Local Audit and Accountability Bill [HL]

Lord Beecham Excerpts

Wednesday 24th July 2013 Lords Chamber

[Lord Palmer of Childs Hill]

My Lords, first, I declare an interest as the current chairman of a local authority audit committee. I shall chair a meeting later this evening. I shall add a touch of reality to the comments made by other noble Lords.

The first subsection of the amendment moved by the noble Lord, Lord Wills, states that the local auditor is to have right of access to the books and records of contractors. In the real world, any local authority worth its salt has in all its contracts a clause allowing it access to the documents of its auditors or the processes that those local auditors use. If a local authority does not have that, shame on it. What we are perhaps trying to do here is to put into legislation something that is a normal commercial attitude that local authorities or corporate bodies should do anyway. As my noble friend Lord Tope said, commissioning is coming on in so many local authorities, and the measure and size of some of the contracts will be very significant. With these large commissioning items, it is not the legislation that should be relied on but the normal contractual terms between the local authority and the contractor. The Government and the noble Lord, Lord Wills, are right to highlight that local authorities should deal with this with their contractors. As my noble friend Lord Tope said, when the Government review these matters, even after this Bill is passed, they should perhaps seek to encourage that within local authorities.

Subsection (3) of the amendment states:

“A local auditor must make available on request any audit documents, obtained under … the Freedom of Information Act 2000”.

That worries me somewhat because, if something is too rigid and too demanding, the net result in practical terms is that people do not put it down on paper in order not to be subject to freedom of information. That might discourage the local auditor from carrying out its job in a deep way. I am all for transparency, but it should be transparency as the auditor feels is right rather than being enshrined in law. Although I understand where the noble Lord, Lord Wills, is coming from, and I appreciate the amendment, I hope that it will encourage the Government to review matters before the Bill becomes law.

[Lord Beecham]

My Lords, I join others in declaring membership of the LGA vice-presidential mafia. I am also a member of Newcastle City Council’s audit committee. I strongly support my noble friend’s amendment, as did the noble Lord, Lord Shipley, a former leader of Newcastle City Council who, alas, is not in his place.

I congratulate the noble Lord, Lord Tope, on the ingenuity with which he has contrived some wriggle room to justify supporting the Government this afternoon as opposed to doing what the noble Lord, Lord Shipley, would perhaps have done had he been here and opposing them, but I do not think his arguments carry very much weight. He is particularly concerned about the cost of these matters, but the audit is carried out on these services whether they are provided as of now by the local authority or by an external body. There ought to be a level playing field in that respect in any event so that there will be a cost of proper auditing by the district auditor and it should not add to the burden that is currently experienced.

The argument that the noble Lord adduces about the need to assess the situation is perfectly fair, but of course it is provided for in the amendment. One could argue that my noble friend has been excessively generous in saying that the review should take place after five years. It may be that a shorter period will be short enough to assess the functioning of the system and, if there is still a question as to the costs, the costs. However, the principle of my noble friend’s amendment is clearly right.

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[Lord Wills]

My Lords, I moved an identical amendment to this at both Committee and Report stages of the Bill. I will not rehearse again all the arguments I set out at both stages or the merits of greater transparency, which we discussed in the debate on the previous amendment, the advantages of tackling fraud, corruption, incompetence and inefficiency, or the principled arguments in favour of citizens having the right to know about the services provided for them to the maximum extent possible and of taxpayers knowing as much as possible about the services for which they pay. However, I stress again that this amendment sets out not to promote an increase in transparency so much as to tackle a decrease in transparency which is brought about by the new arrangements under the Bill.

As I said on Report, the Audit Commission, which is being replaced by the provisions of the Bill, was covered by the Freedom of Information Act. My understanding is that in addition to information that it held for its own purposes, which of course was covered by that Act, other information held by auditors would also have been regarded as being held by the commission in certain circumstances, and therefore would also be covered by the Freedom of Information Act—for example, when the Audit Commission was investigating a complaint against a specified auditor, when it was conducting a quality control assessment of an auditor’s work or when it had required an auditor to provide information for the discharge of wider commission functions such as making judgments on local authorities’ use of resources. In such circumstances, such information would have been deemed to be held by the Audit Commission, and therefore would be subject to the Freedom of Information Act. These are important categories of information that cover significant areas of public interest and concern. Yet, as far as I can see, no public authority as defined in the Freedom of Information Act has inherited those responsibilities from the Audit Commission under this Bill. Therefore, under this new regime, such information will no longer be covered by the Freedom of Information Act. I think that it should be.

This restriction of transparency damages the public interest and the amendment seeks to prevent that happening. At previous stages, this amendment received support from all sides of the House and has the support of the Local Government Association. Only the Government have stood out against it. In the light of our previous discussions on this issue and the previous debate today, I hope that they will now change their minds. I beg to move.

[Lord Beecham]

My Lords, my noble friend is absolutely right to point out that this is simply a question of preserving, or perhaps reviving, the level terms on which freedom of information has hitherto applied. It is different from the previous case that we debated. No question of cost is likely to be germane to the amendment. It is simply there to ensure that the transparency currently available within a local authority’s documentation is extended to those with which it contracts, subject to the Freedom of Information Act provisions and exemptions. There seems to be an unanswerable case for ensuring that that degree of transparency will apply as it applies now, before the Bill is enacted. I concur with my noble friend who urges on the Government acceptance of this provision, which is different from the previous amendment and to which I can see no possible objection, even from Liberal Democrat Members of your Lordships’ House or, indeed, elsewhere.

[Lord Wallace of Saltaire]

My Lords, the Government are keen to promote transparency. As I have previously suggested, they are sometimes keener than their predecessors were to promote transparency and accountability around outsourced services. However, we agree with the Justice Select Committee’s recommendations in its post-legislative scrutiny of the Freedom of Information Act and consider that the better approach is to preserve transparency through contractual provisions, rather than the formal extension of the Freedom of Information Act at this time. In 2012 the Justice Select Committee considered in detail during its post-legislative scrutiny the challenge of how to deal with contractors of public authorities. The committee concluded that,

“contracts provide a more practical basis for applying FOI to outsourced services than partial designation of commercial companies under section 5 of the Act”.

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There are cost issues, which I know the noble Lord wishes to push to the side, but they cannot be entirely ignored. I shall not rehearse them yet again but issues of cost as well as issues of potential benefit cannot entirely be ignored. Having rehearsed these arguments through various stages of this Bill, I reiterate—

[Lord Beecham]

If it is the Government’s intention to see how the system works and then possibly take further steps, why do they not accept the amendment on the basis that it will incorporate in another place a sunrise clause, giving it the opportunity to proceed without primary legislation, which would otherwise be involved?

[Lord Wallace of Saltaire]

My Lords, this Government, unlike their predecessors, are concerned to minimise the number of burdens on business, contractors and on the voluntary sector. After all, we are dealing with a large number of non-profits. We want to see whether the system works before adding more regulation.

Let me end by reiterating that increasing transparency is important but we do not see that the amendment moved by the noble Lord, Lord Wills, provides the right approach at the current time to the problems that we face. Local people already have the right to ask questions and raise issues with the auditors, and the Government are committed to keeping under review the current approach to encourage local authorities and contractors to interpret their obligations more broadly and, if necessary, consider other approaches.

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[Baroness Hanham]

My Lords, Amendment 3 is a further minor consequential amendment to the Public Audit (Wales) Act 2004 following the closure of the Audit Commission.

The Public Audit (Wales) Act 2004 transferred a number of powers from the National Audit Office and the Audit Commission to the Auditor-General for Wales. This Bill already repeals some sections within the Public Audit (Wales) Act 2004 which refer to the Audit Commission. Sections 69 and 70 provide transitional arrangements to enable auditors of Welsh local government and NHS bodies who were appointed by the Audit Commission to continue for the whole of their term, despite the Public Audit (Wales) Act 2004 transferring responsibility for auditor appointment from the Audit Commission to the Auditor-General for Wales.

Section 69 also makes transitional provision to enable the Audit Commission to complete any studies which include a local government body in Wales that were under way at the time of the transfer. The Welsh Government have now confirmed that the transitional period has been completed and that these provisions can be repealed. I beg to move.

[Lord Beecham]

My Lords, I am sure they will be putting up the flags in the valleys and hills of Wales tonight in celebration of this government amendment, which I am happy to support.

Amendment 3 agreed.