Local Audit and Accountability Bill [HL]

Debate between Baroness Eaton and Lord Beecham

Wednesday 19th June 2013 Grand Committee

[Lord Beecham]

My Lords, this amendment addresses the question of the appointment of local auditors, covered by Clause 7. The procedure requires the local authority to appoint an auditor. Clause 7(2) provides that an auditor may be appointed,

“to audit its accounts for more than one financial year”.

Clause 7(2)(b) states that,

“the authority must make a further appointment of a local auditor at least once every 5 years”.

The amendment would remove the following subsection, which states that the paragraph to which I have just referred,

“does not prevent the relevant authority from re-appointing a local auditor”.

The object of my amendment is to ensure that there is a change after a five-year period. In my submission, it is possible for the auditor and the local authority to have too cosy a relationship. As I read it, there is nothing in the procedure for appointments set out in Clause 8 even for a tendering process to be entered into by the local authority, although I may be incorrect in that regard.

Clause 8 provides that:

“A relevant authority must consult and take into account the advice of its auditor panel on the selection and appointment of a local auditor”.

If a panel did not recommend a competitive tendering process, or even if it did, as long as the local authority had regard to that it would not necessarily follow that there would be such a process.

I agree that five years is a sensible sort of period for a firm to be engaged. However, it seems unfortunate, to put it mildly, that people could be reappointed for a substantial period of five years and then be reappointed with, or particularly without, a tendering process. That would be an invidious and unfortunate position to have arrived at. We are aware, of course, that the market for the larger authorities is likely to be dominated by a handful of firms. That was one of the reservations expressed on Second Reading and during our previous day in Committee, and I think that most of us, possibly including the Minister herself, are not entirely comfortable with that. To see such a process as a repeat appointment, particularly in the context of these large national outfits, is anti-competitive, if I might put it in that way. It also raises an issue about the kind of relationship that might develop when a firm is anxious to retain the contract.

For those reasons, in my submission it would be better to require not simply a reappointment process but a process that excluded the original firm. There might have to be a backstop position in case nobody else presented. That matter might require, for example, the agreement of the panel and the authority or even, potentially, of the Minister or the department. I suppose one might need that safeguard, but the important principle is that there should not be indefinite appointments of the kind that, as I see it, the Bill would facilitate. I beg to move.

[Baroness Eaton]

I find it somewhat surprising that there is this perceived idea of auditors being too cosy with their client, a local authority, because all the probity and requirements of audit mean that they would be being professionally negligent if they did not do the job they are supposed to be doing. I really do not think that this is quite as much of an issue as the noble Lord, Lord Beecham, is suggesting.

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[Lord Beecham]

My Lords, I endorse what the noble Lord, Lord Tope, has just said about the principle, which my noble friend also referred to, of combining these two roles. It does not seem at all necessary to have panels on the one hand and a committee on the other. As the noble Lord has reminded us, most authorities have established audit committees. I ought to declare an interest again as a member of Newcastle City Council and as an elected member serving on the audit committee, which is independently chaired and has a majority. It works very well and it seems to make absolute sense that that body should also have oversight of these appointments.

Perhaps I may refer to the noble Baroness’s observations. Although technically the noble Lord, Lord Tope, is right that it is not for this amendment, as the remarks have just been made I shall endeavour to rebut the thrust of the argument. This is really a matter of perception. It is important that the public are convinced that in the matter of the propriety and regularity of an authority’s financial transactions, the oversight of the process—not just the appointment process, but the whole job of audit—is carried out without the conflict that might arise from, for example, a controlling group in an authority having a majority of members on a committee.

Whereas of course in many cases there will be a mix of members, in some councils the political position is that there is no opposition, or there is insufficient opposition to be represented on the committee. It is desirable that we should go that further step, to which we will no doubt address our minds shortly. The cardinal point is that the Government are right that there should be audit committees, but they should do the whole job, including the appointment process. I very much welcome my noble friend’s amendment.

[Baroness Eaton]

My Lords, I failed to declare that I am also a member of the audit committee of my council.

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[Baroness Eaton]

Perhaps I may raise one small issue about the independent members of an audit panel. I do not see, unless I have missed it, how the process is expected to take place, and I have some concerns about the clarity of the job description and expectations. In some local authorities, particularly in the appointment of people such as coroners, these have not always been as transparent as they should be. It would be helpful if we knew what process is expected for authorities to achieve the genuine independence and quality suitable for the needs of the panel.

[Lord Beecham]

Perhaps I may add some more questions. I am sorry that they come so late. While paragraph 2 of Schedule 4 deals with a number of issues, it helpfully defines what is meant by a “relative”. Although seven categories of relative are referred to at page 40 of the Bill, there is no definition of the words “close friend”, which appear in paragraph 2(2)(c). Is it possible to define what is meant by “close friend”? If it is not, I suggest that the words should be taken out of the Bill, because this could lead to a ridiculous situation.

What is the rationale for dealing with health service bodies in a different way under paragraph 3 of Schedule 4? It seems to be a parallel process, and I wonder why it is regarded as separate. Why is the process not the same for the two bodies? In particular—I should know, but I do not—what are the current audit arrangements in health service bodies? We know what they are in councils—they either do or do not have an audit committee—but I do not know whether, at the moment, health bodies have audit committees as such. If they have, just as many of those who argued for the panel concept to be incorporated in the audit committee would argue for the same in health. At least my noble friend and I think that these two bodies are one more than is necessary, and if that is true for local government it is also true for health bodies. I am slightly puzzled by the potential parallel structure here.

Local Government Finance Bill

Debate between Baroness Eaton and Lord Beecham

Thursday 19th July 2012 Grand Committee

[Lord Beecham]

It is even less forgivable that the department that has the overall responsibility for dealing with the problems of poverty and sustaining the income of pensioners and vulnerable people should apparently not wish to know how many people are eligible or how many are claiming. It is not doing what it ought to be doing and promoting take-up. When it comes to promoting take-up, there are a number of things that many councils—in fairness, I think of all political colours—have pursued. I was able to persuade my own council, Newcastle City Council, then under the leadership of the noble Lord, Lord Shipley, to stage a benefits summit two or three years ago in which we brought together a range of people, some major public sector employers, such as the health service, trade unions, community groups and others, to look at ways in which we could promote a range of benefits. The council committed some resource to doing that. It certainly led to an increase on top of what was already being claimed. I think the figure was £8 million or £10 million, so it can be done.

The previous Government mounted take-up campaigns, usually advertising campaigns, but they are not actually all that effective. The increase in take-up from that kind of media campaign, with adverts in cinemas and perhaps on television, tended to be of the order of only about 1%. It did not have sufficient impact. What is needed is face-to-face or some kind of human contact at least, perhaps even at the end of a telephone, with people in the workplace and elsewhere promoting take-up. That is why the first part of my noble friend’s amendment is very important. It is hugely important to engage local charities, such as Help the Aged, although I think that merged into—

[Baroness Eaton]

Age UK.

[Lord Beecham]

Yes, Age UK. I should know because I am the honorary president of the Newcastle branch. Perhaps I am suffering some of the consequences of advancing old age myself. But organisations such as that one are very much involved, along with Citizens Advice and other organisations. We have projects in my own ward dealing with problems of the elderly, and there will be organisations of that kind and different groups, such as Child Poverty Action Group. They are the first port of call, but they are facing huge extra demand anyway as a result of other changes currently in train, not least around legal aid and advice, so there is huge pressure on them in terms of delivery. But other organisations should be involved.

I come back to the workplace point. We have talked repeatedly about the working poor who are likely to face increased pressures; not even all the working poor by any means claim benefits, as we have already heard. It would be useful for local authorities to consult employers and trades unions and particularly public sector employers, who ought to have the highest sense of responsibility towards their workforce, to engage them in the process of helping people to claim their entitlement. Arguably, it is in the interests of any employer to do that, as employers might almost see this—although I am not commending this as an ethical approach—as a way in which to help people without having themselves to bear the cost of increasing wages. I would much rather see wages go up but, in the absence of that and in the present economic circumstances, it is perhaps unrealistic to expect them to do that. Employers could then at least be engaged in promoting this kind of take-up. Therefore, those parts of the amendment moved by my noble friend that talk about consultation with organisations should, as I am sure she would agree, embrace not just the charity or third sector but also employers and trade unions. People should also be connected to a proper estimate of the likely entitlement. It really is a matter for the Government to rethink their position if, as my noble friend has described today, they are simply not going to do that, which would be a gross dereliction of duty. It is bad enough that they do not seem to be interested in promoting take-up as a department; it is worse if they do not even want to know what the extent of the demand really is.

In respect of Amendment 81, I take the point made by the noble Lord, Lord Shipley. The sense of the amendment is that it would be in the totality of the approach to funding that the Government would be required to see that the discount scheme was capable of dealing with all eligible claimants. That would be our preference, but that does not necessarily mean that it should be directly funded by the Secretary of State. It would be a question also of the department seeking to know what is happening on the ground in terms of this range of 330 different schemes and different levels of discount. The principle is certainly worth looking at. Perhaps the amendment might need further refinement on Report. The noble Lord has a point, but so does my noble friend.

Localism Bill

Debate between Baroness Eaton and Lord Beecham

Monday 17th October 2011 Lords Chamber

[Lord Beecham]

My Lords, I do not know about other noble Lords but, having heard the noble Lord speak to his amendments, I find myself more confused than I was when I read them. Therefore, it is an extremely good idea that these matters should be taken away and discussed further and perhaps enlightenment will dawn on me by the time we get to Third Reading. However, I agree with the noble Baroness and the noble Lord, Lord Best, that if we can avoid a plethora of unnecessary referendums, so much the better. In that light, I would be happy for the Minister to consider the matter further and for it to be perhaps slightly reshaped at Third Reading.

[Baroness Eaton]

My Lords, I declare an interest as a vice-president of the Local Government Association, which has offered its broad support for the neighbourhood planning reforms. Indeed, a lot of the thinking on the reforms has come from the innovative and creative local planning schemes which councils have introduced over many years. I do not know of a single council that does not want a more flexible and consensual planning system—indeed, the most consensual possible—and common sense tells us that this benefits communities. The Government have made great strides forward, shredding down the national planning policy framework and confirming that residents will be firmly at the heart of local developments. However, within these new parameters we need to ensure that the planning system can move as fluidly and quickly as possible. I hope that this amendment, to which I am happy to attach my name, clarifies that in certain cases referendums on planning issues might be locally appropriate, as we have heard. The noble Lord, Lord Best, said that discussions with the Minister have suggested a mechanism whereby, if there is consensus, this process will go straight ahead without a referendum. I think that would be well received.

The Local Government Association has estimated that the cost of holding a local referendum on a planning issue will be in the region of £5,000. This is a very significant figure when you consider the sheer number of referendums that could take place around neighbourhood planning issues. It would not be a case of a one-off cost of £5,000 as many costs would arise for local authorities. When the public sector, particularly local government, is so tightly squeezed, that hardly seems a wise use of public resources and public money. I share the request of the noble Lord, Lord Best, for clarity. We would all be much happier if this process was made much simpler and referendums were rarely used in neighbourhood planning. Certainly, councils across the country would support that. I support the noble Lord, Lord Best.