The Future of EU Enlargement
Lord Wallace of Saltaire Excerpts(11 years, 4 months ago)
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Lord Boswell of Aynho
This Motion invites the House to take note of the report of your Lordships’ European Union Committee, which I have the privilege of chairing, on the subject of the future of European Union enlargement. I am conscious that the comparatively late start to these proceedings may have led to some attenuation of the speakers list and, possibly, compression of the debate. Nevertheless, I am pleased that this debate is so timely, given the immediate accession of Croatia as the 28th member of the European Union; the first accession to the rotating presidency by Lithuania since its accession in 2004; and the imminence of the possibility of discussion about future accession and enlargement at the upcoming European Council later this week. This is a very timely occasion.
The European Union has a long history of enlargement. Our country was part of the first and what is still the largest wave of enlargement when we joined what was then known as the European Community at the same time as the Irish Republic and Denmark in 1973. Since then, there has been a steady stream of countries seeking to join the European Union. We are now about to embark on our seventh enlargement with Croatia. There are currently five candidate countries and three potential candidate countries, so the enlargement agenda shows no sign of halting.
Our report considered the process by which aspirant countries moved towards readiness for membership. In doing so, we revisited many of the questions asked in our previous 2006 report, The Further Enlargement of the EU: Threat or Opportunity?. With the benefit of the passage of time and the benefit of hindsight, we reflected on lessons learnt from the 2004 and 2007 enlargements.
I also express my gratitude to all the witnesses who gave evidence to the inquiry, particularly those from countries which have recently joined and those which are on track to join the Union now. It almost goes without saying that we drew immensely on the expertise of our staff in drawing up this report.
Enlargement is formally a reactive process. It is for individual countries to apply to become member states. However, the Union has always had an enlargement agenda, because enlargement is an integral lever for development and has been accepted as such both in the founding and successive treaties. The current agenda has two main drivers: the first, safeguarding stability and security within wider Europe; and the second, achieving economic prosperity and growth. I believe those two objectives to be intimately connected. Historically, enlargement has had a transformative power. I would evidence that by the political changes seen in recent years in what are now comparatively older member states such as Spain, Portugal and Greece. Furthermore, we should remember that the single market is of enormous benefit to all members—new ones and existing ones, too.
The euro area crisis and questions about the role and governance of the Union have led to enlargement slipping down the political agenda. It has been suggested that some countries, such as Germany and France, may have lost sight of its importance. The United Kingdom Government are to be commended for their commitment to enlargement, and we share the view of many of our witnesses that the momentum in this vital work must not be lost.
The Copenhagen criteria of the EU set out three key standards that a candidate country must meet to be eligible for membership: political, economic and the ability to take on the obligations of membership. Although these were devised in anticipation of central and eastern European enlargement, we were persuaded that they still represent the right starting points for any future enlargements. In acknowledging this, we were critical of the Union’s failure to apply the criteria rigorously in the cases of Romania and Bulgaria, which meant that on joining they were not at a point where they could meet the full obligations of membership. This, in turn, led to the creation of somewhat unsatisfactory post-accession instruments. The Copenhagen criteria are helpful and should not be weakened.
The road to accession for candidate countries is, rightly, not just the warm political one; it also involves significant legal, technical and administrative work. The first step of the official enlargement process is an application for membership. After granting official candidate status, the European Council must take a unanimous decision to open formal membership negotiations. A candidate country then conducts negotiations with Ministers and ambassadors of the Union Governments regarding the European Union’s body of secondary legislation—the so-called acquis communautaire. There are 35 chapters of the acquis, such as justice, freedom and security, judiciary and fundamental rights, and freedom of movement for workers. Necessary reforms must be implemented and demonstrated, and we support the rigorous approach to this that has recently been shown. The requirements made of countries have continued to grow and, while this is justified, the Union must take care to ensure that the burden of work it places on candidate countries is not insurmountable—criteria should be strictly necessary, taken in good faith, and should be consistently applied across the board.
I do not wish to dwell on events in any particular country, but I would say that experience shows that we have far greater influence over our near neighbours and candidate countries when it is clear that together, as a Union, we are serious about enlargement and serious about conditionality—that is, that real reforms are followed by concrete progress in the accession process and that there are also consequences when there is any regression. Yesterday, at a European conference in Dublin, we heard from Valentin Inzko, the high representative for Bosnia-Herzegovina, about the importance of developing in that country a political culture of tolerance and compromise. With his great experience, the high representative was very clear about the importance of that conditionality.
The Instrument for Pre-Accession Assistance seeks to provide financial support for aspirant countries’ reforms. We were disappointed to note the many instances of failure to convert funds from commitments to actual spending, and so we recommended that the next IPA should focus more on the strategic aims of the enlargement policy and the needs of candidate countries. Furthermore, a more rigorous approach must be taken to any backsliding over reform, with the Union being willing to slow or halt the enlargement process and turn off the funding tap. If I may express a personal view slightly beyond the remit of our report, I am increasingly attracted to the option of offering western Balkan countries in particular an opportunity to work together on what might be termed self-help projects to which an appropriate degree of challenge money could be made available by the Commission, with the countries themselves being the generators for this process.
The Union must learn some tough lessons regarding the resolution of issues between countries. The entry of Cyprus in 2004 without reconciliation or conclusion between its Greek and Turkish populations has led to a continuing entrenched dispute. That has diminished the Union’s leverage in encouraging both sides to reach a settlement. It is distressing and it is difficult to see the best way to handle disputes such as this. On the one hand, using Cyprus as an example again, resolving the dispute was rightly not a condition of joining the Union, otherwise Turkey would simply have gained a veto over its membership. On the other hand, without a resolution having been found, Turkey’s accession process has itself become more challenging. The Union must strive to find a way to keep disputes between countries from slowing down or halting the enlargement process altogether, while also encouraging practical solutions. There are a number of very substantial disputes that must be resolved before the accession of the current aspirant countries. I welcome the plan for normalisation of relations between Serbia and Kosovo, which has been agreed under the auspices of the High Representative and Member of this House, the noble Baroness, Lady Ashton of Upholland. This has opened the way for both Serbia and Kosovo to move forward along the road to eventual membership.
I have already touched on the political and economic advantages of enlargement. In spite of the economic crisis, the new member states from 2004 and 2007 have seen rapid economic growth after joining. Similarly, compliance with the requirements of accession means that political and, indeed, business landscapes are often changed for the better, with a healthier balance of power between domestic parties and an increased role for opposition parties being fairly common features in new member states.
The benefits of enlargement are also two-way between old and new member states: the Union is better equipped to deal with its neighbours, and existing member states see economic benefits from the expansion of the number of consumers in the single market. United Kingdom exports to central and eastern European countries almost trebled between 2001 and 2011, reaching close to £14 billion in 2011. I am sure other Members will want to speak in greater detail about the risks to certain policy areas represented by enlargement but I shall, for now, limit myself to suggesting that it should be possible to overcome such issues and they should not be seen to deter, let alone to act as a bar, to any future enlargement.
Debates about enlargement and the future of the Union more generally, often tend to focus on a perception that free movement of labour might prove a risk to domestic labour markets. We heard compelling evidence that this was not the case and that migrant workers had often filled gaps in the labour markets of older member states that were otherwise unfilled by nationals. However, it would be remiss not to acknowledge that there have been some negative impacts from the free movement of persons. For example, the relocation of businesses to exploit cheaper labour costs may have impacted on member states economically, and there is undoubtedly a risk of non-workers travelling to receive social security benefits. However, the free movement of workers is a treaty right and an important element of the European Union’s internal market. Member states need to communicate generally the many advantages to their populations and to work collectively to address any genuine concerns that remain within the existing policy frameworks and within those broad objectives.
Turning to the future of the enlargement process, it is right that the Union should have a rigorous process for the admission of candidate countries, not least to ensure that necessary reforms are introduced and entrenched. The eastern partnership countries must undertake significant reforms before they can be considered for candidacy, but equally their desire to be considered should not be forgotten in discussions about future enlargement. I hope that the eastern partnership summit to be held in Lithuania in November is helpful in this respect. We recognise that there is some reticence regarding future enlargement, and we recommend, frankly, that the Commission and national Governments together do a better job of explaining its benefits and warning of the costs of non-enlargement. It is not a cost-free exercise to remain with the status quo.
In conclusion, the Union has a long history of supporting enlargement. One could almost argue that it is within the DNA of the Union to promote enlargement. That is the process that we in the UK have long been associated with and from which we have benefited. Lessons must be learnt from recent experiences, but the current economic crisis and debates about the future role of the EU should not distract us from this important enlargement agenda. The future economic and political stability of Europe in many ways depends on it and it is an intimate part of that process. I beg to move.
Lord Wallace of Saltaire
I simply remind noble Lords that the advisory speaking time for this debate is eight minutes.
Local Audit and Accountability Bill [HL]
Lord Wallace of Saltaire Excerpts(11 years, 4 months ago)
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Lord Palmer of Childs Hill
Let me give an example. If one is looking into housing fraud, one does not, as a local authority, look only at the housing department and benefits claims. I know that local authorities such as mine look towards the UK Border Agency, with which they have a great relationship. When they look into possible fraud, administration error and all the other things that the noble Lord spoke about, the powers already exist. I am asking whether they need to be enshrined in the Bill.
Lord Wallace of Saltaire
My Lords, for these purposes, I should remind noble Lords that I am the spokesman in the Lords and the Minister for the Cabinet Office and have spent long hours in this Room discussing data sharing and data matching during consideration of the Electoral Registration and Administration Act, when many similar issues came up. I must say that I had not appreciated how extensive data sharing was within the Audit Commission and local government. Central government has been approaching this matter with a rather greater degree of caution and hesitation. Perhaps I should phone the Guardian and tell it just what the Audit Commission has been doing in this regard. I am sure that that newspaper would like to make it a front-page spread.
I am very conscious that this whole issue of data matching and data sharing in the public and private sectors, given that they overlap, will occupy us all over the next three or four years. I have no doubt that at some stage, under whichever Government we have in two or three years’ time, we will be discussing some major new legislation in this area because the data revolution is moving so fast.
The possibilities for data matching and data sharing are increasing rapidly. I am conscious from my discussions around this issue within the Cabinet Office and with outside bodies, including the Information Commissioner’s Office, that national patient records are among the most sensitive issues for citizens as regards information sharing. As noble Lords will know, whether one can share limited information without allowing access to full information is one of the great issues in the area of data matching. Therefore, when one talks about data-matching success in local government—and I recognise, as we all do, that the detection of fraud and error is an extremely valuable and useful activity—we nevertheless all have to be aware that issues of privacy are very strong and powerful, and are protected by various lobbies in this country. We must therefore proceed with caution.
Discussions are well advanced on the issue of an appropriate home and we hope to be able to announce by Report stage that the matter will finally have been agreed. However, there are a number of final issues about accountability and management that still have to be settled within Whitehall.
“Omit section 22(1) (Audit Commission).”
Lord Wallace of Saltaire
My Lords, in moving Amendment 18ZZA, which applies to paragraph 8 of Schedule 10, I shall also speak to Amendments 20, 21, 22 and 23, which make a range of minor and technical amendments to Schedule 12. These amendments remove redundant references to the Audit Commission and make clarifications to related provisions in existing legislation.
Amendment 18ZZA applies to paragraph 8 of Schedule 10. This is a consequential amendment to the Local Government Act 1999 to remove a reference to the Audit Commission. This has the effect of ensuring that the Audit Commission is no longer specified as having a role in relation to best value inspections.
Amendment 20 changes the definition of “local auditor” in the Social Security Administration Act 1992. This amends paragraph 23 of Schedule 12 and ensures that “local auditor” is now defined as within the meaning of the Local Audit and Accountability Act 2013—as it will be after Royal Assent—rather than simply within the context of any specific part of that Act.
Amendment 21 makes a consequential amendment to Section 125(2)(b) of the Greater London Authority Act 1999. This applies to paragraph 34 of Schedule 12 and has the effect of removing the provision allowing the Audit Commission to certify information provided by a functional body to the Mayor of London.
Amendments 22 and 23 make minor and consequential amendments to Section 212 of the Local Government and Public Involvement in Health Act 2007. These amend paragraph 66 of Schedule 12, which makes consequential amendments to that Act, and seek to clarify the Government’s intent that only the UK Secretary of State can make provision about entities connected with cross-border local authorities. These amendments also tighten the definition of “local authority” in this context.
These are minor and technical amendments that remove redundant references to the Audit Commission and make clarifications to related provisions in existing legislation. I beg to move.
Lord Beecham
My Lords, the noble Earl has made a compelling case. We seem to be moving from the high politics of Greater Manchester and West Yorkshire to Clochmerle or Eatanswill. There is nevertheless a real issue here, of which I was certainly unaware. The ridiculous numbers involved to call a poll, the non-binding nature of the result and the financial cost all seem to add up to a pretty lethal cocktail which ought to be addressed. I hope that the Minister will give the noble Earl an indication that the Government will look at this and seek, either on the basis of his amendment or in some other way, to deal with what looks like a highly anomalous situation in which a tiny handful of people—even fewer than voted in police commissioner elections—can wreak havoc in a local community.
Lord Wallace of Saltaire
My Lords, I was unaware of the parish poll dimension. I say from the outset that, although we are very much on the outer edges of the scope of the Bill, the noble Earl’s points are clearly of importance for the modernisation of parish polls, which has rather fallen through the net. The questions of the threshold for triggering the poll and what a legitimate subject for a poll should be are issues to which we would be happy to give further consideration. We would happy to meet the noble Earl to discuss this further. I am rapidly turning over in my mind the question of how one deals with that. Even though this is a relatively limited area, it might be the sort of thing that is appropriate for a Private Member’s Bill in a future Session, which might be given a fair wind. It is a relatively self-contained set of issues.
We are aware of the issue of whether one could institute postal or proxy votes. Certainly, we should be lengthening the time during which a vote could be cast and modifying regulations about the threshold for triggering a parish poll. All those issues really need to be considered.
I understand that the provisions of the regulations limit the content of polls to matters which have been considered by the parish meeting, which means that the person chairing a parish meeting could rule out of order any attempt to discuss matters which are not parish affairs and so prevent parish polls on, for example, EU referendums, or whatever it may be. However, we are all conscious that different parishes and local communities are often dominated by different small groups. This is one of the problems we have with getting back to community self-government. I am often conscious that I am extremely lucky to live in the community of Saltaire, which has far too many people who are highly educated. We are overstuffed with activists, and there are other areas around Bradford which are not so blessed with local activists willing to turn up to lengthy committee meetings in the evenings and take part in local community activities. With that assurance and that offer to talk further on this small but important issue, I hope that the noble Lord will feel able to withdraw his amendment.
The Earl of Lytton
My Lords, it was not my intention to press the amendment, particularly as we are in Grand Committee, but I am extremely grateful to the Minister for his comments and for his offer at any rate to look into the matter further and have a further discussion. It is a narrow but important issue, and it will be even more important if what I might call the fruits of the localism agenda in terms of expanding the number of organisations that operate at this level—perhaps not in name but effectively as parish and town councils—are set to increase. I hope that it will become the model of preference at community level. The matter is not without ongoing consequence and I will certainly forward to the Minister some of my paperwork. That will do for this evening and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, the amendment calls for a report to Parliament on the impact of the new audit regime and for this to be made within three years of the passing of the Act.
Let me acknowledge at the start the undertaking given by the Government on a post-implementation review but its objectives appear to be somewhat narrowly based and do not address some of the fundamental issues. The Bill provides for arrangements that are significantly different from the current regime whereby the Audit Commission effectively acts as regulator, commissioner and provider of audit. As the pre-legislative scrutiny committee report sets out, the new regime is more complex and certainly more fragmented. The regulation of local audit will transfer to the Financial Reporting Council, professional accounting bodies and the National Audit Office. Commissioning of local audit will transfer to local public bodies, and the provision of local audit will go to private sector firms. Research and value for money will be picked up by the NAO to a limited extent and by the sector’s own self-improvement. The National Fraud Initiative’s ultimate destination has yet to be determined, as we have discussed, and the co-ordination of grant certification remains a little vague.
Although some of the bases have been covered, potential gaps remain. Some of the bodies that are subject to the new regime are accountable to government departments other than CLG. How is this to be co-ordinated across government? Audited bodies themselves will have to liaise with government departments, the NAO and auditors because the commission will not be on hand to act as an intermediary. The role of accounting officers within departments is fundamental to the management and control of resources. They are currently able to draw on information on the outcome of audits, implementation of major initiatives and value for money outcomes analysed by the Audit Commission. How is this all to happen in the future? Unless the Minister can tell us otherwise, there appears to be no organisation that will be publishing the outputs of more than £200 billion of public expenditure.
Clearly, quality of audits is paramount. The role of the FRC as overall regulator and its specific role in providing quality assurance to just a few “major audits” has been the cause of some concern. We hear the government assurances on this but consider that Parliament is entitled to a more formal report on how this is working in practice. Can the Minister confirm that the reports of the recognised supervisory bodies monitoring auditor performance outside major audits will be in the public domain?
There is also the need for oversight on how this is working for all “relevant authorities”, including health bodies and smaller authorities. Many of the provisions in the Bill are not applicable to health service bodies because equivalent provision is made in other legislation. We have not thus far sought to compare or contrast these provisions with those applicable to other relevant authorities. Contemplating consolidation may give the Ministers a nightmare at the moment but the Bill does not give us a sense of how joined up this is all going to be in practice. A report to Parliament would cover this. I beg to move.
Lord Wallace of Saltaire
My Lords, the Government support the intention behind this amendment. Post-implementation review is acknowledged good practice. It will provide the assurances that Parliament and the general public will want that the new audit arrangements are achieving the outcomes that we expect, and it will identify how policies might be improved if they prove to be less effective than we anticipate. For these reasons, the Government have already committed to undertake such a review. This is set out in the impact assessment, at Section K.
However, I am not persuaded that the timeframe envisaged in the amendment is the right one. The commitment in the impact assessment is to a review within three to five years of Royal Assent. This is in line with the Government’s general commitment to post-legislative review. The reason for preferring a slightly longer period in the case of this legislation relates to the implementation of local auditor appointment.
Assuming that this Act is passed in early 2014, the amendment would require a report in early 2017. As noble Lords are aware, the earliest date at which local auditor appointment would begin is 2017. It would seem to make sense to include some assessment of the move to local appointment in the proposed review. This would enable a robust assessment of audit quality and auditor independence in the new regime, and of the impact of local appointment on the audit supply market.
Nevertheless, government departments, through the accounting officer, are accountable to Parliament annually for the money voted to them. Where this money is distributed to others, accounting officers need to be able to demonstrate that appropriate accountability arrangements are in place, usually through an accountability systems statement. The external audit of local bodies is one of the evidence sources that will help to demonstrate whether the system is working effectively. We will ensure that the necessary assurance can be provided to accounting officers and to Parliament.
The provisions for the audit regime of health bodies have been designed to provide at least the same level of assurance to the Department of Health accounting officer and Parliament on the use of resources by the health sector as current arrangements. All the health bodies covered by this Bill are included in the annual accounts of the Department of Health. The department reviews the outcome of the audits and annual governance statements of all health bodies and the NAO also uses these to inform its audit of the departmental accounts.
Finally, I would like to say a few words of reassurance about the scope of the proposed post-implementation review. The impact assessment explains that the review will look at how well the core objectives of the local audit reforms are being met. I remind noble Lords that these objectives are: to deliver greater localism, decentralisation and transparency; to maintain competitive audit fees; and to uphold high standards of auditing.
There does not appear to be anything in the list of specific requirements in the amendment which is obviously out of scope. The impact assessment makes a commitment that we will work up the detail of the review with representatives from local government and other interested parties. I hope that these reassurances will satisfy the noble Lord and he will be willing to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the noble Lord for his response. Of course, I will withdraw the amendment.
As I said in moving the amendment, I was aware of the proposal to have a post-implementation review. I accept the point about the timeframe. If it was done within three years, we would not have had any—or certainly many—local appointments of auditors so would not be able to judge the ramifications.
I do not know whether the noble Lord can help me on a further point, or write to me on it. In considering the Bill, I do not think that we have done enough work on how the regime for health bodies and other relevant bodies fits together. They are all defined as being relevant authorities. However, a whole raft of provisions appear to apply to relevant authorities other than health bodies. We may not have an overall view of how that fits together but one would hope that any review of how the measure will work in practice would pick up what the inconsistencies and consistencies of the regimes are and what lessons can be learnt from one stream which could benefit the other. That aspect appears to have received less attention than many other aspects of the Bill. However, I accept the undertaking that there will be a post-implementation review based on consultation with relevant bodies. I accept the point about a three to five-year timescale rather than within three years. That seems to me entirely reasonable. I do not know whether the noble Lord can say anything further on the health bodies point.
Lord Wallace of Saltaire
I take the point about health bodies. This clearly is an important part of the arrangement. We, of course, intend to include health service bodies in the post-implementation review. If there are other matters about the health bodies that the noble Lord would like to discuss between Committee and Report, I am very happy to do so. We recognise that this is an important part of the whole shift.
Lord McKenzie of Luton
I welcome that and would like to take up that opportunity. In the mean time, I beg leave to withdraw the amendment.
“(1) Section 210A (extraordinary report: local authorities) is amended as follows.
(2) In subsection (1), for the words from “the Audit Commission” to the end substitute “the regulator may require the local authority to allow its accounts, so far as they relate to the provision of social housing, to be audited by a local auditor appointed by the regulator.”
(3) After subsection (1) insert—
“(1A) The regulator may not appoint a local auditor to audit the accounts of a local authority if that person—
(a) is the person (or one of the persons) appointed under or by virtue of the Local Audit and Accountability Act 2013 to audit the authority’s accounts, or(b) was the person (or one of the persons) who carried out the most recent completed audit of the authority’s accounts under or by virtue of that Act.“(1B) Sections 19(1), (2), (5) and (6), 21 and 22 of the Local Audit and Accountability Act 2013 (local auditors’ general duties and right to documents etc.) apply in relation to an audit under this section as they apply in relation to an audit of the local authority under or by virtue of that Act.
(1C) On completion of the audit under this section, the local auditor must report to the regulator about such matters and in such form as the regulator determines.”
(4) Omit subsections (2) and (3).
(5) In subsection (4) for “Audit Commission’s costs of preparing the report” substitute “costs of the audit (including the local auditor’s remuneration)”.
(6) For subsection (5) substitute—
“(5) In this section—
“accounts” has the meaning given by section 4 of the Local Audit and Accountability Act 2013;“local auditor” means a person who is eligible for appointment under or by virtue of the Local Audit and Accountability Act 2013 as an auditor of the local authority’s accounts.”(7) In the heading, for “report” substitute “audit”.
In section 249(1) (management transfer) after “section 210” insert “or 210A”.”
Lord Wallace of Saltaire
Amendment 23A would add new provisions within Schedule 12. The purpose of this amendment is to include local authority social housing providers within the Homes and Communities Agency’s existing powers to require a separate audit report into social housing accounts, once the Audit Commission has been abolished.
Currently, Section 210 of the Housing and Regeneration Act 2008 gives the Homes and Communities Agency a power to order an extraordinary audit as part of an inquiry under Section 206 of that Act in respect of a private registered provider of social housing where it has serious concerns that a housing provider has mismanaged its affairs. The agency can require the registered provider to allow its accounts and balance sheet to be audited by a qualified auditor appointed by the regulator.
Section 210A applies this regime to local authority housing providers by placing a duty on the Audit Commission, if asked by the regulator, to provide a report on the local authority’s accounts, so far as they relate to the authority’s provision of social housing. Amendment 23A ensures that local authority social housing accounts continue—upon closure of the Audit Commission—to be subject to examination as part of a Section 206 inquiry by enabling the Homes and Communities Agency to appoint an auditor which is on the register held by the recognised supervisory body to undertake an extraordinary audit. I therefore beg to move this amendment.
“Charities Act 2011 (c. 25)99A The Charities Act 2011 is amended as follows.
99B (1) Section 149 (audit or examination of English NHS charity accounts) is amended as follows.
(2) In subsection (2) for “a person appointed by the Audit Commission” substitute “a person who—
(a) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006,(b) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2013), or(c) is a member of a body for the time being specified in regulations under section 154 and is under the rules of that body eligible for appointment as auditor of the charity.”(3) In subsection (3)—
(a) for “the Audit Commission” (where it first occurs) substitute “the charity trustees”,(b) in paragraph (a) for “a person appointed by the Audit Commission” substitute “a person who is within subsection (2)(a), (b) or (c)”, and(c) in paragraph (b) for “a person so appointed” substitute “a person who is qualified to be an independent examiner”. (4) After subsection (3) insert—
“(3A) For the purposes of subsection (3)(b), a person is qualified to be an independent examiner if (and only if)—
(a) the person is independent,(b) the charity trustees reasonably believe that the person has the requisite ability and practical experience to carry out a competent examination of the accounts, and(c) the person—(i) falls within a description of person for the time being included in the list in section 145(3), or(ii) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2013).”(5) Omit subsection (4).
(6) For subsection (5) substitute—
“(5) The Commission may—
(a) give guidance to charity trustees of an English NHS charity in connection with the selection of a person for appointment as an independent examiner;(b) give such directions as it thinks appropriate with respect to the carrying out of an examination in pursuance of subsection (3)(b);and any such guidance or directions may either be of general application or apply to a particular charity only.”(7) Omit subsection (8).
99C (1) Section 151 (audit of accounts of larger groups) is amended as follows.
(2) In subsection (4)(b), for “a person appointed by the Audit Commission” substitute “a person, appointed by the charity trustees of the parent charity, who is within section 149(2)(a), (b) or (c)”.
(3) In subsection (6)—
(a) for “Subsections (4) and (6) of section 149 apply” substitute “Section 149(6) applies”, and(b) for “they apply” substitute “it applies”. 99D (1) Section 152 (examination of accounts an option for smaller groups) is amended as follows.
(2) In subsection (6)—
(a) for the words from “the Audit Commission” (where it first occurs) to “so appointed” substitute “the charity trustees of the parent charity be audited by a person, appointed by those trustees, who is within section 149(2)(a), (b) or (c); or examined by a person, appointed by those trustees, who is qualified to be an independent examiner”,(b) for “(4) to (6)” substitute “(3A), (5) and (6)”, and(c) after “section 149(3)” insert “; except that in subsection (3A)(b) of that section the reference to “the charity trustees” is to be read as a reference to “the charity trustees of the parent charity”.”99E In section 154(1) (regulations relating to audits and examinations) after paragraph (a) insert—
“(aa) specifying one or more bodies for the purposes of section 149(2)(c);”.”
Lord Wallace of Saltaire
My Lords, as Cabinet Office spokesman in the Lords with some responsibility for charities, this is another amendment on which I shall speak. This is, indeed, about health service charities.
Amendment 24 makes changes to the Charities Act 2011 in respect of English NHS charities as a result of the abolition of the Audit Commission. Currently, the auditors of English NHS charities are appointed by the Audit Commission, so this amendment ensures that arrangements are in place for the audit of English NHS charities’ accounts after its abolition.
The trustees of English NHS charities will be able to appoint a person who is eligible to act as an auditor under the Companies Act 2006, this Bill or regulations under the Charities Act 2011. The amendment allows smaller English NHS charities, with income of between £25,000 and £500,000 in the year in question, to opt for an examination of their accounts as an alternative to audit, which is intended to minimise costs of producing accounts to the charities. This is consistent with the way smaller non-NHS charities are treated in the Charities Act 2011.
The criteria for who may undertake such examinations are set out in the amendment. An examiner of an English NHS charity’s accounts must be independent and the charity’s trustees must reasonably believe that the person has the requisite ability and experience to carry out a competent examination of the accounts. The examiner of an English NHS charity’s accounts must also be a member of a professional body as set out in Section 145(3) of the Charities Act 2011 if the gross income of the English NHS charity is between £250,000 and £500,000 a year, or be eligible under the Local Audit and Accountability Bill, once enacted.
The amendment enables the Charity Commission to give guidance to NHS charity trustees on the selection of an independent examiner and directions as to how an examination is to be carried out. The amendment also applies the same provisions to the group accounts of a parent NHS charity as have been set out for individual NHS charities. I beg to move.
Lord McKenzie of Luton
I have only one question for the noble Lord which concerns his reference to an independent examiner and a person who is independent. Can he remind us which definition of “independent” we are dealing with here?
Lord Wallace of Saltaire
I think we are referring back to the definition as in the Charities Act 2011. Since we have batted forward and back on the question of what exactly “independent” means in this respect, I may need to write to the noble Lord just to confirm the exact definition being used here.
Local Audit and Accountability Bill [HL]
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Lord Wallace of Saltaire
My Lords, this amendment removes an unnecessary provision from paragraph 16 which is a supplement to paragraph 15 of Schedule 5. Paragraph 15 substitutes Section 1248 of the Companies Act 2006, with which I am sure noble Lords are all familiar. It enables the Secretary of State to direct a relevant authority to retain an auditor to carry out a second audit in certain circumstances.
Paragraph 16 substitutes Section 1249 of the Companies Act 2006 and inserts supplementary provisions about second audits. Subsection (3) states that a direction given to retain a second auditor may be enforced by injunction, which exactly replicates the wording in Section 1249 of the Companies Act. However, given that all public authorities, unlike companies, are subject to judicial review, we now wish to remove subsection (3) which refers to the use of an injunction; this is clearly not necessary. Should a relevant authority fail to comply with the direction relating to a second audit, an action could be brought for judicial review. This is currently the way in which local public bodies are brought to account. This is a minor and technical amendment that removes an unnecessary provision. I beg to move.
Lord McKenzie of Luton
I thank the noble Lord, Lord Wallace of Saltaire, for the explanation of this amendment, and I have no problem with it. My question was about what alternative the Government had in mind by deleting this enforcement by injunction. The Minister dealt with that; it is by judicial review. As to being familiar with the Companies Act 2006, I have a great affection for it; it was the first piece of legislation I ever worked on. I spent days carrying the bag of the noble Lord, Lord Sainsbury, around committee rooms on it, although do not ask me what is in it. I support this amendment.
Lord McKenzie of Luton
My Lords, this is another quick one, I expect. This amendment relates to an offence under Clause 22. Clause 21 provides for an auditor’s right to documentation and information. Clause 22 makes it an offence without reasonable excuse for a person to obstruct the process or to fail to comply with any requirement of a local auditor. A person guilty of an offence can be subject to a fine on summary conviction. A local auditor can recover reasonable expenses in connection with proceedings alleged to have been committed by certain persons from the relevant authority. Those persons include, for example, a member or officer of the relevant authority. The amendment seeks to makes certain that the right to recovery runs, albeit that the person committing the offence is no longer a member or officer of the authority. This raises the issue of when an offence might have been committed when it includes, for example, continuing failure to provide information or explanations by somebody who has ceased to be a member or officer and perhaps put themselves in that position deliberately. This ties the position back to Clause 21(8)(f), which brings such individuals within the scope of those from whom the auditor can seek information. We do not want anyone to escape by jumping ship or, indeed, for the recovery of costs to be precluded in those circumstances. I beg to move.
Lord Wallace of Saltaire
My Lords, Clause 21 gives auditors a right to access documents and information that they consider necessary for them to exercise their functions under this Bill. Clause 22, as the noble Lord has just explained, provides that a person who obstructs the auditors’ rights under Clause 21, without reasonable excuse, commits an offence. Clause 22 enables the auditors to recover their expenses from relevant authorities in connection with offences committed by members or officers of the authority.
This amendment enables me to highlight two improvements we have made to the Bill since we published it in draft. First, we have included former members and officers of a relevant authority within the duty to provide information and explanation as required by the auditor. Secondly, we have increased the provisions supporting the auditors’ recovery of their costs. Auditors will be able to recover reasonable costs from the authority being audited for their time. We expect that the contracts between the auditor and relevant authority will also enable this, but to remove doubt, the Bill includes specific provisions to enable the auditors to recover costs or expenses for specified functions.
As I have set out, Clause 22 enables the auditors to recover reasonable expenses incurred from the authority as a result of any offence committed by a member or officer of the authority or a person within a connected entity of that authority.
This amendment would extend the provision set out in this clause to enable auditors also to recover expenses regarding offences committed by former members or officers of an authority from the relevant authority. This is a matter to which we gave some thought when we were strengthening the provisions supporting the auditor to recover costs and expenses incurred in undertaking its functions. We concluded that there are some circumstances under which it would not be right for a relevant authority to be required to fund these costs automatically; for example, where a person was a member or officer at the time to which the information or explanation relates but commits the offence of obstructing or not complying with the auditor after they have left the position. Rather than legislating to provide for such rare situations, we consider that it would be preferable for the relevant authority and auditor to agree via their contracts how the auditor’s costs and expenses would be covered in such an unusual situation. I hope my explanation allows this amendment to be withdrawn.
Lord McKenzie of Luton
I am grateful to the noble Lord. I think his explanation confirms what I thought was an issue about somebody who was involved and who had committed an offence but subsequently left the organisation. In those circumstances, if I understand the explanation, that precludes the recovery of the auditor’s reasonable expenses. Did I understand that correctly?
Lord Wallace of Saltaire
My understanding is that it means that the recovery of the reasonable costs does not automatically fall to the authority. If the person who had left the employment of the authority was unreasonably obstructing the provision of the information—refusing to give it—there are circumstances in which the reasonable costs might indeed fall on him or her; that would be a matter to be agreed in the contract between the auditor and the authority.
Lord McKenzie of Luton
I am grateful for that. I missed that part of the explanation originally. If we are not saying that the costs are not going to be recovered, if it is not the audited body, it is going to be the individual. I am grateful for that explanation, and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
I speak briefly in support of my noble friend’s amendment concerning freedom of information. He has opened up a very important area of discussion. My understanding—as he said—is that the Audit Commission, as a public authority, is subject to freedom of information but that those private sector firms appointed to undertake local public audits are not. The purpose of the amendment is to put them in a position where they would be subject to freedom of information. My noble friend made a good case for this.
As I understand it, there was a consultation on that in 2011 and the Audit Commission’s response was that it was sensible for auditors to be brought within the Freedom of Information Act, adding that it would be necessary to make it clear that freedom of information requirements applied only to information held in support of the functions of local public auditors. My noble friend made a good case.
In relation to Amendment 17, I am not quite clear about the extent to which my noble friend wishes this to proceed. It talks about the audit documents from private companies to which the local authority has contracted services. It is sometimes, possibly frequently, the case that it is not just one entity that is providing services. There is a whole range of sub-contractors in the chain and I am not sure quite how it would work in those circumstances. However, I believe that my noble friend has raised a very important point and, like him, I look forward to the Minister’s reply.
Lord Wallace of Saltaire
My Lords, I recognise the importance of this transparency issue. I suppose that I should start by declaring an interest as someone who has received a number of parking tickets from Wandsworth Council. It strikes me as odd that I have never received any parking tickets from Bradford Council. London councils must be sharper on the draw on this, and of course they use private contractors rather more than do councils in Yorkshire and, for all I know, councils in Newcastle.
There was considerable consultation on this issue, and I regret to tell the noble Lord that one thing that came back most strongly from it was a fear that this sort of provision would increase audit fees.
Amendment 17 seeks to give auditors a right of access to the audit documents of companies with which local authorities have entered into contracts and a duty to publish those documents. Following consultation, we believe that the Bill provides sufficient powers for local auditors to access all documents and information that they need in order to undertake the audit and that they have powers to publish those documents, and that therefore the amendment is not needed.
Clause 21 includes a broad power that enables auditors to access all documents and information that relate to the relevant authority which the auditor thinks are necessary to support him or her in undertaking the audit. These rights apply not only to documents and information held by the authority, its members and staff but to documents and information held by other persons—including the authority’s contractors—that the auditor thinks are necessary to undertake his or her statutory duties in relation to the audit of the relevant authority. Clause 22 makes it an offence to obstruct the auditor’s power to obtain these documents and information or to fail to comply with the duty. These provisions are very similar to those under the existing Audit Commission Act regime, which have not proved to be lacking.
In terms of publication of documents, the auditor is able to refer to information and documents from private companies in audit reports where these are appropriate to the audit of the local authority. In addition, the Government’s code of recommended practice for local authorities on data transparency encourages local authorities to publish all expenditure over £500, as well as copies of contracts and tenders. All councils are publishing spend above £500 and many provide contracts information. In late 2012, we consulted on updating the code and making it mandatory through regulations, and we will publish a government response later this summer.
Amendment 18A would amend the Freedom of Information Act so that auditors appointed by local authorities are defined as public authorities and are subject to the provisions under that Act. Auditors appointed by the Audit Commission are not currently included within the remit of the FOI Act. When we originally consulted on the future of local audit framework in spring 2011, we asked whether the future regime should bring local auditors into the Freedom of Information Act. After considering the broad range of responses to the consultation, the Government concluded that there was no compelling case to bring the auditors’ public office functions within the remit of the FOI Act.
There are two key reasons for that. First, we believe that doing so would add little to the existing provisions within the Freedom of Information Act and this Bill. Local authorities are already covered by the Freedom of Information Act, and therefore these requests could be directed at the local authority. Secondly, all respondents to the question—I stress “the respondents”, not the Government—said that they thought that bringing auditors into the Freedom of Information Act would increase audit fees.
In addition, the Bill already supports local transparency and local electorate access to the auditor in a number of ways. For example, the Bill retains all the existing rights for electors to inspect the statement of accounts and audit documents, and to raise questions and objections with the local auditor. Schedule 11 to the Bill enables an auditor to release material in response to this, unless it could prejudice the effective performance of the auditor’s functions.
I hope that that provides assurances that the new regime will support openness and transparency at all stages of the audit process. Auditors will have access to all documents and information that they consider relevant to the audit, local authorities will publish information relating to expenditure and contracts with private firms and local people will be able to inspect the accounts and raise objections with these assurances.
Having debated many previous amendments on other Bills with the noble Lord, I suspect he may nevertheless say that he is not entirely satisfied with all this. If he would like to talk to the Government between Committee and Report, we would be happy to do so, but I hope that, with those assurances, he will be prepared, at this stage, to withdraw his amendment.
Lord McKenzie of Luton
Before my noble friend withdraws his amendment, will the Minister clarify something? I think part of his answer was that all the transparency that is needed is provided for in the Bill and the regime that we are discussing. In that case, why is there concern about additional audit fees? What extra transparency is being forgone to keep those audit fees down if they would rise if my noble friend’s amendment is pursued?
Lord Wallace of Saltaire
I take the noble Lord’s cynicism about it always being a question of costs, although costs are not entirely a negligible issue at the moment for any of us. We had better pursue through further discussions the particular examples that the noble Lord raised and the question of how far into the internal workings of private contractors one needs to go to be sure that one is getting the value for money and service that one really requires.
Lord Wills
I am very grateful. My noble friend reinforces the point about the pathetic nature of the Government in accepting these arguments about increased audit fees. They really need not be there. These auditors are getting access to a very lucrative new stream of work and they should pay the price to the public in making information available.
Lord Beecham
Before my noble friend withdraws the amendment, what is the present position when a contract is let by the local authority for a particular service in terms of the audit? What is the relationship of the district auditor to a council-commissioned contract in relation to its own service? Does he have access and is he subject to the same disclosure requirements that my noble friend seeks as if the council itself were directly providing that service?
Lord Wallace of Saltaire
My clear understanding is that auditors do have access to the relevant accounts of the contractor, but that would probably differ a great deal from one contract to another. I therefore need to make sure that in saying that they have access I am talking about all the cases rather than some. It may well be that a number of contracts differ one from the other.
Lord Wills
Again, I am grateful to my noble friend, who has made an important point. We will return to these issues in private discussion and I hope that I can persuade the Government that they need to be a little more robust in responding to the consultations. They often are, but not in this particular case. In the mean time, I beg leave to withdraw the amendment
Social Mobility
Lord Wallace of Saltaire Excerpts(11 years, 4 months ago)
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Lord Wallace of Saltaire
My Lords, we have had a really good Moses Room debate. As I have experienced on several occasions, it is something like an academic seminar, from which one learns a good deal. I thank the noble Baroness, Lady Tyler, partly because I should have been reading a lot of this stuff before and she made me read it. We have had a very interesting and informative debate in which I have to say that the speech of the noble Baroness, Lady Sherlock, was one of the most interesting and inspiring. I hope that we will now go away and start arguing about this more actively in our parties and groups to take it forward.
I have a speech with a whole range of statistics on what the Government are doing about social mobility, but I want to concentrate on character and resilience, which is the bit that has not been as emphasised in dealing with social mobility as it should have been.
I was originally a bit of a cynic about the big society, the national citizen service and community organisers, until I went to see a national citizen service scheme in Bradford last summer and spent a long afternoon with children from what I know to be some of the roughest schools in Bradford, when I was asked to teach them how to give a speech. It was fascinating, because I realised that I was dealing with people who thought that they could not do things, that they could never stand up in front of others and perform. I managed to persuade three of them to do so. I began to see that that course gives you that much more confidence to believe that you can do things which before you thought that you could not. I am now a strong proponent of national citizen service. We are expanding its coverage this summer. Of course, it is only one of the many elements that we need, but it is giving children at different levels more opportunity to realise: “I can do that”. It teaches them how to volunteer and to take part in community activities. That is exactly the sort of thing that helps.
Similarly with the community organisers’ scheme. In Yorkshire, I see the problems of social mobility most of all in the big, almost entirely white estates in Bradford and Leeds—and occasionally in Sheffield and Hull. There is very high unemployment, a lot of intergenerational unemployment and a deep sense of grievance that the local authority does not look after them, but they do not actually look after themselves very much. There is a high incidence of Staffordshire bull terriers. There is a sense that nothing much is being done for them. The community organisers’ scheme tries to get them back into the habit of thinking that they could do some things for themselves with themselves, the local authority and local voluntary organisations. That is how you start to rebuild a community, because, as the right reverend Prelate said, the collapse of local community is part of the problem here. Your nonconformist church, your established church or whatever gave you a lot of those skills as you grew up within it. Sunday schools were not just about learning the number of books in the Old Testament, there were a lot of other things as well. That part of what the Government are doing is useful.
I declare an interest. For the past seven years, I have been chair of a musical charity. I was bounced into it by some young men who have been choristers at Westminster Abbey a long time after me, who decided that they were going to set up not only a choir but something that would bring music into primary schools. Two weeks ago, as they took over a church in the City of London, the right reverend Prelate the Bishop of London and I watched the Hackney Youth Children’s Choir performing. Evidently from their clothing, they were children from deprived backgrounds, standing up and performing in front of us and really enjoying themselves and therefore getting a sense that they can do things.
I believe that music in schools, as well as sport and getting people out learning to volunteer, is a very important part of building self-confidence. One of the reasons why the Parliament Choir is so good is that music teaches you two of the basic political skills: one, standing up in front of other people; and two, projecting your voice. Of course, that suggests that not everything we do on character and resilience needs to be done by government, let alone central government. A lot of this can be done by volunteers, by non-governmental organisations and by government—locally and centrally—and civil society working together.
A number of people have talked about early years and talking to small children. I have another personal interest in that I watch my two-and-a-half year-old grandson and am deeply conscious that the amount you talk to a small child comes right back at you over the months, and that those whose parents do not talk to them are a long way behind by the time they are three. In spite of the attacks in the Daily Mail, I am strongly in favour of local authorities and voluntary organisations providing parenting class incentives, explaining to young parents in particular what they can do for their children before they go to school, such as breakfast clubs and children’s centres. My figures suggest that actually the reduction in the number of children’s centres has been extremely small in the past two or three years. There has been a certain amount of merging and so on. We all recognise that this is a very important part of the mix of things that we need to do.
Moving on to what one does in the later years, I find it very depressing as I go around Yorkshire and ask people in pubs, restaurants and hotels why they employ so many Poles, Slovaks, Lithuanians and so on, and the answer is almost always, “Because they turn up for work on time, they do not take sick leave, they dress smartly and they want to get on”. Unfortunately, the children from these big inner-city estates tend to take a lot of sickies and often do not really want to work the hours that they would have to. We should be motivating them to think, “Actually, this is quite fun” and that living in Upper Wharfedale or wherever it may be for a bit might be also quite fun. It is not just a matter of forcing people to work and showing them what they can do but showing them that they can follow their own careers and that work cheers you up.
The noble Lord, Lord Knight, asked how we get people out of poverty. The best way to get people out of poverty is to get them into work—I think we all agree—and that is partly where character and resilience are needed to motivate all these people who are growing up, sitting around and complaining. I am conscious that I am caricaturing a little—but not very much. I have a vivid memory of an afternoon in Armley jail in Leeds talking to the “popos”—the persistent and prolific offenders—and thinking that these people actually had the talent to do things if they had only been directed and encouraged in the right way.
A number of other points have been made about state schools and public schools. The question of public benefit is clearly one that we need to revisit. I know that a number of public schools are sharing their excellent facilities with local state schools. That needs to be encouraged. It is something that they should be doing on their own anyway. They can certainly help with volunteering and getting out in local communities, and that is something that we should be taking a good deal further.
Universities and access were mentioned. Again, I have an interest to declare. When I taught at the University of Oxford, every year I used to take children from sixth forms in Wandsworth around Oxford. It was a disillusioning experience, I have to say. I did it because my children were at state schools in Wandsworth. The culture clash between many of the working-class children from Wandsworth and the admissions tutors at Oxford colleges was sometimes far too wide to be able to bridge. It is excellent that the Sutton Trust and others are doing a great deal with summer schools and access programmes. Partly re-educating the admissions tutors is a road we need to go down.
Apprenticeships help a great deal, particularly as we move towards keeping people in school until 17 and 18 and discouraging people from dropping out of education altogether. Giving people practical and directed work experience with apprenticeships is highly desirable. The number of apprenticeships has been rising over the past two years and we wish to take it a good deal further. Volunteering of all sorts—the Girl Guides, the Woodcraft Folk and all those other things—used to provide opportunities for this. We have to build that back in. As has also been said, this is all part of citizenship. It is not an accident that those big, working-class estates only provide a 15% turnout at local elections and about 25% at general elections. They feel completely disengaged, so we need to rebuild the local community for all these activities.
We have heard about a wider range of issues from my noble friend Lady Miller, the noble Baroness, Lady Sherlock, and the right reverend Prelate the Bishop of Derby on a more equal society and moral climate, which go wider than we can go on this occasion. We recognise that part of what went wrong over the past 25 years has been that we have become a much more atomised society, which valued wealth for its own sake and in which inequality has risen. Part of the argument that we all need to be making about taxation, personal reward and what companies and banks pay is that a society which is too unequal becomes a society which is very difficult to hold together. One loses a sense of common interest and community, locally, regionally and nationally. The banking commission hints at that in one or two places, but does not quite get sufficiently explicit on it; that sounds to me like a good role for the Church of England to take further in its contribution to the public debate.
Having made those comments as a wind-up to this seminar, I thank again my noble friend Lady Tyler for introducing this subject and for encouraging me to read a number of things which her All-Party Parliamentary Group has produced; I very much look forward to seeing what it produces from now on. I know that the Deputy Prime Minister and others are actively interested in the work of this group. We recognise that social mobility and inclusion are extremely complex areas. There is no single factor but a whole host of factors that come into play. I hope that we are all committed to building a more socially inclusive and coherent society.
Local Audit and Accountability Bill [HL]
Lord Wallace of Saltaire Excerpts(11 years, 4 months ago)
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Lord McKenzie of Luton
My Lords, this is a very straightforward amendment, which is intended to ensure that the Secretary of State will consult before producing regulations under paragraph 4 of Schedule 3. Perhaps the Minister will take the opportunity to share with us what the broad content of the regulations will cover, or say when we might expect to receive a draft. I beg to move.
Lord Wallace of Saltaire
Here I am acting as the Minister, jumping to my fifth subject today, although I am happy to do so. As has just been explained, Amendment 14ZD would require the Secretary of State to consult relevant authorities and representatives of local government before exercising powers as set out in Schedule 3 to make further provision about the appointment of an auditor to certain bodies.
We are sympathetic to the concerns behind the amendment, which we understand are to ensure that bodies are suitably consulted before further provision is made on auditor appointment. Perhaps it would be helpful if I clarify the scope and purpose of this power, which I understand to be the purpose of this probing amendment. The power is limited to bodies not covered by paragraphs 1 to 3 of Schedule 3. It therefore does not apply to local authorities, police bodies, or the GLA.
Schedule 3 already makes provision in relation to these bodies to ensure that the appointment process reflects their specific governance arrangements. In the case of local authorities, it prevents the delegation of the appointment decision below full council. This ensures that the appointment of the auditor is made in a transparent manner and with proper accountability. The power at paragraph 4 is simply intended to allow the Secretary of State to make similar minor provisions for other bodies covered by the Bill to support accountability. This might mean preventing the delegation of the appointment decision for other bodies as set out, as the noble Lord will know, in Schedule 2.
As set out in the statement of intent that the Government laid earlier this week, we will work with delivery partners and interested parties to consider what specific provisions are needed. With these reassurances on the scope and purpose of the clause, and on our intent to consult affected bodies, I hope that this provides sufficient additional information for the noble Lord to be able to withdraw his amendment.
Lord McKenzie of Luton
I am grateful to the noble Lord for that response. I certainly intend to withdraw the amendment. However, perhaps he could be a little more specific about the other bodies covered by this. I am not sure that I fully grasped his point about particular bodies. Does he have an example?
Lord Wallace of Saltaire
Schedule 2 sets out a range of other bodies. The minor bodies that are set out range from waste management boards to drainage boards to parish councils and to others but do not include the major local authorities or the GLA et cetera. Schedule 4 relates to Schedule 2. I hope that is clear.
Lord McKenzie of Luton
I am grateful for that further exemplary clarification. I have not had a chance to read the statement of intent in detail yet, which came on Monday when we were in Committee. In the mean time, I beg leave to withdraw the amendment.
Lord Beecham
Perhaps I may just ask whether it would remain open to authorities to combine in placing audit contracts. The Audit Commission identified substantial savings having been made by central commissioning, and it anticipated that if extended to the remaining 30% of contracts, a significant further saving of some £400 million over five years could be made. I am not necessarily saying that that is the way to go but, under the provisions of the Bill and this whole appointment process, would it still be open for such an approach to be adopted by authorities coming together, for example, in a particular region or a particular class of authority, obviously with the support of their independent panels? Would it still be open to them to move in that direction, getting a sort of bulk purchase by agreement rather than it being imposed externally? It would be helpful to have some assurance on that.
Lord Wallace of Saltaire
My Lords, I am happy to give that assurance. That is entirely acceptable and to be expected within the Bill. Often small authorities in particular will find it convenient and useful to combine how they approach this matter. However, as the noble Lord has just said, this is by voluntary co-operation rather than by imposition from the centre.
I have to reprimand the noble Lord, Lord Tope, for making exactly the first point that I was going to make, thus cutting down on what I have to say.
Lord Wallace of Saltaire
The Government understand and support the intentions behind the amendment—to ensure that there is transparency over the appointment of the auditor—but they are not convinced that this is the sort of thing that needs to be in the Bill. The Bill already includes a requirement for the notice to include the advice of the auditor panel, which is required to advise on the selection and appointment of the auditor. This might cover issues such as the length of the appointment and the process for appointment. Under the Bill, auditor panels must have regard to guidance issued by the Secretary of State on their functions. We expect that such statutory guidance, or wider guidance on best practice, might cover the sorts of issues that should be included in any advice from the panel.
With those reassurances, I hope that the noble Lord will be willing to withdraw the amendment.
Lord McKenzie of Luton
I am grateful to the Minister. I certainly do not intend to press the amendment. I say to the noble Lord, Lord Tope, that I did not honestly expect the Minister to rush to accept the wording; it was a mechanism to open up a debate, particularly about the process and there being transparency in the extent to which other firms are invited in—in a beauty parade or whatever the mechanism is. That may be some measure of the determination of the local authority, if it has one, to broaden and open up the market. However, I entirely accept that that will be the expectation and that it will be set down in some of the guidance that will flow from this Bill. Accordingly, I beg leave to withdraw the amendment.
Lord True
My Lords, I declare an interest myself, as leader of a local authority, and apologise for not being able to take part in these proceedings before. I shall make a very small point, which need not be clarified now but perhaps could be before Report.
I have a great deal of sympathy with the tenor of comments being made universally around the Committee about the risks of overlapping. I strongly follow the noble Earl’s comments about the importance of the integrity and role of audit as it is practised by local authority officers at the moment. I was going to raise my query later, but I shall follow the noble Earl, because it affects independence, which is the subject of this amendment. Paragraph 2(2)(b) of Schedule 4 would not disqualify somebody from being a member if,
“the panel member has not been an officer or employee of an entity connected with the authority within that period”—
that is, for five years.
The only thing that needs to be made clear and perhaps can be made clear on Report is whether that means the authority or the individual. Let us posit a case of somebody who has been an officer of a body and has gained a great deal of lifetime experience, and has retired early, perhaps eight years ago—we do not want any age complication, so let us just say that he no longer works for that authority. After his departure, some years later, that body becomes a connected authority, whereas he has had no connection with it for some time. His experience might be useful, and one does not want to exclude potential individuals by idle wording. I take it that the Bill means that somebody who has been working for, or connected with, the authority in the past five years should be excluded. However, the way in which it is written could mean that if you have worked at any time for a body that becomes connected in the previous five years, you would be excluded. I think that the second category might be considered, as somebody could be useful in pursuing this role.
Lord Wallace of Saltaire
My Lords, the definition of independence is set out in Schedule 4, which says that a person is independent if they are not a member or officer of the authority and have not been within the past five years, or a “relative or close friend” of such a person. Questions of objectivity and competence, particularly competence, are, apart from qualifications in accountancy, a little more subjective. Professional competence is defined by qualifications rather than by other things.
The intention here is to allow flexibility rather than to be too prescriptive. I am told that 80% of local authorities already have audit committees; 31% have at least one independent member and 15% have more than two independent members. If panels can be constituted from members of the audit committee, that is fine, provided that they are independently chaired and have an independent majority. There could be two independent members of the local audit committee, plus one other, to make the specific appointment for external audit. I assume we all accept that there is a difference between the continuing internal audit process and the appointment of external auditors. We are trying not to be too prescriptive on this, but that is the distinction that we are drawing.
There are concerns that audit committees will get in a muddle about having audit panels alongside them, but that is not at all necessary, particularly in larger authorities. We are not convinced that we need to make audit committees a statutory requirement in local government, although, of course, practice is such that the overwhelming majority of large and small local authorities have audit committees. Local authority audit committees may wish to set up a small auditor panel, which may be connected with the audit committee, provided that it has an independent chair and an independent majority. There can be important links between the role of a panel and the audit committee, but their specific roles are distinct.
We do not think that there is a wider case for imposing statutory majority independent audit committees on local government for internal audit, for some of the reasons mentioned, but for a panel that appoints the external auditors that case should stand. Under the accounts and audit regulations, local authorities are already required to ensure that a committee, or a meeting of the whole body, reviews arrangements for the internal control and effectiveness of internal audit, approves the annual governance statement and considers and approves the statement of accounts. That is what the audit committees in most local authorities already do, usually led by back-bench councillors and, as noble Lords have said, very often by opposition councillors. However, the Government are not prescriptive about the precise structure that local bodies use to meet these requirements. Based on these existing functions, guidance from the Chartered Institute of Public Finance and Accountancy suggests that members of audit committees should be independent of the executive but need not be fully independent of the council.
Lord Wallace of Saltaire
My Lords, we will move on to the question of health bodies in our discussion of further amendments, and I hope that the noble Lord will allow us to return to the issue when we deal with them.
In answer to the noble Lord, Lord True, the Bill would not prevent someone who had worked for the local authority but had finished working for the local authority more than five years ago acting as an independent member of the panel. That is certainly my reading, and I state that as the Government’s clear understanding of the position.
On the question of a close friend—I appreciate that the noble Lord, Lord Beecham, is querying this—I am told that the phrase is already in the Localism Act. It is, to some extent, a matter of perception, but we all understand, from having dealt with local authorities over a long period, that this is one of the areas where one needs to make sure that panels look independent and are assured to be independent. Where someone seems like a close friend, it is clear that we will give guidance that that sort of person ought not to be appointed to a panel in that area.
There is more on the definitions in the letter of intent that was circulated on Monday, which I hope noble Lords have seen, and there will be more in the guidance provided to local bodies. I hope that provides sufficient reassurance for the amendment to be withdrawn.
Lord Tope
My Lords, I am slightly confused, because the group of amendments with which we are dealing is about the relationship between audit committees and auditor panels. The noble Lord, Lord McKenzie, as the mover of the amendments, will comment on that in a moment. However, I am quite sure that we will return to this issue, if only to seek clarification about the distinction and whether the two bodies should be, or have to be, separate. My noble friend Lord Wallace seemed almost to be saying that the auditor panel could in effect be a subcommittee of the audit committee. I do not think that that was quite what he meant, but maybe it was. We still need to clarify that role.
My confusion started when my noble friend went on to reply to Amendment 14BBA, which is not only in the name of the noble Earl, Lord Lytton, but in mine. That amendment has not been moved yet, so I am not quite sure whether we are dealing with it. If we are, and for the sake of preventing us from dealing with it later on—if and when it ever gets moved—perhaps I might say that the noble Earl is vastly more expert than me on the case of small bodies, such as parish councils and the like. However, the amendment comes from the Local Government Association, which represents primarily the larger authorities that do have these concerns. Personally, I have no great problem with majority independent members, but the LGA is concerned about it on a number of grounds.
First, the LGA quite rightly makes the point about the professional integrity of auditors, which the noble Baroness, Lady Eaton, has already made, as has the noble Lord, Lord True, and others, and which I think we all accept. They are already fully regulated, quite rightly and properly, and therefore the perception of independence is, in a sense, already covered to a considerable extent by the regulation.
Secondly, there is the rather more important, practical problem of whether in some areas it will be possible to find a significant number of truly independent people. That does not mean somebody elected to the council as being independent of a political party; it means somebody who is truly independent of the council in a way that is defined in the schedule. In some areas, it may not be possible to find sufficient people of relevant experience. That does not mean that they have a professional qualification necessarily, but that they have relevant experience and are also able and willing to put in the necessary time to serve on this. That may be less of a concern in some London boroughs that many of us know. However, I can well see that in more rural areas or smaller district councils, it may well be quite a significant difficulty. That is part of the concern that the LGA was raising and which we need to include in this debate, whichever amendment we are debating at this moment.
The Deputy Chairman of Committees (Lord Haskel)
I have to inform your Lordships that if Amendment 14BB is agreed I cannot call Amendment 14BBA on the supplementary list because of pre-emption.
Lord Wallace of Saltaire
My Lords, we are, in a sense, continuing the previous debate. Before I directly address the amendment in terms of defining “independent”, I shall speak with another hat on. As noble Lords will know, I speak for the Cabinet Office on issues of civil society and I am struck by the fact that the largest single part of the population that is becoming more active in all civil society activities is the fit retired. There is a very large and growing element there and it is precisely the area from which local bodies are likely to find the independent members that they are looking for. Looking around this room, I note that many of us would fit into that category but, unfortunately, we are not retired. Therefore we have less time than we would otherwise like to have. The noble Lord, Lord Tope, is particularly fit, although I like to think that I am fitter than he is.
We are happy to look into the question of how one defines “close friend” and of course we will have discussions on a range of these issues between Committee and Report. However, I reiterate that a third of audit committees already have independent members and 15% have two independent members. We see the independent panels which will appoint external auditors as not having the heavy weight of work that audit committees have but as fulfilling a rather more distinctive function.
The proposal in the amendment for mandatory audit committees is addressed more directly in other amendments but, as I understand it, this specific amendment is intended to ensure that, as well as being independent of the authority, members of an auditor panel or audit committee do not have wider conflicts of interest that might compromise their independence. I agree that potential conflicts of interest should of course be taken into account in appointing members of auditor panels. However, the Bill already includes a duty for relevant authorities to have regard to guidance issued by the Secretary of State in relation to their independent auditor panels.
We intend that such guidance will cover exactly these sorts of issues, such as how auditor panels will operate and who should sit on them. We intend to work closely with the sector and interested parties on developing such guidance and identifying what wider interests should be considered in appointing members of a panel. I hope these reassurances are sufficient for the noble Lord to withdraw his amendment, or perhaps to ask for further discussion between the Committee and Report stages.
Lord True
My Lords, I should apologise to the Committee. It was probably my fault that we got confused. I was following my noble friend Lord Lytton and my eyes went to page 40, and we therefore drifted on to the next group.
Perhaps I may ask a brief question. The noble Lord, Lord Beecham, raised the question of a “close friend”—it is good to know that the noble Lord has many close friends—and he is right to be concerned about the definition. Where is the question of political friendship dealt with in this? While it is good practice in local authorities, including my own, to have an opposition chairman—we are conscious of the political issue—is the situation of independents having close political associations but not close personal ones dealt with, in this or other legislation, in a way which would enable the work of panels not to be distorted by political considerations? In some authorities which are perhaps not as well governed as others, those kinds of considerations can be just as important as personal friendships.
Lord Wallace of Saltaire
My Lords, we are willing to look at that as well and I will write to the noble Lord. After all, we are talking about panels that may consist of two independents and one member of the audit committee. We are not talking about a vast number of people to be found outside. However, my understanding is that “independent” will exclude close political friendship. My experience of close political friendship also tends to mean close personal friendship, but we could discuss that in the bar or on another occasion.
Lord Palmer of Childs Hill
My Lords, perhaps I can come back on that because I am probably the only person in your Lordships’ House who is a chairman of an audit committee. The present situation in many audit committees, of which mine is one, where the chairman is a member of an opposition party, which I am, gives an incredible independence. You are not part of the ruling party and when we were in power we did the same the other way round.
As the noble Lord mentioned, we already have two independent members, which is very good. However, the trouble is that if you appoint an independent chairman or chairwoman of the committee, that person could well have a political affiliation. Therefore, when the controlling party in that local authority was looking for an independent chair of that committee or panel, not unnaturally it would look to people whom they know or know of. The current situation where the person is of an opposition party, where that is relevant, seems to get over that point because that person is not a close political friend. I just wanted to pick up that point from my personal experience as something to think about that when we are considering this point.
Lord Wallace of Saltaire
My Lords, I am very happy to look at this again between Committee and Report and make sure that the definition is as clear as it can be.
Lord McKenzie of Luton
My Lords, I am grateful to the Minister for that response and for the undertaking to look at this again. The points that have been made around the Committee today emphasise that there is less clarity than there should be on how this is all meant to operate and some of the nuances that could flow from just a strict reading of the legislation as it is.
I understand the point about making a judgment about whether someone was independent from an authority because of a business relationship. As the Minister said, you would seek to deal with that through guidance and it would be an issue as to whether they should be appointed to serve on the committee or the panel. In a sense, we are differentiating between someone who is not independent in that category and someone who is a relative, where they are not precluded from being appointed to the panel or committee. However, there cannot be too many of them or the requirement for a majority to be independent would break down. I am not quite sure of the logic in that. However, rather than stretch the debate this afternoon, I ask the Minister to look at that as part of the broader discussion. Maybe we could have a meeting of all noble Lords who have contributed before we get to Report because it would be difficult to repeat this discussion at Report without some interim deliberations. Having said that, I beg leave to withdraw the amendment.
EU: UK Membership
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Lord Dykes
To ask Her Majesty’s Government what representations they have made to the Government of Germany about recent comments made by senior members of that Government about the United Kingdom’s membership of the European Union.
Lord Wallace of Saltaire
My Lords, the Government discuss a range of issues with Germany and with other EU member states, many of which agree about the need for reform to address the challenges that the EU faces, including dealing with the eurozone crisis, increasing the EU’s competitiveness in the global economy and making the EU more flexible and democratically accountable. Of course, the Government are committed to membership of a reformed EU. As the Prime Minister repeated on Monday, membership of the EU is in the UK’s national interest.
Lord Dykes
Does my noble friend agree that our connection and links with Germany are a key factor for us not only bilaterally but in extending and empowering our greater influence in the whole of the European Union? Can he give some specific examples of how British Ministers have engaged positively with their German counterparts in recent times to further those links?
Lord Wallace of Saltaire
My Lords, this Government have made it a priority to increase our engagement with Germany. We have nearly quadrupled the number of ministerial and senior official bilateral visits to Germany each year compared with 2009-10. We have established joint meetings twice a year of the British-German ministerial committees on the European Union, in which I take part myself. The Foreign Secretary has made many visits to Germany, most recently to the Königswinter conference on 31 May, and the Prime Minister works very closely and regularly with Chancellor Merkel.
Lord Tomlinson
Does the Minister accept that, in the impressive list that he gave of things that we are discussing with our German friends, he did not mention our future engagement with justice and home affairs, on which I am sure that the German Government have strong views, somewhat in conflict with the views expressed from the government Front Bench in the other place yesterday?
Lord Wallace of Saltaire
I thank the noble Lord for his usual extremely constructive contribution. Of course we are discussing co-operation in police and judicial matters with the Germans, as we are discussing all other matters.
Lord Marlesford
Does my noble friend agree that bilateral discussions are one thing, but negotiations on the future of the EU are another? When do the Government expect negotiations to start and with whom?
Lord Wallace of Saltaire
My Lords, the European Union is a continuous process of negotiation. We are pursuing a multilateral reform agenda and, indeed, in the past few months a number of things on that agenda have been achieved. We were committed to containing the growth of the European Union budget and the multiannual financial framework agreement has achieved that. We have been committed, as indeed were the previous Labour Government, to extensive reform of the common fisheries policy; that has now been more or less achieved. We were committed to an EU patent court; that is now here. There is a range of further items that we wish to pursue and we will do so with like-minded member Governments, many of whom share our concerns, through the processes of multilateral negotiation.
Lord Hannay of Chiswick
My Lords, does the Minister agree that one of the best ways of ensuring that great concerns are not caused by British European policy would be to accept the sage advice of the Foreign Affairs Committee in another place? In its report published earlier this week it said that the way to proceed is through a broad, positive reform agenda for the EU as a whole and not by devising new cut-outs for the UK. In the effort that the Government are making to talk at all levels with the German Government, which I strongly welcome, please do not forget—and I hope that the Minister will say that he has not forgotten—about the need to talk to France, too, because unanimity is needed to get many of these changes.
Lord Wallace of Saltaire
My Lords, we have certainly not forgotten about France or the other 25 members of the European Union. Bilateral discussions and multilateral negotiations are a constant process. We welcome the report from the Commons Foreign Affairs Committee and I recommend it to Members of this House.
Lord Grocott
Given that these days we are regularly given the benefit of different members of the Government giving different opinions on government policy, will the Minister, with his academic and political background, give us the latest definition of what he understands by the term “collective responsibility”?
Lord Wallace of Saltaire
My Lords, we are a coalition Government. However, I remember that during the previous Government there were occasions when Ministers—and special advisers—actively briefed against one another.
Lord Pearson of Rannoch
My Lords, as we are the eurozone’s largest trading partner, both for exports and imports, will Germany not do all in her power to ensure that none of our jobs is in danger when we come to leave the failed political construct of the EU itself?
Lord Wallace of Saltaire
My Lords, the idea that countries in deficit have the overwhelming negotiating advantage over countries in credit would not be supported by most economic historians. I trust that the noble Lord noticed the Daily Mail story yesterday on the European Parliament, which noted that three of the five most ineffective and absent Members of the European Parliament are members of UKIP and that the most conscientious, dedicated and hardworking group is the British Liberal Democrats.
G8 Summit
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Lord Wallace of Saltaire
My Lords, I wish to add my regret that, sadly, the right reverend Prelate the Bishop of Bath and Wells is about to retire. Over the past week, I have been thinking about the first Bishop of Bath and Wells whom I was aware of, who stood on the right of the Queen, I think it was, as she was crowned. In some ways I regret—though in others I am glad—that the current right reverend Prelate has not been able to assert that privilege during his time as a Bishop. We shall miss him, but the Bishops keep the House of Lords young, as they say.
Before moving to other topics in this debate, I want to answer the noble Lord, Lord Triesman, on the coalition Government’s attitude to international and European co-operation. I say this as a Liberal Democrat, but what I have heard from the Prime Minister and Foreign Secretary in recent weeks has been outstandingly clear: our national interests rest in international co-operation and in remaining a full and committed member of the European Union. I have heard no such clear statement from any member of the shadow Cabinet.
If we are to have responsible opposition, we also need a clear indication from the Labour Party of its commitment to staying in the European Union and its position on a referendum. We need clear cross-party support in the national interest. I see that the noble Lord is unhappy with my criticism, but I look forward to hearing a clear statement from the Labour Party on those issues. I am happy with the coalition position on European reform and with the way in which we are moving forward with the balance of competences exercise and I reject the idea that we are being blown about by the right-wing press and UKIP.
This has been a good debate in terms of the G8’s broad agenda, particularly about going to Fermanagh. To hear the noble Lord, Lord Trimble, refer to Fermanagh as “tranquil” is an indication of just how far Northern Ireland has moved. Enniskillen was anything but tranquil 20 years ago. Fermanagh and Tyrone were bandit country during the Irish emergency. It is therefore tremendous that the Prime Minister was determined to bring the G8 to Northern Ireland this year to showcase Northern Ireland to the international media, to foreign Governments and as a place to invest.
I note to myself that it is now time for Yorkshire to start lobbying for the G8 summit to be held there when it comes around in eight years’ time, for not dissimilar reasons. Meanwhile, the Tour de France will have to do for next year. I am already discovering that it is impossible to get a hotel anywhere on the route of the Tour de France for next year, so Yorkshire is already beginning to do quite well in that regard.
Let me turn to the substance of what the G8 leaders will discuss when they meet next week and address the question of whether the G8 is the right body to meet. The noble Lords, Lord Bates and Lord Howell, and the noble Baroness, Lady Falkner, raised questions about whether we should now be going with some other body. It is of course always easier to carry on with what you have than to carry on with something new. However, I would stress that in many ways this is the best group we have because it is the only group we have to focus attention on strategic global issues, whether they are economic, political, developmental or environmental.
As the noble Lord, Lord Bates, remarked, the G8 had its origins as the G4 in 1975, when three major European Governments were trying to bring a then rather distracted American Government back to discussing how we managed the global economy. It was then expanded to become the G7 with Italy, Canada and Japan—and with the EU playing a role, because the EU as a collective body has competence in matters of trade, which has always been very important for the G7 and G8. Russia was added in the mid-1990s when, as a post-communist country, it was becoming a much more open society and moving towards a rather more open market economy. This is a group, after all, which is committed to free institutions, open markets and open societies. That is one reason why, as I was saying at the Dispatch Box yesterday, we have some concerns about the direction in which Russia is going. These eight countries are responsible for 50% of global output and 66% of global trade, so in many ways they are still the reliable top table at which one has to discuss many of these matters, in a rather messy response to the need for some form of global governance among major sovereign states.
There is of course the G20 now, the larger grouping which includes the Chinese, the Indians, the Indonesians, the Brazilians and others. The G20 will be meeting in St Petersburg in September, under Russian chairmanship, and many of the issues to be discussed among the G8 will be pursued further there. We all have to recognise that in different ways China, India, Indonesia and Brazil are still reluctant to take on and share the full responsibilities of global leadership and that much of the agenda for global co-operation and future global regulation thus remains to be negotiated between European countries, the European Union and the United States, then to be accepted by others.
The G8 has of course grown more institutionalised. It has grown larger and its agenda has grown amazingly wide. The numbers of officials attending have mushroomed and our Prime Minister is attempting to bring back direct conversation, intimacy, informality and a focus on getting things done. The noble Lord, Lord Hunt of Chesterton, queried the outcome and the follow-through. One of the British initiatives this time is to have an accountability report to look back at former G8 pledges and see what has been done. We have produced a report with checks on what we think has been achieved, or moderately half-achieved, and what has been left undone. It is not that bad a record, actually. Of course, as in all negotiations between Governments, there are some things on which you simply cannot manage to make progress, but we have made a lot of progress, particularly on global development.
Lord Wallace of Saltaire
I do not know whether it is yet in the Library. It was published two days ago. I will do my best, looking hopefully at the Box, to put it in the Library as soon as we can. I must say that I have been briefed by a number of officials who are working incredibly hard for the G8 exercise. I am very grateful that one of them has been able to spare a bit of time out of her 14-hour day to come here and assist me in this and I wish to add my compliment on her remarkably clear handwriting.
The G8 is an informal directing group and the discussions within the G8 then feed out to others. On the final lunch the secretaries-general of the IMF and the OECD will be there and the tax transparency agenda will be carried on quite largely through the OECD. The land ownership agenda, which was mentioned by the noble Earl, Lord Listowel, will be carried out partly through the Food and Agriculture Organisation. Discussions are part of a very intricate network in which we work as we can with others. There are a number of associated conferences now. We have had a Foreign Ministers’ G8 with very active engagement from the Russians on issues such as Syria and elsewhere. We do not always agree but we are actively discussing these issues. There is also the Science and Innovation conference mentioned by the noble Lord, Lord Hunt. The Nutrition for Growth compact has been signed by 24 Governments from the developed and developing worlds, 22 business groups, four science organisations and a number of major international non-governmental organisations.
Sessions at the G8 will cover the global economy, including trade, and the very important bilateral negotiations which have been taking place between the EU and Japan and which will be taking place between the EU and the United States. There will be a session on international political issues and foreign policy, a session on countering international and cross-border terrorism, a session particularly devoted to tax and transparency, and a final lunch at which the delegates will be joined not only by the secretaries-general I have mentioned but also by a number of other senior figures from Africa and South America.
The Prime Minister has focused on the three Ts—trade, tax and transparency. I have already spoken about trade. We very much hope that we will be able to get back to a global trade agenda with the World Trade Organisation. However, some of the leading members of G20 have not been particularly co-operative on a global trade agenda which is why we are having to pursue regional trade negotiations. If we are able to achieve a trade agreement between the United States and the European Union to follow those with Japan, Korea and Canada, we will have made a major contribution to global economic growth. This is about the rules which shape global trade and the fairness and openness which characterise them.
We have also discussed tax. Britain has a particular responsibility here because of the number of overseas territories and Crown dependencies which have become offshore financial centres. The Prime Minister has been in contact with all of our overseas territories and Crown dependencies. They have now all agreed on a number of measures. Bermuda is still discussing the question of a multilateral convention on mutual assistance on tax matters but we hope to resolve that issue with Bermuda before we have sorted out the complete agenda for the G8.
I was asked about the fourth money-laundering directive. This is an EU measure and proposals are currently being negotiated by member states and the European Parliament. They would require that companies obtain information on their beneficial ownership, hold this information and make the information available to competent authorities. The European agenda, the global agenda and the G8 agenda overlap and complement each other. In all of this one has to recognise that tax sovereignty and global markets do not go easily together. That is why we have to pursue these international negotiations on tax transparency in order to regain a degree of our tax sovereignty. The Government have been relatively successful over the past three years at regaining tax from multinational companies. I am told that HMRC has collected more than £23 billion in extra tax since 2010 through challenging large businesses’ tax arrangements and tackling transfer pricing issues, and we continue to hope that we will raise a good deal more through tax transparency.
As noble Lords know, transparency is about not only tax but beneficial ownership. The noble Earl, Lord Listowel, asked particularly about transparency over land tenure. The problem with land tenure in developing countries is that often records do not exist, so in terms of technical assistance, as part of bilateral or multilateral aid programmes, helping these countries to establish clear records of land tenure is a necessary part of what we do to establish who owns what, where foreign companies are buying in and how far we protect local farmers on their own. There is very careful work on greater transparency with less developed countries, starting with proper land records.
On 22 May the Prime Minister announced that Her Majesty’s Government intend to sign up to the Extractive Industries Transparency Initiative, which was set up to tackle corruption, to improve the way in which the revenues from oil, gas and minerals are managed and to ensure that people across the world share in the economic benefits of natural resources in their country. A lack of transparency there, as with land transactions, is very much part of the obstacles that we have to overcome in ensuring that free trade and open markets benefit everyone, including the poor and weak countries, which are often open to these sorts of extractive industries in particular.
The lunch on Tuesday will focus particularly on Africa, looking at the millennium development goals and, as we have already mentioned, talking about the larger issue of nutrition. I am disappointed that we are not paying more attention to population on this occasion. The noble Lord, Lord Hunt of Chesterton, is disappointed that we are not spending more time on climate change, although there will be preparations for a major conference in 2015 under different tutelage—the UN Committee on Climate Change—which will be a main focus.
With regard to our political discussions, I was asked particularly about Syria. At Prime Minister’s Questions yesterday, the Prime Minister said:
“We should use the G8 to try to bring pressure on all sides to bring about what we all want … which is a peace conference, a peace process, and the move towards a transitional Government in Syria”.—[Official Report, Commons, 12/6/13; col. 331.]
This has been a worthwhile debate. I was nervous that the agenda of the G8 was so wide that I would be unable to cope with many of the questions that would come in. I sat here trying to imagine the noble Lord, Lord Hunt, talking to his Soviet colleagues during the Cold War about eastern and western approaches to weather forecasting and whether there was a Marxist approach to it as well as a capitalist one.
We have looked back to the previous UK-sponsored G8 in 2005. Gleneagles was a great success and helped to push the G8 on to the development agenda to a much greater extent than before. It is still managing to push that forward. This Government, as the Nutrition for Growth compact shows, are still attempting to use the combined efforts of the developed democracies, non-governmental organisations and international organisations as such to promote a more open global market and a more equitable global society.
We look forward to a successful G8 summit next week. This is of course only one in a long series of heavy intergovernmental negotiations, but Her Majesty’s Government are using this opportunity to press forward what I hope all noble Lords will agree is a very worthwhile and constructive global agenda.
Lord Hunt of Chesterton
Will the Minister respond on the issue of water? This is the United Nations International Year of Water Co-operation and the water issue has not really had the emphasis it should have had, as was mentioned by the noble Lord, Lord McColl.
Lord Wallace of Saltaire
My Lords, the noble Lord, Lord Alderdice, has sponsored one or two conferences on water in the Middle East in the past year with the support of the Foreign Office. We are all well aware of the many complexities of water. Those of us following the argument between Ethiopia and Egypt over the dam on the Blue Nile will know that water wars are not necessarily too far away. There are a great many complications and the Government understand that not only clean water but also cross-border water supplies are very important matters for us to deal with. It is not neglected simply because it is not a major item on this year’s G8 agenda.
Russia: Non-Governmental Organisations
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Lord Wallace of Saltaire
My Lords, the Government are concerned by pressures on NGOs across Russia, including the NGO “foreign agents” law. These concerns are outlined in the FCO’s Human Rights and Democracy report for this year. In recent months the Foreign Secretary, the Minister for Europe, and my noble friend the Minister of State for Justice have raised this subject with their Russian counterparts. Two days before the Prime Minister’s 10 May visit to Sochi, senior officials raised concerns about the treatment of civil society at the annual UK-Russia human rights dialogue, held in Moscow.
Lord Judd
Do the Minister and the Government agree that a vibrant civil society, participating in public debates and analysing policy on the basis of the experience of engaging in society are vital to a healthy democracy? How can the recent draconian action by the Russians, with more than 208 organisations now raided by government officials, possibly strengthen democracy and stability in Russia? How can this be reconciled with membership of the Council of Europe? What are the Government, together with European Union partners, doing, in the Ministers’ meeting at the Council of Europe, in bilateral meetings and on every possible occasion, to bring these truths home to the Russians?
Lord Wallace of Saltaire
My Lords, Russia is at present moving away from the principles of open society. That is deeply concerning to all of us. We continue to express our deep concerns about that, and our concern that this does not allow for the long-term stability of Russia itself, every time we meet our Russian counterparts.
Baroness Williams of Crosby
My Lords, while I agree strongly with some of the remarks made by my noble friend the Minister and the noble Lord, Lord Judd, at present the Council of Europe is very much engaged in close discussions with the Russian authorities and some questions are being raised about whether the draconian law will be carried out effectively or reconsidered. May I therefore suggest that the better approach at present is probably through the Council of Europe, of which Russia is a member, dedicated as it is to all the values and ideals of democracy, rather than an individual national protest by the United Kingdom when the President of Russia is just about to arrive here?
Lord Wallace of Saltaire
My Lords, the United Kingdom is, I think, the only EU member state that has a bilateral human rights dialogue with the Russians. We have had it for some years and we think it is valuable. The EU itself has collectively expressed its concerns at the current Russian situation. Our counterparts in the German and French Governments, whose German party political foundation offices and Alliance Française have been raided and inspected in Russia, have also expressed their concerns.
Lord Anderson of Swansea
My Lords, does the Minister agree that the current swathe of repression of non-governmental organisations is just one of a number of measures taken by the Russian Government as they move along the path of a quasi-tsarist autocracy? Have we specifically raised this matter in the Council of Europe with like-minded countries, as Russia is a member and has certain obligations under the Council of Europe agreement?
Lord Wallace of Saltaire
My Lords, we actively discuss with our partners in the European Union and the Council of Europe a whole range of concerns, including those about Russia. I think I am correct in saying that one in every four cases before the European Court of Human Rights at present concerns Russia.
Lord Triesman
My Lords, we share the anxieties that have been expressed. I was interested to hear the Minister mention in his very first response NGOs from outside Russia. What is the current status of the relationship between the Russian Government and the British Council, and is the British Council able to conduct its normal and completely proper work inside that country? If I may follow up a point made by the noble Baroness, Lady Williams, is there perhaps an opportunity for a side meeting at the G8 to underline this issue with the Russian President?
Lord Wallace of Saltaire
My Lords, the British Council was under considerable pressure some years ago. Indeed, my wife and I were in St Petersburg and visited Stephen Kinnock, who was then the head of the office there, the day after his office had been inspected by the authorities in a clear attempt to intimidate its activities. At present, however, the Alliance Française is being pursued, not the British Council. The British Council does its best to operate in rather difficult circumstances.
Egypt
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Baroness Cox
To ask Her Majesty’s Government what is their assessment of the situation of religious minorities in Egypt since the Arab Spring.
Lord Wallace of Saltaire
My Lords, Egypt has witnessed an upsurge in sectarian violence during the transition period. Foreign Office Ministers have been clear throughout the events in Egypt that have taken place since the revolution that the freedom of religious belief needs to be protected and that the ability to worship in peace is a vital component of a democratic society. We continue to urge the Egyptian authorities to promote religious tolerance and to revisit policies that discriminate against anyone on the basis of their religion. We are also in contact with representatives of the Coptic Church and other religious groups.
Baroness Cox
My Lords, I thank the Minister for his sympathetic reply. Is he aware that since the downfall of President Mubarak there have been attacks on Sufi shrines, the marginalisation of the Baha’is, hostility towards Muslim secularists and a massive escalation of assaults on Christian communities, including the Coptic cathedral, when security forces stood by doing nothing to deter the violence? In what specific ways have Her Majesty’s Government encouraged the Egyptian Government to create an environment of social cohesion, reduce tensions and promote mutual respect between adherents of different faiths so that they can live together as equal citizens in a nation that recognises their rights and values their citizenship?
Lord Wallace of Saltaire
My Lords, as we all know, it has not been an easy transition, and one could add to the noble Baroness’s list new laws that limit the role of NGOs and their ability to accept foreign funding, arrests of bloggers and restrictions on the freedom of the media. It is a messy transition, which is not entirely surprising given how long the authoritarian Government of Egypt had been in effect and given also the internal divide between a relatively liberal urban elite and a much more conservative peasant class from outside Cairo. We have intervened on a number of occasions. My noble friend Lady Warsi made a major speech at the organisation of Islamic states conference on the importance of freedom of religion and belief, and my honourable friend and colleague, Alistair Burt, has spoken to the Egyptian Government several times in Cairo and elsewhere on the importance of respect for minority rights of all sorts.
Lord Boateng
How are the lessons from Egypt being applied to Syria? Given the plight of Christian refugees in the region since the rebellion in that country, it is not clear how the removal of the arms embargo actually assists the development of a free and multifaith, tolerant Middle East.
Lord Wallace of Saltaire
That is a huge question. A free and tolerant Middle East is something that we would all love to have. At present, in Iraq as well as in Syria and a number of other countries, the question of religious minorities, be they Muslim or non-Muslim, is very much in play. We know that the conflict between what one might call moderate Sunnis and Salafi Sunnis is also acute. We do what we can, and I have to say that Muslim leaders in this country also do what they can, to influence the debate, but we recognise that the Middle East is in turmoil. Coming out of this very long period of authoritarian regimes does not make it easy to change habits immediately.
Baroness Hussein-Ece
My Lords, in Egypt the use of defamation laws to lock up people on supposed religious grounds has increased, and Article 44 of the constitution bans blasphemy. What actions are Her Majesty’s Government taking in the UN Human Rights Council in Geneva to ask the Egyptians to look again at these provisions?
Lord Wallace of Saltaire
My Lords, we are working through a number of multilateral and bilateral channels to argue to the Egyptian Government that they need to have a much more open attitude towards minority opinion of all sorts. Article 44, as the noble Baroness rightly says, prohibits blasphemy, but Article 45 advocates freedom of speech. Given the continuing conflict about the role of the judiciary in Egypt, it will take some time for the new Egyptian constitution to be applied in full.
The Lord Bishop of Ripon and Leeds
My Lords, will the Minister confirm that freedom of religion involves the right to change one’s religious beliefs and that Egypt and other nations need to be pressed to ensure that those who change their religious affiliations are defended in doing so? How far are the Government able to put pressure on countries to ensure that blasphemy laws do not prevent that happening?
Lord Wallace of Saltaire
My Lords, religious tolerance is something that we in the United Kingdom learnt about the hard way through religious persecution. We have to argue as vigorously as we can to all other countries that religious tolerance between a whole range of different religions is highly desirable in the development of an open and stable society.
Baroness Symons of Vernham Dean
My Lords, the Government are about to host the G8 conference and much of it will be focused on the Deauville partnership about Arab countries in transition. To revert to the specific question raised by my noble friend Lady Cox, in hosting the G8, will the Government take any specific initiatives to progress religious tolerance?
Lord Wallace of Saltaire
At the moment, I am not aware of the Government’s preparations for the G8 in this area. I shall feed that back to the Government and see what they can do.
Baroness Afshar
My Lords, is not the real problem that by focusing on faith as a means of the political arrangement in the Middle East—in Israel, in Egypt and in all areas—we are coming to the dangerous point of fanaticism taking over? People are doing things in the name of faith. Would it not be a good idea to demand of nations not to take their faith as a parameter of government? I speak about Iran as well as Israel and other countries.
Lord Wallace of Saltaire
One has to demand that of people as well as of nations. As we know, there are moderate people of faith and extremist people of faith in almost all religions one can think of, sadly, including Buddhism. We all have to work actively to promote a moderate version of faith. I am a member of the Church of England and as a Christian I have always regarded St Thomas as my favourite saint because he doubted.
Elections (Fresh Signatures for Absent Voters) Regulations 2013
Lord Wallace of Saltaire Excerpts(11 years, 4 months ago)
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Lord Wallace of Saltaire
That the draft regulations and order laid before the House on 25 April and 8 May be approved.
Relevant document: 1st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 June.