Local Audit and Accountability Bill [HL]

Lord Tope Excerpts

Wednesday 22nd May 2013 Lords Chamber

[Lord Tope]

My Lords, as always, I must begin by declaring my interest as a London borough councillor and, again as always, I thank the Minister for the careful and considerate way in which she explained the main provisions of the Bill. I am also pleased that my noble friend Lord Shipley will again be working with me on the Bill, bringing with him his many years of experience, some of them as leader of Newcastle City Council. In particular, I welcome the return to local government business of my noble friend Lord Palmer of Childs Hill, who I think has been insulted by the suggestion that audit is anything approaching dull. My noble friend is one of the relatively few chartered accountants I know of who actually understands public sector accountancy and, indeed, has much experience as chair of a local authority audit committee—a post to which, I believe, he was unanimously re-elected only yesterday evening.

The Audit Commission has been a very long time going. Few of us regret its demise and I am pleased to hear that the noble Lord, Lord McKenzie, is not campaigning for its resurrection. Much of what it did, particularly in its early days, was good and helpful but, as the Minister said, its mission grew and grew. Few of us in local government will regret the passing of the assessment and inspection regime. By the end, it was expensive and, frankly, oppressive and rewarded most those who knew best how to play the game.

As the Minister will know but perhaps many others here do not, the Congress of the Council of Europe is carrying out one of its local democracy audits this year to assess how well the UK conforms to its Charter of Local Self-Government. I am pleased to say that the ending of this regime is judged to allow the UK to meet the requirements of Article 8.2 of the charter for the first time since the UK signed it in 1997. That is an important step forward that I did not wish to pas unnoticed in your Lordships’ House.

We must, however, be careful that we do not throw the baby out with the bath water, and that we keep the best and get rid of the rest. In particular, we must address concerns of CIPFA, the Chartered Institute of Public Finance and Accountancy. It feels that the Bill presents an opportunity to embed the wider scope of public audit. Given that this point was well made by CIPFA and others in the consultation, will the Minister explain why the Government have clearly decided not to do so?

I also share the concern of CIPFA, the LGA and others about the proposed arrangements for audit, the relationship with a council’s audit committee, many of which are chaired by a member of the opposition, and the appointment of auditors. My noble friend Lord Palmer will no doubt speak more about this with considerable personal knowledge and we shall certainly need to examine it in detail in Grand Committee. Let me say at this stage that I really do wonder why the Government believe it is either necessary or desirable, or indeed possible, to have independent auditor panels. In my long experience of local government, I have yet to meet anyone who has been clamouring to be a member of an independent auditor panel. That is not usually the way in which public engagement is sought by the public.

There is also much to be said for national procurement of auditors, and I am pleased that the Minister has made clear that local authorities will certainly be able to procure collectively. The LGA is arguing that national procurement should at least be an option. That is one of the measures that will no doubt be examined in Committee.

The proposed role of the National Audit Office will also be explored in more detail and I hope that it will prove useful. Certainly the requirement to consult with relevant parties on any studies is very welcome, but there is concern about mission creep, based at least in part on experience with the Audit Commission, to which the Minister has already referred, which started well but grew and grew. We will not wish that to happen to the National Audit Office. With these proposals it should not happen, and I am sure that we will explore ways to prevent even the possibility. For instance, the LGA is suggesting a statutory limit for the number of studies each year. Given the financial regime in which we are working, I am sure that that will be desirable. Perhaps the Minister will say a little more in her summing up about the role of the National Audit Office, which essentially reports to Parliament, as distinct from local government, and how the parliamentary exercise will be carried out.

Without doubt, the most controversial part of this Bill is Clause 38, giving statutory backing to the existing publicity code. As the noble Lord, Lord McKenzie said, most if not all in local government support the publicity code as a voluntary code. However, there is widespread concern and perhaps some misunderstanding about why it is intended to back the code with statutory provisions. As usual, we ask the Government for objective evidence that the problem is so widespread and so serious that this action, which is hardly consistent with localism, is necessary and why existing powers are insufficient to deal with the very few well publicised cases of abuse, such as in Tower Hamlets or, arguably, Lambeth. I am looking forward to the no doubt robust defence by the noble Lord, Lord Beecham, of the activities in those boroughs and perhaps one or two other authorities—certainly not the majority. All we have had from the Government is rather silly and misleading statements from the Secretary of State about “town hall Pravdas”. That might in itself be a breach of the publicity code.

The overwhelming majority of local authority magazines or newspapers fall well within the scope of the publicity code and are not in the least controversial. In my experience, in every survey of public opinion that I have known, the public say they want more information, not less, and all of us would say that they have a right to that information. Local authority publications that comply with the publicity code are one way, and arguably still the best way, to provide it for the great majority of the public who do not regularly search their council’s website, or who have neither the ability nor the wish to do so at all.

It has been argued that local authority newspapers or magazines are a threat to local newspapers, but there is no evidence to support that. A quarterly magazine with little or no advertising is hardly a threat to a weekly newspaper. Indeed, the opposite is often the case and there are far more places where the practical partnership between the local council and the independent local press brings mutual benefit to each than places where anyone thinks there is a problem.

Many regret that the Bill does not remove the requirement to publish statutory notices in the local press. The LGA states that this requirement alone costs local authorities £26 million a year, yet no one would seriously argue that it is either the best or most cost-effective way of communicating information to the public, or even to those with a particular professional interest in the subject matter. I understand that the Government are carrying out a review of this requirement, coincidental to but separate from the Bill. Will the Minister tell us more about this review and whether its conclusions will be reached in time for them to be included before the Bill is enacted, possibly early next year? I am sure that we will spend much time on this part of the Bill, which has caused great alarm, yet I am sure that the Minister will be able to reassure us today that its proposals will make no difference at all to what the great majority of local authorities do now.

Finally, we come to the issue of extending council tax referendums to include levies and precepts from other bodies. As I have said many times in your Lordships’ House, I am strongly opposed to council tax referendums, which are really just the latest manifestation of capping by central government. It has always seemed to be a fundamental democratic principle that the role of a local elected councillor is to balance the needs of the local community with the cost to that community of meeting those needs—and to be properly and effectively accountable to the local community for the decisions taken in doing so. Council tax capping by whatever name or disguise runs contrary to that democratic principle.

It follows therefore that I would be much happier if the Bill abolished council tax referendums altogether, rather than extending their scope; but given that this is not going to happen, I can certainly understand the logic of this proposal and we will examine its effects in greater detail in Committee. The noble Lord, Lord McKenzie, has already asked about the retrospective nature of this provision. By the time the Bill is enacted, we will be almost completely through the current financial year and attention will be entirely focused on the coming financial year, 2014-15. I hope that when the Minister replies, she will be able to reassure us and say something helpful about the retrospective nature of this, and whether we will be seriously looking in the early part of the next financial year at decisions legitimately taken about the current financial year.

I understand that we are currently offered the prospect of 24 hours in Grand Committee to better understand the Bill and its implications. I am sure this will prepare us well to make it an even better Bill on Report. I look forward to working again with the usual team on all sides of the House to do just that.