Local Audit and Accountability Bill [HL]

Earl Attlee Excerpts

Tuesday 21st January 2014 Lords Chamber

“(2A) References in this Act to provision made under it include provision made under Part 42 of the Companies Act 2006 as it has effect by virtue of Schedule 5.”

[Earl Attlee (Con)]

I shall speak also to Amendments 47, 49, 50, 51, 52, 54, 56, 57 and 58, which relate to the eligibility and regulation of auditors in the new local audit framework.

Commons Amendments 35, 47, 49, 54, 57 and 58 are all minor and technical tidying-up amendments. Amendment 35 would ensure that references throughout the Bill to subordinate legislation made under it will cover Part 42 of the Companies Act 2006, as applied by Schedule 5 to the Bill. This means that provisions on eligibility and regulation will be included whenever the Bill refers to subordinate legislation. Amendment 47 would insert a new subsection that will apply explicitly to Sections 1288, 1289, 1290 and 1292 of Part 42 of the Companies Act 2006 in relation to local audit. These sections set out how regulations and orders under the Companies Act are to be made.

Amendment 49 corrects a drafting error in order to mirror accurately the obligations under Schedule 10 to the Companies Act 2006. Amendment 54 makes a minor change to ensure that the definition of local auditor used in the Companies Act 2006, as modified and applied to local audit, refers to the correct clause in this Bill. Amendments 57 and 58 ensure that a body to which the Secretary of State’s functions are delegated under Schedule 5—which we expect to be the Financial Reporting Council—can be audited by either a statutory auditor or a local auditor.

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[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of this quite large group of amendments. I believe they cover quite minor and technical matters. Generally, we have no issues to raise on them. When I was first going through the amendments, I did wonder about Amendments 51 and 52, which replace the power of the Secretary of State to make regulations with provisions in the Bill. As the noble Earl explained, this is to do with which existing qualifications will be recognised. It is unusual for Governments to take something from regulations and put it in a Bill, but I understand the rationale.

Amendment 56 clarifies that no aptitude test is required if an individual is providing services on a temporary or occasional basis, and it is accepted that this is to be judged by reference to duration, frequency, regularity and continuity. The Minister will be relieved to know that I do not intend to press further detailed explanations of how those terms might be interpreted. We have no further points to raise on this group of amendments.

[Earl Attlee]

My Lords, I thank the noble Lord for his support for these amendments.

Motion on Amendment 35 agreed.

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Moved by

[Earl Attlee]

That this House do agree with the Commons in their Amendment 41.

41: Clause 47, page 31, line 40, leave out subsection (2)

[Earl Attlee]

My Lords, I beg to move that this House do agree with the Commons in their Amendment 41, which is a privilege amendment.

Motion on Amendment 41 agreed.

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Motion on Amendment 43

[Earl Attlee]

Moved by

That this House do agree with the Commons in their Amendment 43.

43: Schedule 2, page 37, line 36, leave out paragraphs (a) and (b) and insert “that is wholly in England”

[Earl Attlee]

My Lords, Amendment 43 removes internal drainage boards which are partly in England and partly in Wales from the local audit provisions in the Bill. There are two such internal drainage boards: Powysland and Lower Wye. Both are mainly in Wales but currently fall under the Audit Commission regime. Last November, the Welsh Government announced their intention to transfer the functions of the two cross-border IDBs, along with the functions of one IDB that is wholly in Wales, to Natural Resources Wales, and to bring them under the Welsh audit system. The Welsh Government subsequently supported a legislative consent Motion to make audit arrangements for these two bodies under this Bill as a stopgap measure until the new governance arrangements are in place. However, the legislative consent Motion was not passed by the National Assembly for Wales. In line with the devolution settlement, the amendment therefore removes these two bodies from Schedule 2. Schedule 2 lists the relevant authorities that would fall under the new audit regime.

It is the Welsh Government’s intention that the new governance arrangements will be in place by the time the Audit Commission is abolished, by 2015, and preparations for this are in hand. The Welsh Government are also working with Defra to agree a way forward with regard to the future management of the areas in England covered by the two cross-border internal drainage boards. Both cross-border bodies will continue to fall under the Audit Commission regime until then.

Welsh Ministers have agreed that we retain the power in Clause 2 as a backstop power to add cross-border bodies back into Schedule 2 by regulations at a later date, should the transfer of functions take longer than expected. Regulations made under this power will be subject to consultation and the affirmative procedure. They would also require consent from the National Assembly for Wales. With this explanation, I hope noble Lords will accept this amendment. I beg to move.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of this amendment. I accept that it is consequent upon decisions of the Welsh Government and their intention to transfer the functions of the two cross-border bodies to Natural Resources Wales and to bring them under the Welsh audit system. I understand also that it is the intention that the new governance arrangements will be in place by the time the Audit Commission closes, but that a backstop has been retained should that not actually have occurred. We are content with this amendment and happy to support it.

[Earl Attlee]

My Lords, I am grateful for the noble Lord’s support.

Motion on Amendment 43 agreed.

Moved by

[Earl Attlee]

That this House do agree with the Commons in their Amendments 44 to 73.

44: Schedule 3, page 38, line 21, at end insert—
“(4) A local auditor appointed to audit the accounts of a parish meeting must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”