Hilary Benn
Main Page: Hilary Benn (Labour - Leeds Central)Local Audit and Accountability Bill [Lords]
Hilary Benn Excerpts(10 years, 6 months ago)
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Hilary Benn (Leeds Central) (Lab)
The Bill might appear to some to be rather dry—[Hon. Members: “No!”] I am relieved to hear that.
As the Secretary of State has said, the Bill principally concerns how we ensure the probity, economy, efficiency and effectiveness of the spending of billions of pounds of public money. As we have heard, it might be said that the Bill, introduced by one of the late Baroness Thatcher’s great supporters, seeks both to extend, through greater transparency in council meetings—the subject of her private Member’s Bill, as the Secretary of State has reminded us—and to overturn, through the abolition of the Audit Commission, part of her political legacy. The Audit Commission was of course set up by the noble Lord Heseltine. As he explained in his autobiography—it is important to remember this:
“I thought it wrong in principle, as the 1976 Layfield Report had said, that councils should be able to appoint their own auditors. Awkward auditors do not get reappointed.”
That was his judgment.
Lord Heseltine’s creation did have achievements to its credit, although we did not hear them from the Secretary of State. It contributed to savings in local government and it developed value-for-money comparisons. I think I am right in saying that it was the Audit Commission that appointed John Magill under section 13 of the Local Government Finance Act 1982 to investigate Shirley Porter and the homes for votes scandal in Westminster.
Mr Redwood
On the point about the value-for-money component of the audit, I and a friend of mine, John Hatch, wrote that idea up and persuaded Conservative Ministers to introduce it. It did not come from the Audit Commission.
Hilary Benn
I shall come to the need to maintain a value-for-money focus in the work of the successor bodies for precisely the reasons that the noble Lord Heseltine set out, but I accept that the Audit Commission had its critics and in some respects it lost its way. The Opposition accept that there is no going back on its abolition—rather suddenly announced, to the surprise of many, by the Secretary of State in August 2010. Clearly, it is personal.
The fact that it has taken three years for the Bill to reach this House is a sign of the complexity of what has been removed and what has had to be created to replace it, and of an unfinished task. It took the dedicated probing of my noble Friends Lords McKenzie and Beecham—I pay tribute to them for their expert scrutiny in the other place—to draw out all the questions to which the Government still do not have answers, despite having had so long to think about them. I wish to acknowledge the helpfulness of the noble Baroness Hanham during consideration in the other place. She indicated the Government’s willingness to move on some of our areas of concern, but on one occasion she was famously reduced to saying that
“this matter is still under consideration, as are all the other matters.” —[Official Report, House of Lords, 15 July 2013; Vol. 747, c. 557.]
I shall now turn to these outstanding matters.
First, the Bill needs to provide for the joint procurement of audit for principal authorities, and we are told that this will be added in Committee. It must be, because significant savings can be made this way. The Government’s own impact assessment recognised that individual audit procurement was unlikely to match joint procurement when it came to producing lower fees. There is a limited market in public audit. In the last financial year 800 councils, health bodies and fire and rescue authorities were audited by private firms. How many auditors were appointed? Seven. We believe, and many others agree, that the intended savings may not appear at all—quite the contrary.
A central procurement system with the power of appointment could yield savings of up to £200 million over five years, according to the Audit Commission’s own analysis. I do not understand why the Government spent quite so long in the other place resisting what is a very sensible idea, and we look forward to seeing the promised amendment.
Secondly, there seems to be a marked lack of enthusiasm on the part of Ministers for the kind of comparative value-for-money studies that the commission has undertaken. We are not yet sure how the value-for-money profiles, which help to ensure best practice and are currently maintained by the commission, are to be managed in future and by whom. When he introduced the original legislation to create the Audit Commission, the then Secretary of State, Lord Heseltine, said:
“Audit involvement in value-for-money work is not new, but the Bill gives much greater emphasis to it. The commission will have a duty to undertake comparative studies . . . and the auditor will have a duty to satisfy himself that the authority has made proper arrangement for securing value for money.”—[Official Report, 18 January 1982; Vol. 16, c. 52.]
This Bill puts less emphasis on it. Only a residual role is being given to the National Audit Office. Is that really the right thing for Ministers to do, given the pressures that councils face today, and the changes they are having to make to the way they work? Surely, this is a time when value-for-money studies—learning from others—are even more important than they were.
George Hollingbery (Meon Valley) (Con)
The right hon. Gentleman will know that the Bill enables the National Audit Office to provide value-for-money studies, but because he is well informed about local government matters, he will also know that the Local Government Association has expressed considerable enthusiasm for conducting these reviews itself. Is it not better that local government finds what it needs to make value-for-money judgments on, and starts those reviews itself?
Hilary Benn
I entirely accept the hon. Gentleman’s point. It seems to me that there is a case for both. Having read the deliberations in the other place, I am just reflecting that Ministers there really lacked enthusiasm for the continuation of central value-for-money work, but I take his point about local authorities coming together to learn from each other.
Thirdly, the Bill as drafted requires the appointment of new auditor panels. The health bodies, as we know, will have panels based on their existing audit committees. On the one hand, the ad hoc Committee that scrutinised the draft Bill described that as an added layer of governance and made a case for strengthened audit committees in order to meet the independence requirements of best practice. On the other hand, the contrary argument has been made that there would be difficulties in asking audit committees to do the work of the panels, not least because in many local authorities the audit committees have a much wider range of responsibilities. Perhaps when he replies, the Minister will explain how he sees audit panels working as sub-committees of audit committees.
Fourthly, on freedom of information, the Bill will weaken the public’s right to know. The Audit Commission is covered by the Freedom of Information Act, but, generally speaking, private auditors are not, so transparency, which the Secretary of State repeatedly tells us he supports, will be diminished. That is really important, especially as more councils are outsourcing work to private companies. We all remember the Government’s recent unhappy experience with the tagging contract scandal. Given that the Government’s view on applying the Act and the arguments they advanced in the other place have changed over time, it would be helpful if the Minister indicated whether there is any chance that their view might change again.
George Hollingbery
I am grateful to the right hon. Gentleman for being so generous in giving way. Is it not the case that clauses 21 and 22, when combined with clauses 24 and 25, mean that freedom of information requests are completely superfluous? Clauses 21 and 22 allow the auditor to request any and all documents not only from the council but from connected parties, and clauses 24 and 25 make that information available to the public, so why would one need an FOI request?
Hilary Benn
I do not accept the argument that the Freedom of Information Act is superfluous, because it depends on whether auditors seek the information in the first place. I think that, regardless of the action that auditors might or might not take, the public should be protected by having the right to request the information. That point was made extremely forcefully and eloquently by my noble Friend Lord Wills in the other place.
There are some other concerns. We need clarity on who will maintain the outsourced contracts when the Audit Commission finally disappears. What about certification relating to reimbursement of housing benefit claims? We welcome the movement of the national fraud initiative to the Cabinet Office, but the provisions on the purposes for which data matching can be used do not include the prevention and detection of maladministration and error, which we would like to be reflected.
That is what is in the Bill, but there is a great big hole in it. It is principally a backward-looking piece of legislation giving effect to the Secretary of State’s decision of three years ago. He has completely failed to make provision for auditing in the new world being built before our very eyes, which I think is an astonishing omission. The proposed audit arrangements simply do not provide for that changing world in which public services are managed and provided. We have shared services, community budgets, city deals and combined authorities, which are all part of a shift towards much stronger working between central and local government, yet the current and proposed audit arrangements still focus much too narrowly on institutions—the arrangements in the Bill for local government and the National Audit Office for Whitehall—rather than the work they do. Therefore, as community budgets develop, does it really make sense for different auditors to examine the use of the local government pound while the NAO examines the use of the Whitehall pound when they are being spent together? If the service is shared and common, so should the audit be. I hope that Ministers will reflect on that point.
Robust independent audit of public bodies is essential to ensuring public confidence in Government. It is up to us to ensure that we get it right, especially after the three years that have intervened, followed by a Bill that—I gently point out—took longer to gestate than a baby African elephant.
I turn now to clause 38. Let me say at the outset that one local authority publication, which the Secretary of State mentioned, is pretty clearly outside the letter and the spirit of the code—that is, East End Life, which is weekly, advertises property, and carries local news. The Labour leader in Tower Hamlets says that it is an expense that residents cannot afford. The question for the House is therefore a simple one: why has the Secretary of State not done anything about it already? Why has he not sought judicial review? It is no good his shaking his head—he could have taken action, given the fuss he is making, but he has chosen not to do so, and he gives no answer.
Robert Neill
On precisely what grounds does the right hon. Gentleman think that judicial review could take place, since non-compliance with the code has no sanction attached to it?
Hilary Benn
It would be a very important legal argument as to whether the courts would attach weight to what is a code. If the Secretary of State is that worried about East End Life, why did he not take action before coming to this House to ask for clause 38 and the extraordinary powers it contains?
The Secretary of State is asking the House to give him the right, if he feels like it, to control local council publications. We have recently had a great deal of debate about the royal charter following the Leveson report. [Interruption.] The Secretary of State is chuntering, but there is a lot more to say about this clause. The charge has been levied, quite wrongly, that politicians are trying to control what appears in the press, yet this clause really would give a politician the power to control, if he wanted to, what is written, how often, and in what way. This shows that underneath a lot of localist rhetoric, the right hon. Gentleman is nothing more than a centralist. I am astonished that Liberal Democrats appear to be happy to go along with a thoroughly illiberal proposal.
The clause would allow the Secretary of State to issue an order directing that one authority, or every authority, comply with his interpretation of one or all of the provisions of the code. I remind the House that the code covers paid advertising, leaflet campaigns, publication of free newspapers and news sheets, the maintenance of websites, the frequency of publications, the content of publications, and even display stands at party political conferences. Clause 38(1)—the first time I read this I could not really believe it—says the following—[Interruption.] I know that Government Members do not want to hear it. Perhaps the right hon. Gentleman could explain why he wants to be given this power:
“The Secretary of State may give a direction to an authority whether or not the Secretary of State thinks that the authority is complying with the code to which it relates.”
Roughly translated, he wants the power to give direction to a council even though he does not think that it is not complying with the code, and nor does anyone else. We are sometimes mystified by the way his mind works, but under this Bill he will not even have to answer to himself for his own thoughts and actions.
That prompts the question why the Secretary of State has put this measure forward. He advanced two arguments, the first of which is about competition with local newspapers. I agree that local newspapers are a very important part of our democracy. Their independent reporting holds us to account, and they give us important news and information about what is happening in our area. However, many local newspapers are in real difficulties as readership declines and people get more of their news from the electronic media. Sir Merrick Cockell, the highly respected Conservative leader of the Local Government Association, says:
“We’ve simply not been shown any evidence that council publications compete unfairly with local newspapers.”
Such evidence as we do have suggests that the amount of advertising revenue taken by council publications is relatively small, especially compared with the amount of revenue contributed to local newspapers by way of statutory notices.
It is therefore very curious that, despite great play being made in the Secretary of State’s speech and in all the consultation documents of unfair competition and the loss of advertising revenue, it was reported a little while ago that he had indicated to a private meeting of Conservative councillors at the LGA conference that the requirement to place statutory notices in local newspapers is going to be phased out within a couple of years. I would be happy to give way to the right hon. Gentleman if he would like to clarify the Government’s position on the future of statutory notices. The House will have noticed that he has nothing to say. That is because on the one hand he is arguing that council magazines and the advertising revenue they take are a terrible threat, while on the other hand it seems, as reported by Conservative councillors who were at the meeting, that he is thinking of withdrawing a much larger amount of money that papers get from local councils in the form of statutory notices. The truth is that his position is utterly inconsistent.
George Hollingbery
I am grateful to the right hon. Gentleman for giving way; he is truly being generous with his time. Is he able to give any particular reason why local papers could not report statutory notices as a news item rather than as something that they are paid to do? Does he think it is right that the public purse subsidises commercial organisations like local newspapers when they have plenty of other opportunities to make money?
Hilary Benn
The hon. Gentleman makes a perfectly fair point, partly because of the changing way in which people are getting their news. He is right that there is nothing to prevent papers from publishing those notices anyway, and I think that everybody recognises that we are moving towards a different era. The point I am making is that the Secretary of State has jumped up and down to complain about advertising revenue, which is very small compared with the much larger revenue that comes from statutory notices, hence the inconsistency of his argument.
Annette Brooke (Mid Dorset and North Poole) (LD)
Should the main concern not be the best use of council resources? Is it really a good use of those resources if they are paying for statutory advertisements that most people manage to miss?
Hilary Benn
That is a fair point, as I have said, but perhaps the hon. Lady should have a conversation with the Secretary of State about what his policy is, because we are none the wiser. Indeed, when the code of practice was originally published, the Government specifically rejected a prohibition on authorities taking third-party advertising in their magazines. That is what paragraph 8.25 of the explanatory memorandum had to say.
Ian Mearns (Gateshead) (Lab)
Does my right hon. Friend agree that, while an awful lot of people may miss statutory notices, some organisations—like estate agents, property agents and anybody involved in the licensing trade—trawl through the papers deliberately looking for them?
Hilary Benn
I accept my hon. Friend’s point. If the system is changed in the future, as long as people knew where they should look, they could trawl through council websites or other publications.
On the frequency of publication, the vast majority of councils that produce magazines publish them four times a year or less. A very small number publish more frequently, but does that constitute justification for the power in clause 38? Does it actually matter if a small parish council puts out an A4 newsletter once or even twice a month? What business is it of the Secretary of State anyway? Has he not got more pressing things to do?
The second argument we have heard is that Ministers are exercised by propaganda on the rates. The Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), has talked about a
“corrosive abuse of taxpayers’ money.”—[Official Report, 14 February 2013; Vol. 558, c. 840W.]
The Secretary of State has talked about pocket Pravdas, town hall Pravdas and shutting down the Pravda printing presses. Members will detect a bit of a theme there, so I thought I had better have a look. I spent a little time reading through council publications, copies of which I have with me.
Given what Ministers have said, I was expecting to find a hotbed of raw, red propaganda and party politics, but I have to say that I was sorely disappointed. There was not a single proclamation from local authority supreme Soviets, no diktats from executive board commissars and—this was especially disappointing—not a single article on the latest tractor production figures. There was nothing on collective farms. The nearest I got to that was an article about a community garden where “residents developed plots”. Is that the sort of dangerous, collectivist revolutionary activity—plotting in the garden—that keeps Ministers awake at night? Actually, the piece is from an excellent publication, South Kesteven Today—the local magazine of the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles)—and is about a community garden in Stamford.
I continued my search for the cause of all this anxiety. I had a look at Bradford’s Community Pride. The Under-Secretary of State for Communities and Local Government, the hon. Member for Keighley (Kris Hopkins), who has responsibility for housing, has left the Chamber, but the magazine had an article on deadlines for primary school applications and an explanation of council tax. Is that a problem?
I had a look at the Epping Forest magazine, Forester, which had an article about parking charges. We know how that subject gets the Secretary of State going, but it is also a very good publication. And what has Luton done? What has Luton done?
Hilary Benn
The Secretary of State obviously forgets that he criticised Luton for its publication. I have the latest edition of Luton Line. It is a very good publication. On the front page is a photograph of the former Transport Minister, the hon. Member for Lewes (Norman Baker), holding a spade and standing next to the Labour leader of the council—now that is a coalition to reckon with. They are celebrating work starting on a new relief road.
These publications contain articles about recycling, articles on health, pleas for foster parents, adverts for MPs’ surgeries, and lists of councillors. Pocket Pravdas? What a load of nonsense.
Moving from the fanciful to the serious, the LGA has taken independent legal advice on clause 38, and Sir Merrick Cockell says that it
“confirms our fears that a government could hand power to one individual in Whitehall to restrict councils from campaigning on important issues such as HS2 or hospital closures if they so wish.”
Roberta Blackman-Woods (City of Durham) (Lab)
He doesn’t know his own Bill.
Hilary Benn
No, the Secretary of State does not know his own Bill and he does not want to hear what his Conservative colleague, Sir Merrick Cockell, has to say about it.
Members should remember what the code says. Paragraph 15 states that local authorities should
“avoid anything likely to be perceived by readers as…being a commentary on contentious areas of public policy.”
High Speed 2 is contentious, as are hospital closures, the removal of fire engines, and whether Heathrow should expand. Is the Secretary of State really saying that there is something wrong with local councils representing the views of their residents? Sir Merrick’s conclusion is that clause 38 “sets a dangerous precedent”. I could not agree more.
The National Union of Journalists says:
“There is no evidence that extra statutory powers are required”.
The National Association of Local Councils opposes clause 38. Birmingham city council said in its response:
“we do not accept the government’s starting point.”
Exactly!
Mr Redwood
We all understand that it can be desirable for councils to run political campaigns and that it will certainly happen. Is not the point that they can do so in the usual way—by making speeches in the council chamber, talking to journalists, getting it in the local media and putting it on free websites—but not through paid-for propaganda?
Hilary Benn
Let us take the case of High Speed 2 and the concerns that have been expressed by some of the right hon. Gentleman’s colleagues about the route. Is he saying that local councils should not be able, on behalf of their residents, to express a view, to make representations and to say that they want the route to be changed? If he is not saying that, I do not see how he can support clause 38, given the advice that the LGA has taken.
Hilary Benn
No, I have been very generous in giving way.
The great localist is, in this Bill, asking to be given a great big blue pencil so that he can cross out things that he does not like.
Hilary Benn
The right hon. Gentleman shakes his head and says that it is nonsense, but he is undone by his own words. He has obviously forgotten what he said in the response to the consultation, in which ministers justified the new powers by saying that they would
“ensure that in future effective action can be taken should any council be considering publicity that is of a political or tendentious character.”
The only way in which that can be interpreted is that the Secretary of State is seeking to take a pre-emptive power of censorship. What did he mean by that and how on earth will it work?
Last year, the Secretary of State told the Conservative party conference that
“without constant vigilance—the cigar-chomping Commies will take over.”
What none of us realised then was that the person we needed to worry about was him. Clause 38 is wrong in principle and I cannot see how it will work in practice. We will seek to remove it in Committee.
I turn now to clause 39 and the new matters that the Secretary of State wants to include in the Bill. In responding to the debate, will the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth, explain why he is reneging on the deals that his Government signed by making the provision on referendums and levying bodies retrospective?
The Secretary of State well knows that an important element of the Leeds city region deal was the establishment of a significant transport investment fund, partly funded by central Government and partly funded by the transport authority levy over 20 years. A year ago, the former cities Minister, the right hon. Member for Tunbridge Wells (Greg Clark), said that the deal was:
“Giving cities the powers, control over resources, and funding they need to fire on all cylinders”.
Will the Secretary of State explain why, almost a year after his ministerial colleague put pen to paper to sign the deal, he is asking the House to undermine it? Will he set out his assessment of the impact of his decision, and say what effect it will have on holding back investment in transport infrastructure and local growth in the city region? This is an important point of principle, because I fear that the actions of the Secretary of State in imposing the rules retrospectively and going back on a done deal will undermine confidence in the city deal process—which I support—and harm the certainty on which sound financial planning and private investment rely.
To limit the damage of his decision, will the Secretary of State clarify for the record that at the time the city deal was signed, he had no plans, and had had no discussions, about changing the rules on levying authorities? The answer to that must be no, because if he had done so he would—of course—have been honour-bound to disclose that to the people with whom he was negotiating.
Mr Pickles
It is important to address this rather silly suggestion. From the published plans and what we know, the extra levy does not make a single percentage share difference. We know what the city deal is for Leeds—it is perhaps the most ambitious of the lot. Even assuming that we have the same referendum threshold as in the past, the proposal comes nowhere near to going over that threshold.
Hilary Benn
First, that is not the view held by the Leeds city region, and secondly, the House will have noticed that the Secretary of State did not answer the specific question I put to him about what he knew when he signed the deal.
The Secretary of State proposes to make other changes by widening the scope of the Bill, and there have been discussions about how we deal with the problem of the Leeds city region and the fact that York cannot be a full member of the combined authority because of what is known as the Selby corridor—it is not coterminous. Perhaps he will respond to that point. I am grateful for the indication I have received from Ministers that they are willing to deal with that issue—in the Bill if they can, and if not through other legislation—and it would be helpful if the Secretary of State could place that on the record.
Mr Pickles
I am happy to say that what the right hon. Gentleman wants to achieve—to ensure that authorities can work together as part of a deal, even though they are not coterminous—is eminently reasonable. Whether we achieve that through the Bill or through other mechanisms, we are happy to enter into discussions about that, and I am confident we can have a resolution before Christmas. What he seeks is wholly reasonable, wholly sensible, and we will do our best to achieve it.
Hilary Benn
I am genuinely grateful to the Secretary of State for that assurance, and I look forward to working with him to bring that change about.
On parish polls, it is clearly not sensible to allow 10 people, in some cases, to trigger a referendum in a parish that represents 10,000, 20,000 or an even larger number of people. We will therefore support that change, and also the proposal that councils in England should allow the recording and videoing of council and committee meetings. In this day and age, big changes in technology make recording and videoing readily possible, and I cannot see the difference between sitting in a meeting, listening and writing down what is being said, or—for those who have shorthand—taking a verbatim record, and making one’s own recording.
As the Secretary of State acknowledged, a new generation of bloggers is relating to politics in a different way, which we should all warmly welcome—frankly, the more people who get to hear what their local council is doing, the better. Who knows? Perhaps this House will one day follow suit and allow those watching us to keep their own records of proceedings—indeed, I may one day be tempted to record the Secretary of State from across the Dispatch Box. I have, however, a sneaking suspicion that Brass Crosby—who, as some Members will know, was committed to the Tower of London in the 1770s for daring as Lord Mayor to release a newspaper editor who had had the audacity to report what was happening in Parliament—and indeed Thomas Hansard, after whom the Official Report is named, would both thoroughly approve of that change.
In conclusion, there is a great deal for the Committee to discuss, and I know that my hon. Friend the Member for Corby (Andy Sawford) will do a sterling job leading for the Opposition and responding to the debate. We owe it to ourselves, local authorities and the people that we—and they—represent, to get the right system in place, and it is clear there is still much to do.
Robert Neill (Bromley and Chislehurst) (Con)
I was delighted to hear my right hon. Friend the Secretary of State finish an important piece of work to which we committed ourselves when we first came into government. I was intrigued to listen to the right hon. Member for Leeds Central (Hilary Benn), the shadow Secretary of State. It was a curate’s egg performance. I grant that there were some near rib-tickling moments—some of which were probably not intended—but it was a classic case of an Opposition searching for something to oppose. My right hon. Friend has introduced and delivered a Bill that the Government said at the very beginning of the coalition we would introduce. I am delighted that it has come to fruition.
Let me deal with the various parts of the Bill. I was fascinated to see some of the Audit Commission’s expenditure when I was part of the Opposition Front-Bench team. In the climate of the 1980s, there was an argument for considering a body such as the Audit Commission. However, two things happened: the Labour Government caused massive mission creep in the Audit Commission, and the climate changed. What caused the massive mission creep? Effectively, the Audit Commission was used as the machine for imposing a centralised performance regime on local government. That was a distinctly and fundamentally un-localist thing to do.
The situation is well described by Professor George Jones of the London School of Economics, whom many hon. Members will know—he is the biographer of Herbert Morrison. Professor Jones would not regard himself as a natural admirer and advocate of the coalition Government’s policies, but he believes in local independence. I disagree with many of the things he says, but he has described the Labour Government as taking “a fateful decision” that
“turned the Audit Commission in effect into an agent of central government…[It] marked the end of its independence, which was confirmed as further tasks required by central government were placed on the Commission: inspecting local authorities’ performance, judging and scoring them.”
Professor Jones is one of the leading independent academics. Most people would say he has a left-of-centre viewpoint—he happens not to be a member of any political party—but that significant academic is condemning the actions of a Government of whom the right hon. Member for Leeds Central was a member. It is therefore a bit rich of him to accuse the Secretary of State of back-door localism. Anyone who knows my right hon. Friend and the history will know that that is nonsense.
The Audit Commission grew beyond its remit to such an extent that it became the elephant in the room in a great deal of local government budgeting. Increasingly, time and again, local authorities—officers and members—felt themselves to be more constrained. They felt they had to play the system and adopt policies and priorities that ticked the box of Audit Commission approval. The system of reward and funding was such that they were incentivised to tick the box to meet central Government objectives rather than those of their council tax payers.
That was initially swept away when the coalition Government got rid of the iniquitous comprehensive area assessments regime, which, at that time, was a huge amount of the Audit Commission’s work. Essentially, the core audit function was left. As I recall, by that stage, the Audit Commission was about the fourth largest audit practice in the country. There was no logical reason why such a large audit practice should not operate in a commercial environment, providing that a proper statutory regime was in place to overarch it and that there was a proper regulation and performance regime, which the Bill introduces.
We saw that when the in-house audit practice was successfully floated in the private sector. It is worth noting that, as a consequence, there has been a 40% reduction in audit fees paid by local authorities. By the time the Bill is implemented and the Audit Commission is finally abolished, there will be a 50% reduction in those bills. That has got to be a good and thoroughly localist thing. Those of us experienced in local government will remember regular complaints about the level of charging by the Audit Commission. There was also the iniquitous situation of its top-slicing, whether it did the job in-house or it was done through private sector contractors, which was clearly unjustifiable. I hope people accept that the Bill recognises a sensible reality.
I have to say with a smile that I note the cost of trying to persuade the Opposition Front Bench team to change our minds was put at £56,000. They were getting my right hon. Friend the Secretary of State and I cheaply at that price. On the other hand, it did not have much effect, so perhaps they were had in any event. I assume that £50,000 was for my right hon. Friend and £6,000 was for me—I am fully aware of the status of these things—but it says something of the level of unreality in the Audit Commission. In the end, that is why it had so few friends in local government and why its departure will be unlamented. Instead, we have a sensible set of checks and balances which need to be put in place, and which I think the local government sector now understands.
It is also worth saying that performance management and improvement in the sector has matured—a point made in interventions on the right hon. Member for Leeds Central. There is a great willingness to collaborate and work closely together; that is a classic case of recognising that the game has moved on.
The Bill seeks to tackle the code of practice on publicity, which is significant. I was the Minister when we introduced the code and there had been a number of egregious examples of abuse by local authorities. East End Life is of course the example most regularly cited, but I am afraid there are others.
Hilary Benn
It would certainly help consideration of the Bill on Second Reading if the hon. Gentleman listed those examples. Indeed, Baroness Hanham said that she had a list, but did not want to share it with Members in the other place. Perhaps the hon. Gentleman will now tell us which local authorities are breaking the code.
Robert Neill
The right hon. Gentleman obviously knows that the only roles in Gilbert and Sullivan I could do at school were the patter songs—one does not have to sing in tune. I do “have a little list” and will come to it in but a moment.
It is significant that East End Life, run now by an independent council but initiated at a time when the council was otherwise controlled, is one case on which the right hon. Gentleman and I can agree. We agree that that is a particularly bad case, but it goes further than that. Much of East End Life was based on some of the work done by The Londoner, which was produced by the first Mayor of London. By the end of his first term of office, he was a member of the right hon. Gentleman’s party. The current Mayor of London has had no difficulty in getting his case and his arguments across to the London public, and getting information about Greater London authority services across, without the cost of The Londoner. In fairness, even when Ken Livingstone was a member of the Labour party, he supported the current mayor of Tower Hamlets—against a Labour candidate. Perhaps I should not remind the right hon. Gentleman of that.
Robert Neill
Yes, but I did not use them to attack the policies of the Opposition in party political terms. I would not have been allowed to do so under the ministerial code, and anyway they were dealt with by civil servants. I think the hon. Gentleman is also forgetting that, in all the cases I have described, local authorities that are using publicly funded publicity instruments to protest against Government cuts are using discretionary spend that they could have directed into front-line services. That is a classic example of why the Labour party is unhappy about this issue. I regret to say that it goes well beyond the egregious case of Tower Hamlets.
If local authorities want to get information across, which I accept has to happen, they might like to do as my own council, the London borough of Bromley, does. Rather than going to the expense of running its own newspaper, it puts a four-page wrapper around one of our local papers about four times a year. Those pages set out the information very attractively. They are well designed and contain professional journalistic input, and they wrap round the free-sheet that is delivered to everyone anyway. That is a cost-effective and politically proportionate way of getting genuine information across. Also, it does not offend against the code. It is nonsense that although an independent watchdog has held Tower Hamlets to be in breach of the publicity and advertising codes, there is still no legal means of doing anything about it. The Bill will rectify that anomaly.
I say with respect to the right hon. Member for Leeds Central that it is not good enough to say that we could try a judicial review.
Robert Neill
Well, we could try to resolve many things by way of a judicial review, but whether that would be a wise or proportionate use of public funds, when the outcome is highly uncertain, is questionable. Surely it would be much better to deal with the problem at source, in the way that is being proposed. The Opposition appear to have little to say on this matter, and they appear to be shedding a great many crocodile tears about this aspect of the Bill.
Brandon Lewis
As a general matter of principle, I am happy to meet anybody who wants to talk about any part of my brief. I obviously extend that invitation to Transparency International UK.
On the fairness of council tax referendums, my hon. Friend the Member for Mid Dorset and North Poole rightly outlined the anger of some areas and residents when they are faced with claims of a council tax freeze but receive spiralling bills from their authority. Clause 39 specifically addresses that—it ensures that claims of a freeze are based on the bill that hits doormats rather than any half-measures.
My hon. Friend the Member for Meon Valley (George Hollingbery), who has a background in local government, spoke of his wide experience of comprehensive area assessments and gave a great outline of exactly why we need a firm ending of the Audit Commission, so there is no chance of it coming back in the format we have experienced. He touched on auditor appointments, on enforcing the publicity code, which I will deal with later, and on council tax referendums and levying bodies. He suggested a range of interesting opportunities to ensure that referendums are dealt with in a proper and fair manner for the authorities. I look forward to taking his suggestions forward in Committee.
Let me be clear why the Government have decided to proceed with the final abolition of the Audit Commission. The House has heard how our reforms to local audit will result in a more efficient audit system, with an estimated £1.2 billion of savings—I would not want to disappoint the hon. Member for Corby by not mentioning the £1.2 billion of savings. That is exactly why it is important to push forward and embed that to stop any chance of future Audit Commission mission creep.
The reforms are not just about saving money. They are about the Government’s drive to decentralise power and responsibility to local bodies, and giving local people better tools to hold bodies to account. By cutting out the middleman, local bodies will no longer be forced to foot the bill for Audit Commission costs. They will know exactly what they are paying for in their audits. Local bodies will be required to publish information about their auditor appointments and any public interest reports they receive from the auditor. People will therefore be able to find that information locally, rather than having to go to a remote central body.
The reforms improve local accountability. As many hon. Members, including Opposition Members, have said, the Audit Commission had lost its way, forcing councils to focus on Audit Commission priorities rather than priorities that matter to local residents. My hon. Friend the Member for Meon Valley outlined some of those. As a councillor, I remember sitting in meetings when officers told us what we should do—it was often to do with waste collection. The suggestions were not made because they were right for our residents, but because they ticked a box to please the Audit Commission, and the Government would punish us further down the line if we did not take that action. The Government’s impact assessment estimates that the cost to local authorities of complying with the CAA was around £25 million per year—that money could be better spent on other things that residents want and need and deserve to have delivered.
Let me reassure hon. Members who are concerned that the quality of audit will suffer. The Government are committed to ensuring that that does not happen. Private audit firms have long had a role to play in auditing public bodies. As I have said, the Audit Commission has contracted out some 30% of its audit contracts to private audit firms. Last year’s outsourcing exercise demonstrated that public audit can be carried out to the same high level but at a much lower cost to the taxpayer.
The Bill contains robust mechanisms to safeguard auditor independence. The work of the auditors remains largely unchanged and auditors will still be required to use their professional judgment to decide whether to make a report in the public interest if they believe something is amiss. To enshrine that important principle, the Bill allows auditors to recover costs for their time in making a public interest report or advisory notice. By amending existing secondary legislation, we will ensure that whistleblowers can make disclosures to local auditors directly or to the National Audit Office.
Many hon. Members have mentioned the publicity code. I want to make one point clearly at the outset: there is no change to the code. The measures contribute to the Government’s commitment to localism rather than run counter it. Given that the code is not changing, I am somewhat surprised that any hon. Member has a problem with it being put into statutory form. Opposition Members have complained that the Government have not enforced the voluntary code. By putting it in statute, we can make sure that it is enforced to ensure that taxpayers’ money is spent appropriately and properly, and not for political ends.
There have been exaggerated claims that provisions on the code will lead to central Government clamping down on, for instance, HS2 campaigning, which has been mentioned. That is nonsense. Councillors are free to campaign on behalf of their constituents. Indeed, the Government legislated in the Localism Act 2011 to give councillors the freedom to campaign. If any challenge is balanced and factually accurate, it will not contravene the code, unlike some publications. For example, Nottingham city council’s website seems unusually to mirror the Nottingham Labour party’s website. Residents might want to question expenditure on that sort of thing. If anything, the publicity code defends council communications from political interference and propaganda-pushing, as was outlined by my hon. Friend the Member for Bromley and Chislehurst, who gave a range of examples.
The Government have no intention of monitoring or censoring communications, but it is right for us to act when concerns are expressed that local authorities are in breach of a code approved by Parliament. It is certainly right to act when authorities use taxpayers’ money to fund publicity for political purposes.
Brandon Lewis
The right hon. Gentleman keeps asking for evidence, but my hon. Friend the Member for Bromley and Chislehurst has given it to him. In addition, I suggest the right hon. Gentleman compare Leeds city council’s website with the Labour party website.
The Government are aware of the burden that placing statutory notices in newspapers can place on local authorities, and that some authorities believe there are cheaper and more effective ways of informing local people on issues that affect their lives. The Secretary of State has been clear that, in the internet age, commercial newspapers should expect, over time, less state advertising as more information is syndicated online for free. Local papers need to develop new business models to fit the 21st century, particularly as it does not make sense to cross-subsidise one industry with fees from another. However, that will take time.
The Government’s council tax referendum measure will give protection against large increases in taxes raised by levying authorities such as waste disposal, integrated transport and pension authorities. Some say that the measure is unfair. I dealt with that earlier in my speech, but let us be clear that local authorities and levying bodies can work together and have done so, both under the old Government capping procedure, and more recently through the referendum principle. Councils have long worked together to agree council tax levels. That was always the case under previous systems.