Local Audit and Accountability Bill [HL]

Lord Palmer of Childs Hill Excerpts

Wednesday 24th July 2013 Lords Chamber

[The Earl of Lytton]

My Lords, I had intended to add my name to the amendments tabled by the noble Lord, Lord Wills. I regret that probably I advised the clerks too late for that to happen. I start, therefore, by apologising to the noble Lord.

As did the noble Lord, Lord Tope, I declare my interests as a newly polished and appointed vice-president of the Local Government Association and a possibly somewhat more tarnished president of the National Association of Local Councils. The issue is one of not adding unnecessarily to costs, as the noble Lord pointed out. Part of me says that whenever locally—or at whatever level—a greater throughput of taxpayers or public money is being used, it is right that the level of scrutiny is proportionate. The reference to “significant private companies” is perhaps slightly less than I would have liked. I would have liked the figure itself to have been objectively significant rather than the company providing the service being significant. I am not sure that I know what a significant company is in this context, whereas I am clear as to what a significant figure might be.

However, it is right that auditors should have a degree of discretion in looking at this. As I said at an earlier stage in the Bill, we may be looking at quite small organisations that, for whatever reason—perhaps because of some project they are undertaking—may be responsible for deploying fairly significant sums. It is right that those should be subject to scrutiny. There is no place here for opacity in the way in which figures are presented. Therefore I very much support the principle of this amendment.

I will digress, if I may, onto the freedom of information issue. I am aware that one of the get-outs in relation to providing freedom of information data is when the request is considered to be vexatious. The standard of “vexatious” as a term of art seems to be a matter of self-assessment to a degree by the body that is providing that information; at least, that is how it seems to me. The noble Baroness opposite is shaking her head slightly; if I have got it wrong, I apologise. However, it seems to me that that is capable of a degree of latitude. I certainly have seen evidence of “vexatious” used as a reason for not providing information—although not in the context of local government—and the term ought to be made a little clearer. In general terms, I support what the noble Lord, Lord Wills, has put forward and am grateful to him for continuing to bring it to the attention of the House.

[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.