Local Audit and Accountability Bill [HL]

Debate between Lord Shipley and Lord Palmer of Childs Hill

Monday 15th July 2013 Lords Chamber

[Lord Shipley]

My Lords, I remind the House of my vice-presidency of the Local Government Association. I was unable to discuss this matter when it was raised by the noble Lord, Lord Wills, in Committee, but he is making a very powerful case. I hope Ministers will be able to respond in a way that meets the issues that he has so rightly raised.

It is clear in Amendment 18 that a private company that is contracted, let us say, to run a refuse collection service or to run a leisure centre will appoint its own auditors to carry out an audit of the service that it undertakes. However, I do not think that that will prove sufficient. The public interest requires, where public money is being spent on a service, that the auditor on behalf of the public sector should have access to information that lies with the body that is providing the service through a contract. This appears to be an attempt to prevent a local government auditor having access to information that would assist the undertaking of that audit because a service has been provided by a private sector company. That does not stand the test of public accountability.

The noble Lord, Lord Wills, has got it right with Amendment 18. It is reasonable to say:

“A local auditor has a right of access at all reasonable times to audit documents from private companies that the local authority have contracted services to during the last financial year”,

and it is reasonable to say:

“Local auditors only have a right of access to audit documents from private companies … that relate to the service provided to the local authority by that company”.

In both respects, that is a reasonable requirement for a local auditor to expect. The public interest is best served by the auditor having those powers because this is about contract compliance in financial matters and service delivery. It is a basic requirement if an audit is to be undertaken successfully. How else can the general public have confidence that public money is being efficiently and properly spent on their behalf? I hope that we will hear from the Minister something that will convince us that Amendment 18 is not necessary.

On Amendment 23, there should be no diminution in the rights under the Freedom of Information Act. When it comes to transparency, particularly in view of the matters that have occurred recently, of which the noble Lord, Lord Wills, reminded us, your Lordships’ House has a duty to ensure that transparency in public expenditure and the delivery of the public interest actually happen. I hope that the Minister can give us the assurance that the noble Lord, Lord Wills, is seeking.

[Lord Palmer of Childs Hill]

My Lords, this is a very interesting amendment. I just wanted to add one other perspective. Any local authority worth its salt, particularly in this time of outsourcing, when so much is being outsourced to outside companies and bodies, will insist—as I have always insisted in my own local authority—that it has a right within the contract with the outside contractor to be able to audit the documents of the outside contractor. The place to do all the things that my noble friend has suggested is very often within the contract between the local authority and the contractor.

How that works in practice is that the local authority and its internal auditors need to see what the audit processes are within that outside contractor. The idea that the auditor of the local authority will go in on a normal basis and delve into the detailed books and records of the outside contractor is probably stretching the imagination a bit. The trouble with audits—this is where the noble Lord, Lord Wills, really hits the nail on the head—is that they are, in general, historical and you are looking at what went wrong. The noble Lord, Lord Wills, gave two good examples of what went wrong. The question to the noble Lord, Lord Wills, is: if the Government or the local authority had the ability to go in and audit the sort of companies and organisations the noble Lord described, would they have found these particular problems at that stage?

The noble Lord, Lord Wills, is on to a very important point. But I believe—as I hope that my noble friend the Minister will tell your Lordships’ House—that those protections of being able to audit should be more properly contained within the contract between the local authority and the outside body to which it is contracting.

Local Government Finance Bill

Debate between Lord Shipley and Lord Palmer of Childs Hill

Monday 22nd October 2012 Lords Chamber

[Lord Shipley]

My Lords, I agree entirely with the noble Lord, Lord Smith, that this is the best of the options that we have available. Crucially—and it is the reason why I thought that the Government might be willing to accept it—the amendment would cost them nothing.

In her Written Statement last week announcing a £100 million transitional grant, the Minister said that it was,

“to help those councils who choose to do the right thing”.—[Official Report, 15/10/12; col. WS164.]

The problem with that is that it does not recognise that many councils cannot do that. There are several reasons why this is the case. We have heard reference to the council tax freeze—last year, this year and now next year. Last year was fine, because the Government built into the baseline of all local authorities the amount that they had lost through the tax being frozen, but, in this financial year and the next financial year, no money has been or will be built into the baseline. That means in practice that councils will have to absorb inflation and rising costs.

There was an expectation that councils, in being able to tax at 100% empty or second homes, would be able to make up the gap in their finances. The problem is that many councils do not have many empty homes or second homes and therefore cannot use that means to make up the gap in their finances.

We should also note, as I reminded the House on Report, that according to figures from the Institute for Fiscal Studies, councils in poorer parts of England have had budget cuts since 2010 at almost three times the rate of councils in the south of England. That is partly a result of the loss of working neighbourhoods funding.

The consequence of all these factors is that many councils have no flexibility or room for manoeuvre. This amendment would give them some extra flexibility. It would mean a small extra weekly sum from a large number of working-age, single person households, most of which have had a freeze in council tax for the past two years and would otherwise have a freeze next year. It would be enough in most cases to take poor working-age households out of paying council tax, thereby preventing a regressive tax being implemented.

Last week, at Report, I reminded the House of a statement made by the Deputy Prime Minister a few days ago. I shall repeat his words because I think they are hugely relevant. He said:

“As we have to tighten our belts … as we have to make more savings as a country … you start at the top and work your way down, not the other way round”.

I agree that those who are poor should be protected. The reason why I give my full support to the amendment is that it does just that: it protects the poor better than the Bill. Given that it has the full support of all political groups on the Local Government Association, I hope that your Lordships’ House will feel able to support it.

[Lord Palmer of Childs Hill]

At this stage, we get down to essentials, as we did in the previous amendment. That amendment addressed the crux of the problem. I appreciated what the noble Baroness, Lady Hollis, said about this being in the universal credit. That has come through from various noble Lords. However, we are where we are, as my noble friend Lord Tope said, and we must deal with that.

The important thing about the amendment is that it gives discretion to local authorities. That discretion is important. Speaking as a councillor in the London Borough of Barnet, I believe that that would help my council, although it would not help all councils. It is an extension of the localism which we debated previously. This amendment and the previous amendment tabled by the noble Baroness, Lady Hollis, support the poorest in society. That is why, contrary to my normal beliefs, I voted for the previous amendment and will certainly vote for this one.

My noble friend Lord True spoke about the difficulties that it would impose on local authorities to have the change at this late stage and asked how it would help. As I said, local authorities have discretion whether to do this or not, and that discretion does not have to be applied this year—it could be applied next year. Many local authorities may decide to use their part of the £100 million in transitional relief this year to ease the pain but, as I pointed out on Report, it will help only this year. By next year, the amendment, building on the review suggested by the noble Baroness, Lady Hollis, will mean that local authorities can achieve my aim and, I hope, that of many noble Lords: to help the poorest in society.

My noble friend Lord True said that that was swallowing a spider to catch a fly. Without the amendment and the previous amendment, the Bill is a particularly dangerous fly and I think that it is worth swallowing the spider.