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Commons Amendment

Volume 591: debated on Monday 22 June 1998

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3 After Clause 4, insert the following new clause—

ACCESS BY COMPTROLLER AND AUDITOR GENERAL TO DOCUMENTS ETC

(".—(1) Section 33 of the 1993 Act (accounts of Secretary of State and National Debt Commissioners) shall be amended as follows.

(2) After subsection (3) there shall be inserted—

"(4) For the purpose of exercising his examination function in relation to any accounts prepared under subsection (1), the Comptroller and Auditor General—

  • (a) shall have a right of access at all reasonable times to any documents which he reasonably requires which are in the custody or under the control of any section 5 licensee; and
  • (b) shall have a right to require from any officer or employee of any section 5 licensee, or from the auditors of any section 5 licensee, an explanation of, or information relating to, any such documents;
  • but a section 5 licensee shall not, by virtue only of this subsection, be a body to which section 6 of the National Audit Act 1983 applies.

    (5) For the purpose of—

  • (a) exercising his examination function in relation to any accounts prepared under subsection (1), or
  • (b) deciding whether, or to what extent, to exercise any right conferred by subsection (4),
  • the Comptroller and Auditor General shall have regard to any information which the Director General has obtained from any section 5 licensee and which is relevant to the exercise of that function.

    (6) Where, in exercising his examination function in relation to any accounts prepared under subsection (1), the Comptroller and Auditor General obtains any information which gives him grounds to believe that a section 5 licensee has, or may have, contravened any of the conditions of its licence under section 5, the Comptroller and Auditor General shall as soon as practicable disclose that information to the Director General.

    (7) A section 5 licensee shall be under a duty—

  • (a) to permit the Comptroller and Auditor General to exercise the right conferred by subsection (4)(a); and
  • (b) to do all that may be reasonably practicable to secure that any person who under subsection (4)(b) is required to provide an explanation of, or information relating to, any document complies with that requirement;
  • and any breach of that duty shall be actionable at the suit of the Comptroller and Auditor General.

    (8) The right of access to documents conferred by subsection (4)(a) includes a right to take copies of or make extracts from documents.

    (9) In this section any reference to documents includes a reference to information held by means of a computer or in any other electronic form; and in the case of information so held the right of access conferred by subsection (4)(a) includes a right of access to, and to take copies of, that information in a visible and legible form.

    (10) In this section—

    "examination function", in relation to the Comptroller and Auditor General, means his function under subsection (3);
    "section 5 licensee" means a body which holds or has held a licence under section 5."

    (3) This section has effect in relation to accounts prepared under section 33(1) of the 1993 Act so far as they relate to periods beginning on or after 1st April 1999.").

    My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3, which stands by itself. This amendment will allow the Comptroller and Auditor General access to the records of the lottery operator for the narrow purposes of auditing the National Lottery Distribution Fund but it will not set any general precedent for access to private bodies within regulated sectors.

    This amendment will allow the Comptroller and Auditor General to examine documents held by the section 5 licence holder—that is, at the present time Camelot—and require written and oral explanations of them when carrying out his functions of examining, certifying and reporting on the accounts of the National Lottery Distribution Fund. The amendment is intended to meet the concerns indicated by the Public Accounts Committee in its 20th Report in 1996–97. The Government accepted that necessary access sufficient to complete the audit of the National Lottery Distribution Fund was appropriate in their response to the Public Accounts Committee in July 1997. The change is being introduced now, after careful consideration between other government departments and the National Audit Office. Because of the need for wide consultation it was not possible to introduce this amendment earlier, and I apologise to noble Lords that it was not possible for them to review the clause in the Grand Committee.

    The work to be carried out by the Comptroller and Auditor General will be complementary to the regulatory work currently conducted by the Director General of the National Lottery. In drafting the amendment, we are mindful that the extra compliance costs it creates should be modest. As the Minister made clear in another place, it ensures that the Comptroller and Auditor General has a duty to take into account the work undertaken by the director general and the documents available to him through Oflot. We believe that this change, which has been welcomed by the chairman of the Public Accounts Committee of the other place, will reinforce transparency in the audit of the National Lottery Distribution Fund, will add to the public confidence in the lottery and ensure greater parliamentary accountability for the sums due to good causes. I beg to move.

    Moved, That the House do agree with the Commons in their Amendment No. 3—(Lord McIntosh of Haringey.)

    My Lords, this amendment extends the control of the public auditor, as the noble Lord has just explained, over a private company. We did not raise any objection to that in the other place and I do not propose to do so now, but I would like again to put on record a couple of disquieting thoughts.

    First of all, have the Government considered that this amendment may have some compliance costs and indeed may impose compliance costs on the licensee? Have they formed any estimate of what those costs might be? Such costs, of course, come out of the profits and ultimately out of the amount of money available for good causes.

    Secondly, we are worried about how the amendment will work in practice. Is it likely to lead to litigation as to which documents the Comptroller and Auditor General may require? We are all in favour of transparency but again I would point out that there are no parallel rights of access by the Comptroller and Auditor General to the documents of the privatised utilities. Why should there be extended access in this particular case? I shall be interested to hear what the noble Lord has to say.

    A very much smaller point arises in subsection (5) which says that,
    "the Comptroller and Auditor General shall have regard to any information which the Director General has obtained from any section 5 licensee".
    Is that correct? I would have thought that both here and in subsection (6) the reference should be to the commission, but I am not familiar with the exact drafting convention.

    My Lords, I thank the noble Lord for his general support for the amendment, and I acknowledge that it is entirely proper for him to raise these matters. First, as regards the issue of compliance costs, the present situation is that the Comptroller and Auditor General concentrates his audit efforts on the department and on Oflot. Subsection (5) of the amendment provides for him to take account of the work of the director general so as to reduce the scope for duplication of effort.

    Broadly speaking, I think it can be said that he will be auditing the same things, but if this amendment is agreed to he will be auditing them directly from the documents held by the licence holder rather than doing it at second hand through the figures from Oflot. But in total the audit procedure will not be significantly more complicated. Of course the noble Lord is right. There will be some additional costs, but we believe, as does the Comptroller and Auditor General, that they will be modest.

    The department has proposed that, together with the director general and Camelot, it should discuss with the National Audit Office the way in which this clause is going to be made to work in order to ensure that there is no duplication and also to ensure that there is no burden which has not been anticipated on anyone. I do not see why there should be any need to go to litigation. The Comptroller and Auditor General will have access to all that he needs to conduct his audit. All sorts of bodies are used to the idea of the Comptroller and Auditor General having access to their papers. The Government are confident that the various parties will work closely together.

    Subsection (5) of the proposed new clause, which is Amendment No. 3, specifically provides for the Comptroller and Auditor General to take account of the work of the director general. It minimises the extent to which Camelot, the licence-holder, will be bothered. I am referring to the director general and to Oflot, but when the amendments about the commission come into force, which will be in the early part of next year, the references that I have made will be updated accordingly.

    I acknowledge the appropriateness of the noble Lord's concerns but, for the reasons that I have given, I believe them to be minimal. I commend the amendment to the House.

    On Question, Motion agreed to.