Local Audit and Accountability Bill [Lords]
Debate between Chris Williamson and George Hollingbery
Chris Williamson (Derby North) (Lab)
The Government have presented us with yet another very bad Bill. Indeed, it is so bad that it is difficult to know where to start, but let me begin by saying that there is a certain irony in what we are doing today. As was pointed out by my right hon. Friend the Member for Leeds Central (Hilary Benn), the Audit Commission was established by a former Conservative Government 30 years ago, and here we are now, debating this Bill because another Conservative Government want to get rid of it.
Government Members, including the Secretary of State himself, have suggested that the exposure of the gerrymandering of Westminster city council, which was exchanging homes for votes, had nothing to do with the Audit Commission. I wonder, however, whether the regime that the Government are now proposing would have been able to unveil that appalling scandal, as the district auditor did then. It really was an absolute disgrace, and it led to a huge surcharge on the leader of the council.
The role of the Audit Commission has been both extended and reduced over the years, but I often found its interventions very helpful when I was leader of Derby city council. It was able to assess the effectiveness of local public services, thus providing us with a benchmark in relation to local authorities in other parts of the country and the services that they provided. It did so by means of the comprehensive area assessment which has been so ridiculed by the Secretary of State, and which was one of the first things to be ditched when the Government came to office.
It is probably not surprising that the Government made that decision, as it coincided with their imposition on local authorities of unprecedented cuts, which have continued year after year. The comprehensive area assessment would doubtless have highlighted the significant diminution in the quality and breadth of the services provided by local authorities that resulted directly from the Government’s cuts agenda—and a very unfair agenda it was. As we know, the cuts fell most heavily on the local authority areas in greatest need, although, perversely, some authorities in other parts of the country received an increase in Government grant. I think that, had it been allowed to continue, the comprehensive area assessment would have put the Government parties in a highly embarrassing position.
George Hollingbery
When I was a portfolio holder on Winchester city council, I had to respond to the comprehensive area assessment. One of my favourite statistics that it made me report was the number of buildings that were open to the public and the number of those buildings that were accessible to disabled people. I managed to improve the ratio in my first year in post, simply because we closed a building to the public. Do Members actually think that that constitutes a useful set of reporting targets for any normal council? If the hon. Gentleman is really so keen on the comprehensive area assessment, may I ask whether he would reinstate it if he were the relevant Minister in a Labour Government?
Chris Williamson
The hon. Gentleman makes an extreme point to illustrate his argument. No one is justifying unnecessary targets. There was perhaps an over-burdensome target culture, but surely that is not a reason to throw the baby out with the bathwater. It would be an extreme overreaction to get rid of the whole shooting match just because there were perhaps some overbearing and silly performance indicators, although there was certainly scope for improvement. As my right hon. Friend the Member for Leeds Central said, we accept that the Audit Commission is going, but what is being put in its place leaves a lot to be desired.
Government Members have said that getting rid of the Audit Commission will realise significant savings, but the truth is that most of the savings have already been achieved by axing the inspection work for which the commission was responsible. It seems that this is yet another case of double counting by the Secretary of State, as there is not much evidence to support his statement that there will be a saving. Indeed, many experts say that fees are likely to increase as a consequence of scrapping the commission. The draft Local Audit Bill ad hoc committee called for the publication of a new financial impact assessment and said that the baseline should be 2010-11, rather than 2009-10. If that were done, we might get a clearer picture of what the savings will be, if any, as a consequence of the Bill.
George Hollingbery
The hon. Gentleman is being generous in giving way. I am puzzled by the putative ideas on the savings that are being made. The Audit Commission has recently re-let 70% of the business that it did in-house to private contractors and achieved 40% savings—some £40,000 per council, I understand, although that figure may be slightly wrong. Nevertheless, there was a 40% reduction in the costs of audit. Does the hon. Gentleman not recognise that that is a real and proper saving that would not have happened if the Audit Commission were still in place?
Chris Williamson
Let me quote people who perhaps know a little more about these things than me. The draft Local Audit Bill ad hoc committee looked at the matter in detail. It
“heard conflicting evidence about whether and how much public money is likely to be saved by implementing this legislation.”
I have struggled to find anyone who thinks that the proposal is a good idea.
The Audit Commission said:
“Under a free market model, the current benefits of pooling auditors’ costs will be lost and councils in remote geographical locations”—
many of the locations represented by Government Members—
“will have to meet the economic cost of the audit. In some cases this may be significantly higher than historical fee levels.”
The Local Government Information Unit said:
“If the market concentrates further, or even stands still, this will eventually lead to higher, not lower, fees.”
The Select Committee on Communities and Local Government has pointed out that the Government’s proposals for local government
“contrast with the situation in central government, where the NAO is reducing the percentage of work that it contracts out to private firms”.
I do not understand why that double standard is being applied by the Government when it comes to local government. Cynics might say that the Government are creating yet another money-making cartel. We know that the Conservative party has form in using taxpayers’ money to enrich vested interests in the private sector. We need look no further than the privatisation of the utilities, with millions of consumers being ripped off on a quarterly basis by the big six utility companies. We could also look at railways privatisation, which has seen the railway companies fleecing the travelling public, or the deregulation of the private rented sector, where we have seen a massive hike in rents. As a consequence, the housing benefit bill has gone through the roof—some £10 billion a year is going into private landlords’ pockets. This is yet another example of the Conservative party flagrantly using taxpayers’ money to enrich vested interests in the private sector. It is a shameful abuse.
The Communities and Local Government Committee hit the nail on the head:
“Unless the Government can crack the problem of the very limited competition in the audit market in the UK, it will be open to the accusation that the abolition of the Audit Commission is not a measure to save public money but merely a mechanism to transfer public money into private hands.”
I could not put it better myself. Clearly, that is an endorsement of my suspicion about the Government’s real motive for introducing the Bill.
Chris Williamson
Indeed. As I understand it, those were the unanimous findings of the Communities and Local Government Committee.
The Bill is misconceived in another respect. My right hon. Friend the Member for Leeds Central dealt with this eloquently. In the Bill, there is no recognition of joint working, which is essential; it was increasingly important when I was leader of Derby city council. We worked to bring other public sector agencies on side with us to get more bangs for the public sector pound that was being spent in Derby, and that is even more essential as the budget at our disposal diminishes.
Therefore, I hope—my right hon. Friend made this plea—that the Government will reflect on the matter. If, as seems likely, they proceed with the Bill, I hope they will consider how the audit process could be made more relevant and up to date, given the situation we find ourselves in and the way in which public services are delivered. It does not make sense to require each public sector body to undertake a separate audit. It would be far better to recognise the fact that local authorities and other public sector agencies are working collaboratively. It is far better to have a collective audit that recognises the reality of the way in which public services are delivered in this day and age.
George Hollingbery
I was interested in the comments by the shadow Secretary of State, because the explanatory notes to schedule 4, paragraph 1, say:
“This paragraph sets out the different ways in which a body may meet the requirement to have an auditor panel. It is intended to provide flexibility for different arrangements that can reflect local circumstances and, for example, any joint working arrangements.”
There are clearly provisions in the Bill to deal with that matter.
Chris Williamson
But not—[Interruption.]—as my right hon. Friend the Member for Leeds Central is pointing out sotto voce, where there is a national and local collaboration in that sense. That is the point. This is not a partisan matter; I hope that the Government will take that on board and make that sensible amendment so the Bill is more fit for purpose.
I want to touch on the Secretary of State’s Orwellian proposal effectively to take charge of all council communications across the country. Whatever happened to the Secretary of State’s brave new world? When he first came into office he promised the end of what he described at the time as
“the Ministerial command and control system”.
Well, if this is not a ministerial command and control system, I do not know what is. This is the party that promised us localism and that promised it would sweep away the controlling hand of central Government. What a joke!
The Secretary of State has most certainly gone back on that, and his justification for his position simply does not stand up to examination. Let me quote a couple of experts in the field. The National Union of Journalists said:
“We do not believe that this element of guidance reflects the needs of many communities, nor the practicalities of providing prompt, accurate advice and information to them. In areas where there are no, or limited local newspapers”—
that, again, will include the constituencies of many Members on the Government Benches—
“then sharing planning details, service changes and details of consultations on a quarterly basis is insufficient.”
Even coalition Members in the other place have criticised this proposal. Lord Tope said:
“All we have had from the Government is rather silly and misleading statements from the Secretary of State about ‘town hall Pravdas’.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898.]
Baroness Eaton, who, like the Secretary of State, is a former leader of Bradford city council, said
“there is no evidence that council publications are competing unfairly with local newspapers and, by the Government’s own admission, very few councils are breaking the existing recommendations”
and,
“It is therefore regrettable that many of the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903 and 902.]
The Conservatives claim to be the great localists. When I was on the Front Bench and said that the Labour party is the true localist party, Conservative Members scoffed, but here we have a clear example of the Conservative party being the true centralisers in this country today.
We must also consider the retrospective impact of the proposed council tax referendums. The hon. Member for Bromley and Chislehurst (Robert Neill) referred to that and suggested that somehow it was not really an issue, but I beg to differ. I genuinely think that there is a real issue, which goes a long way towards undermining city deals—a welcome innovation as they give more powers to local authorities in the major core cities around the country—although I think the Government should go further in terms of devolving powers.
Again, I could not find anybody with a good word to say about this part of the Bill. The LGA says it jeopardises growth-generating investment. The country is on its knees and we are barely back into growth, so it seems absolutely crazy to deny the opportunity of growth-generating investment now. The Chartered Institute of Public Finance and Accountancy says it will confuse local accountability. Baroness Eaton said:
“It is like revising the speed limit downwards and then fining any motorist who has not obeyed the new limit before it was introduced.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903.]
The truth of the matter is that local authorities are reaching agreements with levy-imposing agencies with whom they are working in partnership. They will have made arrangements going forward and some of the fees will be increasing over time, and that could push the council tax increase above the threshold at which a referendum must be called. That could leave councils in a very difficult situation. What will happen if the referendum results in opposition to the increase being imposed? The fees will still have to be paid. It will simply mean there will be even deeper cuts over and above the unprecedented cuts that have already been imposed on local authorities.
We know that many local authorities are heading towards a situation in the very near future—in the next financial year and certainly the year after that—where it will not be possible to deliver any non-statutory services. The litter will not be removed from streets and grass verges will be growing out of control. What is going on here? This is simply unacceptable. These are services that define a decent and good society, yet they are being put in jeopardy still further by this part of the Bill.
This is a dog’s dinner of a Bill, as is clear from what has been said not only by my right hon. Friend the Member for Leeds Central and me, but all the experts on these matters. They are all saying the Government have got this wrong. I urge the Minister to take a long hard look in Committee at the provisions contained in this Bill, and to perform some serious surgery and agree to the amendments we will be putting forward to try to make a better job of what is a very poor Bill. I think it will create a very difficult situation for local authorities, end up costing more money and ill-serve the people in the local authority areas that will be affected.