the noble Lord would say something entirely unhelpful from past experience. I will come precisely and exactly to that point, but let me make the case in principle, with which the noble Lord is honest and experienced enough in these matters to sympathise.

Let me make it clear that this is in no way an attack on the BBC. I am a committed supporter of the BBC, as I think is the noble Lord. It provides the best news coverage both domestically and internationally of any media organisation, probably in the world. I totally support its freedom to report, including the recent “Panorama” on corruption inside FIFA. I note, when abroad, how high the corporation’s reputation is. In short, I believe that we would be mad to turn our back on the BBC or see it weakened. But one of the things we should recognise is that the BBC is currently, and has been for some time, under attack from powerful forces who would like to see it changed and weakened. There is no question about that. It is therefore crucial that the BBC has a structure which, apart from anything else, enables it to fight its corner, to put its case and to reply swiftly and with confidence to attacks when they come. My view is that this is simply not achieved by the present divided leadership of the BBC and much of that fault lies with the formation of the BBC Trust.

The BBC Trust is a recent invention. For the vast majority of the time and history of the BBC we did not have a trust and there was no need for such a body. It was set up by the last Government in the aftermath of the dispute with the BBC about its reporting of Iraq. The result has been that there have been not one board but two boards. We have had an executive board that has been headed by the director-general but with non-executive members—something pretty unusual in corporate history—and we have had the BBC Trust, which was kept deliberately separate from the BBC executive, housed in a different body and with the chairman being able to call himself the BBC chairman but only as a courtesy title. That is exactly how it is set out.

The Select Committee which examined the royal charter of the BBC, which I chaired and of which the noble Lord, Lord Maxton, was a member, opposed this change. Basically, in précis, we said that it would be much better to have one organisation—a BBC board, a chairman, non-executive directors, a chief executive and other executives—in other words, a structure just like the structure of any other major corporation in this country, with regulation carried out if necessary by Ofcom. We were not alone remotely in our opposition to the change that was being proposed at the top of the BBC. Past chairmen of the BBC such as Christopher Bland made it clear that they were opposed to it. Most significantly of all, by the end of the last Government, Ben Bradshaw, then Secretary of State for Culture, also said that he was opposed to it. So I think we can say that there is a pretty strong consensus, and an even stronger consensus in the broadcasting industry, that this is an unnecessary body and that reform and change need to take place. Perhaps I should say in parentheses that this is in no way a personal criticism of the present chairman of the trust, Sir Michael Lyons, who I know and like and have worked with entirely happily. It is not a criticism of him; it is a criticism of the divided structure. But Sir Michael is now standing down and there therefore exists the opportunity to change the structure into something more sensible. That is the point. This Bill seems to me potentially to give that opportunity.

The purpose of the Bill is to eliminate or pare down unnecessary bodies in the public sector. The BBC Trust qualifies on all counts. It adds to cost, causes delay and sometimes confusion in decision-making, and could all be done so much better than it is. Again, I think there is no real conflict on that. But so far that opportunity has not been taken. I do not detect that that is because this Government are any more enthusiastic than the last Government about the trust—any more enthusiastic than Mr Bradshaw. The concern seems to be that action would mean interfering with the royal charter. I come now precisely to the point that the noble Lord, Lord Maxton, was putting. Our view as a Select Committee was that the whole governance of the BBC should be put on a statutory basis, but this was resisted by previous Ministers on the grounds that the royal charter cemented everything in for 10 years. That, in précis, was the case that was put to us. In the past few months we have seen the licence fee frozen and the cost of the World Service added to the licence fee, and we very nearly saw the cost of licences for the over-75s added to the licence fee as well. I do not debate the merit of those proposals—I would love to do so, but I do not—but I observe that it has not proved very durable cement as far as the 10-year period is concerned.

21:30

The fact is that the royal charter, which sounds so very grand, is fiercely anti-democratic. It gives, and is intended to give, all power to the Executive. The royal charter is a straightforward deal between the Government and the BBC which at no stage comes near Parliament for a decision. We can give our views. The Select Committee gave its views and was thanked profusely. No one took any notice of them, but the Select Committee was profusely thanked for them. I think other Select Committees did the same. I am simply not persuaded that the royal charter should act as a block to change, and even less am I persuaded when I hear that one possible solution is that the trust should now appoint a new chairman. We know it is an unsatisfactory body, but the headhunters are already hunting for a successor to Sir Michael. They say the circle should be squared by giving the executive board a new non-executive chairman. If that plan goes through, we will end up not with one chairman of the BBC, but with two. That seems a pretty eccentric solution to this problem.

Although I guyed it a bit, I am very conscious of the point made by the noble Lord, Lord Maxton, and there may be other solutions. If there are, I am very happy to hear them from the Minister. What I would be unhappy about is not hearing any solution at all and being told that we are going to wait for the next five or six years, because that is a totally unsatisfactory position. I do not think it is satisfactory to go ahead and appoint a new chairman for a body that most people in broadcasting think is unsatisfactory and does not serve its purpose.

I should again emphasise that I am in no way anti-BBC; I think noble Lords may have detected that. On the contrary, I think it is fundamental for the state of the media in this country, but my view is that this divided structure does the BBC no favours whatever. It is in the interests of the BBC that we should have one board and one chairman, and that means abolishing the BBC Trust. No one seriously believes that the trust will survive another charter review in four, five or six years. No one thinks that if we are going to go ahead with a charter review, the BBC Trust will come out of it as a solution because it is virtually certain that it will not. Rather than waiting for five or six years, there is everything to be said for acting now—saving money, certainly, but above all getting clearer lines of responsibility than we have at the moment. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I declare an interest as a member of your Lordships’ Select Committee on Communications and pay tribute to the stewardship of the former chairman, the noble Lord, Lord Fowler, who has just spoken. It was interesting to listen to the initial spat between the noble Lord and another former member of the committee about whether this amendment could be permitted. In truth, the whole of his speech appeared to be about moving the BBC into Schedule 7, not Schedule 1. The attack, as it was, on the current governance arrangements of the BBC was well made and echoed what was in the Select Committee’s report a few years ago, but it is really about change, not abolition. However, I will pass on because we are in tickling and teasing mode rather than worrying too much about exactly how these things are coming out at the moment.

Today’s debate has been, for those of us who are somewhat new to the arrangements for discussing Bills, a wonderful tour d’horizon of the far reaches of our constitutional arrangements in this country. I did not know enough about agriculture, justice, the Audit Commission or various things to do with shipbuilding. I may even have heard about aircraft—or was it the other way around? I was not quite sure at the end of that discussion whether we had in fact had an answer to the amendment earlier today, but, again, I will pass on. We were only tickling there. Underneath all this, however, does the discussion not raise one or two principles? It seems to me that, although a lot of the heat and energy in this debate has been about whether we are doing it right, the elephant in the room—that terrible hackneyed phrase—is really what this says about our constitutional measures.

Every Government and every governing operation has to work out how to deliver the services that legislatures create for them. In that, we have to think about subsidiarity—the lowest level to which we can devolve the operations which are to be carried out, and make sure they are done properly. We have to give protection from undue interference from those who have set up the arrangements and freedom to those who are charged with getting on with the duties to undertake reasonable stewardship. I do not hear those principles coming through very much in the debate we have been having, but they are surely underlined in what we are saying.

The amendment to which I am speaking is really, as I said, a teasing amendment—a hypothetical situation perhaps. But the noble Lord, Lord Fowler, brought out very well, and I am sure other speakers who will join us in this debate will also say, that nobody argues against the very special place that the BBC holds in this country. It makes entertainment programmes among so many other things, so it obviously affects every aspect of our culture, and it informs and therefore changes the terms of the political debate. It is absolutely at the heart of what we believe our country is about. It is important that we find some form of super-protection, and I think the noble Lord was saying the same thing, both within the environment in which the BBC operates, but also against Ministers and even against Parliament. One could not imagine, if the BBC were to be abolished, the DCMS accepting responsibility for all the various aspects of our life that the BBC influences. That must not be right.

We could not abolish the BBC, but how do we manage it? That is the question that we have to think about. Clearly, the state has to balance the interest it has in economy, efficiency and effectiveness, and apply that to all its public bodies. I worked in a similar body, the British Film Institute, some time ago; just before I arrived, it had negotiated very hard indeed against the then Government to achieve a royal charter, which was given to the BBC about 50 years after its incorporation in 1933. We celebrated that, because it felt as if we had received the gold standard in terms of freedom from interference from Ministers and those in authority. It was illusory, obviously, because Ministers are very persuasive and good at getting around anything that could possibly smack of concern about these sorts of issues; but it was something that we ritually touched every month or two, just to reassure ourselves that we did exist, that we had that protection and that we should have had it. The BBC is in a similar position. Its charter is renewable, as it was not in the BFI’s case, but there was sufficient public interest and discussion in the renewal process to ensure that the BBC would not be affected too badly.

My concern in this amendment—and I am not entirely sure whether I am speaking in favour of it or against it, but I suppose I am tickling it—is that this is really about how one would find in a constitutional settlement, perhaps a codified constitution towards which we are surely moving, a way of expressing some of the issues that appear in our day-to-day existence, which we take for granted, such as academic freedom, freedom of speech, and the ability to switch on our television and see unmediated news and entertainment. These things have to be written in somewhere, not be dealt with simply by a framework Bill, a subsequent affirmative order or in speeches made in this House or another place. That is more important than some of the points made around other bodies here. There are one or two organisations and bodies that we would recognise as being hard-wired in our operation of this country, but I have yet to find an appropriate place within the various organisations that we currently see.

In another debate at another time, I encouraged the noble Lord, Lord Maclennan, to talk a little more about his ideas for a council of state, which might in some way take on the responsibilities of this Chamber. It may be that at some point we should think again about how we account for those senior bodies, such as the BBC, that we must have in our arrangements. I leave that thought with this House.

[Lord Maxton]

My Lords, given that I waited 40 minutes for a bus last night in the cold, I do not intend to detain the House for long tonight. I do not think that this amendment could be part of this Bill. The BBC is part of the royal charter. To get rid of the trustees, as the noble Lord, Lord Fowler, said, you would need to put the BBC on a statutory basis in an Act of Parliament. I accept the tenor of his amendment, and I supported the report when it was published in terms of not wishing to have trustees but having a different type of governance. However, my worry is that, if we get to the point where the BBC is to be established by an Act of Parliament, it would mean passing an Act of Parliament to abolish the present situation—essentially abolishing the present BBC—and then re-establishing it. In those circumstances, given what the noble Lord said about the threat that is coming to the BBC from external forces, we would put the BBC under even greater threat. That would be the whole existence of the BBC in those circumstances.

Having said that, I have a lot of sympathy with what the noble Lord has said, not just because the governance of the BBC is wrong in terms of the trustees. This is no criticism of the trustees personally, but they have failed in one of their primary responsibilities—to hold the BBC, somehow independently of the BBC, to account. They have failed to do that job properly in one particular regard. The BBC, after all, is funded entirely out of public funds, and the trustees should say to the BBC that it should be accountable to the public in the same way as is every public body funded by the taxpayer. In particular, as the noble Lord will know, I believe that the whole BBC—every person, both employee and contractor—should be subject to the Freedom of Information Act in the same way as are all other public employees. Therefore, we should know exactly what some of the people in the BBC earn, and I do not mean the big entertainment stars. I am much more interested in knowing what some journalists earn, as they attack those of us who are public servants in other ways, including attacks on MPs about their expenses. In that sense, the BBC Trust has failed in its duty to hold the BBC to account. For that reason, I would support the amendment in the name of the noble Lord, but I feel that if his amendment is carried it would put the BBC as a whole at some risk.

[Baroness Jones of Whitchurch]

My Lords, I have listened to the contributions of the noble Lord, Lord Fowler, with some interest. I certainly acknowledge his experience and his interest in the future of the BBC over the years. He described himself as a committed supporter of the BBC and I certainly endorse that. However, by raising this issue in this way, I fear that he will undermine the very cause that he at the same time is seeking to champion. I say that for a number of reasons.

There may well be the need to have a debate over the future of the BBC Trust. As the noble Lord, Lord Fowler, said, the previous Secretary of State, Ben Bradshaw, has already described the BBC Trust as not a sustainable model in the long term, a fact which we acknowledge. But this is not the time for such a review. The truth is that over the last few months the BBC has been battered by the challenges to its role. There have been, as has been acknowledged, powerful forces seeking to undermine its role. It was forced in an unseemly timescale to agree a financial package that might have been more robust, more defensible and more justifiable if a longer time had been taken over those negotiations. In its wake, questions have been left over the future funding of organisations like the World Service and S4C which might not have been intended at the outset of those negotiations.

21:45

More importantly, that whole period over the last few months has left a question mark in the minds of the great British public over the future of the BBC. It is worth acknowledging in this debate that whatever we think of the BBC and the way that it is run, it is still a much loved institution in this country. The general public would like to see that we are standing up and defending that organisation, because it is still held in very high regard.

There has been a bit of a debate about whether or not this is a teasing amendment. Like others, I do not know enough about the constitution to know whether the noble Lord, Lord Fowler, is serious or not. If he is, why create further uncertainty at this time, particularly as the current Secretary of State at the DCMS has said that major changes are not appropriate before the review of the royal charter in 2016? If that is the current state of play of the Government, then why create further uncertainty and further question marks over the BBC’s future? Also, this is not the appropriate vehicle for such a debate. If there is to be a review, we need to find an alternative venue and structure for a measured, thoughtful and timely debate that will allow us to look at the future governance in the round. This will enable us to ensure that when we come to a solution about future governance, it is more sustainable than the structure that we have in place at the moment.

My colleague the shadow Secretary of State for the DCMS has asked for an inquiry by the Culture, Media and Sport Select Committee. Again, the noble Lord, Lord Fowler, will be aware of the power of those sorts of Select Committees. There is a role for these kinds of bodies to give the sort of scrutiny that these issues will allow—to take them away from the cut and thrust of the Chamber and work through something that will be sustainable in the longer term.

There has been a lot of criticism of this Bill already in terms of its framework, style and lack of depth, and therefore the opportunity that it gives for people to put their pet projects on to the list, perhaps without due scrutiny. I was very interested in the comments made by my noble friend Lord Wills that there is a need not only to look at the governance of the BBC but to look at some of the other institutions that we have in the round. Again, I argue that this Bill is not the means by which we should do that. Yes, let us have a debate about the future governance of the BBC. Yes, let us find the right opportunity and the right time to do it. If we can find the right means for that, there might well be more consensus going forward than this amendment, in this form and in this Bill, will allow. I hope that the noble Lord will consider withdrawing it on that basis.

[Lord Taylor of Holbeach]

My Lords, I thank my noble friend, who I hold in high regard, for moving this amendment. However, I have to disappoint him by saying, like the noble Baroness, Lady Jones of Whitchurch, that this is not the time nor the place. Now is not the time, and this Bill is not the place, to debate the proposals that he has presented in this amendment. Perhaps the contribution from the noble Lord, Lord Maxton, explained that for the Committee.

The BBC Trust is established through the royal charter, the current charter being in place until the end of 2016. The Government have no intention of bringing the charter to an end before its designated end date of 2016. There are certain benefits in granting a 10-year charter and remaining committed to its stated duration. For example, a charter supports the independence of the BBC from government and Parliament, to which the Government are committed in the coalition programme. A 10-year charter provides greater certainty and stability for the BBC in the way that it operates, including its governance arrangements, and gives the BBC an ability to plan for the future while allowing for a fundamental review at expiry. Ending the charter before its due date would undermine these important principles and lose the benefits of granting a 10-year charter. As noble Lords are aware, the Government have agreed with the BBC that the NAO can have full access to the BBC’s accounts in order to make it more transparent and accountable to Parliament. The Government do not believe that there is a case for any greater accountability to Parliament. As the noble Lord, Lord Stevenson of Balmacara, said in a very thoughtful speech—I was grateful for his contribution—the BBC must be able to hold Parliament and parliamentarians to account. Increasing the BBC’s accountability to Parliament would counter the principle of safeguarding its editorial independence.

The future of the trust as a model of governance will be fully assessed at the time of the next charter review. I am sure that my noble friend Lord Fowler will be in a position to advise on that assessment, and I imagine that he will do so robustly. As my noble friend is aware, the chair of the trust is due to leave the post at the end of his current term and a new chair will be appointed from next May. The BBC Trust offers a direct line of accountability to TV licence payers. It holds the executive to account. This separation has a purpose. As I have said, when the next charter expires, all issues relating to the BBC will be discussed.

When the current charter was created, extensive consultation took place. The public made it clear that the BBC should not be made more accountable to Parliament.

[Lord Fowler]

What does the Minister base that on?

[Lord Taylor of Holbeach]

As I have said previously in my response, the public said in the consultation that they did not want the BBC to be beholden to Parliament because they felt that its independence and ability to criticise Parliament and government would be impeded.

Furthermore, the BBC is not a statutory body, as the noble Lord, Lord Maxton, pointed out. This Bill is designed to cater for bodies where changes need legislation in order to be effective. This is not the position in relation to the trust. Therefore, as with all other non-statutory bodies, it is not appropriate to include it in the Bill.

Despite disappointing my noble friend—I am sure that I have not surprised him—I would ask him to withdraw his amendment.

[Lord Fowler]

My Lords, as the Minister said, it is a disappointing reply. Frankly, I think that we are going backwards, because the previous Secretary of State in the previous Administration made a darn sight more radical assessment of the royal charter than the Minister has. He is now repeating all the things that we were told about four or five years ago. It is exactly the same script as the Department for Culture issued at the time. This stuff about the public having been asked is complete rubbish; I really do think that the department might at least take that out of its script if nothing else. I am sorry to get heated about this, but it is fairly dismal.

I thank all noble Lords for their contributions. It has been a useful debate. What the noble Lord, Lord Stevenson, said was extremely interesting. I do not think that the royal charter is a gold standard. It has not worked for the BBC. It is frankly just a deal, as I said, between the Secretary of State on the one side and the chairman of the BBC on the other. We can set up Select Committees to kingdom come, but some of us have to take notice of those Select Committees, and the record of that has not been great. When we come to Select Committees, I would point out to the noble Baroness, Lady Jones, that the Select Committee in the House of Lords and the Select Committee in the House of Commons have both said that the BBC should be placed upon a statutory basis. There is no doubt about that. The noble Lord, Lord Maxton, raised an interesting and important point about the statutory basis and the dangers that it could have and I do not wish to decry that. I also remember him arguing passionately in the Select Committee that the only democratic representatives, as far as the licence fee was concerned, were Members of Parliament.

The noble Baroness said that the BBC has been battered. She might consider that one reason it has been battered is that it has no strong chairman, no strong board and no one to respond for it. She asked, “why now? We cannot have a debate now.” I would point out that I have had a request for a debate on the Order Paper for the past 12 months. There are not that many opportunities for debates in this House. The crucial question, the crucial issue is this. Sir Michael Lyons, the chairman of the BBC Trust, is resigning. It gives us an opportunity to rethink.

Of course I will withdraw this amendment, but I warn the House that when both the government and opposition Front Benches agree on a policy, then the Back Benches need to think very carefully indeed. With that in mind I beg leave to withdraw the amendment.

Amendment 23A withdrawn.

House resumed.

House adjourned at 9.58 pm.