Local Audit (Public Access to Documents) Bill

Lord Bourne of Aberystwyth Excerpts

2nd reading (Hansard): House of Lords
Thursday 6th April 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I am pleased to speak today on behalf of the Government in support of the Local Audit (Public Access to Documents) Bill, introduced by my noble friend Lady Eaton. I thank her for her sterling efforts on this legislation. She comes to the task with vast experience of local government. I also thank the noble Lord, Lord Kennedy, for his typically responsible position on scrutinising legislation and for his kind and appropriate words in relation to the efforts of my noble friend Lady Eaton on the Bill.

It is absolutely right that both the Government and the Opposition should seek to provide appropriate accountability, and we both believe that this is a necessary extension of what exists at the moment. Transparency is important. The disinfectant of light on what happens in public proceedings in Parliament, council chambers and other elected bodies is absolutely right.

I also thank my honourable friend Wendy Morton MP, who has taken this legislation through the other place, for her efforts in relation to it.

On the noble Baroness’s earlier comments, this Bill is small in size but important in relation to the Government’s transparency agenda. This is why the Government are happy to support it. We believe that its potential impact in assisting local transparency and accountability will help local electors better to understand their local authority’s spending decisions. If they are unhappy with those decisions and something deserves scrutiny, those electors will then be able to ask a question of the auditor or raise an objection to a particular matter. That action would then empower the auditor to investigate further before the accounts are closed. The 30-day timing before the sign-off will enable the auditor to seek corrective action, where appropriate, from the authority—perhaps by making recommendations for change in the audit report—to comment on value-for-money judgments made by the council, or, in the most serious cases, to issue a public interest report, which the council is required to consider publicly and respond to.

Some have suggested—although not today—that a freedom of information request would have a similar effect. However, that would require the requester to know to some extent what they want before seeking information. Furthermore, unlike these rights, it cannot directly result in preventive action or change in relation to the most recent years’ accounts. That is why we believe that this Bill, though small in size and provisions, will potentially make a considerable difference.

My noble friend Lady Eaton kindly suggested that I pick up the point in relation to health bodies, which are excluded from, among other things, the inspection rights in the Local Audit and Accountability Act 2014 and are, consequently, also excluded from this Bill, which amends that Act. This is because local health bodies are not directly accountable to the local electorate in the same ways as local authorities. The National Health Service Act 2006, as amended by the Health and Social Care Act 2012, enables residents and patients to see the accounts of clinical commissioning groups and NHS trusts. However, the local auditors of health service bodies are required to report unlawful expenditure to NHS England or the NHS Trust Development Authority—which now, since 1 April, forms part of NHS Improvement—of clinical commissioning groups or NHS trusts respectively, and to the Secretary of State.

The accounts of all of the health service bodies covered by the 2014 Act are consolidated into the resource account of the Department of Health, which is presented to Parliament and subject to audit by the National Audit Office. The expenditure of those bodies is also within the scope of the Comptroller and Auditor General’s value-for-money remit under the provisions of the National Audit Act 1983. In general, foundation trusts are not covered by the 2014 Act. They are responsible for appointing their own auditors under paragraph 23 of Schedule 7 and Schedule 10 to the NHS Act 2006. The rules governing audit for these bodies are set out in that Act. In short, that is why the health bodies are not encompassed by the 2014 Act and hence not in the Bill. I hope that that demonstrates why they are excluded.

Unlike health bodies, local authorities are directly accountable to their electorate, and it is therefore only right that local people should be able to inspect their accounts in order to ask questions of the auditor and potentially object to items of expenditure. This Bill, by enabling journalists to inspect accounting records and publicise what they find, has the potential to bring this information to the wider attention of local electors, who will then be empowered to act by asking the auditor questions or by making an objection, thus triggering an investigation.

Points have been made in relation to this legislation that it might potentially result in auditors receiving a large number of questions or objections. I agree with the noble Lord, Lord Kennedy, that it is not foreseen that there will be a stampede of journalists taking up this right. It does not seem that that is going to happen. Currently the number of objections and questions received from local electors is very small—last year only around 65 from more than 11,000 audited bodies. While the publication of articles detailing high or unorthodox expenditure in an area could result in a number of local electors asking questions of the auditor, the number who will take the next step is likely to remain small, especially given the 30-day timeframe.

In closing, I once again thank my noble friend Lady Eaton. I hope that I have been able to reassure noble Lords on the two specific issues of health bodies and the likely number of people who will take up this right. I echo the words of my noble friend and of the noble Lord, Lord Kennedy, by encouraging all noble Lords to support the Bill.