Budget Responsibility and National Audit Bill [HL]

Baroness Browning Excerpts

Monday 8th November 2010 Lords Chamber

[Baroness Browning]

My Lords, I support both parts of the Bill, but there are issues which I hope my noble friend on the Front Bench will be able to answer in Committee. To put the Office for Budgetary Responsibility on to a statutory footing is undoubtedly a good thing, but as we have heard, the office’s remit is ambitious to say the least. It is therefore important not only that it develops and maintains a reputation for trust, reliability and transparency, but also that the structure which is put in place resolves from the beginning some of the difficulties that have unfortunately arisen while it has been on a non-statutory footing.

I want to ask first about Clause 9 and the right to information given to the Office for Budgetary Responsibility. The Minister mentioned in his opening remarks that there is to be a memorandum of understanding between the OBR and the Treasury. I assume that such a memorandum will extend to other government departments such as the Department for Work and Pensions, which would almost certainly be another department where there will need to be a similar arrangement. Further, as my noble friend Lady Noakes pointed out, there is also the question of the Bank of England. There is a clear interface and how it is to be managed is very important.

More particularly, the word “reasonable” is writ large throughout Clause 9. That is a good thing. I am not a lawyer, but I am aware that lawyers love the word “reasonable” because it is open to many interpretations and is one on which many decisions are made. Can my noble friend advise the House today whether, in light of the reasonableness I have just mentioned and the detail of the subsections of this clause, the memorandum of understanding will be made available to noble Lords before we start our detailed scrutiny of this clause in Committee? It is always helpful when passing legislation, if something as important as this is going to come up, that we can anticipate that it is going to be available. It will be of interest not only to noble Lords but, I am sure, to another place. I am sure, too, that members of the Treasury Select Committee would also have an interest. I ask this because it seems to me that the future reputation and integrity of the OBR will depend on its ability to access and use information.

On that last point, Clause 9(4) quite properly states:

“This section is subject to any enactment or rule of law which operates to prohibit or restrict the disclosure of information or the giving of any assistance or explanation”.

I think we can all understand why the provision is there, but has my noble friend thought through how the OBR will deal with freedom of information requests when, for example, it is in receipt of information it has obtained from other government departments in order to carry out its own duties and fulfil its responsibilities? How will this interface with other government departments affect the OBR’s ability to respond to FOI requests before it publishes information and data?

I turn now to the second part of the Bill. Having for many years had the privilege of serving, along with a colleague on the Labour Benches of your Lordships’ House, on the Public Accounts Committee, I have a particular interest in the move to introduce corporate governance into the National Audit Office. I hold the National Audit Office in the highest regard. Its work is some of the finest that we produce in this country and it is an exemplar internationally. It was always a great privilege to be able to study its reports, although they sometimes seemed to come thick and fast.

The Tiner report in 2008 has already been mentioned. It was given a warm response by the Public Accounts Commission. By introducing this measure into this Bill, rather than picking up clauses from a former Bill which did not proceed, have the Government benchmarked this section against the Tiner report and, in particular, against the Public Accounts Commission’s response to the Tiner report? The commission made some important points and set out three particular issues that it felt should be looked at in terms of how corporate governance was introduced. The commission said:

“The C&AG must have the authority to form completely independent judgements about the audits and value for money and other studies conducted by the NAO and the presentation of these to Parliament”.

It went on to point out:

“The NAO must maintain systems of governance and internal controls consistent with best practice, applied in ways which do not fetter its independence from Government, and to report publicly on these systems in its Annual Report”.

The Public Accounts Commission pointed out that those two objectives are not quite compatible. I hope that my noble friend has struck the right balance in bringing forward these measures in the Bill. As the commission said in its third point, it is clear that:

“The NAO must conduct its work according to relevant auditing and professional standards and prevailing best practice”.

It is somewhat ironic that the NAO, which must be like Caesar's wife in the way that it conducts its own affairs, has for so long been without the protection of what I believe is put into the corporate governance of this legislation and which will be very helpful to it.

My noble friend Lady Noakes mentioned the board that would be introduced. The Public Accounts Commission, in its response to the Tiner report, expressed some concerns. It said:

“We have considered carefully the extent to which the C&AG should be constrained by the Board as regards the overall strategy of the NAO and control over resources. In our view it is important that the Board should not be able to prevent the C&AG conducting an audit which he or she considered necessary or oblige the C&AG to undertake an audit which he or she did not regard as of sufficient priority”.

I totally support that and hope that my noble friend will reassure me about the independence of the C&AG. It is the case that the NAO submits to the Public Accounts Committee lists of reports that it is engaged in. Those are debated in another place. It is at the discretion of the Public Accounts Committee which reports it uses for evidence sessions. It is also an important part of that flexibility and the responsibility of the C&AG that there have been times when the Public Accounts Committee itself has proposed to the NAO reports that it believes should be brought forward. For the independence of the Public Accounts Committee, it is important that it can collectively go to the Comptroller and Auditor-General and ask through him or her that the NAO should carry out certain studies that are deemed to be particularly important.

I support this legislation, but I hope my noble friend will reassure me that these matters will be addressed when we get to Committee stage and that he will bring forward more information on the sharing of information between particularly the Treasury—but also other government departments—and the Office for Budget Responsibility.