Bus Services Bill [HL]

Lord Shipley Excerpts

Report: 2nd sitting (Hansard - part one): House of Lords
Monday 24th October 2016 Lords Chamber

[Baroness Scott of Needham Market]

My Lords, Amendment 28 returns to the question of an independent audit of proposals for new franchising schemes. I thank the Minister for meeting me in September to discuss this matter and for his subsequent letter. The purpose of the amendment is to provide the House with an opportunity to look again at the question of an independent audit and for the Minister to elaborate and build on the letter that he sent me.

The issue here is protecting the public against the careless use of local taxpayers’ money. I have always believed in devolution; indeed, I have long thought it was a scandal that our major cities constantly have to go cap-in-hand to government whenever they want to undertake a capital programme. But I am also a great believer in democratic accountability, and there is a real problem in mayoral models in that the very concentration of power in the hands of one individual that makes it such an attractive option to government also runs a significant risk of poor decision-making because it is untested by debates in traditional committees or through effective scrutiny.

The Public Accounts Committee published a report in July in which it said:

“There has been insufficient consideration by central government of local scrutiny arrangements, of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

The committee went on to talk more about its concerns about capacity issues, particularly financial and technical skills, which have been exacerbated by budget cuts. Providing a requirement for a mayor to give information that proposed new schemes, potentially worth millions of pounds, have been independently audited is an important safeguard. The auditor usually engaged by a local authority may very well have their independence compromised by their wish to hold on to the contract.

Equally importantly in terms of public confidence is that the audit should be seen to be independent. The Public Accounts Committee had this to say:

“Robust and independent scrutiny of the value for money of devolved activities is essential to safeguarding taxpayers’ money, particularly given the abolition of the Audit Commission … Currently, local auditors focus on individual bodies’ financial statements and arrangements for securing value for money, rather than assessing value for money itself”.

In his letter to me, the Minister referred to the guidance on the matter that he had agreed to develop, and I would be grateful to hear more about that today. He referred to the availability of freedom of information as a means of achieving transparency. I wonder whether he can confirm today that such freedom of information requests will not be met with commerciality exemptions. I beg to move.

[Lord Shipley (LD)]

My Lords, I support this amendment, to which my name is attached. My noble friend Lady Scott of Needham Market said that it related to the protection of the public, and I agree entirely with all that she said. I draw the Minister’s attention to the fact that the context is not the same as it was when we debated this matter in Committee, because an amendment was agreed on day one of Report extending franchising powers to all relevant councils and local transport authorities. I supported that in the Lobbies but I have always believed that it must be accompanied by a robust and thorough audit and full scrutiny of any proposal for franchising.

Detailed audit and scrutiny processes exist within mayoral combined authorities because this House wrote into the Cities and Local Government Devolution Act much more comprehensive arrangements for audit and scrutiny than had originally been planned. As my noble friend Lady Scott of Needham Market made clear, it is not as much as we wanted, and many feel that it is not enough—but it is, nevertheless, more than is proposed in the Bill for non-mayoral combined authorities.

I hope that the Minister will give much further consideration to the proposal that there should be full scrutiny and audit of any franchising plan proposed by a council or local transport body which is not a mayoral combined authority. My noble friend Lady Scott received a letter from the Minister dated 5 October which expresses much agreement on the need for the audit process to be credible and open to public scrutiny, and accepts that there must be robust evidence and analysis. Indeed, on page 2 the letter accepts that the process should be independent, and one in which other people will have the right to challenge the report. Clearly the process must be seen to be transparent.

We need an auditor with appropriate professional standing who is clearly independent of the contractor and also has professional knowledge of audit, finance and, crucially, transport. I suggest to the Minister that it will be a rare person indeed who, as auditor to a council or a local transport body, has all those skills. It is my view that a specific appointment should be made.

I accept that this matter could be subject to further discussion during the passage of the Bill and then in the production of guidance—but, now that the House has extended franchising powers to non-mayoral combined authorities, having a robust and independent audit system has become increasingly important.

[Lord Snape (Lab)]

My Lords, I support the views put forward by the two previous speakers. Under previous legislation, there were five main tests for franchising. I do not propose to go over them, but they were fairly stringent. Attempts by local authorities to introduce franchising previously failed those tests.

We are in uncharted territory with the Bill. It does not seem inherently fair that the authority that wants to set up a franchising scheme can be judge and jury for that scheme, which appears to be the current situation. We need a degree of independence in judging the merits or otherwise of such a franchising proposal. Common fairness demands some sort of independent scrutiny of the proposals.

I do not know the Minister’s intention, but I hope that he will see the common sense and fairness behind the noble Baroness’s amendment. If an independent element is not introduced, one can just imagine the number of judicial reviews that will be held—from one end of the country to the other—if bus companies feel that they have been unfairly treated by the franchising authority acting as judge and jury. So the amendment is eminently sensible and I hope that the Minister will act on it.